What happened with Gartner this quarter?

• Total revenue rose 11% year over year to $610 million and 12% excluding the negative impact of foreign exchange rate movements.

• Normalized EBITDA (earnings before interest, taxes, depreciation, and amortization), which excludes stock-based compensation and certain acquisition-related charges, increased 7% to $118 million, and 5% on a constant dollar basis.

• GAAP EPS fell to $0.57 from $0.61 in Q2 2015, with roughly $0.14 worth of acquisition and integration charges denting results. Adjusted earnings per share, which excludes acquisition-related charges, grew 9% to $0.71.

Business segment results

Drilling down into Gartner's individual business segments, we see that research revenue rose 16% (17% in constant currency) to $449 million. Gross contribution margin held steady at 70%, while client retention and wallet retention (retention times revenue per customer) each declined 2 percentage points to 83% and 104%, respectively, compared to the prior-year period. And contract value was $1.75 billion at the end of the quarter, an increase of 9% (13% in constant currency).

Consulting revenue grew 6% to $94 million. Consulting segment gross contribution margin fell to 35% from 38% in Q2 2015, while utilization improved to 69% from 68%. Gartner also grew both its consultant force and backlog, with its billable head count rising to 626 and backlog expanding to $109 million as of June 30, compared to 564 and $97 million at the end of the second quarter of 2015.

Revenue for Gartner's event business fell 10% to $67 million, mostly due to changes in Gartner's events calendar, with revenue rising 16% for events that were held in both Q2 2016 and Q2 2015. And gross contribution margin for the events segment climbed to 54%, up from 53% in the year-ago period.

Looking forward

Gartner reiterated its 2016 full-year guidance, including:

• Total revenue of $2.405 billion to $2.465 billion
• Adjusted EPS of $2.67 to $2.89
• Normalized EBITDA of $450 million to $480 million
• Operating cash flow of $370 million to $395 million
• Free cash flow of $352 million to $377 million

"We are well on track to deliver another year of double-digit growth in contract value, revenue and earnings, coupled with strong cash flow conversion," said CEO Gene Hall. "We consistently deliver tremendous value to our clients which results in long-term growth in cash flow and earnings to our shareholders."

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