Gartner(IT) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue was $1.4 billion, up 12$379 million, up 15% year-over-year on a reported basis and up 19% FX neutral [128] - Adjusted EPS was $2.88, up 24$144 million, representing 18% of revenue and 65% of EBITDA [110] Business Line Data and Key Metrics Changes - Research revenue grew 7% year-over-year as reported and 9% FX-neutral [105] - Consulting revenues increased by 10% year-over-year to $127 million, with a 14$4.5 billion at the end of the first quarter, up 10% versus the prior year [106] - Global Technology Sales (GTS) contract value grew 9% year-over-year, while Global Business Sales (GBS) contract value grew 16% year-over-year [119] Market Data and Key Metrics Changes - CV from enterprise function leaders across GTS and GBS grew at double-digit rates, while CV from tech vendors grew mid-single digits [106] - GBS practices, excluding sales and marketing, grew at double-digit rates, with supply chain and HR growing faster than 20% [107] - Retention for GBS was 110% for the quarter, compared to 115% in the prior year [107] Company Strategy and Development Direction - The company is focused on delivering value to clients through research and consulting, addressing mission-critical priorities [78][99] - The strategy includes a capital allocation plan emphasizing share repurchases and strategic tuck-in M&A [15][113] - The company expects to continue its sustained record of success, with modest margin increases over time [121] Management's Comments on Operating Environment and Future Outlook - Management noted that the tech sector is adjusting to post-pandemic demand and that the banking industry is facing challenges due to rising interest rates [118] - The company has taken a prudent approach to planning for 2023, expecting full-year EBITDA of at least $1.33 billion [17] - There is a higher-than-normal level of uncertainty in the world, but the company remains well-positioned to drive growth [101] Other Important Information - The company repurchased more than$100 million of stock during the first quarter, with about $950 million remaining on its share repurchase authorization [46] - The overall multiyear contracts as a percent of the research business is around 70$920 million for 2023 [132] Q&A Session Summary Question: What are the challenges in the tech vendor channel? - Management acknowledged that the tech vendor channel is facing challenges, impacting new business and retention metrics [54][126] Question: How is the company leveraging generative AI? - Management highlighted that generative AI is improving internal efficiencies and client interactions, enhancing overall productivity [21][51] Question: What is the outlook for contract value growth? - Management indicated that contract value growth is expected to remain strong, despite tough comparisons in the upcoming quarters [54][114] Question: How is the company managing expenses? - Management stated that they are managing expenses prudently while supporting future growth, with a focus on maintaining strong margins [112][148] Question: What is the company's approach to pricing and contract renewals? - Management confirmed that they are holding strong on pricing and not offering discounts, maintaining their pricing structure [39][153]