Gartner’s Earnings: Trouble for the Rest of Us?

15 May 2007

Those of you who haven’t looked at Gartner’s first quarter earnings result earlier this month (see here) missed one of the strongest quarters by any analyst firm in a long time, and therein lies some ominous news.

First a quick look at some of the numbers.  The stock itself is not only at/near a 52 week high, it’s near a 9 year high.  (It’s still well off its all-time high of around 42, achieved back in 1997, on the day of my departure from Gartner.  Coincidence?  I think not.  J)

The revenue story is almost startling.  Year-over-year revenue grew 19%.  Even adjusting for currency influence, revenue grew 16%.  Put another way, Gartner’s revenue growth was approximately equal to Forrester’s revenue.  Even if you look purely at Gartner’s research revenue (stripping out events and consulting, which represent almost 1/3 of the business), Gartner’s growth is still Forrester-esque.  Given that research growth in recent quarters and years was measured in high single digits, this accomplishment is noteworthy particularly given guidance whereby Gartner expects to maintain this revenue growth, and is aggressively hiring salespeople to maintain the growth.  They added 53 net in the quarter and hope to make the total 120 for the calendar/fiscal year, representing a 20% growth in the sales force.  Lastly on the metrics front, dollar retention was 104%.  Dollar retention is a metric they use to measure retention in existing clients as opposed to a long-used metric some of you may be familiar with, NCVI, which represented net contract value increase or merely the netting of new/expanded business netted against client losses.  This is the first time that metric has ever been over 100% and represents a combination of ability to sell new products into existing clients as well as the impact of price increases.

It is these last two items that have particular implications for AR professionals.  Many of you continue to bristle about significant price increases from Gartner, wondering if they really expect you to pay those kinds of fees.  Clearly the evidence Gartner is seeing at a macro level is that clients will pay the increased fees, perceiving either the delivery of real value and/or the lack of a real credible alternative to paying Gartner.  As importantly, this evidence points to continued if not expanded Gartner influence in their end user client base.  We won’t address here any longstanding concerns about issues of research quality vs. ubiquity but suffice it to say that the combination of role-based research deliverables as well as market power is arguably enabling Gartner to expand its influence in end-user IT organizations.  We’re just now seeing the results of our annual B2B spending influence study so we’ll be sure to see if our data supports this conclusion.

5 Responses to “Gartner’s Earnings: Trouble for the Rest of Us?”

  1. The Human Capitalist » The Lessening Influence of Gartner

    PingBack from http://humancapitalist.com/?p=360

  2. Flipping the analyst business model « AccMan

    PingBack from http://www.accmanpro.com/2007/05/21/flipping-the-analyst-business-model/

  3. Does Gartner’s influence grow at the same rate as its revenue? : Analyst Equity

    PingBack from http://www.lighthousen.com/?p=684

  4. http://blogs.hillandknowlton.com/blogs/arcade/archive/2007/05/15/gartner-s-earnings-trouble-for-the-rest-of-us.aspx

    PingBack from http://frankthefrank.info/entry.php?id=kwws%3d22eorjv1kloodqgnqrzowrq1frp2eorjv2dufdgh2dufklyh2533%3a2382482jduwqhu0v0hduqlqjv0wurxeoh0iru0wkh0uhvw0ri0xv1dvs%7b

  5. foreclosures

    Howard Schultz, the former owner (who sold the team two years ago) has decided to sue the new owners. His goal; to declare the sale of the team null and void as a means of keeping the team in Seattle- and retuning his validity and helping his reputation

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