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Gartner (IT) Q2 Earnings and Revenues Surpass Estimates
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Gartner, Inc. (IT - Free Report) reported strong second-quarter 2018 results, with revenues and earnings surpassing the Zacks Consensus Estimate.
Adjusted earnings of $1.03 per share outpaced the consensus mark by 6 cents and increased 17% on a year-over-year basis.
Revenues totaled $1 billion, which exceeded the Zacks Consensus Estimate by $15 million. The reported figure was up 19% year over year. Adjusted revenues of $1 billion were up 14% from the year-ago quarter. Strength across the majority of the segments drove the top line. Total contract value was approximately $2.9 billion, up 12% year over year.
Shares of Gartner have gained 3.2% over the past year, underperforming the industry’s rally of 23.2%.
Let’s check out the numbers.
Revenues by Segment
Revenues at the Research segment increased 25% year over year to $770 million. Gross contribution margin was 69% in the second quarter, up from 65% in the year-ago period.
Under Global Technology Sales, client retention was 82% and wallet retention was 105%. Global Business Sales client retention was 83% and wallet retention was 97%.
Revenues at the Consulting segment grew 5% from the year-ago quarter to $96 million. Gross contribution margin was 35% in the quarter, up from 34% in the year-ago period. Backlog, the key leading indicator of future revenue growth for the Consulting business, totaled $106 million compared with $91 million in the prior-year period.
Revenues at the Events segment increased 22% from the year-ago quarter to $111 million. Gross contribution margin was 57%, up from 55% in the year-ago period. Revenues at the Othersegment summed $23 million, while gross contribution margin was 65%.
Operating Results
Adjusted EBITDA increased 11% year over year to $191 million. Adjusted EBITDA margin contracted 50 basis points (bps) to 19.1%.
Balance Sheet and Cash Flow
Gartner exited the second quarter with cash and cash equivalents balance of $141.8 million compared with $190 million at the end of the prior quarter. Long-term debt at the end of the second quarter was $2.15 billion compared with $2.19 billion at the end of the second quarter. Operating cash flow totaled $174 million and free cash flow was $183 million in the reported quarter.
2018 Outlook
The company expects full-year revenues to be in the range of $3.92-$4.03 billion. The Zacks Consensus Estimate stands at $3.99 billion, which is within the currently guided range.
Adjusted earnings are anticipated to be in the range of $3.51-$3.91 per share. The Zacks Consensus Estimate is pegged at $3.74, within the currently guided range.Adjusted EBITDA is projected in the $710-$760 million band. Operating cash flow is envisioned between $425 million and $475 million. Free cash flow is expected in the range of $416-$456 million.
Investors interested in the broader Business Services sector are keenly awaiting second-quarter earnings reports from key players like Avis Budget (CAR - Free Report) , Genpact (G - Free Report) and Delphi Technologies . While Avis Budget and Genpact will report their quarterly numbers on Aug 7, Delphi Technologies will release results on Aug 8.
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Gartner (IT) Q2 Earnings and Revenues Surpass Estimates
Gartner, Inc. (IT - Free Report) reported strong second-quarter 2018 results, with revenues and earnings surpassing the Zacks Consensus Estimate.
Adjusted earnings of $1.03 per share outpaced the consensus mark by 6 cents and increased 17% on a year-over-year basis.
Revenues totaled $1 billion, which exceeded the Zacks Consensus Estimate by $15 million. The reported figure was up 19% year over year. Adjusted revenues of $1 billion were up 14% from the year-ago quarter. Strength across the majority of the segments drove the top line. Total contract value was approximately $2.9 billion, up 12% year over year.
Shares of Gartner have gained 3.2% over the past year, underperforming the industry’s rally of 23.2%.
Let’s check out the numbers.
Revenues by Segment
Revenues at the Research segment increased 25% year over year to $770 million. Gross contribution margin was 69% in the second quarter, up from 65% in the year-ago period.
Under Global Technology Sales, client retention was 82% and wallet retention was 105%. Global Business Sales client retention was 83% and wallet retention was 97%.
Revenues at the Consulting segment grew 5% from the year-ago quarter to $96 million. Gross contribution margin was 35% in the quarter, up from 34% in the year-ago period. Backlog, the key leading indicator of future revenue growth for the Consulting business, totaled $106 million compared with $91 million in the prior-year period.
Revenues at the Events segment increased 22% from the year-ago quarter to $111 million. Gross contribution margin was 57%, up from 55% in the year-ago period. Revenues at the Other segment summed $23 million, while gross contribution margin was 65%.
Operating Results
Adjusted EBITDA increased 11% year over year to $191 million. Adjusted EBITDA margin contracted 50 basis points (bps) to 19.1%.
Balance Sheet and Cash Flow
Gartner exited the second quarter with cash and cash equivalents balance of $141.8 million compared with $190 million at the end of the prior quarter. Long-term debt at the end of the second quarter was $2.15 billion compared with $2.19 billion at the end of the second quarter. Operating cash flow totaled $174 million and free cash flow was $183 million in the reported quarter.
2018 Outlook
The company expects full-year revenues to be in the range of $3.92-$4.03 billion. The Zacks Consensus Estimate stands at $3.99 billion, which is within the currently guided range.
Adjusted earnings are anticipated to be in the range of $3.51-$3.91 per share. The Zacks Consensus Estimate is pegged at $3.74, within the currently guided range.Adjusted EBITDA is projected in the $710-$760 million band. Operating cash flow is envisioned between $425 million and $475 million. Free cash flow is expected in the range of $416-$456 million.
Zacks Rank & Upcoming Releases
Gartner currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting second-quarter earnings reports from key players like Avis Budget (CAR - Free Report) , Genpact (G - Free Report) and Delphi Technologies . While Avis Budget and Genpact will report their quarterly numbers on Aug 7, Delphi Technologies will release results on Aug 8.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>