Gartner, Inc. (IT)
Q3 2011 Earnings Call
November 1, 2011 08:30 am ET
Gene Hall – Chief Executive Officer
Chris Lafond – Executive Vice President & Chief Financial Officer
Brian Shipman – Vice President, Investor Relations
Peter Appert – Piper Jaffray
Dave Lewis – JP Morgan
William Bird – Lazard Capital Markets
Manav Patnaik – Barclays Capital
Robert Riggs – William Blair
Bill Southerland – Northland Capital
Kelly Flynn – Credit Suisse
Daniel Leben – Robert W. Baird
Brian Karimzad – Goldman Sachs
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I will now turn the conference over to Brian Shipman, Gartner’s Group Vice President of Investor Relations for opening remarks and introductions. Please go ahead, sir.
Thank you and good morning, everyone. Welcome to Gartner’s Q3 2011 Earnings Conference Call. With me today is our Chief Executive Officer Gene Hall and our Chief Financial Officer Chris Lafond. This call will begin with a discussion of the quarterly financial results disclosed in today’s press release as well as an update of our increased revenue guidance, followed by an opportunity for you to ask questions. I’d like to remind everyone that the press release is available on our website, and that web address is www.gartner.com.
Before we begin we need to remind you that certain statements made on this call may constitute forward-looking statements. Forward-looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the company’s 2010 annual report on Form 10(k) and quarterly reports on Form 10(q), as well as in other filings with the SEC. I would encourage all of you to review the risk factors listed in these documents. The company undertakes no obligation to update any of its forward-looking statements.
With that I would like to hand the call over to Gartner’s Chief Executive Officer, Gene Hall. Gene?
Good morning, everyone. Thanks for joining us. Our Q3 results for 2011 continued the growth trend that we’ve delivered through the successful and consistent execution of our long-term strategy. As you’ve heard me say before, the fundamentals for our strategy have been and remain to create extraordinary research insight, to build strong sales capability, to deliver high-value differentiated offerings, to provide world-class service, and to continuously improve our operational effectiveness. This strategy has been successful across our lines of business and across all geographies.
In Q3 2011, research contract value continued to demonstrate strong growth. We achieved 15% contract value growth excluding the impact of foreign exchange, and ended the quarter at the highest level ever reported in Gartner’s history. The 15% year-over-year increase in research contract value was driven by both strong Q3 new business as well as strong client and wallet retention. New business was the highest of any Q3 in Gartner’s history, and wallet retention was 100% the second quarter in a row.
Our events business remains strong. In Q3 revenue growth of 12% excluding the impact of foreign exchange was above our long-term target of 5% to 10%. For our events held this quarter, attendees were up 12% and exhibitors were up 14%. We also added two new events and we continue to optimize our events portfolio for maximum value. In consulting, the solid pipeline we told you about on last quarter’s call drove revenue growth of 4% excluding the impact of foreign exchange, a notable improvement from the first half results we reported previously.
The overall momentum in our business has been driven by the success of our initiatives to improve sales force productivity, drive higher client retention, grow share of wallet among existing customers, and penetrate net new opportunities. Information technology continues to grow in importance for virtually every institution in the world. IT and supply chain management remain the best way for companies to improve in any macroeconomic environment.
These areas are and will continue to be complex and continuously evolving. IT and supply chain professionals need expert assistance and insight to help them make the critical business decisions they face virtually every day. Gartner is the best and most cost-effective resource they can turn to for that help, and often makes the difference between success and failure in any economic environment.
I just returned from our largest symposium event in Orlando, Florida. This even had our highest attendance ever with more than 8000 attendees, including more than 2000 CIOs. I had the opportunity to meet with a number of clients, and they were there because IT is central to the key initiatives and strategies in their institutions, and they know that Gartner is the best source for help to ensure these critical initiatives are successful. While at the Orlando symposium I also had the opportunity to interact with many of our sales people and they are as energized and enthusiastic as I’ve ever seen.
I’ve never been more confident or excited about our prospects for continued accelerated growth than I am today. We have a vast, untapped market opportunity for our services which we estimate at over $45 billion for research alone. There are hundreds of thousands of IT and supply chain practitioners who could potentially be Gartner clients but who have never been educated on the value we can provide. The Gartner brand is in a class by itself. Our products and services lead the market and we have a highly compelling business model. Gartner is the strongest company it’s ever been.