Craig Safian
Executive Vice President and Chief Financial Officer at Gartner
Thank you, Gene, and good morning. First quarter results were strong with acceleration in contract value growth and strength in revenue, EBITDA and free cash flow. EPS was particularly strong as the benefit of share buybacks reduced our share count. With results above our expectations, we are increasing our 2022 guidance. The improved outlook reflects the better-than-expected first quarter top line results and increased revenue from conferences we now expect to hold in person.
First quarter revenue was $1.3 billion, up 14% year-over-year as reported and 16% FX neutral. In addition, total contribution margin was 70%, up 44 basis points versus the prior year. EBITDA was $329 million, up 3% year-over-year and up 5% FX neutral. Adjusted EPS was $2.33, up 17%. And free cash flow in the quarter was $150 million, up 4% year-over-year. Adjusting for insurance proceeds received last year, free cash flow was up 17% on a rolling fourth quarter basis.
Research revenue in the first quarter grew 16% year-over-year as reported and 18% on an FX-neutral basis. Retention was very strong again and new business continued to increase. First quarter research contribution margin was 75%, up 81 basis points versus 2021. Higher-than-normal contribution margins reflect improved operational effectiveness, increased scale and continued temporary avoidance of travel expenses.
We have been increasing our head count, which we expect to continue as we move through the year. Contract value, or CV, was $4.2 billion at the end of the first quarter, up 16% versus the prior year. This includes our decision to exit the Russian market, which reduced CV by about $14 million. Quarterly net contract value increase, or NCVI, was $80 million net of the impact of Russia CV just noted. Quarterly NCVI is a helpful way to measure contract value performance in the quarter even though there is notable seasonality in this metric. We saw a broad-based CV growth across all of our practices.
Our technology practice grew 14%, and all of our other business practices grew at double-digit growth rates with the majority of them growing more than 20% year-over-year. From an industry perspective, retail, manufacturing and services led our CV growth. Global Technology Sales contract value was $3.3 billion at the end of the first quarter, up 14% versus the prior year. GTS had quarterly NCVI of $46 million in the quarter, again, net of the impact of exiting Russia. While retention for GTS was 107% for the quarter, up about 900 basis points year-over-year. GTS new business was up 6% versus last year, when very strong new business benefited from a post-pandemic bounce, including modestly higher than normal win backs.
GTS quota-bearing head count was up slightly year-over-year. In the first quarter, we promoted a higher-than-normal level of front-line sellers to sales manager roles. This reflected our strong CV performance and sets us up for future growth. This March was our best hiring month since the start of the pandemic. Our net hiring is in line with our plan, turnover is improving, and we remain on track to achieve double-digit QBH growth this year.
Our regular full set of GTS metrics can be found in the appendix of our earnings supplement. Global Business Sales contract value was $899 million at the end of the first quarter, up 24% year-over-year, which is above the high end of our medium-term outlook of 12% to 16%. GBS CV increased $34 million from the fourth quarter, while retention for GBS was 115% for the quarter, up about 11 percentage points year-over-year. GBS new business was up 18% compared to last year, reflecting robust growth across the full portfolio and against a strong compare. GBS quota-bearing head count increased sequentially and is up 15% year-over-year.
We remain on track to grow GBS head count at double-digit rates in 2022. As with GTS, our regular full set of GBS metrics can be found in the appendix of our earnings supplement. Conferences revenue for the first quarter was $10 million, in line with our expectations. The first quarter is always a seasonally small quarter, and we pushed several conferences to later in the year to increase the likelihood of running them in person. Contribution margin in the quarter was negative 28%, given the seasonality in revenue and normal quarterly costs.
We held five virtual conferences in the quarter. We held Evanta meetings in both virtual and in-person formats. As we look to the rest of the year, we plan to run 24 in-person conferences. We will continue to run a mix of in-person and virtual conferences as a part of our go-forward strategy for the business. I will detail our updated annual outlook for conferences shortly. First quarter consulting revenues increased by 17% year-over-year to $116 million. On an FX-neutral basis, revenues were up 20%.
Consulting contribution margin was 44% in the first quarter, up almost five percentage points versus the prior year with better-than-expected revenue and a mix benefit from strong growth in contract optimization. Labor-based revenues were $96 million, up 14% versus Q1 of last year and up 18% on an FX-neutral basis. Backlog at March 31 was $147 million, increasing 30% year-over-year on an FX-neutral basis with another strong bookings quarter. We revised our backlog methodology to include the expected revenue from the out-years of multiyear agreements.
This change contributed about seven percentage points to the backlog growth rate in the quarter. Our Contract Optimization business was up 29% as reported and 30% on an FX-neutral basis versus the prior year. As we have detailed in the past, this part of the Consulting segment is highly valuable. Consolidated cost of services increased 13% year-over-year in the first quarter as reported and 14% on an FX-neutral basis. The biggest driver of the increase was higher headcount to support our continued strong growth. SG&A increased 27% year-over-year in the first quarter as reported and 29% on an FX-neutral basis.
SG&A increased in the quarter as a result of a $24 million nonrecurring real estate charge, higher commission expense following strong CV growth in 2021 and increased hiring in sales and G&A functions. SG&A without the facilities-related charge would have increased 22% year-over-year and would have been 47% of revenue in the quarter. We expect SG&A expenses to increase over time as our hiring continues. EBITDA for the first quarter was $329 million, up 3% year-over-year on a reported basis and up 5% FX neutral. First quarter EBITDA upside to our guidance primarily reflected revenue exceeding our forecasts.
Depreciation in the quarter of $23 million was down modestly versus 2021. Net interest expense, excluding deferred financing costs in the quarter, was $30 million, up $5 million versus the first quarter of 2021 due to an increase in total debt balances. The Q1 adjusted tax rate, which we use for the calculation of adjusted net income, was 20.3% for the quarter. The tax rate for the items used to adjust net income was 24% for the quarter. Adjusted EPS in Q1 was $2.33, growth of 17% year-over-year.
The weighted average fully diluted share count for the first quarter was 83 million. This is a reduction of more than six million shares or about 7% year-over-year. We exited the first quarter with about 82 million fully diluted shares. Operating cash flow for the quarter was $168 million, up 7% compared to last year. capex for the quarter was $17 million, up 38% year-over-year as a result of an increase in capitalized software. Free cash flow for the quarter was $150 million. Free cash flow growth continues to be an important part of our business model with modest capex needs and upfront client payments.
As many of you know, we generate free cash flow well in excess of net income. Our conversion from EBITDA is very strong with the differences being cash interest, cash taxes and modest capex, partially offset by strong working capital cash inflows. Adjusting for the insurance proceeds we received last year, free cash flow as a percent of revenue or free cash flow margin was 22% on a rolling fourth quarter basis.
On the same basis, free cash flow was 84% of EBITDA and 159% of GAAP net income. At the end of the first quarter, we had $456 million of cash. Our March 31 debt balance was $2.5 billion. Our reported gross debt to trailing 12-month EBITDA was under two times. Our expected free cash flow generation, unused revolver and excess cash remaining on the balance sheet provide ample liquidity to deliver on our capital allocation strategy of share repurchases and strategic tuck-in M&A.
We repurchased around $450 million of stock during the first quarter and about $630 million through the end of April. Last week, the Board increased the repurchase authorization by $500 million, bringing us to a total of about $1 billion available for open market buybacks. We expect the Board to continue to refresh the repurchase authorization as needed going forward. Since the end of 2020 through the end of this April, we have reduced our shares outstanding by eight million shares. This is a reduction of 9% from the end of 2020.
As we continue to repurchase shares, we expect our capital base will shrink. This is accretive to earnings per share and combined with growing profits, also delivers increasing returns on invested capital over time. We are increasing our full year guidance to reflect strong Q1 performance and the return of in-person conferences. We also updated guidance to reflect a stronger U.S. dollar. We now expect an FX impact to our revenue growth rates of about 260 basis points for the full year. This is up from 150 basis points based on rates when we guided in February.
As we detailed last quarter, 2021 research performance benefited from several factors, including QBH tenure mix, NCVI phasing within the quarters and the year, record retention rates and strong nonsubscription growth. We continue to assume that those benefits do not persist at the same levels through 2022. The growth compares also get harder as we move through the year. We are taking a balanced approach based on historical trends and patterns, which we've reflected in the updated guidance. We are updating our guidance for the incremental revenue from 24 planned in-person conferences with significantly more visibility into the second quarter. We will continue to update our outlook as we have more visibility.
For our local one day Evanta events, we expect to run most of them in person while continuing to run some virtually. We expect about 1/3 of our full year conferences revenue in the second quarter this year. Consistent with our commentary last quarter, our base level assumptions for consolidated expenses continue to reflect significant headcount increases during the year to support current and future growth. We have modeled higher labor costs and T&E well above 2021 levels as we've previously indicated. We will also have higher commissions during 2022 due to the very good selling performance we delivered in 2021.
Finally, we continue to invest in our tech, both client-facing and internal applications as part of our innovation and continuous improvement programs. Our updated guidance for 2022 is as follows: we expect research revenue of at least $4.575 billion, which is FX-neutral growth of about 14%. The FX-neutral growth is up about 160 basis points from our prior guidance due to strong NCVI performance in the first quarter. We expect Conferences revenue of at least $270 million, which is growth of about 30% FX neutral.
We expect Consulting revenue of at least $430 million, which is growth of about 7% FX neutral. The result is an outlook for consolidated revenue of at least $5.275 billion, which is FX-neutral growth of 14%. The FX-neutral growth is up about 330 basis points from our prior guidance due to strong performance in the first quarter and the shift to in-person conferences. Without the strengthening U.S. dollar since February, our revenue guidance would have been about $155 million higher than previous guidance.
We now expect full year EBITDA of at least $1.135 billion, up $100 million from our prior guidance and an increase in our margin outlook as well. Without the strengthening U.S. dollar since February, our EBITDA guidance would have been about $110 million higher than previous guidance. We now expect 2022 adjusted EPS of at least $7.80. For 2022, we now expect free cash flow of at least $930 million. Our guidance is based on 82 million fully diluted weighted average shares outstanding, which reflects the repurchases made through the end of April. All the details of our full year guidance are included on our Investor Relations site.
Finally, for the second quarter of 2022, we expect to deliver at least $300 million of EBITDA. We had a strong start to the year with momentum across the business. Contract value continued to accelerate. EPS grew mid-teens, fueled by the significant reduction of shares over the past year. We repurchased roughly $630 million in stock this year through April and remain committed to returning excess capital to our shareholders. Looking out over the medium term, our financial model and expectations are unchanged. With 12% to 16% research CV growth, we will deliver double-digit revenue growth.
With gross margin expansion, sales costs growing in line with CV growth over time and G&A leverage, we can modestly expand margins from the normalized 2021 level. We can grow free cash flow at least as fast as EBITDA because of our modest capex needs and the benefits of our clients paying us upfront. And we'll continue to deploy our capital on share repurchases, which will lower the share count over time and on strategic value-enhancing tuck-in M&A.
With that, I'll turn the call back over to the operator, and we'll be happy to take your questions. Operator?
