Gartner, Inc. (IT)

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Gartner, Inc. (IT)

Investor Day Call

February 16, 2012 09:00 ET

Executives

Brian Shipman –Group Vice President, Investor Relations

Gene Hall – Chief Executive Officer

Peter Sondergaard – Senior Vice President, Research

Alwyn Dawkins – Senior Vice President, Gartner Events

Per Anders Waern – Senior Vice President, Gartner Consulting

David Godfrey – Senior Vice President, Global Sales

Chris Lafond – Chief Financial Officer

Analysts

Manav Patnaik – Barclays Capital

Dan Leben – Baird

Dave Lewis – JPMorgan

Andrew Albert – Invicta Capital

Presentation

Operator

Ladies and gentlemen, please welcome Gartner GVP, Brian Shipman.

Brian Shipman – Group Vice President, Investor Relations

Good morning, everyone and welcome to Gartner Investor Day. My name is Brian Shipman and I serve as the Group Vice President of Investor Relations. I will begin this morning by highlighting our Safe Harbor statement. Please take careful note of it, on screen and in your handouts.

Today’s session will begin with our Chief Executive Officer, Gene Hall, who will describe Gartner’s compelling business opportunity. After Gene, we'll take an in-depth look at our three business segments. Peter Sondergaard, who runs Gartner Research, will describe how we create our industry leading insight and how that insight supports our double-digit growth strategy. Leading Events is Alwyn Dawkins. He will show you how our Events segment is a natural extension of our Research business driven by wining strategy. Per Anders Waern, who manages Consulting will share with you the unique value proposition. Our Consulting organization provides to our largest clients. After a short break, David Godfrey, who heads up our Global Sales organization will show you how we are pursuing and capturing our vast market opportunity.

Our CFO, Chris Lafond will go deeper into our business model, the operating metrics we use to manage our company, and how we are achieving double-digit growth over time, consistent with our long-term goals. Finally, Gene and Chris will close out our time together by taking questions from the audience.

Ladies and gentlemen, the Chief Executive Officer of Gartner, Gene Hall.

Gene Hall – Chief Executive Officer

Good morning and welcome to Gartner Investor Day 2012. To our returning guests, it's really great to see you again and for those of you that are joining us for the first time you are going to learn about a pretty exciting company. Well, it's a preeminent organization providing insight to IT decision makers, we at Gartner the center of IT and supply chain management and that is a continually relevant ever changing landscape. We've built the capabilities to sustain double-digit growth over the long-term in revenues, in EBITDA, in EPS, and in cash flow.

Let’s begin by thinking back to a time when there were no iPads or iPhones, the cretaceous period of technology, when there was no notion of the cloud, there was no Facebook, no Twitter, no LinkedIn, when the phrase social computing was an oxymoron. Think that even further, when the critical function of IT was to run reports and the input was on punch cards, then reports are done in the wide track-fed paper that weighed several pounds, the Jurassic period of IT. Now, it seems like ancient history, but it wasn’t all that long ago. In a business processes, customer interactions, information conception are fundamentally different from what they were just 15, 10 or even 5 years ago. Technology innovations have changed the way people work, where they work from and how they collaborate within our ever expanding global community.

Now, of the many IT innovations that are critically impacting organizations today, there are 5 that are particularly prominent: mobility, social computing, cloud, big data and the shift of IT to drive our cost optimization throughout the organization. The recent visit to a doctor’s office in Florida, I looked around the lobby and half the people sitting in the room look to be retired. They are actually playing Angry Birds on the smartphone instead of reading six-month-old copies of People Magazine. The other half of the room appear to be staying connected to the workplace, so that nobody knew they were out of the office. Mobility has fundamentally changed what you do and where you can get it done and the implications have just begun. In fact, as I look around this room, many of you rolling your BlackBerrys right now.

Well, social computing has permeated the institutions of all shapes and sizes. Organizations are trying to understand how do you social media with their clients, and that’s whether they are large B2B or B2C companies, government entities, or even small privately run institutions. The cloud is everywhere in every strategic conversation. CEOs and CIOs are looking to lower cost and increase service levels by offloading services to cloud providers. At the same time, the cloud offers an unprecedented ability to build new products and competitive advantage. And that applies to both every institution and their competitors.

Now, move this era of rapidly changing technology, we have more information than ever before. From baseball to marketing, big data is enabling better intelligence for every enterprise and in this information rich environment IT organizations are being called upon to use this data to create value. The fifth innovation is the way we look at and use IT. During the past when companies needed cost reductions, they often reduced IT budgets. Now, when companies need to reduce cost, they are likely to spend more on IT and use IT to reduce cost in other parts of the business. All of this puts IT in the spotlight. In fact at the World Economic Forum in Davos, Switzerland this year, (indiscernible) even the 102-page program guide had more references to technology and social media than any of the nerdiest Silicon Valley blogs that I read daily.

Well, every institution, every industry including private sector, public sector, for profit, not for profit, every size company in every geography around the world, is under pressure to improve. And they know that IT is a central part of driving that improvement. And they also know they need help. So, where can institutions turn to for this help, Gartner. Gartner is the single best source for clients do the insight if they need to understand where and how to successfully use IT and supply chain to achieve their objectives.

Now, the core progress differentiated value proposition is the insight generated by more than 800 analysts that are around the world and this insights delivered to our clients through our three business segments: Research, which comprises about 70% of our revenues; Consulting, which makes about 20%; and Events, which makes up the remaining 10%.

In our Research segment, we deliver world-class insight, primarily through subscription-based digital media service. The success in our Research segment is actually amplified by our Consulting segment. Through Gartner Consulting, we are able to deepen relationships with our clients while extending the reach of our research beyond what our analysts provide. Finally, our Events segment offers current, relevant, and actual technologies sessions led by Gartner analysts while facilitating pure exchange.

We also have a vast untapped market opportunity. We estimate the market opportunity for our Research segment to be at least $47 billion. That gives us oceans of opportunity. Within Research, IT professionals and IT functional leaders represent our largest market while CIOs, supply chain professionals, and other roles represent another opportunity. A little bit on the right represents the $1.1 billion of market penetration that we have today.

Now, for those of you who would follow us over time, you know that we have been pursuing the same winning growth strategy for several years. The fundamental building blocks are to first create extraordinary research insight, to build strong sales capability, to deliver high-value differentiated offerings, and to provide world-class service. And we do all of this while continually improving and innovating across all areas of our business. And our performance-driven leadership team drives that strategy to success.

The each element of our strategy has been built along two dimensions, which together continuously improve our capabilities. The first to mention is introducing innovative programs to deliver on our strategy. We then continually improve upon these programs. The second to mention is adding new innovative programs that drive higher performance over time. And these two dimensions compound together to strengthen our capabilities over time. So, I'll illustrate these two dimensions, we'd use an example from one of the elements of our strategy. So, one of our strategy is to deliver extraordinary research insight. The first program in generating extraordinary research insight is to focus on the most critical topics that are facing IT and supply chain professionals. We reevaluate this program on a continual basis and we've gotten better and better over time and making sure we are focused on the most critical topics. And we are going to continue to reevaluate and realign our research topics on a go-forward basis.

In fact, it’s built into the fabric of our organization. With this finely tuned program in place, working well and continually improving, we then add another high impact program. So, the second premium put in place is to expand our research coverage. We added in-depth enterprise architecture coverage through our META acquisition with the supply chain coverage through the acquisition of AMR and then we had a detailed technical research with our Burton acquisition. And we'll continue to expand our research coverage going forward.

We didn't stop there. We then added additional programs. Each of these programs strengthens our capabilities. Continually improving each of these programs further strengthens our capabilities and together the compound providing sustained and accelerating performance. We have programs in place such as these for all the elements of our strategy. We have programs to build strong sales capabilities. We have programs to develop high value depreciated offerings. We have programs to provide world-class service. For every one of our strategy, we are continually making improvements and innovations.

Another critical element of success is strong leadership. As you will see over the course of this day, ours is an experienced and highly talented leadership team. Each has a background of successful leadership in their area of responsibility and we work together as a team extremely well. And these leaders who have driven our culture are continuous improvement and innovation. It’s that culture that is generating a track record of sustained performance in our key operating metrics. They are eager to share with you the programs that they have in place to implement our strategy and achieve long-term profitable growth. This winning strategy has led to an impressive and sustained track record of performance.

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