Yahoo Finance Gartner Inc (IT) (Q1 2024) Earnings Call Transcript Highlights: Steady Growth Amid Economic ...
Revenue: Q1 revenue was $1.5 billion, up 5% year-over-year, FX neutral.
EBITDA: Q1 EBITDA reached $382 million, modestly up from Q1 2023.
EPS: Adjusted EPS for Q1 was $2.93, a 2% increase from the previous year.
Free Cash Flow: Q1 free cash flow was $166 million.
Contract Value: Ended Q1 at $4.9 billion, up 7% year-over-year.
Research Revenue: Grew 4% year-over-year in Q1, both reported and FX neutral.
Consulting Revenue: Increased by 6% year-over-year to $135 million in Q1, 7% on an FX-neutral basis.
Conferences Revenue: For Q1 was $70 million, slightly above expectations.
Guidance for 2024: Updated to include stronger revenue, EBITDA, EPS, and free cash flow expectations, reflecting a stronger U.S. dollar impact.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you give more perspective on GTS new business sold trends, especially since it was weaker this quarter compared to last? A: (Craig W. Safian - CFO) The new business for GTS enterprise function leaders was up low single digits year-over-year in the quarter, but it was down a bit on the tech vendor side. The larger-than-normal amount of tech vendor contracts up for renewal, which were typically 2- or 3-year deals, affected the first quarter. The tech market is very different today than it was a few years ago, leading to some recalibration and less new business on those renewals.
Q: How are large enterprise clients and tech vendors reacting to contract renewals, especially in terms of reducing seats? A: (Eugene A. Hall - CEO) In the small end of the market, companies that got funding 2 or 3 years ago are now struggling to get funding due to higher interest rates and a shift in venture capital investments towards AI startups. At the large end, companies are laying off tens of thousands of people, creating a tougher selling environment. The largest number of renewals from 2 or 3 years ago came up in Q1, but we expect conditions to improve throughout the year.
Q: Given the current challenges, why do you still believe CV should start to accelerate after this quarter or the next? A: (Eugene A. Hall - CEO) Despite tougher economic conditions, our enterprise function leaders CV grew by 10%. We had a significant number of tech vendor renewals in Q1, which we expect to decrease later in the year. Additionally, our forward sales pipeline is very robust, giving us confidence in our outlook.
Q: Can you discuss the impact of AI on demand and how Gartner is utilizing AI internally? A: (Eugene A. Hall - CEO) AI is a topic of high interest across all functional areas we serve, similar to how cloud computing was a few years ago. While it's a hot topic and good for closing sales, it hasn't led to a step change in demand. Internally, we use sophisticated machine learning algorithms and neural networks mainly for data analytics to understand our business better.
Q: What are your expectations for tech vendor trends moving forward, and what percentage of business is related to tech vendors? A: (Craig W. Safian - CFO) Tech vendor CV is a little less than 25% of total CV. We expect our tech vendor business to grow by 12% to 16% over the medium to long term, despite the current challenging market.
Q: How are you managing the renewal activity and contract terms compared to a few years ago? A: (Craig W. Safian - CFO) The terms of renewals have been stable and normal, with about 70% of our contract value being multiyear contracts, primarily 2-year terms. We build price escalators of between 3% and 5% into these contracts, which align with our pricing expectations when we sign the contract.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
