Good morning, ladies and gentlemen, and welcome to Gartner's earnings conference call for the fourth quarter and full year 2011. A replay of this call will be available through March 7, 2012. The replay can be accessed by dialing 1-888-286-8010 for domestic calls, and 617-801-6888 for international calls; and by entering the passcode 57406329. 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 fourth quarter and full year 2011 earnings conference call. With me today is our Chief Executive Officer, Gene Hall; and our Chief Financial Officer, Chris Lafond. This call will begin with a discussion of Q4 and full year financial results disclosed in today's press release. We will also discuss our outlook for the company, including our newly issued guidance for 2012, followed by an opportunity for you to ask questions. I'd like to remind everyone that the press release is available on our website, 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 2010 annual report on Form 10-K and 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. I would also like to take the opportunity to remind everyone that we will be hosting our Annual Investor Day on Thursday, February 16 in New York City, and registration is required in advance. If you haven't done so already, please make sure you contact my assistant Germaine Scott at 203-316-3411 to register for the event and she'll provide you with the logistics. With that, I would like to hand the call over to Gartner's Chief Financial Officer, Chris Lafond. Chris?

Thanks, Brian, and good morning, everyone. We ended 2011 with double-digit growth in revenue, earnings and cash flow. Our results again demonstrate the continued successful execution of our strategy, our ability to consistently deliver on the long-term financial objectives we communicated over the past several years and our overall importance for the strategic IT initiatives of our clients. We saw a continuation of the strong trends in our key business metrics that we delivered during the first three quarters in the year. Year-over-year contract value growth remained strong and retention rates ended at or near all-time highs. Consulting backlog were 8% since the end of Q3 and both attendees and exhibitors at our events increased by double-digits year-over-year. Demand for our services was robust across all of our business segments in the fourth quarter. Our strong topline performance and effective execution and capitalizing on the operating leverage in our business allowed us to once again expand, both our growth contribution and EBITDA margin. As a result, we delivered significant growth in earnings, both in Q4 and for full year. In the fourth quarter normalized EBITDA increased 17% year-over-year and our GAAP diluted earnings per share was up 14%. For the full year, we delivered normalized EBITDA of $279, up 21% from 2010. GAAP diluted earnings per share were $1.39, up 45% from last year. With the strong finish to 2011, we are well-positioned for continued growth in 2012. I'll now provide a review of our three business segments for the fourth quarter and full year and then conclude with a discussion of our outlook for 2012. Starting with research. Fourth quarter research revenue was up 14% to $263 million with negligible impact in foreign exchange in the quarter. For the full year, research revenue grew 17% to over $1 billion.…

Good morning, everyone. As Chris has discussed, we achieved strong 2011 performance. Our 2011 results continue the positive trend of growth that we delivered since early 2009 with a successful and consistent execution of our strategy. We had strong growth across all geographies, all client-sizes and all industry segments. IT is one of the most important drivers of growth and comparative advantage for virtually every institution in the world, but IT is also complex and continuously evolving. As a result, IT professionals need expert assistance and insight, to help to make the critical business decisions that they face virtually every day. This includes advice on managing IT for business success as well as how to best purchase the $3.8 trillion that they're expected to buy during 2012. The same is true for supply chain professionals. Gartner is the best and most cost-effective resource that IT and supply chain professionals can turn to for that help. Our assistance often makes the difference between success and failure for our clients. At the same time, we benefit from having a vast untapped market opportunity for our services, which we estimate at $45 billion. There are hundreds of thousands of IT and supply chain professionals, who could potentially be Gartner clients, but have never been educated on the values that we can provide. We have the right strategy to capture this opportunity. As some of you know, the fundamental to our strategy are to create extraordinary research insight, to build strong sales capability, to deliver high-value differentiated offerings, to provide world-class service and to continually improve our operational effectiveness. This consistent strategy is driving our growth and will allow us to maintain sustained double-digit growth overtime. During the fourth quarter, more than 5,000 CIOs attended our symposium events and I had the opportunity to…

So, Gene, can you talk a little bit more about the 15% to 20% long-term revenue growth target within research? I mean, obviously, you haven't been in that range or even been in the high-end of that range certainly for a while. And what gets you to the higher-end of that range?

So I think what gets us to the higher end of that range is focusing on increasing sales force productivity and also making sure that we grow our sales force in the kind of the range we talked about is those two things. The market opportunity is clearly there and our operational performance is clearly there, so it's really focused on that sales productivity and the growth of our sales force. And as you know, the sales productivity is one of the big focuses that we have. And as you saw, we actually in terms of sales force growth, grew a little bit of a top-end of our range last year, as we saw a lot of really good talent that we'll bring onboard a little bit early for 2012.

Would you then not expect to see an acceleration of research revenue growth in 2012?

So, Peter, as you know, the way our revenue recognition works is that the sales people sell a contract and then we recognize that revenue ratably for that contract. So in a simple level, the way I think about it is the contract buy in 2011 turns into revenues in 2012, what we sell in 2012 in terms of contract value, turns into revenues in 2013. And so the kind of research revenues for 2012 are based on the contract value brought in 2011. So what we sell in contract value during 2012 will really affect the research revenues in 2013.

Right. And so therefore, logically we might expect to see an acceleration in contract value growth in '12, would that be fair?

We certainly would like to see that.

In terms of hiring plans for 2012, same level, same percentage growth rate that we saw last year?

Again, we're expecting during 2012 to have a sales force growth in 15% to 20% range. So it's exactly in target of late last year.

But not committing to be at the higher-end of the range?

No.

And then, Chris, this will be the last question. More to do on the G&A line, you've had a lot of success in terms of holding those across and getting the margin leverage from that. So I guess, how much more is there to do on that front? And then beyond that, where does the margin leverage going forward come from?

Yes, Peter, good question I think. As you've seen over the years we've done a good job of being able to maintain, in some cases the absolute dollars we spent, but certainly in every case as a percent of revenue continue to come down. Our expectation for the foreseeable future is that G&A cost will grow slower than overall revenue, so as a percent of revenue you'll continue to see G&A continue to fall. So we still think there's ample opportunity to do that over the next few years and you should continue to see similar trends you've seen over the past few years.

Your next question comes from the line our Dave Lewis with JPMorgan.

First question is with the events business, can you guys provide a little more detail on what's driving the strong growth there. And is there an opportunity or is there any chance for that up sell there into research business, could pick up going forward. I know about 50% of those clients or attendees do not have a research subscription. But what are your thoughts there?

So basically what's driving the growth our events business is two things, one is just the fundamental value proposition that we have at Gartner which is IT people and supply chain people, having similar issues. And I mentioned some of the things earlier today, things like: How do I deal with global computing? What I'll do with cloud computing? How does the social computing apply to my business? Can I use big data and business intelligence? As well as again there is always a focus on cost production and things like that. And same thing is with supply chain. And so you have people that have these problems they want to debate, need to solve. They're being charged by the business to solve and they need help. And they see Gartner as a great source that helps. And they see events as a source that help just like the see research and consulting. And that's one piece that's driving our events business growth. It's just the kind of market needs. The second one is that we're executing very well. We basically have done a great job in terms of marketing our events business to prospects. And so it's the combination of this need to be adoptive with our clients. And the fact they see that we have a strong value preposition with them and that we've been executing very well in terms of getting those clients to our events. I'll add to that too. We've actually getting them to the events and when they're actually at the events, we ask people to score how we're dealing with them. And the value that clients place in our events, it's never been higher. It's been growing up year after year. And in 2011, it's the highest its ever been. So now we are getting there. But they're seeing great value. And that ties into your last point which is this not an up sell in opportunity? Absolutely, as you mentioned there is a sizable fraction of our event clients who are not Gartner research clients. But they can do our event, they learn more about Gartner and it is a great opportunity when they learn more about Gartner to sell them research services as well.

And last one from me, can you just comment on the Legacy Burton and now Gartner supply chain business. Would you be able to tell us that they are outperforming the Legacy business? And the second half of the question on supply chain is that business expanded market opportunities significantly? I believe when it was acquired you had about a third-year sales reps that had relationship in the adjacent CIO office. How should we think about penetration there in terms of the growth opportunity going forward?

After we acquired AMR, we launched a new set of products that are more consistent with what we do in our IT space. Those products have been extremely well received. Basically the clients of the Legacy products that are happy with them are doing great and we're happy with that. But in terms of future growth, we really focus on these new products which are doing very, very well. Overall, that business is just doing great. It's going really nicely. And in terms of penetration, it has a very, very small tiny penetration in terms of the total market opportunities. So we have a real huge opportunity there. And again, it's getting terrific growth and if anything we should see the growth accelerating.

Your next question comes from the line of Robert Riggs with William Blair.

Just a follow-up on the sales force. It sounds like you're able to hire a little more people than you had anticipated that there is a lot of good talent out there. Is attrition kind of trending as expected, and have you made any changes in programs that are onboard in retention to drive that sales force productivity higher?

Basically as you said, what we're seeing is a lot of great talent out there and we've been very successful in tracking that talent to Gartner which is why we are ahead of our plan in sales hiring. And if people are going out to the door hiring more, you can't get ahead of the game. So we've actually had a very good retention. It's been very consistent over the years in terms of our sales people. Now we're working on that. We continue to work on getting that down because again we want to retain sales people. And so even though we think we have very good retention today, we'd think we can that even better which would just help in terms of our hiring and the tenure sales force. So we're working at the issue and we have done things like you've said. So we do have good on board products, we have great recruiting products to identify people that are we think are highly likely to be successful in our environment and then strong on boarding and development programs for those folks who want to get to on board. But I think our on boarding and professional development programs are as good as or better than any other company I have ever seen. And we get that feed routinely when our sales people come on board.

And then as for the consulting business, you've been working through this managing partner strategy for a while a now. Could you give us an update for that piece of the business are you finding the people that you want there and is that kind of going in line with expectations?

So as you pointed out in consulting, one of our major issue in consulting is to have a team of managing partners that sort of drive that business. We started basically with none of those peoples several years ago and we've been adding up and we're up to approximately 70 of those managing partners today. And that's been a tremendous successful program. We've been able to identify great people. Those people come on board and there their productivity has been exactly what we'd expect. And in fact as we did, we actually want to full complement of those managing partners on board that will really help the overall performance of the consulting business. And so real challenge is we went from zero to now 17, we need to get to quite a few more before we're at the full capacity there.

Your next question comes from the line of William Bird with Lazard.

Gene, I was wondering, if you could just talk about what you're seeing in Europe right now?

So as Chris and I both mentioned, we saw strong double-digit growth across all of our geographies, all of our industries and all client sizes. And so that's what we are seeing.

And have you seen any change in tone of business as you've rolled into 2012?

Basically, as you can see from our guidance, we're very enthusiastic about the prospects for 2012. So that applies everywhere.

And what were your diluted shares at yearend and given the guidance it seems like $97 million, $98 million shares, are you just assuming that you built cash and it's not deployed?

Diluted shares for the fourth quarter were about $97 million. And what we have traditionally said over the time is that at a bear minimum we shares back to offset the impact of our equity programs. And we will continue to do that at a minimum. We, as you know, will continue to generate significant cash. And we look to two things for that cash; one would be acquisitions where they make sense. And as you know we are pretty thoughtful about acquisitions and we'll continue to be that way. But if we find them we will use them there, and if not we will continue to buy shares back in the open market. And so the guidance we gave is to kind of remain roughly where we are. But should we get more aggressive that number could come down over the time.

So just to clarify that $97 million, I know that was your weighted average was that also the quarter end number?

Hold on for one second Bill and I will get that for you. Why don't we go and do another question.

And just a follow-on Gene, how do you think about the prospective growth in research client organizations and how you deploy the sales force in effect?

So there is huge growth opportunity in client organizations. We think there is more than 100,000 actual client organizations out there, and we have a tiny fraction of those today. So we think there is growth in both number of organizations, like you saw in 2011. We also think that there is a huge opportunity to penetrate the existing organizations much deeper as well. So we're trying to have growth opportunity everywhere we look, and we're still looking for shares.

We might have to get back to you on that share count for the end of the quarter.

Your next question comes from the line of Bill Sutherland with Northland Capital Markets.

I'm curious about your outlook on consulting and your confidence of a real pickup and momentum there. I see the backlog, obviously strong. But there was somewhat of a strong at the end of '10. So I'm just wondering if there is anything in addition just to the backlog trend that gives you confidence for the consulting guidance.

I guess there are two things. One is that the convert kind of looking at what's going on in operation of the business and we feel very comfortable with the guidance we gave in terms of operationally. The second thing is the point we mentioned earlier about managing partners. We added a number of managing partners through the last year. Again, as we look at it, the productivity of those people has been very good. We've been able to attract people and get them up to speed. And we kind of extrapolate into '12, the performance that we'd expect from the few we brought on Board in 2011, we see we have performance right in the range to be what we had in our guidance.

I know you don't want to say there is an endpoint as far as the number of managing partners as a percent of your total headcount there. But are you a quarter of the way there or 70 or half way?

Just to give you a flavor for it, we are at about 70 today and we are looking something like 110 to 120 eventually. So we've still got ways to go, which is why you see there mid-to-low single-digit growth in consulting expectations.

And then one last one on the events. On the new events, is that just a total add or are there anything dropped and then roughly size-wise what are the expectations?

There is a couple of them that will be dropped. So there is probably a net five in, a couple out to get your kind of the three delta. If you think about where we're positioned now with the portfolio, we have a pretty solid portfolio in many of the mature markets like the U.S. where we still have plenty of opportunities to launch more around the world. That's the strategy we will have over time to continue to launch existing events in other parts of the world.

Your next question comes from the line of Brian Karimzad with Goldman Sachs.

On the sales force ramp, can you, Gene, give us a sense for when a great salesperson starts on day one, how many quarters do you expect for them to ramp before they become accretive to the overall productivity?

So the way you can think about our sales force is when we hire somebody in their first year, they have less than average productivity. In their second year, they have average productivity. So their selling is up to average by the time they are in their second full year. And again, that then will get reflected in contract value, which then in the next year actually turns into revenue. So if we hire somebody today, their first year will be below average productivity. Their second year's average productivity that will be next year and then that turns to contract value in that year. And in the third year, it actually translates into revenue for the business. So because of the pro-rated recognition of revenue that we use, it takes a while after you sell it, but we feel really good about the fact that we get our people, we hire new people, they do sell in the first year, but they are full average productivity by the time they're in their second full year.

So theoretically, if you start hitting that high-teens growth rate in the sales force third quarter, it wouldn't be until third or fourth quarter this year that you will see that start to flow through in contract value growth.

That would be consistent with what I just described, yes. That's a good way to think about it.

Chris, on the free cash flow for '11, you finished the year with the operating metrics kind of towards the high end of your outlook. The free cash flow came in a bit closer to low end. Can you just walk through what the delta was?

Just on the free cash flow, when you look free cash flow, there are a couple of things. The cash taxes in the time of cash taxes affect that a bit. What we have over the past few years is, if you look back over four, five years, very little cash taxes and in some cases refunds and slowly that's creeping up in terms of become a cash tax payer. It's certainly nowhere near at the level that we have on the face of the P&L. So our effective tax rate is obviously much higher than our cash tax rate. But having said that, it creeped up a little bit and that's probably the vast majority of the real delta that we see. The other thing that we've talked about over time that you will continue to see in our cash is that over the past four or five years we've done a really good job of continuing to improve the effectiveness of our cash collection efforts. And we've got a lot of benefit out of that over the past few years. We're starting to see that stabilized now, we're at a very nice high level in terms of how quickly to collect cash and so we're not seeing the continued one-time benefits of improving. We're starting to see it kind of get to a normal run rate. So those are the few things that are starting to affect the cash flow a little bit in terms of how much additional year-over-year growth we get. But as I mentioned earlier, we're still expecting good strong cash flow growth, well in the double-digit and again significantly higher than net income over time.

Your next question comes from the line of Dan Leben with Robert W. Baird.

Gene, just could you talk in the fourth quarter within the consulting business. What you saw within the contract authorization portion versus the other parts of consulting?

So basically, in the fourth quarter of '10 the contract optimization business was extremely strong in fourth quarter 2010. In fourth quarter 2011 we had a strong quarter, but relative to the extremely strong performance in 2010, it didn't look like as good.

So when you look out to the forecast for next year with the utilization coming up nice in the fourth quarter. Is that the high end of the guidance range on consulting, is that essentially normalized utilization of these types of levels, maybe a little higher with a little bit of headcount growth, I just want to understand the dynamics within the range. What the possible outcomes are?

So utilization would be at the high end. What you said is exactly right which is if the revenues with the high end utilization lookout would be the high end as well in consulting.

The range in consulting as we talked about every year is also a factor of our contract optimization business. As you know that business tends to be a little more lumpy. And there is things that happened that don't recur et cetera. So at the various ranges of the guidance there's that business but, Dan, as Gene mentioned that range around the utilization as well.

Your next question comes from the line of Manav Patnaik with Barclays Capital.

So on the sales force growth expectations 15% to 20%. I just wanted to try and tie that in with obviously all that is organic growth. I want to tie that in with what your pipeline looks like on the M&A front? And just trying to understand where the opportunities are in that pipeline that you see? And are there any good opportunities to acquire companies that already have the sales force with the productivity in place?

So basically first, we believe we can sustainably grow our sales force organically in the 15% to 20% range. So any acquisitions we did would be above and beyond that. And so there are both great organic growth opportunities. In terms of the M&A front, we actively tracked many companies and we think there are lot of opportunities out there. That it has to be the right company at the right price with the right fit. And those have happened in the last few years, we've had three, in fact we had two in one month because it happened at the right time with AMR and Burton. And so basically, as we've said, one of the uses of our cash is for acquisitions but only if the price is right and it fits right.

Obviously, you guys have already shown, you guys have managed to grow the sales force pretty nicely in the double-digit range within that long-term guidance. Can you just help us understand again sort of the profile of who these sales people are and where you're hiring them from? Just to trying to get a little more comfort on the ability to continue to hire 15% to 20% additional sales force year-over-year.

Yes, basically, what we're looking for are basic sales skills. It doesn't take technology. It basically takes great sales skills. There is a essentially unlimited market of people that have great sales skills out there. And we found, if anything we're getting better actually at both identifying the right people and attracting them to Gartner. Our recruiting organization is really terrific and had done a great job with that. And there is such a vast army of sales people around the world that have great sales skills. And Gartner such a great place to be if you are a sales person. And we have no doubt in our ability to continue to grow our sales force in the 15% to 20% a year for essentially forever.

And I guess, what is the churn being like on the sales force. I mean what is the rate relative to historical that you've seen today?

So basically our churn of the sales to the attrition of sales force has been virtually unchanged over the last few years. It's been very steady. Even with the change in the economy it's been very steady. Again, Gartner is a very attractive place for sales people to be. And people want to be here as your sales person.

And just lastly housekeeping question, I apologize if you said it before, what's the tax rate implied in the guidance of '12?

32% to 33% is what we have in the range of our guidance.

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

Before I make remark, Chris, wanted to clarify on one question.

So just to follow-up on Bill's question on the share count, so let me just share a few data points. Our basic weighted average share count at the end of the Q4 was 94.7 million, our basic ending share count in absolute terms was 93.3 million and our diluted weighted average was 97 million. So those stats should give you a sense of the shares as we ended the quarter and how that will look in 2012. And just another point on shares, remember that we do issue shares for our equity programs during Q1. And as we talked about, we continue to repurchase shares in the open market.

Thanks, Chris. And one last plug here for our Investor Day on February 16, in New York City. Registration is required in advance. If you haven't done so already, either contact me directly or my assistant Germaine Scott, her number is 203-316-3411. We look forward to seeing you next week in New York. Take care.

Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect and have a great day.