Gartner, Inc. IT reported robust third-quarter 2018 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate. Both the metrics also improved on a year-over-year basis.
Adjusted earnings of 85 cents per share outpaced the consensus mark by 23 cents and increased 30.7% on a year-over-year basis.
Revenues of $921.7 million exceeded the consensus estimate by $1.9 million and improved 11.3% on a year-over-year basis. Adjusted revenues, excluding divested operations, came in at $910 million, up 11% year over year on a reported basis and 13% on a foreign currency-neutral basis. Strength across a majority of segments drove the top line. Total contract value was approximately $3 billion, up 12% year over year on a foreign currency-neutral basis.
So far this year, shares of Gartner have gained 19.8%, significantly outperforming 9.1% rise of the industry it belongs to.
Quarterly Numbers in Detail
Revenues at the Research segment increased 18% year over year on a reported basis and 20% on a foreign currency-neutral basis to $774.18 million. Gross contribution margin was 69% in the reported quarter. Under Global Technology Sales, client retention was 83% and wallet retention was 105%. Global Business Sales client retention was 83% and wallet retention was 97%.
Gartner, Inc. Price, Consensus and EPS Surprise
Gartner, Inc. Price, Consensus and EPS Surprise | Gartner, Inc. Quote
Revenues at the Consulting segment grew 9% year over year on a reported basis and 10% on a foreign currency-neutral basis to $78.75 million. Gross contribution margin was 23% in the reported quarter. Backlog, the key leading indicator of future revenue growth for the Consulting business, totaled $108 million.
Revenues at the Events segment increased 27% year over year on a reported basis and 31% on a foreign currency-neutral basis to $57.14 million. Gross contribution margin was 44%. Revenues at the Other segment summed $11.59 million, down 79.9% from the year-ago quarter number.
Adjusted EBITDA, excluding divested operations, increased 15% year over year to $149 million. Adjusted EBITDA margin contracted 50 basis points (bps) to 16.4%.
Operating cash flow totaled $249 million and free cash flow was $251 million in the reported quarter. Capital expenditures came in at $24 million.
Gartner issued fourth-quarter 2018 guidance for revenues, adjusted earnings and adjusted EBITDA. The company expects revenues in the range of $1.07-$1.12 billion. The Zacks Consensus Estimate of $1.11 billion is above the midpoint of the guided range.
Adjusted earnings are expected in the range of $1.18-$1.34 per share. The Zacks Consensus Estimate of $1.38 is above the guided range.
Adjusted EBITDA, excluding divested operations, is anticipated around $211-$231 million.
Gartner updated its guidance for 2018. The company now expects adjusted revenues in the range of $4.11-$4.21 billion compared with $3.9-$4.0 billion guided earlier. Adjusted EBITDA is projected in the $750-$800 million band compared with $710-$760 million as anticipated earlier.
Adjusted earnings per share are anticipated to be in the range of $3.71-$4.11 compared with $3.51-$3.91 guided earlier. The Zacks Consensus Estimate of $3.74 is below the midpoint of the currently guided range.
Operating cash flow is anticipated to lie between $437 million and $467 million compared with $425 million and $475 million as projected earlier. Free cash flow is expected in the range of $440-$460 million compared with $416-$456 million guided previously.
Zacks Rank & Upcoming Releases
Gartner currently carries 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 third-quarter earnings reports from key players like Genpact G , Delphi Technologies DLPH and Green Dot GDOT . While Genpact will report on Nov 6, Delphi Technologies and Green Dot will release quarterly results on Nov 7.
Wall Street's Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Gartner, Inc. (IT): Free Stock Analysis Report Delphi Technologies PLC (DLPH): Free Stock Analysis Report Genpact Limited (G): Free Stock Analysis Report Green Dot Corporation (GDOT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research