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Gartner (IT) Surpasses Q1 Earnings Estimates, Cuts View

Zacks Equity Research

Gartner, Inc. IT reported mixed first-quarter 2020 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Adjusted earnings per share of $1.20 beat the consensus mark and increased year over year more than 100%. Revenues of $1.01 billion missed the consensus estimate by 1.6% but improved 5% year over year on a reported basis and 6.1% on a foreign currency-neutral basis.

Total contract value was $3.5 billion, up 10.6% year over year on a foreign currency-neutral basis.

So far this year, shares of Gartner have lost 17.9% compared with 14.4% decline of the industry it belongs to and 11.5% decrease of the Zacks S&P 500 composite.

 

Quarterly Numbers in Detail

Revenues at the Research segment increased 10.2% year over year on a reported basis and 11.3% on a foreign currency-neutral basis to $909 million. Gross contribution margin was 71.9% in the reported quarter.

Revenues at the Conferences segment decreased 73.3% year over year on a reported basis and 72.7% on a foreign currency-neutral basis to $14 million.

Revenues at the Consulting segment grew 2.8% year over year on a reported basis and 3.8% on a foreign currency-neutral basis to $96 million. Gross contribution margin was 30.7% in the reported quarter.

Adjusted EBITDA of $214 million improved 50.8% year over year on a reported basis and 52.8% on a foreign currency-neutral basis.

Gartner Inc Price, Consensus and EPS Surprise

 

Gartner Inc Price, Consensus and EPS Surprise

Gartner Inc price-consensus-eps-surprise-chart | Gartner Inc Quote

Operating cash flow totaled $56 million and free cash flow was $31 million in the reported quarter. Capital expenditures totaled $25 million.

2020 View

Gartner lowered its full-year 2020 guidance. The company now expects total revenues to be $3.81 billion compared with the prior guidance of $4.63 billion. The current Zacks Consensus Estimate of $4.37 billion is higher than the updated guidance.

Adjusted EPS is anticipated to be $3.00 compared with the prior guidance of $4.06. The current Zacks Consensus Estimate of $3.14 is higher than the updated guidance.

Adjusted EBITDA is projected to be $625 million compared with the prior guidance of $745 million. Free cash flow is anticipated to be $300 million compared with the prior guidance of $505 million.

Currently, Gartner carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

S&P Global Inc. SPGI reported first-quarter 2020 adjusted earnings per share of $2.73, which beat the consensus mark by 15.7% and improved 29.4% year over year on the back of revenue growth, benefits of productivity initiatives and reduced business travel.

IQVIA Holdings Inc. IQV reported first-quarter 2020 adjusted earnings per share of $1.50, which beat the consensus mark by 1.4% but decreased 1.9% on a year-over-year basis. The reported figure was within the guided range of $1.46-$1.51

Insperity, Inc. NSP reported first-quarter 2020 adjusted earnings of $1.70 per share, which beat the consensus mark by 5.6% but decreased 14.1% year over year. The reported figure matched the higher end of the guided range of $1.61-$1.70.

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