高德納諮詢公司 (IT) 2013 Q1 法說會逐字稿

Good morning, ladies and gentlemen.

Welcome to Gartner's earnings conference call for the first quarter 2013.

The replay can be accessed by dialing 888-286-8010 for domestic calls and 617-801-6888 for international calls by entering the pass code 27555773.

This call is being simultaneously webcast and will be archived on Gartner's website at www.gartner.com for approximately 90 days.

I will now turn the conference over to Brian Shipman, Gartner's Group Vice President of Investor Relations for opening remarks and introductions.

Please go ahead, sir.

Thank you, and good morning, everyone.

Welcome to Gartner's first quarter 2013 earnings call.

With me today is our Chief Executive Officer, Gene Hall; and our Chief Financial Officer, Chris Lafond.

This call will include a discussion of Q1 2013 financial results, as disclosed in today's press release.

After our prepared remarks, you will have an opportunity to ask questions.

I'd like to remind everyone that the press release is available on our website, and that URL is www.gartner.com.

Before we begin, we need to remind you that certain statements made on this call may constitute forward-looking statements.

Forward-looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the Company's 2012 annual report on Form 10-K and our quarterly reports on Form 10-Q, as well as in other filings with the SEC.

I would encourage all of you to review the risk factors listed in these documents.

The Company undertakes no obligation to update any of its forward-looking statements.

With that, I would like to hand the call over to Gartner's Chief Executive Officer, Gene Hall.

Gene?

Good morning, everyone, and welcome to our Q1 earnings call.

The continued effective execution of our proven strategy resulted in another quarter of double-digit growth.

As we build momentum in 2013 we are well positioned to deliver double-digit growth in our key financial metrics going forward.

The global macroeconomic environment in 2013 hasn't improved since we last spoke and it continues to be difficult.

In fact it has worsened in many areas.

In this environment we continue to see robust demand across the business for our services.

And we delivered our 11th quarter in a row of double-digit contract value growth.

During Q1 of 2013 as we have consistently done over the past few years, we delivered double-digit growth in contract value and revenues.

As you will hear in more detail from Chris, Gartner's performance remains strong.

I will share a few highlights.

Research, our largest and most profitable segment, continues to grow at double-digit rates, consistent with the growth trends we have seen over the past three years.

We delivered 14% contract value growth with all geographies, all client sizes and every industry segment growing at double-digit rates.

Our retention rates remain high with client retention 82% and wallet at 98%.

Our Events business continues to exceed our long-term growth rate target with revenue growth of 20% over first-quarter 2012 excluding the impact of foreign exchange.

As you know our Consulting business tends to less consistent quarter-to-quarter than our Research business yet we continue to see great demand.

So while Consulting was slighting below expectations in Q1, our pipeline for Q2 looks solid and backlog remains at healthy levels.

We expect the full year to be within the guidance we issued at the start of year.

These results continue to illustrate the ongoing success of our strategy and the tremendous value we bring to our clients.

I recently spent a few days meeting with several hundred of our top-performing sales associates.

They are excited about our prospects for growth even in this economy.

Our sales associates consistently report that our clients value our services whether they are growing or facing budget cuts.

We know how to build world-class sales capabilities, and we continue to invest in our sales force.

This investment benefits from world-class sales recruiting, sales training and sales leadership.

Our strong sales capabilities coupled with world-class products and services and our industry leading analysts allows us to consistently deliver strong results.

I said this before and it remains just as true today, these are remarkable times for technology.

Technology is transforming the world from governments and cities to banking, healthcare, agriculture, manufacturing and more.

The nexus of forces, social computing, mobile computing, cloud computing and information is driving change on a scale seldom seen.

Technology is transforming how we work and what we do and it affects every industry and Gartner is at the heart of it.

Every company whether for profit or not for profit, large, medium or small, any government agency in the world is a potential client giving us a vast untapped market opportunity for our services.

Gartner is the best source of help for enterprise leaders launching critical initiatives within this technology revolution.

Our assistance often makes the difference between success and failure for our clients, and we are relevant whether an institution is growing or facing economic challenges.

The successful execution of the right strategy drives our consistent performance.

As some of you know the fundamentals of our strategy are to create extraordinary research insight, to build strong sales capability, deliver high-value differentiated offerings, to provide world class service and to continually improve our operational effectiveness.

This time-tested strategy will allow us to maintain sustained double-digit growth in the future.

I remain confident and excited about Gartner.

The Gartner brand is in a class by itself.

Our products, services and people are superior to the competition, and we have a great business model and we are relevant to virtually every company and government agency in the world.

In summary, I would like to leave you with three takeaways from today's call.

First, we continue to see robust demand for our services.

Our vast market opportunity and our consistent winning strategy allow us to once again deliver double-digit contract value growth.

Second, clients value our services whether they're growing or facing difficult budget cuts.

And third, we continue to be well positioned to achieve sustained double-digit growth in our key metrics as we have done over the past several years.

With that, I would like to hand the call over to Chris.

Thanks, Gene, and good morning everyone.

As Gene mentioned, we are off to a strong start to 2013 with 14% growth in contract value and double-digit growth in total revenues in the first quarter.

Our results continue to demonstrate the successful execution of our strategy and our ability to consistently deliver on the financial objectives we have communicated over the past several years.

We continued to see strong trends in our key business metrics during the first quarter.

Year-over-year contract value growth remains strong and retention rates ended at or near all-time highs.

Our Events business increased by 20% year-over-year on an FX neutral basis, and our Consulting backlog increased in a seasonally light quarter.

Demand for our services remained strong across our three business segments, even as companies face the uncertainties of the current macro environment, because we are a key partner for IT and supply chain professionals in running efficient and innovative programs to drive growth in their organizations -- programs crucial to the success or failure of their strategic initiatives.

We are engaged on the most important projects for the institutions we work with, and this is why the successful execution of our strategy -- with the successful execution of our strategy we continue to deliver consistent revenue growth and strong financial performance, and also why we are so confident that 2013 will be another year of double-digit growth.

Let me know review each of our three business segments for the first quarter.

Starting with Research, first-quarter Research revenue was up 13% to $310 million.

Currency fluctuations had no material impact on Research revenue.

Contribution margin in this segment increased almost 70 basis points to 69.3% in the first quarter as our strong execution continues to capitalize on the operating leverage in this business.

All of our key Research business metrics remained strong in the first quarter.

Contract value grew to a record level of $1.269 billion, a growth rate of 14% year-over-year on an FX-neutral basis.

As has been the case for the past several years our growth in contract value in Q1 was extremely broad based and contract value grew at double-digit rates across every geography, client size and industry segment.

New business again increased year-over-year continuing the trend we have seen since late 2009.

The new business mix was balanced between sales to new clients and sales of additional services and upgrades to existing clients.

While our contract value growth continues to benefit from our discipline of annual price increases and no discounting, approximately 80% of our contract value growth came from volume with the balance coming from price increases.

We have consistently increased our prices by 3% to 6% per year on an annual basis since 2005.

We implemented a price increase during the fourth quarter of 2012 and we expect to do so again in 2013.

Our volume growth reflects our success in continuing to grow the business by penetrating our vast market opportunity with both new and existing clients.

As a result we ended the quarter with 13,203 client organizations, up 7% over last year's first quarter.

Our client retention rate ended the quarter at 82%, the same level as last year's first quarter, and we have maintained client retention at or near record highs for 10 quarters in a row.

In addition to retaining our Research clients at an impressive rate, the clients we retain continue to increase their spending with Gartner and wallet retention ended at 98% in the first quarter.

Wallet retention is higher than client retention due to a combination of increased spending by retained clients and the fact that we retained a higher percentage of our larger clients.

As we have discussed in the past, our retention metrics are reported on four-quarter rolling basis in order to eliminate any seasonality.

In summary we delivered another strong quarter in our Research segment.

We grew our contract value by $151 million on an FX-neutral basis year-over-year.

We continue to see high levels of demand from clients and we expect acceleration in contract value and revenue growth over time.

We remain confident in our ability to deliver double digit annual revenue growth in this segment over the long-term.

Turning now to Events.

Our Events segment started 2013 continuing the extremely strong year-over-year revenue growth we have delivered for the past three years.

The first quarter Events revenue increased 19% year-over-year on an as-reported basis and 20% excluding the impact of foreign exchange.

During the first quarter we held 12 events with 5,788 attendees compared to 13 events with 5,707 attendees in the first quarter of 2012.

Approximately $2.2 million of the revenue increase was due to the two events that were moved into the quarter.

We also had $1.6 million in additional revenues from the 10 ongoing events held in the quarter.

On a same-event basis attendee revenue was up 16% and exhibitor revenue was up 19% year-over-year.

Q1 is our lightest quarter for the Events business with the fewest number of events held, and as a result relatively small changes in expense can impact the quarterly margin.

The gross contribution margin for Q1 decreases compared to 2012.

This is related to a combination of factors including higher operating expenses from the expansion of a major event and the move of two events to new venues.

Looking ahead, we see strong demand for both attendee and exhibitor participation at our upcoming events.

For the full year we expect this business to grow as we guided at the beginning of the year, continuing the trend of strong revenue growth, growth in contribution margin and margin expansion that we have seen over the past few years.

Moving on to Consulting.

Our Consulting business tends to be less consistent quarter-to-quarter than our Research business.

As Gene mentioned, we had a slower start to the year than we expected with revenues in Consulting declining 3% on a reported basis in the first quarter.

Excluding the impact of foreign currency translation revenues decreased 2% quarter-over-quarter.

Importantly we are seeing good and steady demand for our Consulting services.

Backlog is the leading key indicator of future revenue growth for the Consulting business, and we ended the quarter at $97.5 million.

This represents 2% growth year-over-year and a healthy four months of backlog.

Additionally, our pipeline looks equally solid as we enter the second quarter.

With the current backlog and visibility we have into the pipeline, our full-year revenue expectations for the Consulting segment remain unchanged.

Recall that our benchmark and core consulting practices delivered 6% FX-neutral revenue growth in 2012.

We are extremely careful in adding resources only to areas where we see consistent and strong demand.

As a result we began thoughtfully adding delivery resources in the second half of 2012.

Prior to that, our Consulting headcount was essentially unchanged since the end of 2010.

We continued adding resources in Q1 of this year including the addition of 10 managing partners.

With these additional resources our utilization rates declined in Q1, and as result the gross contribution margin in this segment declined versus Q1 of 2012.

We fully expect utilization to recover quickly as the new hires contribute, given our strong backlog position.

Billable headcount of 528 was up 11% from the first quarter of 2012.

First-quarter utilization was 65%, down roughly 5 points from the prior year first quarter and revenue for billable headcount ended the quarter at $404,000.

We remain confident in the full-year expectations for this business, and we have the backlog and pipeline to deliver on the guidance we established at the start of the year.

We still expect Consulting revenues to grow by 2% to 7% for the full year.

Moving down the income statement, SG&A increased by $18 million year-over-year during the first quarter.

We continue to tightly control G&A costs across the entire Company, and we continue to believe this expense item will provide us with a source of operating leverage in the future as G&A will continue to decline as a percent of revenue.

The SG&A increase is primarily driven by the growth in our sales force.

As of March 31, we have 1,461 quota-bearing sales associates, an increase of 173 sales associates from a year ago.

Moving on to earnings.

We delivered another quarter of solid earnings growth.

Normalized EBITDA was $75 million in the first quarter up 5% year-over-year, and GAAP diluted earnings per share was $0.38 up 6% year-over-year.

As we indicated when we gave our initial guidance, we expected Q1 to be our seasonally lowest earnings quarter.

Also as expected our Q1 2013 GAAP diluted earnings per share includes $0.01 per share in amortization and other costs associated with our acquisitions, including Ideas International.

Turning to cash.

Operating cash flow increased by 5% to $20 million in our seasonally smallest quarter of the year.

In Q1 of each year we see significant uses of cash with our annual bonus and year-end commission payments being made.

Over the long-term we continue to expect to generate free cash flow substantially greater than our net income given our tight cash management and the negative working capital characteristics of our Research business.

During the first quarter we utilized our cash to return capital to shareholders through our share repurchase program, and we repurchased almost 1 million shares at a total cost of approximately $49 million.

We ended the quarter with a strong balance sheet and cash position with net cash of $64 million.

Our newly refinanced credit facility runs through March 2018 and at this time provides us with about $550 million of remaining borrowing capacity.

We have ample cash flow and liquidity to continue to grow our business and execute initiatives that drive increased shareholder value.

We continue to look for acquisition opportunities as a potential use of cash.

We believe that repurchasing our shares also remains a compelling use of our capital, and we have $187 million remaining under our Board authorization.

Let me finish with a discussion of our guidance for the year.

As Gene mentioned, we are reiterating our guidance we laid out for you on our fourth-quarter conference call back in February.

The details are in the press release, but as a reminder our guidance calls for double-digit growth in revenue, normalized EBITDA, EPS and cash flow for the full year.

So to summarize, we delivered another quarter of double-digit revenue growth in Q1, our seasonally smallest quarter of the year.

Demand for our services is strong, and our key Research business metrics remained at or near our all-time highs in the first quarter.

Our initiatives to improve operational effectiveness coupled with a positive operating leverage inherent in our business delivered solid earnings growth and substantial cash flow.

As always, we are actively exploring strategic alternatives for deploying our cash, and we will continue to invest in our business and return capital to shareholders through our share repurchase program and we expect to repurchase shares throughout 2013.

Finally the double-digit growth in contract value in the first quarter, we continue to build a solid foundation for delivering strong revenue and earnings growth in 2013.

We are well positioned for double-digit revenue and earnings growth and increasing returns to our shareholders over the long term.

Now I will turn the call back over to the operator, and we will take your questions.

Operator?

Thank you.

(Operator Instructions).

And your first question is from the line of Tim McHugh, William Blair & Company.

Please proceed.

Tim, you there?

I apologize.

Your line is open, Tim.

Please go ahead.

Hello, can you hear me now?

We got you now, Tim.

Okay.

First, I wanted to ask about the sales productivity.

It looks like it was kind of flattish year-over-year.

Was there any variance in that kind of by market?

I know you said revenue growth wasn't, but how should we think about sales productivity at this point?

Tim, it is Gene.

When we laid out the guidance this year, one of things we said is we were assuming a flat macroeconomic environment around the world and no increase in sales productivity in our plan.

If anything the macroeconomic situation is worse.

If you look at Europe, Europe's actually got worse decline than last year.

Asia's growth has slowed, and the U.S. certainly has not accelerated.

So our sales productivity has been -- even in that environment has been flat.

If you look at it underneath the covers kind of what is going on in different geographies or whatever, there is nothing really different going on there.

We are getting pretty much, as I talked about we have double-digit growth across every geography, across every industry segment and across every size company.

So there is nothing different that is happening in Q1 than in the past.

When you say just because the macro environment is worse, are you talking just, I guess, based on your own interpretation of headlines, or are you talking more about feedback you hear from salespeople in the business?

No, just what the stated -- not our feedback from salespeople, but more what the economic analyzers say.

So if you look at Europe, Europe's growth this year has been more negative than it was last year and it is expected to continue that way.

So it is not from our sales people, it is from the economic experts.

Our sales people, again, I think from a salesperson's perspective it is the same kind of environment.

They see individual companies or individual institutions; some of them are doing great in terms of their own growth, some of them have financial problems and we can help any of those institutions.

So I think from a salesperson's perspective it is kind of the same.

Okay.

And then on the Consulting business, I know last quarter, you had talked at least for last year how the Contract Optimization business was the source of weakness, but you saw good growth in kind of the remainder of the core benchmarking type of practice.

Is that a similar distinction, or any color in terms of the sub lines within Consulting?

Hi, Tim.

It is Chris.

Just a couple of things if you recall what we had talked about around our Contract Optimization business going this year is we assumed it would be flat to the prior year and that is how we are trending overall.

What we are really seeing is across the business flat to slightly down across all of the businesses, and it is kind of consistent around the world.

As I said in my talk track, we have added quite a few delivery resources; getting them all up to speed, getting them all productive has put some pressure on the margin, some pressure on the utilization as we get all those people up to speed.

So we feel very comfortable that we have a good strong backlog, that we are seeing continued demand across all those segments and we will continue to deliver the results that we expected at the beginning of the year in that kind of 2% to 7% range.

Can you remind me the number of managing directors?

The 10 -- I am assuming that was kind of a net number, but 10 increase there.

I'm trying to get a sense of how significant that is of a (Inaudible).

We now have with those additional 10, about 80, 82 managing partners.

We've continued to invest there as you know over the past few years.

It was another nice step forward as we expected to this year.

It has been working for us really well, but bringing them in and onboard takes a little bit of time get them up to speed, but we feel very comfortable.

We are still executing the strategy that makes good long-term sense both for the Consulting business and for the Research business as we continue to focus the selling activity inside of the Consulting organization itself.

Okay.

Thank you.

Thank you.

Your next question from the line of Joseph Foresi, Janney Securities.

Please proceed.

Hi, my first question here is on the sales force productivity.

I know you had given some rough parameters on what your hiring plans were there.

Any changes in those plans, and maybe you can give us some update on what sales force hires look like at least through the first quarter?

It is Gene.

Great question.

There is no change in our plan for the hiring for the year.

In fact, Chris will go through this in a second, but we actually accelerated the hiring in Q1.

Yes.

So Joe, we increased our sales force by about 13% year-over-year.

That is a little faster than what we were last year.

If you remember what we said last year was that as we saw productivity not improving as quickly as we wanted to, we took a pause and looked at where that was happening and reallocated some resources.

We feel very comfortable with what we are seeing.

We started this year with the expectation that productivity would not improve given our expectations for the environment at a macro level.

That is exactly what is happening, and so we are very comfortable with what we are seeing.

And as result we have begun to accelerate and fully expect that we will be in that 15% to 20% range this year as we end the year.

Got it.

And then on the Consulting business any change in the type of mix on the deal side or any change in decision making particularly on what we would discretionary work?

It is Gene.

I would say there is not any.

And I think what you are seeing in the Consulting business is more just a normal variation from quarter-to-quarter.

As Chris said, we do not expect any change for the full year.

It is worth spending probably a minute and just talking about reminding you -- everybody about the strategic role of Consulting.

Which is -- the strategic role of Consulting is to help support our Research business.

Let me elaborate for a second.

In our Research business clients access research documents online and produced by our analysts; in addition they can do half hour phone calls.

And that is the primary way we deliver on our Research business.

There is a set of our customers particularly the very large institutions that would like more in-depth help.

So the reason we are in the Consulting business is for those clients that want that more in-depth help in areas they are getting our research on, our Consulting business provides a vehicle for doing that.

That is kind of the strategic role of the Consulting business.

We are growing it -- as you know our objective is to grow it a bit slower than the overall Research business, it's because that is the rate we think actually provides the best support to this Research business.

The other thing is, which is really great, it's supporting the Research business but it has really good margins and has the -- so we are doing it at a very profitable rate as well.

We are not in Consulting for its own sake; we are in Consulting as part of an integrated strategy with the Research business.

Last one for me, going back to your comments about the macro.

That was clearly directed towards the headlines.

Given your guidance and your reaffirmation of guidance I assume that the macro has not changed from what you built in to the original guidance.

Is that correct?

That is correct, exactly.

Great, thank you.

Thank you.

Your next question from the line of Peter Appert, Piper Jaffray.

Please proceed.

Thanks.

Chris, margins down a little bit year-to-year and I understand there is seasonal factors and obviously the Consulting Events business weigh on it.

But does it cause you to rethink at all expectations for margins either on a near-term basis or target for margins over the next couple of years?

No, not at all.

I think when you look at -- in the quarter everything is trending as we would normally expect.

When you look at our Events business, doing incredibly great.

And yes, the margins there, as I mentioned in my talk, were down, but we had expected that.

We had expanded an event in a pretty significant way.

We moved a couple of events to new locations as we continue to grow those events.

And often as you move events and effectively expand, which tends to be like relaunches, those margins tend to have -- be slightly lower initially and then grow, and that is exactly as we expected.

So the margins we expect will come back as we do with all the other events.

We know how to do this, we know how to launch events, we know exactly what the expectations are and they are running at exactly as we expected them to.

So no issues at all on the Events side and still expect a great year and continued margin expansion.

As I mentioned on the Consulting side, it was quite some time before we added resources.

We essentially had flat Consulting organization since 2010.

So we had not added resources quite some time other than adding managing partners, but even there the overall headcount was only up a very little bit.

So we added some resources there.

Fully expect utilization will come back.

We have the backlog, the pipeline that we see, so feel very comfortable there and still expect that business will -- margins will continue to expand.

Overall nothing we see in the quarter gives us any pause or concern either for the year or over the long-term.

Great.

Thank you, Chris.

You also highlighted an expectation that you would get back to the 15% to 20% sales force growth by the end of the year.

Should we read into that an expectation that we could see sequential acceleration and contract value growth as the year progresses?

Peter, what we had said at the beginning of the year and we continue to say is we fully expect that we will see that acceleration happen over time and it is a question of when.

As we said this year, we did not expect the economy to improve; we didn't expect sales productivity to improve.

The environment is challenging and the environment our companies are facing are challenging.

We are still performing great.

As you can see we are still continuing to deliver 14% contract value growth, retention rates; all of our key metrics are at or near all-time highs remaining on the trends we have seen.

So we feel really good about what we are seeing, which is why we are continuing to pretty aggressively grow the sales force and will continue to do that.

Now the question will be as things start to stabilize in the world hopefully start to see acceleration, and as we also told you we are not sitting around waiting for the world to stabilize.

We are doing lots of different things in our business all the time to improve, to improve sales productivity, to improve how we operate, to improve what we do and deliver to our clients.

So we are going to continue to do those things, and it is our expectation that we will see that acceleration.

I can't tell you it will be next quarter or three quarters from now, but we fully expect it will come.

Got it.

Gene, you highlighted in your starting comments the strength across the portfolio in terms of end-user markets et cetera.

Any in particular that you would call out in terms of areas where you are seeing particular strength in terms of end-user market or geographies, and then sort of related to that.

And any comment in terms of sequestration, are you seeing any impact on your results from that?

Peter, in terms of particular markets, again there is no new news there.

As I said, we are seeing double-digit growth across everything, so there's nothing different in Q1 about that.

In terms of sequestration, as you know we are a business that -- we know how to deal with institutions that are either doing well or not doing well and that have budget problems or don't have budget problems.

This is not the first time that we have dealt with a federal government or any government institution for that matter that has sequestration -- has budget kinds of things.

We deal with this not just for the U.S. federal government but other governments all the time.

We are used to it; we know what we are doing with it.

In addition to that as you know we are highly diversified geographically and by industry, so the combination of the two is the fact that we know how to deal with these situations.

And the fact that we are so highly diversified by geography and by industry makes it so it won't have a meaningful impact on us.

Thanks, Gene.

Thank you.

Your next question from the line of Eric Boyer, Wells Fargo.

Please proceed.

Thanks.

I was wondering could you give us the core Consulting growth ex the Contract Optimization?

I think you said it was 6% for 2012.

What was it in the quarter?

Hold on one second, Eric, we will get that.

Yes, so it was -- if you look back last year, core and benchmarking was up 6% for the full year.

It is effectively I think flattish year-over-year, so I think it is essentially a 0% growth in that business for the first quarter.

Okay.

And did you see an acceleration within the other areas, ex your Contract Optimization throughout the quarter into this quarter, to give you confidence that you think the Consulting piece of the business is going to snap back here?

What we saw as I talked about, we saw a couple of things.

We continued to see good bookings, which is why our backlog continues to remain strong.

We still have four months of backlog.

We saw good demand around the entire world.

So we did not see dramatic differences in different parts of the world in terms of performance, so the pipeline looks really solid as well going forward into next year.

So not only did we have good bookings in the quarter and good backlog, we have good pipeline looking forward.

Q2 looks pretty solid for us.

We brought a number of delivery people on and managing partners on given the demand we saw.

So for all those reasons we feel very confident that we will continue to see the kind of growth expectation we set at the beginning of the year.

There is nothing we saw in our Q1 results, nothing we see in the forward-looking pipeline that suggests otherwise.

Any type of work or areas that you are seeing particular strength in within Consulting?

And then the resources that you are bringing on, where are those onboarding on to?

I would not necessarily say I think we have seen any dramatic change in the business from what we saw last year going into this year in terms of practice areas.

One of the areas that always remain strong is our benchmark business.

That has been a very solid business.

In every environment companies like to benchmark so that business continues to be solid.

We fully expect to see continued demand of Contract Optimization.

As you know that business can bounce around a bit depending on when clients choose to engage on some of those larger transactions, but there is always a flow of activity there.

We have added resources around the world.

We have added resources in certain parts of Europe, we have added them in benchmark, and we've we added them in the U.S. We have been adding resources pretty broad-based, based on where we are seeing that, but again it is not one little pocket.

There is some pretty nice strength that we see in the backlog and in the pipeline.

Finally, any change you are seeing in the sales force attrition rate as far as voluntary attrition?

Our sales attrition rate has gotten a little bit better, but it's kind of -- I'd put it in the -- it is not like it is -- we have very good sales attrition, and it just got a little bit better.

So I would say no real news, but if there were any news to it, it's good news.

Okay, great.

Thanks a lot.

Thank you.

Your next question from the line of Jeff Meuler, Baird.

Please proceed.

Thank you.

I know this is a relatively small dollar amount, so I hate to keep beating this dead horse.

But on Consulting was it more of a client pause maybe around some of the macro and legislative uncertainty around year end, or was this more of an execution issue as you brought on some new people, you moved some people around as you brought on 10 new managing partners?

Was it more of a client issue or execution?

Jeff, it is Gene.

I would put it actually in a little different category, which is the nature of our Consulting business is you go negotiate a deal and these things are -- when they start, et cetera, depends on kind of the client's situation.

So it is just intrinsically more variable from quarter-to-quarter than if you look at something like our Research business for sure.

Even our Events business.

We know when have an event for the quarter, we know what kinds of things to expect.

For Consulting, projects can slip a little bit between one quarter and another quarter.

I look at this more as being the normal variation of flipping from quarter to quarter.

As we have said, if you look at our backlog and our pipeline, it supports that.

As opposed to there's something -- like it had to do with some macro factor or something like that.

Okay.

I think just a follow-up then on the last question.

Have you started to see those client situations, that variability, have they started -- the projects started in March and April then?

We had a bunch of projects, a bunch of business that came in in April that might have come in in March and happened to flip into April, absolutely.

So again we are seeing we are on a pretty good track there.

Okay.

And then on Events can you help us with revenue growth?

It looks like total number of attendees was just up slightly.

Was this price increases on the events, was this some shifting in terms of the mix between higher and lower priced events?

It is a combination of things.

We moved some events out of the quarter, some events into the quarter, so as we always we do we have a little bit of movement around.

So sometimes you will see a big event move and a smaller one move in and vice versa.

We certainly did see some nice price increase in mix, so some of the events were different size, so the pricing on those events tends to be higher.

It is combination of factors that drove the revenue and drive the performance.

We look at it and look forward -- we still feel very confident.

Again if you look at the same Event business attendee revenue up 16%, exhibitor revenue up 19%.

The prices are up as we would expect them to be both from a mix perspective and just annual price increase.

So everything is flowing as we expected.

Okay.

And then finally, I hear you loud and clear that you continue to plan to repurchase stock.

I wanted to ask a question on the expected pace of repurchases barring some big M&A deal, but asking that in the light of now you have a net cash position and you just locked down some pretty good credit facilities that extend out for good duration.

So would you expect to step up the pace of repurchases relative to what you have done for the last couple of years?

As you know we tend to be pretty aggressive in share repurchases.

If you look back over a number of years we have spent quite a bit of money on share repurchase and we will continue to do that.

We tend to be in the market regularly but also try to be opportunistic where we can be.

So we try to do the best we can in terms of the timing of our share repurchases, but we will continue to be aggressive.

And as you just mentioned we took advantage of the current credit markets to lengthen and expand our credit facilities, so we have plenty of capacity for both acquisitions and share repurchase and we fully expect both will be things that we will do over time.

Okay.

Thanks guys.

Thank you.

(Operator Instructions).

Your next question is from the line of Gary Bisbee, Barclays Capital.

Please proceed.

Good morning.

First question, how do you think about and how do you focus the sales force on trying to increase the number of seats at existing large customers versus adding new customers, and is one of those easier or more difficult in a more challenged economic environment like we are in today?

It is Gene.

It is good question.

We basically ask our salespeople to do both.

Most of our salespeople have an existing client base, and we have a whole set of programs and strategies to support our salespeople.

They are designed to increase the number of seats at existing clients.

We actually track it pretty carefully and that is going very well.

Similarly we have a set of programs that are designed to continue to grow the number of new clients as well, because we think we need to have a balance of both new clients as well as growing our existing clients.

Both of those sets of programs are working very well.

There's the -- as I mentioned before, the way we think about it is not in the macroeconomic environment but what is going on at an individual company level.

And whether a company is doing really well or whether a company is under severe financial pressure we have the ability to help them and clients understand we have the ability to help them.

So we do not have any problem either adding seats or in selling new clients even in very difficult macroeconomic situations, I mean even in very difficult individual company situations.

In fact, just as an example I talked last year how Spain was one of the worst economic environments in the world, and we had very good double-digit growth in Spain.

I could give you several other markets that it was the same kind of way.

So we're not -- we have, it's -- selling to a new client is important, selling more to existing clients in important.

We have programs for both of those and we know how to sell both situations whether the company or institution is doing well or whether they have all kinds of cost pressures.

Okay.

Are there any particular areas of strength or weakness in terms of demand within the Consulting business?

You continue to say you are seeing broad-based strength or demand everywhere.

Three of the last four quarters, Consulting revenue has fallen year-over-year.

It doesn't really necessarily tie with some of the other commentary you give.

When you look at our Consulting business from the perspective of is there a change in the trend line in terms of where the demand is, and the answer to that is no.

There is no individual place that I would say is dramatically different as we sit here in Q1 today than we saw last year.

If you look at each of the three major segments as we talk about repeatedly, our Contract Optimization business tends to be a bit lumpy and it tends to be when clients choose to exercise those deals and choose to move ahead and execute on a big transaction.

That can vary.

And it varies not only with clients but at vendors year ends, so there are lots of reasons that business varies, but I would say we are not seeing versus what we saw last year -- we expected that business to be relatively flat year-over-year.

We are not seeing any indication that is any different.

So fully expect that to be relatively flat for the full year.

When you look at our benchmark business, that business tends to be fairly consistent year-over-year.

It had a really good strong year last year.

People do like to benchmark in all economic environments.

It is something that continues to be a good strong demand for clients.

And then our core Consulting business which has a number of different practice areas around the world, and in a lot of different industries we are seeing relatively consistent demand.

As I said there, it is flat year-over-year, so nothing dramatically different from what we saw in Q1 of last year.

So that is kind of what we are seeing right now.

We certainly have seen backlog.

As Gene talked about, some of the backlog is backlog that will be run out over a longer period of time, so into the back half of this year.

We have good solid backlog, we still see good pipeline and the pipeline that we are seeing suggests everything I just talked about will continue in that Consulting business.

Lastly, are there -- what types of things would you look to acquire?

Is it more geography?

Are there holes in -- probably not holes but extensions that seem obvious to you to the existing product line?

How do you think about what would be on the type of transaction you will be looking for?

Thank you.

It is Gene.

We have done three transactions in the last nine years, and I think that is a pretty good indicator of the kind of things we look at.

I'm sorry -- four transactions.

And if you look at those, they all had a common theme to them, which is they had products that were highly complementary to Gartner.

They were syndicated Research type products.

So I think -- you know, you can look -- our history is a good guide for how we think about acquisitions.

Okay.

Thank you.

Thank you.

There are no further questions, so I would now like to turn the call over to Brian Shipman for closing remarks.

Great, thank you.

And thank you, everyone, for your interest in Gartner, and we will speak to you next quarter.

Thank you.

Thank you for joining today's conference.

This concludes the presentation.

You may now disconnect.

Have a good day.