Gartner Inc. Revenue Surges 38%

Gartner (NYSE: IT) reported second-quarter financial results on Aug. 8.

The global research and advisory company is enjoying strong sales growth as it works to integrate a recent acquisition.

Gartner results: The raw numbers

What happened with Gartner this quarter?

• Total revenue surged 38% year over year to $843.7 million, and 40% on a currency-neutral basis. Excluding the impact of Gartner's acquisition of CEB, revenue rose 13% (15% foreign-exchange-neutral).

• Adjusted EBITDA, which excludes stock-based compensation, acquisition-related charges, and other non-recurring items, soared 57% to $185 million.

• All told, adjusted net income jumped 26% to $79.4 million, and earnings per share increased 17% to $0.88.

Business segment results

Research revenue leapt 34%, to $613.7 million, and 15% when excluding the impact of the CEB acquisition. Adjusted gross contribution margin was 68%, down from 70% in Q2 2016. Gartner's client retention was flat at 83%, while wallet retention (retention times revenue per customer) improved to 105% from 104% in the year-ago period. And Gartner's contract value was $2 billion at the end of the second quarter, a year-over-year increase of 14%.

Consulting revenue grew 6% to $91.7 million. Consulting segment gross contribution margin was 34%, up from 33% in the prior-year quarter, while utilization fell to 65% from 69%. Gartner's billable headcount for its consultant force at the end of the quarter was 667, compared to 626 in Q2 2016. Gartner's backlog, however, decreased to $91 million as of June 30, 2017, down from $93.3 million a year earlier.

Additionally, events revenue jumped 37% to $91.2 million, with gross contribution margin rising to 55% from 54%. And Gartner's new talent assessment business, which came about due to its CEB deal, delivered revenue of $47.1 million, with a gross contribution margin of 37%.

Looking forward

Gartner updated its financial outlook for 2017, including:

• Total revenue of $3.225 billion to $3.320 billion, up from a prior forecast of $3.219 billion to $3.314 billion
• Adjusted EBITDA of $685 million to $720 million, down from $685 million to $735 million
• Adjusted EPS of $3.32 to $3.49, down from $3.32 to $3.60

CEO Gene Hall explained the revised outlook during a conference call with analysts:

Looking out even further, Hall is optimistic as to the combined company's prospects. "The integration of Gartner and CEB is going extraordinarily well and gives us a quantum leap in capability," Hall said in a press release. "Our outlook for long term growth remains incredibly strong."

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Joe Tenebruso has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Gartner. The Motley Fool has a disclosure policy.