Gartner Aktie

All right. Good morning, everyone. I'm Jeff Meuler, Baird's Information Solutions analyst. Thanks for joining us. Pleased to be with Gartner this morning. Gartner is the world's leading subscription-based insights and advisory firm across enterprise function with $5.3 billion of contract value with great long-term growth.

With me on stage is the company's CFO, also a long-time CFO and company employee, Craig Safian, who's overseen much of that growth.

Craig, maybe to just start out, your Insights or research business, it's the key value driver of the company, nearly 90% of consolidated gross profit. Just help investors understand the value proposition for an Insight subscription, things like what does it cost, what's included, how do clients engage, et cetera?

Yes, happy to. And thanks for having me. Good morning, everyone. Thanks for joining us. So as Jeff mentioned, our Insights business is largely a recurring revenue, annual subscription license to our Insights. And I'll start with sort of what we do and who we do it for. So we are targeting the top of the organization chart. So the C-level and their teams across every major enterprise function.

So you may know Gartner, we were built around serving technology professionals, technology leaders, Chief Information Officers and their teams. And over time, through a combination of acquisitions and some of our own organic development, we actually now serve all the major functions within the enterprise, so finance, HR, supply chain, sales, marketing, legal, customer service, et cetera, et cetera, et cetera. And essentially, the way we operate and the way we think about delivering value to our clients is every one of those operating executives and their teams have a core set of what we call mission-critical priorities, or MCPs.

What MCPs are essentially the big things that they need to accomplish for the enterprise. So for example, for a CFO, it might be a finance transformation. For a marketing organization, it might be how do we optimize ad spend and yield the marketing investment in an AI world, things like that. And those are not onetime questions that have a definitive answer. They're actually multiyear journeys. And so our job and our goal is to make sure that we are providing the operating executives we serve across every major function with the insights, tools, assets, intelligence, et cetera, they need to meet those mission-critical priorities.

Now we do that through a variety of different ways. And I'll talk about our product tiering and also talk about how we deliver some of those insights. So I think it's core to remember that the core of our business is we develop insights that help our operating executive clients make the right decisions around their mission-critical priorities.

We've got about 2,400 experts on staff. These are deep domain experts in the specific functions and domains that they serve who are not just "researchers". These are experts. These are world-class. These are former practitioners. These are people from academia. These are people from major consulting organizations. These are people from the major technology companies, et cetera. And they come in because of their expertise, and they're actually able to augment that expertise because of a lot of the, I call it, a network effect that we have from all the operating executives that we serve, and I'll get back to that in a second.

So think about essentially 3 tiers of service that we have for our clients. Our least expensive offering, which is our digital-only offering, basically gives clients the opportunity to interact with all of our insights through gartner.com and through our mobile application. The core thing to remember, though, is even with our digital clients, the primary way they get connected to our insights is not by going to gartner.com and typing in a question or a search or a question and AskGartner.

The primary way they actually get to the insights and the assets is we are proactively pushing them the things that we think are most important and most relevant to them. And we're able to do that because we know who they are. We know the corporate graphics of who they work for, industry, company size, all the dynamics around their company, and we also know what their mission-critical priorities are. And so before they even think about a problem or have a question, we're actually proactively pushing them information. That draws them into gartner.com or our mobile application, and then they're actually able to explore all of our other assets and things like that. And again, the digital-only offering runs about $25,000 per licensed user per year.

As you step up the tiering, we have what we call an adviser product next. That's probably $45,000 to $50,000 per licensed user per year. And you get all the stuff and things and assets that you get from a digital subscription with 2 primary differentiators. Differentiator one is you get a conference ticket to attend one of our destination conferences, which hopefully, we'll talk a little bit about later because that's enormous value to our licensed users.

And then the second major thing they get is the ability to talk to an expert. We call it an inquiry. Essentially, it's a 30- or 45-minute call with one or multiple of our experts so that you can go deeper. You can provide the context of your specific situation. You can get insights and thoughts from our experts around what they're seeing with other clients who may be in similar spaces. And so that -- and you get to do it on an unlimited basis. The average client does it 5 or 6 times a year, but it's enormous value when they do, do it.

And then the third tier of service is what we call guided service. On average, let's just say, around $100,000 per licensed user per year. And you get all the things that an adviser level entitlement gives you, but you also get 2 additional things beyond that. One is a premium experience at our destination conferences. And two is you have actually a named senior level service person, we call it an executive partner, who is a former C-level practitioner who acts as your guide, consultant, concierge, if you are a professional golfer or watch professional golfing, your on course professional caddy. And they only have 25 to 30 clients that they serve. And so they're actually able to really get to know the individual serve as a sounding board and act as an entry point into all the insights that we have. And again, that's about $100,000 per licensed user per year.

But again, at all levels, the main thing is helping operating executives accomplish their mission-critical priorities by connecting them to the right assets and insights and tools and peers at the right time so they can actually move those mission-critical priority journeys along.

Helpful. So contract value is the golden metric, I think, for a lot of investors with Gartner. The long-term growth has been great, 12% 10-year CAGR, I think around 10% organic. 2023 and 2024 were plus 8%. 2025 was plus 1% or plus 4% if you exclude U.S. federal government headwinds. So just what's your perspective on what's driving that? And then the elephant in the room, how do you measure if AI is having an impact or what gives you confidence if it's not?

Yes. So obviously, I'd rather spend more time talking about the 12% CAGR, but I will address the question directly. So I think there's been a handful of rolling macro and geopolitical challenges that have certainly impacted our growth rate over the last few years. In '22 and '23, it was really tech vendor-driven as a lot of the air got let out of that balloon, if you will, with VC funding sort of seizing up, Silicon Valley Bank going belly up and mass layoffs across the tech industry as they were recalibrating their OpEx bases coming out of the pandemic.

When that sort of leveled out and normalized, we then ran into the headwinds of challenges with our U.S. federal business. And so put it in perspective, we entered 2025 with around $280 million of U.S. federal contract value. So that is CV licenses with civilian, defense and intelligence agencies across the entire U.S. federal government, which was about 5% of CV at the time.

The DOGE activity started in earnest really, call it, back half of March and really picked up Q2, Q3, Q4. And we took a lot of hits there. And as you noted, it was almost a 300 basis point impact on our overall growth rate in 2025. We are now starting to lap those challenges, and we do expect to get the mechanical benefit of lapping those challenges as we move through 2026.

And then the third sort of major thing that impacted our results, I would say, I mean, obviously, it was not the best macroeconomic or selling environment, but we pride ourselves on tuning and adjusting so that we can be successful in any environment. That said, I think the volatility in trade policy had a significant impact on our results as well. And because we're selling globally and because we're industry agnostic, size agnostic and market agnostic, about 40% of our contract value sat with clients who rely on supply chains and importation and exportation to make their money or make their products.

And what we saw post Liberation Day last year was it wasn't the amount of the tariff that was the problem, it was sort of the whipsawing volatility around them that caused companies to really seize up on decision-making. And so I put myself in the shoes of a CFO at a Daimler-Benz or John Deere or whatever it may be. And when you don't know if you're solving for a tariff that's 10% or 50%, you kind of just say, "Hey, until we know what this is, we're not taking on any incremental investment." And we saw that impact our tariff -- our clients who rely on importation or exportation.

Again, I think the last several quarters -- or last few quarters, I should say, we've seen much more stability in trade policy, and we should start lapping those again and sort of leads into our expectation for 2026, which is through a combination of lapping the U.S. Fed challenge, lapping the U.S., the trade policy challenge and continuing to transform and adapt our business to be successful in any environment, we fully expect contract value, both the Fed piece and the non-U.S. Fed piece to accelerate over the course of this year.

And AI, just how do you measure it? And what are the proof points that give you confidence or can you give investors confidence it's not having an impact?

Yes. I mean the interesting thing is from the outside, you say there's a 1.0 correlation between AI disruption and CV performance, but correlation is not causation, as many like to say. And so when we look at the business, I say 3 things. So one is we track this religiously. And we track any sort of disruption or competitive activity. And we're just not hearing it from our sellers, and we're asking and analyzing and looking at every deal, and we're just not seeing it as the reason why people are deferring growth or not renewing or what have you.

The second thing I'd say is a lot of our indicators that we look at below sort of the headline and below even that on our operational dashboards, you would expect would be going sideways or down if AI was really disrupting or not. I'll give you 2 examples. One is engagement. And so we measure engagement both from a digital engagement perspective. So how often and how frequent are people interacting behind our firewall, gartner.com or our mobile app. And then we look at human interactions because that's a big piece of our value proposition as we talked about a little bit earlier as well.

And if AI was really disrupting the way our clients operate and the way our clients used us, we would see declines in engagement. And as we talked about coming out of our Q1 earnings call, we've seen quite the opposite. We've driven significant improvements in engagement, both from a digital perspective and from a human interaction perspective.

Second thing I'd say is conferences have continued to perform exceptionally well. The reason conferences continue to perform exceptionally well is people really value our insights. The reason they come to conferences is to interact with our experts. It's to really live what they can learn from Gartner to network with our peers, all the other elements of the value proposition, but the primary reason they're there is because of the insights.

And then the third thing I'd say is our new business and new business pipelines, while the velocity of which -- the way things are moving through the pipeline is a little slower than normal, largely because of the macro overhang and some of the challenges there, we are still generating a huge amount of opportunities adding to the pipeline every month, every quarter. That we've talked about for the last several quarters, pipelines are up -- factory pipelines are up at double-digit growth rates. And so there's still a lot of demand in the market as well. And so as we look at everything, we feel really good that AI is not disrupting us and that we will accelerate our contract value over the course of this year.

And I think fundamentally, a client may come to us and say, "Can I do that with Copilot or Claude or whatever?" And I think it's just -- it's a fundamental misunderstanding of the way we help people. And I alluded to this a little bit earlier, but we are not a question-and-answer engine. We have never been a question-and-answer engine, and we do not aspire to be a question-and-answer engine. We are an insights company that proactively pushes things to our operating executive clients before they even think about it. So think about like addressing blind spots, knowing the unknowns to some extent, mitigating risk, all those things we're able to do where it's great. We say, "Look, you should use the LLMs for X, Y and Z," but that is not a replacement for Gartner. It's a very different thing. And Gartner has got a very differentiated value proposition to help you accomplish your mission-critical priorities.

We always love to hear about a healthy and resilient conferences and insights business here. On that the way you interact with customers, you do have an LLM overlay on your digital platform called AskGartner. I guess what impact is it having? Or how important is it even if a lot of the interaction is like pushing content to them and people coming to conferences and other forms of interaction?

Yes. I mean, look, I think it's table stakes in terms of the way we deliver our product digitally, right? So we need to follow what our users experience is outside of the Gartner ecosystem so they have a similar experience when they come in. And clearly, having a language model on top of the corpus of Gartner information is incredibly important.

The one thing I will say is the proactive pushing is what brings them in. But then once they're in, using AskGartner versus traditional search is significantly better for our clients. And what we've been seeing as we've sort of brought everybody on board and watched usage is when people do get drawn in from the proactive pushing of insights, when they do then go to AskGartner, we are seeing that they actually ask more questions than searches, so more engagement there. They read more documents than when using traditional search, so more engagement there. And they're actually interacting with a larger diversity of our assets, more engagement there.

And so my view or our view on this when we launched it was worst case, it's a better search experience. Best case, it actually does the things I'm talking about. And I think we're seeing nearer to the best case. But again, fundamentally, the primary way that people come in is because of the proactive pushing.

If a client wants to incorporate Gartner's data content and insights with their own first-party data, maybe with some other third-party data sources, is there a mechanism to do that? Is there a future road map where you'll be able to do that and AskGartner? Like just I would think that would be a value.

Yes. I mean -- so yes, it would be a value, and we're staying very close to our clients around what they want and what they need. I think there's 2 thoughts or cautions there. So one is it's not data. Predominantly, it's not data, it's insights, right? So I think with data integrations, it's much more logical and makes a lot more sense because you're sort of building it into a workflow, a spreadsheet, whatever it may be. It is harder to do that with insights.

The second thing I'd say is everything we have is proprietary to us. And we have to be very, very, very careful and diligent about ensuring we protect all that IP. And as we've talked about on the last several earnings calls, it's terabytes and terabytes and terabytes of proprietary information that actually feeds into the thousands of proprietary insight documents that we have. And we just need to make sure that whatever solution we come up with absolutely walls those things off and protects them going forward.

What about in your environment, like where you could do a connector where you're going to get access to a client's Workday or something to help inform the CHRO that has a Gartner seat. Is that an opportunity?

So are you looking for a product management job at Gartner? You're making a good pitch there. Yes, those are all things that we are looking at and considering. And again, we do a significant amount of market research. And also because of the level of engagement of our clients, we're getting live feedback literally on a day-to-day basis from our clients and they're very happy to share those kind of product development ideas with us as well. And so those may be on the future road map.

For now, the way we're operating is we want you to come into our ecosystem and do all of that. Maybe at some point, you'll be able to drop in assets from your own company, your IT architecture, your IT road map, your finance road map, whatever it may be, and actually then query AskGartner for all that stuff. But for now, it is essentially uniquely the Gartner experience when you come behind our firewall.

So Q1 contract value accelerated a very little bit. You had some comments about in-quarter trends because obviously, there was a flare-up in March and a geopolitical situation. So just talk us through kind of the shorter-term trends. And given that it at least feels like we're not as hot in Iran right now as we were in March, are you -- is it your experience that things like slipped out of March and then subsequently closed?

Yes. So we talked about this in early May around Q1. And so the commentary was really around January and February new business were actually trending really positively. In full disclosure, January and February are a lot smaller months than March, right? So the third month of each quarter tends to be significantly larger for us than the first 2 months. But nevertheless, we were trending really positively through the first 2 months of the year.

We did see with the onset of the war in Iran, a lot of decision-making, particularly with companies and industries that can be impacted by oil prices and with markets directly in the line of fire that decision-making did get slowed down. And so we did see a lot of new business opportunities push not close in March. Commentary on the call is a lot of them did close in April, which I think is very positive. And I do think your commentary on the challenges related to the war being a little less hot right now is true, could change tomorrow, but it feels a little bit less risky and less exposure right now compared to what we saw in the back half of March.

Okay. This is a short-term question, but rev rec flows off of contract value. Q1 is seasonally weaker typically for contract value, and it's a more tough -- or more challenging environment right now. So contract value took a sequential step down. Consensus has revenue modeled flattish for insights. That seems kind of illogical based upon where contract value ended. Just any comment on how -- if there's any unusual dynamics that could inflate it or how we should think about modeling off of CV?

Yes, it's a great question. So generally speaking, the simplest way to run the model is you look at what the NCVI was in the quarter and you either step up or step down 1/4 of that in the following quarter from a rev rec perspective. FX rates constant in that scenario. I think last year, the revenue didn't do that, and I think that was largely because of foreign exchange. And so I think I haven't gone...

Foreign exchange benefited us...

So you didn't see the step down sequentially in revenue that you would expect with a negative NCVI quarter last year because foreign exchange offset it. So I don't know everyone's model specifically, but generally speaking, the way to do it is if you generate, I'll make it up, $20 million of positive NCVI in the quarter, you would expect the next quarter's revenue to be $5 million higher and the inverse as well.

Got it. Fed government, as you alluded to, it's down like 2% of total. Mathematically, your total contract value is going to start to benefit from anniversarying the headwinds. But you are now coming up on some of that business that was signed or renewed in the DOGE era. So as you come up on that -- the second opportunity on that, just what are you seeing? Is it now stable? Are you seeing win backs? What's going on with government?

Yes. I mean, definitely more stable. The renewal rates we achieved in the first quarter were obviously significantly better than last year, not quite all the way back to our all-time highs in that space, but significantly better. The way we've thought about that business is in 2 ways. So one is we've modeled this year to be essentially flat, right? So we have not assumed growth in the U.S. federal business for us in 2026 in all of our contract value growth assumptions for this year.

That all said, we fully expect to get back to growth. Our U.S. federal team across sales and services and insights are amongst our strongest teams. Even though it was very chaotic from a contract signing, retention and growth perspective last year, the team still stayed really close to the operating executives that we serve. The reason we renewed 40% to 45% of the business last year is because people were willing to stick their necks out and go to bat for how valuable Gartner is, and we fully expect even the ones that we lost last year to come back over time. It may be this year, may not be this year, but we feel really good about the business and being able to grow that business from a new base going forward.

So most of the businesses, the insights business, you mentioned how well conferences is doing and why. You also have a consulting business. You meaningfully reduced the business outlook for consulting when you reported Q1, just maybe not surprising, but what in your view is driving the weakness? Is there anything that's like AI-related that's structural? And anything that's unusual from a timing factor that we should consider for consulting this year?

Yes. I think a couple of things there. So one is similar to what we saw with our insights business and some decision-making getting deferred, we did see that from a bookings perspective in consulting in the first quarter as well. And we -- I'd say we derisked that business so that even if we don't see a pickup in bookings, we're protected and covered from an annual guidance perspective within that particular revenue line.

I think pipelines are strong. Q2, we believe, will be a good bookings quarter. That will put us back in position to get back on track in Q3 and Q4 because obviously, we book it in Q2 and then we can't -- we don't start working until Q3 or Q4. But I'd say we derisked the line. And then on top of that, our contract optimization business is coming off of 2 record years. And as you know, you've been following us for a very long time, that tends to be an extremely volatile business and 100% reliant on clients making a decision to purchase something. And when there's uncertainty in the market, it can flow through onto the contract optimization side as well.

So you've long had this 12% to 16% insights growth and a variety of other intermediate-term financial targets. Your Q1 supplement, I think, removed the medium-term guidance section. So does that still hold over the longer term? Or what type of environment do you need? And then the follow-on is you kind of inserted a 12% 3-year EPS CAGR. If you can talk through how you came to that target or what the goalpost is now?

Yes, sure. So the -- you can still find the medium-term objectives in our Gartner 101 materials on our investor website. I think, by and large, I think we've got to get through mid-single digit, high single digit, et cetera, before we start having the conversation again about the 12% to 16% growth, and we're obviously very focused on making sure that we accelerate our CV growth rate this year so that we can hopefully start having those conversations again soon. We still believe in a normal operating environment. There's no reason why we can't grow at strong double-digit rates consistently. And so that's sort of that medium-term objective.

In terms of the EPS CAGR, we just thought it was important for people to know that, I guess, 2 or 3 things. So one is revenue does lag CV growth. And while we expect CV growth to accelerate, the revenue is going to lag that a little bit. And while that is happening, we are very actively, and I'd argue, effectively managing our operating expense base so that we deliver consistent profitability and perhaps most importantly, consistent free cash flow.

And then we're doing something with all that free cash flow and returning significant amounts of capital to our shareholders through our buyback programs. And so if you were to say to me, "Craig, EPS CAGR of 12%, you took out 4% of your share count in Q1, your math is terrible." It's terrible, I would be willing to concede that. That all said, we feel very confident that laying out a 12% compound or at least on the EPS is a good positive signal that not only are we confident in our ability to accelerate the growth, but we're also confident in our ability to make sure that we're managing profitability, managing margins and most importantly, managing free cash flow.

And then just in the final wrap, 30 seconds, you have 4 kind of dimensional initiatives in the business to drive improvement. Which ones are you most excited for? Where are you seeing an impact? Where do you expect the impact to build?

So I'm excited for all of them. I think our new leader of Insights, who's a long-term Gartner Insights leader is doing all the right things to drive the business. And all the elements of the transformation are important. They're overlapping. They're not unique and discrete amongst themselves. But everything we're doing there, I'm super excited about because we're an insights company, and that's what drives the business.

Excellent. And with that, we will wrap. Please join me in thanking Craig for his insights on Gartner. And Craig will now be available in a breakout session in the Rockefeller...

Annual Growth Stock Conference. My name is Andrew Nicholas, I'm the business services analyst here at William Blair. Before getting started, I'm required to inform you that for a complete list of research disclosures or potential conflicts of interest, please visit our website at williamblair.com. With that out of the way, pleased to welcome Craig Safian, CFO of Gartner. I'm going to hand it over to him to give you an overview of the business. But again, I appreciate you all being here.

Thank you. Thanks, Andrew. Good afternoon, everyone. Thanks for spending the time with us today. For the next 30 minutes, I'm going to take you on a little bit of a walk, which is an introduction to Gartner. We'll talk about the value we provide to our clients. We'll spend some time on our go-to-market. And then we'll close with what I think is a pretty compelling story about revenue reacceleration, earnings growth, free cash flow growth and returning significant amounts of capital to our shareholders to drive incremental shareholder value. I also would now like to read to you every word on our forward-looking statement. We'll go through that. It's here. So again, I know many of you know Gartner well, many of you are hearing about us for the first time, so sort of just level set around who we are and what we do.

Our whole goal is to make sure that we are delivering actionable objective insights to our clients to help them drive smarter decisions and stronger performance on their individual and organization's mission-critical priorities. And you'll hear me say mission-critical priorities a lot, that is sort of how we center our business and what we're focused on solving and we'll talk about that a little bit later.

Today, we serve every major functional role across the C-suite. So Gartner was born as a company focused on serving technology professionals. And for the first 35 years of our existence, that's kind of all we did or 40 years of our existence. That's all we did. Over the last 1.5 decades, we diversified our portfolio through a combination of acquisitions and organic development, where we now serve not only Chief Information Officers and their teams, not only the tech vendor community from the largest hyperscalers in the world down to a pre-revenue technology companies, but we also serve CFOs and their teams and Chief Human Resource Officers and their team, Chief Supply Chain Officers and their teams, General Counsels and their teams, Chief Marketing Officers and their teams and so on and so on.

So essentially, think of us serving the entire C-suite are -- we sort of built the company based on serving the technology world, and we've now branched out where we serve every major functional area. And look, the simple way to think about the value proposition is we help our clients save time. They get to the right decisions faster. We help them save money, literally helping them negotiate the best deals for themselves on major technology purchases, and we help them manage, mitigate and remediate risk. And in today's world, where we're moving really rapidly, it's pretty chaotic and there's a lot of risk, our services are really invaluable. From a quant perspective, last year, we did about $6.5 billion in revenue. We are a free cash flow machine. We consistently generate free cash flow well in excess of net income.

Our recurring revenue business, which is our insights business, has about $5.3 billion of annualized contract value. And over the last 10 years, we've delivered compound annual growth rate to that CV base of about 12%. And here, you can see some of those stats, contract value on the top and free cash flow on the bottom. I would note the bulk of both of the performance is organic. There have been a few acquisitions, you'll note the step-up from 2016 to 2017 on contract value was 1 large transformative acquisition that we did in 2017, where we acquired a company called CEB. Otherwise, the bulk of what you're looking at is purely organic growth.

So we offer what we consider to be a significantly differentiated value to our clients. And here, these are sort of the hallmarks of what we deliver in broad terms, and we'll get into a little bit more detail around how we do it for each of the different constituencies that we serve. I think the #1 most important thing that we offer that is very, very hard to replicate is our whole brand is based on being independent and being objective. And that means that we don't say you should do X, Y or Z. We say -- based on being paid or who's a big client or what have you, we base it on what is the best answer for your specific situation.

You may know us for our Magic Quadrants, which is probably 1 of our best known, most popular content types. Magic Quadrants are a key tool in just about every technology purchase decision that gets made out in the world today. And clients rely on that because of that independence and objectivity. Second big thing is really the breadth and depth of the insights that we create for people. If you think about the world of technology as an example, you would be hard-pressed to come up with a topic in technology that we don't cover, that we don't have dozens of experts on that we don't go really, really deep on. And so people's priorities change. The market changes, dynamics change. And because of our breadth and depth, we're actually able to take that journey with our clients and actually help them navigate that journey and sometimes even define that journey for them as well.

Obviously, we've been doing this for a long time. And so our brand reputation is incredibly strong. Boards know us, C-suite CEOs know us. We're in sort of every technology, S1, you could imagine or every pitchbook, et cetera. And that's because of the reputation that we have around providing independent and objective advice to help our clients achieve their mission-critical priorities. A lot of what we have in the sort of the foundation for everything we do is a huge amount, terabytes and terabytes and terabytes of proprietary data and information that does not exist outside of Gartner's firewall. And this moat, if you will, is really valuable to us and even more valuable to our clients as we help them execute on their mission-critical priority journeys.

On top of that, because we have such a huge client base, think 80,000, 90,000 operating executives around the world who are registered license users of Gartner, we get the network effect of talking to them on a daily basis, gauging what their interactions are on gartner.com or a mobile application, looking at what questions they're asking our language model behind the firewall on gartner.com, what conferences they're going to, what sessions they're attending, what their analyst inquiries are on what topics what questions, et cetera. And we're able to actually repackage all of that, turn it into proprietary data and information and continue to provide great value to our clients. And then lastly, one of the things we pride ourselves on is execution. And we've been on this journey for a long time. Our CEO, joined the company in 2004 and basically led a very significant turnaround of the company. And it didn't happen by accident.

It happened because we studied everything, we analyze everything. We figure out what works and what doesn't, and then we execute the heck out of the things that work and evolve as the world changes. I'll spend a minute here on the value prop side because I think this is really, really important. And so if you start in the upper left quadrant on the client profile. As I mentioned earlier, we are serving senior operating executives across the entire C-suite, across basically every major enterprise function. And I think what's really interesting about our market opportunity and sort of our pathway for growth going forward is we are size agnostic. We sell to the largest companies in the world down to, as I mentioned, pre-revenue technology companies.

We are industry-agnostic. We sell to energy and utilities companies, financial services companies, public sector companies, not-for-profit organizations, et cetera, et cetera. and we're geography agnostic. We do business in about 90 countries around the world. The reason why we have that breadth of market opportunity is because regardless of where you are or what size you are, you're using technology to run your business. You have a CFO, you have an HR leader, et cetera, et cetera. And so a lot of companies in our space or around our space tend to be very vertical oriented or vertical specific. We don't have that challenge. We're actually able to sell in across the world, all size companies across every industry.

When you think about the C-level executives that we serve, every one of them has a handful of strategic priorities that are make or break for them, their organization or their overall enterprise. And we help them on those major priorities. And the interesting thing is those priorities can change on a dime given the situation. And when you subscribe to a Gartner license, you don't have to buy anything different if your priorities change. You just change your priorities and we go along with you. And that's really where the breadth of our offerings really comes into value. And the other thing I mentioned is we target the top of the org chart in each organization that we serve.

So we are first going after the C level, top of the box in each function. So the Chief Information Officer, the Chief Financial Officer, the Chief Supply Chain Officer. And usually, their direct reports. So in finance, that would be the Head of Financial Planning and Analysis, the Controller, the Head of Investor Relations, et cetera. And in larger organizations, maybe 1 or 2 levels below that. But generally speaking, we are laser-focused on the top of the org chart, C-level and C-level direct reports. If you move over to the right, top right, we talked a bit about this. But our objective unbiased insights really set us apart from what people can get for free, what people could get on the Internet 10 years ago, what people can get from large language models today.

It's the human intelligence, the 2,400 experts that we have on our payroll or former practitioners who go really deep on every domain you could imagine. All the proprietary data that comes as a result of our 90,000 licensed users in every interaction that they have in addition to significant amounts of proprietary market research, primary market research that we do, We do about 0.5 million expert inquiries per year, which are all recorded, transcribed, become part of that proprietary database. We do more than 20,000 vendor briefings per year, which are all recorded, transcribed, become a part of that proprietary database, and you can't get that anywhere else. It's all behind the Gartner firewall.

Moving down around the circle to the bottom right. In terms of the client value, and I think this is, to me, is super important. What we're able to do because we know what role you're in, we know the corporate graphics of the enterprise that you work for, how big you are in industry, et cetera. And because you tell us what your most important priorities are, we are able to proactively push insights to you before you even think you need them. And so oftentimes, we'll get questions around, well, is Gartner a question-and-answer engine, absolutely not, right? Do we have that functionality within gartner.com? We do. But the primary way that clients interact with us is not by going to gartner.com and typing a question, it is by the proactive pushing we're doing that triggers them to say, I need to click on that and learn. They come in and then they go through and interact with all of our other assets, really, really, really important.

Most of our services come with what we call analyst inquiry. That is the ability to talk to an expert on an unlimited basis in 30-minute or 45-minute increments, so you can go deeper, get context around your situation, et cetera. We also have significant online and in-person peer networking opportunities. We have a wonderful conferences business where basically, the magic of Gartner comes to life for our clients. They are user-focused, content-driven, insight-driven conferences, and we deliver about 70 of them around the world. Obviously, we have our own Gen AI tool that sits on the corpus of information. That sits behind the firewall. We have workflow tools, benchmarking tools, et cetera, et cetera. And then on the bottom left, you can see some of the examples around the ways that we can help people or traditional mission-critical priorities.

Again, important to understand that our clients are interacting with us in a variety of different ways. It's not just 1 way. And so yes, they read insights. And we are, as I mentioned, proactively pushing them to them or they are discovering them on gartner.com or a mobile application, but equally as important and all part of the Gartner value are connecting with peers, using our tools, going to our conferences. And we actually have a service team or teams that support you along your mission-critical priority, journeys as well. And then the other thing, and again, I think it is a bit underappreciated and it's on us that it's underappreciated, not on you all. But we help our clients on these journeys in a variety of different ways.

And so one is as an operating executive, you don't know what you don't know. And because we have experts across the spectrum and because we're interacting with our clients on a daily basis, we can help identify those unknown unknowns or blind spots before it comes back to hurt you. Second element is we help you see around corners. You don't know what things may be lurking in those corners, if you decide to go with 1 different technology or choose 1 approach on cybersecurity because we see so many things, we're actually able to help people see around those quarters and -- corners and really mitigate and minimize risk.

Third thing is there is so much information available in the public domain, but a lot of it isn't really helpful for you or there are critical gaps. We fill in those critical gaps for our clients to make sure that they are making the best informed decisions around those journeys and accomplishing their mission-critical priorities. And then the last piece is like we are charting the future. we're looking out several years, and we're helping our clients make sure that the planning they're doing today fits within the realm or the -- within the guidance or guardrails of what the future is going to look like. And again, as I mentioned earlier, and I can't underscore this enough, that's why there's an exclamation point at the end of it, we're doing it proactively. We're not waiting for clients to come to us and ask us questions.

We are actually proactively pushing our most important insights, most relevant insights at the right time to our clients so that they can actually, again, know the unknowns, avoid -- see around corners rather, fill in gaps and understand how it all fits into the future of what they're trying to do for their enterprise. And again, here are some examples. This one is for CIOs specifically, and again, we are doing this proactively, understanding what's happening across the AI landscape and how do you scale your AI capabilities internally. How do you protect yourself in a world of large language models and AI? How do you leverage data so that you can build scalable, integrated fundamentals for your organization to make better decisions and drive the right outcomes for your business.

We help them manage spending and risk. This is actually an underappreciated asset, I think we have. We actually help our clients with a service we call proposal reviews. It's an AI-driven service where we have an AI tool that ingests proposals and we can help our clients ensure they are getting best pricing, best terms and they're actually buying the right stuff. And again, none of that information exists outside of our firewall. And then obviously, talent is a big thing. It always is a big thing. It's probably even more relevant today, especially in a new AI world, helping our clients figure out how do you develop, how do you attract, how do you retain the right talent so that you can be successful into the future.

We have 3 businesses. We are an insights company. That is the fundamental foundational element of our business. It represents 81% of our revenues, probably 90% of our gross contribution margin. And if you did a sum of the parts analysis, probably 95% or more of our overall value. Our Insights business is a recurring revenue business with high renewal rates, selling multiyear contracts predominantly. And again, this is where we help our clients across every major enterprise function around the world, across every industry. Our other 2 businesses are great businesses, but they are there to catalyze, augment and complement the Insights business. We're not in the conferences business because it's a great business. We're in the conferences business because it drives incremental value for our Insights business. and the same with our consulting businesses.

So our Conferences business, which in 2025, represented about 10% of total revenue. We have 2 conference offerings, our destination conferences, which are multi-day conferences, where people travel in to experience our insights, our experts, network with peers, and we actually have a show floor element as well where the technology vendors come and showcase their wares. Some of you may have come to our flagship conference, which is IT Symposium in Orlando, where we have 8,000-ish IT executives come together for 4 days of immersive learning exploration, peer networking and meeting with vendors. It is so valuable. We know that when licensed users attend our conferences, they renew at higher rates. And we know that when we have new business opportunities at our conferences, we close those at higher rates.

And so again, Conferences is a great business, but it exists to catalyze and complement our Insights business. And then we have a Consulting business. Again, a wonderful business because our Insights clients, our largest Insights clients want our help on consulting type projects. And so we only do consulting for our largest clients. We only do it in North America, Western Europe and Japan. But we're in this business because a lot of times, our largest clients want arms and legs on the ground to help them with some of their thorniest IT problems. We generally focus on large program management, IT strategy, cost optimization and things of that nature.

We don't do implementations. We don't do integrations because that would potentially tarnish our independence and objectivity. But again, we're in these 2 businesses, not because they're great stand-alone businesses, we're in them because they complement and catalyze our Insights business. The last few quarters, we've talked a bit on each earnings call about the transformation we're undergoing for our Insights business. And so as I mentioned, we are an insights company. That is what we do. That is the foundation of everything we do. And we are transforming the business along 4 major initiatives.

So one, which we call impact is making sure our insights are on the topics that matter most. And the way we were able to do that, and we talked about this on some past earnings calls, we've actually developed an AI-driven neural network that by leveraging all the proprietary data sources, we're actually able to sense and forecast where demand is going to be and actually make sure we're creating insights on that. Historically, it was a little bit of art and science around what we wrote to and what topics we focused on. Now it is scientific and it's working wonderfully because we're absolutely staying ahead of the curve on what's most important to our clients.

Second element is volume. All of the elements of our value proposition are important, but the place where our clients interact with us most is through our insights. And so we want to make sure that we are creating the right amount of insights on the right topics at the right time for our clients to consume. And we've been on a mission to increase the volume of insights that we are creating. And again, we're doing it on the high-impact stuff as well by leveraging that neural network I just mentioned.

Third element is timeliness. The world is moving at a rapid rate. You all know it, we all know it, et cetera. And so we need to make sure that we're not relying on old processes that take longer and have more bureaucracy, we're actually eliminating a lot of bureaucracy and getting things out much more quickly. So if one of the frontier model companies comes out with a new offering. We have a note on it and insights on it and a position on it within 24 hours. And we're going to keep doing that because that's the way the world is moving, and we need to make sure our clients have a Gartner perspective within 24 hours of major news and major announcements.

And then the last element of it is the user experience, which is primarily our digital experience, which is through the gartner.com platform or through the Gartner mobile application. And so we're making sure that we continually improve the experience so that our clients can easily and efficiently and effectively connect with the insights at the right times.

So as I mentioned earlier, we'll spend a little bit on sort of how we go to market. So when we target an enterprise, we are actually targeting individuals within the enterprise. And as I mentioned earlier, we start at the top of the org chart. So we are going after the C level. And again, it could be the Chief Information Officer, it could be the Chief Financial Officer. It's all of those things for us. And so we target them and when they are a happy client, we're then able to expand down below to their teams. And so if you think about the strategy there, it's really have top of the org chart advocacy so that we can sell deeper into the organization.

Most of our deals on initial deals actually are typically a C-level client and 1 or 2 of his or her direct reports. But then we have the opportunity to continue to expand that going forward. Again, we're selling on an individual license user basis. Our average install is 5 or 6 licenses for enterprise. So we don't -- we're not trying to go broad. We are trying to target the top of the org chart and the top of the org charts' direct reports and in larger organizations, maybe 1 or 2 levels down from that. And we're going to market through distinct channels. We talk about GTS and GBS, but it's actually broader than that. And so here, you've got some stats on GTS versus GBS. So GTS is our traditional Gartner business, historically, heritage Gartner business, which is about $4 billion in contract value today. about 3/4 of our total CV.

And you can see we've got about 3,600 direct frontline sellers in that space doing business with about 11,000 enterprises. GBS, which was created after the acquisition of CEB, we report it as 1 thing. But in reality, it's several different channels underneath it because what we have found is HR leaders are different and make decisions separately and uniquely from finance leaders, from supply chain leaders. And so within GBS, we actually have a supply chain-focused channel that only calls on supply chain leaders and their teams, a marketing channel, an HR channel and so on and so on. They are on average. Again, we've got 7 or 8 major functions within GBS and about $1.3 billion worth of contract value.

So roughly $200 million per function. And there's no reason from a market opportunity perspective, that each of those functions can't be a $1 billion business. or a $3 billion business or even the same size of our IT business. Of the functions within GBS, supply chain, HR and finance are our 3 largest within the GBS business. And then as we think about managing the business from a top line growth perspective and a bottom line growth perspective, we've committed to growing the business, growing the top line and modestly expanding margins each and every year going forward. And you can see over the last 10 years, what that looks like, with 12% top line growth and 15% EBITDA growth. And obviously, implied in there is a pretty significant margin expansion from where we were back in 2015.

And then on the right, you can kind of see, roughly speaking, how our cost base kind of splits up, right? And so as we think about how we're going to generate margin expansion going forward, one, as insights becomes bigger and bigger, we get gross margin leverage because it is our highest margin business with the highest incremental margins. So as Insights continues to grow faster than Conferences or Consulting, there's just inherent gross margin leverage even if we don't get any specific gross margin leverage within the Insights business. And then within SG&A, as you can see, the bulk of it is sales. And remember, we're selling an intangible. And so we need to make sure we've got the appropriate number of sellers out there preaching the value proposition of Gartner and bringing new clients into the enterprise and also retaining our $5.3 billion book of business that is our CV.

And so as we think about it, the way our sort of guardrails work around investment is G&A should grow slower than revenue, and so there's gross margin leverage there. And sales should grow about in line with revenue. So think of sales cost as a percent of revenue as being roughly flat. And so the combination of gross margin leverage, G&A leverage, sales being roughly flat should give us a modest margin expansion going forward from where we are today. And then lastly, our business model structurally is engineered to generate strong -- very strong free cash flow. And you can see the elements of it, obviously, recurring revenue business with high renewal rates and high contribution margins, particularly on our Insights business we invoice upfront.

So we sell an annual contract. We book it, we send an invoice out right away. We collect it 30 to 45 days later, and we're recognizing the revenue over a 12-month period. And so we've got this negative working capital dynamic that allows us to generate free cash flow well in excess of net income. We're obviously not building factories. And so we don't have to spend a ton of money on CapEx, think roughly 2% or less of revenue. And within our sort of operating structure of modest margin expansion, we can actually reinvest in the areas we need to. And when you think about what do we do with all that free cash flow then, we do tuck-in M&A or we do share repurchases. And over the last several years, the bias has clearly been towards share repurchases.

And so you can see on the chart on the right, just the amount of money that we've put to work on behalf of our shareholders, largely by leveraging our free cash flow, a little bit of incremental debt there, not much, really just leveraging our free cash flow generation capabilities. to significantly reduce our share count. You can see the stats there. In the first quarter, just as an example, we bought back about a little more than $500 million, reduced our share count net by 4% in the quarter. And we entered the year with about $2 billion worth of "dry powder" through a combination of excess balance sheet cash and our free cash flow generation forecast for this year.

And so this is a great model. And again, we think that we can -- will accelerate our growth rate from a top line perspective, EBITDA will grow a little bit faster than that, continue to generate strong amounts of free cash flow so that earnings per share, free cash flow per share, however you want to management -- however you want to measure it, grows at an even faster rate than revenue. Thanks and we'll meet for our breakout in a moment.

Thank you. And yes, Maher is the breakout. Invite all of you to join us there. Appreciate you being here.

Thank you, everyone.

Good morning, everyone. Welcome to Gartner's First Quarter 2026 Earnings Call. I am David Cohen, SVP of Investor Relations. [Operator Instructions] After comments by Gene Hall, Gartner's Chairman and Chief Executive Officer; and Craig Safian, Gartner's Chief Financial Officer, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

This call will include a discussion of first quarter 2026 financial results and Gartner's outlook for 2026 as disclosed in today's earnings release and earnings supplement both posted to our website, investor.gartner.com.

On the call, unless stated otherwise, all references to revenue are for adjusted revenue, and all references to EBITDA are for adjusted EBITDA, in each case, excluding the divested operation and with the adjustments as described in our earnings release and supplement. Our contract values and associated growth rates we discuss are based on 2026 foreign exchange rates. All growth rates in Gene's comments are FX neutral, unless stated otherwise. All references to share counts are for fully diluted weighted average share counts, unless stated otherwise.

Reconciliations for all non-GAAP numbers we use are available in the Investor Relations section of the gartner.com website. As set forth in more detail in today's earnings release, certain statements made on this call may constitute forward-looking statements. Forward-looking statements confined materially from actual results and are subject to a number of risks and uncertainties, including those contained in the company's 2025 annual report on Form 10-K and quarterly reports on Form 10-Q as well as in other filings with the SEC. I encourage all of you to review the risk factors listed in these documents.

Now I will turn the call over to Gartner's Chairman and Chief Executive Officer, Gene Hall.

Good morning. Thanks for joining us today. First quarter insights, revenue, EBITDA, adjusted EPS and free cash flow were ahead of expectations. New business with enterprise leaders was strong in the first 2 months of the quarter. Due to changes in the geopolitical environment, client decisions slowed somewhat in March. Year-over-year contract value growth accelerated in the first quarter. We were agile in managing expenses, and we continue to deliver unparalleled value to our clients.

Gartner's strategy is to guide executives on their journeys to achieve their mission-critical priorities. Our clients are the senior most executives and their teams who lead every major enterprise function. For example, Chief Information Officers and Senior IT leaders, Chief Supply Chain Officers and Heads of Logistics, Chief Financial Officers and Corporate Controllers and more. These roles are enduring regardless of change in the world.

The executives who lead these roles will always have priorities that are mission critical to the success of their enterprise, their functions and their personal careers. Priorities that are mission-critical tend to be long, complex journeys. They take time and effort to achieve. Executives want and need help. In today's environment, most executives face information overload. It could be challenging to differentiate authoritative sources from others. Trust is at a premium.

Gartner is the best, most trusted source for the help executives need to achieve success. We proactively deliver insights that guide smarter decisions and stronger outcomes on mission-critical priorities. Gartner insights are derived from a vast pool of highly proprietary data. Every year, we hold more than 0.5 million 2-way conversations with more than 80,000 executives across every major function and in every industry. We conduct more than 27,000 briefings with the executives from technology providers. We also leverage data from proprietary surveys, tools, models, benchmarks and more. This gives us a deep understanding of what executives care about most, what's working and what isn't.

Our insights are independent and objective. They reflect the latest information and situations our clients are experiencing. They're continually updated and they're available exclusively from Gartner. A large part of our value comes from helping clients see around corners. We help leaders understand issues and approaches they're often not aware of. We help them identify blind spots, prioritize issues and avoid costly mistakes. Our insights are forward-looking. We guide clients on how the world is likely to change and what they should do to thrive in uncertain environments.

We deliver unparalleled client value through both digital and human interactions. Clients can access our written insights, budget quadrants, pipe cycles, critical capabilities, ignition guides, toolkits for procurement and governance and many more.

In addition, through inquiry, clients can tap into the deep expertise of our world-class analysts that goes beyond what's in our written insights. They can get personalized support from experienced practitioners. Through our conferences, clients can interact in person with analysts, peers and technology providers. They can validate decisions through the Gartner Pure community, which has more than 100,000 executives from nearly every enterprise function. And of course, they can use AskGartner to go even deeper into specific topics.

No one else does what we do at our scope and scale. Retention is foundational to our success. Clients who engage frequently with our insights, receive greater value and retain at higher rates. To support more frequent client engagement, we've been transforming our business and technology insights organization and processes. I covered the dimensions of this transformation on last quarter's earnings call. They are impact, volume, timeliness and user experience. Today, I'll give you an update on how we're doing. We measure progress in a number of ways. I'll highlight just a few examples for simplicity's sake. Starting with impact. Our objective is to ensure insights are always on the topics our clients care about most right now. We've increased the number of high-impact documents by 22%.

The second dimension is volume. The number of documents in our insights library is up 19%. The third dimension is timeliness. With the accelerating rate of change in the world, we've introduced insights that are published the same day important events occur. The number of these documents has more than doubled. A recent example includes recommendations for heads of software engineering in response to the dramatic change in the security landscape posed by Anthropixs Mythos. And of course, we continue to make improvements on the user experience. For example, we've added the ability to create downloadable PowerPoint presentations directly from within AskGartner. Clients can ask questions in 25 languages, and we continue to integrate additional proprietary data sources. The programs we have underway are driving increased client engagement, which should result in higher retention and additional new business.

AI continues to be one of the most requested topics across all the roles we serve. Gartner sits at the nexus of CIOs and IT organizations, business leaders and AI technology providers. This gives us a full proprietary perspective that includes all the major players. We also have comprehensive independent and objective guidance on all aspects of AI, strategy, ROI, ethics and governance, workforce readiness and more. We cover the full range of issues leaders need to address to be successful with AI. And we are world-class users of AI internally. No one is more capable or better positioned to guide leaders along their AI journeys than Gartner.

Our people drive our success. I just returned from one of our sales recognition events, where I had the opportunity to spend time with hundreds of our most successful salespeople. They continue to demonstrate unwavering dedication to their clients, and are incredibly excited at the future of our business.

In closing, Gartner has an unparalleled and enduring value proposition. We're transforming our business and technology insights organization and processes to deliver even more client value. Clients who engage frequently with our insights receive greater value and retain at higher rates. Gartner is the best source for clients looking to achieve success on their AI journeys, and our teams are incredibly optimistic about our future.

Looking ahead to the rest of the year, we expect contract value will accelerate. We will continue to drive strong free cash flow that we can put to use to drive incremental shareholder value, and we expect to deliver adjusted EPS on a compound annual basis above 12% over the next 3 years.

With that, I'll hand the call over to our Chief Financial Officer, Craig Safian.

Thank you, Gene, and good morning. First quarter contract value, or CV, grew 1% year-over-year. This was an acceleration from the fourth quarter. Insights revenue, EBITDA, adjusted EPS and free cash flow in the first quarter were better than expected. We are increasing our EBITDA, adjusted EPS and free cash flow guidance for the full year. In the first quarter, we reduced our share count by about 4%, buying back $535 million of stock. And we expect to generate significant free cash flow and have fewer shares outstanding over the course of the next several years.

First quarter revenue was $1.5 billion, up 2% year-over-year as reported and down 1% FX neutral. In addition, total contribution margin was 72%, EBITDA was $395 million, up 6% as reported and 1% FX neutral. Adjusted EPS was $3.32, up 11% from Q1 of last year. And free cash flow was $371 million, up 29% year-over-year. Rolling 4-quarter return on invested capital was about 27%.

Insights revenue in the quarter grew 3% year-over-year as reported and was about flat FX neutral. First quarter Insights contribution margin was 78%, up about 120 basis points versus last year. Contract value was $5.3 billion at the end of the first quarter, up 1% versus the prior year and an acceleration from year-end. Excluding the U.S. federal government, CV growth was 3.5%.

At March 31, we had approximately $114 million of U.S. Federal CV. Q1 is normally a higher-than-average renewal quarter and our seasonally lowest new business quarter. The second quarter is a smaller renewal quarter and a larger new business quarter than Q1. We had more than $200 million in new business in the first quarter as there continues to be considerable interest in Gartner's proprietary unbiased insights. As you recall, new business dollars increase each quarter as we move through the year.

Driving engagement is critically important to retention. As Gene discussed, through both digital and human interactions, we understand our clients' mission-critical priorities, and we are proactive in helping them to address those priorities. This ongoing engagement helps drive client success and strong retention. We've increased license user engagement levels over time. In each month of the first quarter, they are higher than they've been in any of the same months over the past 3 years with consistent engagement improvements in both digital and human interactions.

Derived from analyzing monthly active users, overall engagement in Q1 was up over 170 basis points compared to the prior year quarter. Digital engagement improved by more than 160 basis points year-over-year. Human interactions increased more than 80 basis points year-over-year through improvements in the usage of analyst inquiries. Global Technology Sales contract value was $4 billion at the end of the first quarter, up versus the prior year. GTS CV for both enterprise leaders and tech vendors increased by more than 3% year-over-year ex Fed. Wallet retention for GTS was 97% for the quarter. Ex Fed, wallet retention was 99%. GTS new business was down 4% compared to last year and down about 3% ex Fed.

As Gene noted, new business was tracking ahead of the prior year through February and was affected a bit in March due to the geopolitical environment. Global Business Sales contract value was $1.3 billion at the end of the first quarter, up 3% year-over-year. Ex Fed, GBS CV grew 5%. Growth was led by the sales, supply chain and legal practices.

Wallet retention for GBS was 98% for the quarter. GBS new business was down 2% compared to last year. Again, as Gene noted, new business was tracking very favorably through February with some client decision-making slowing down in March. Conferences revenue for the first quarter was $78 million. On a same conference basis, revenue growth was around 9% FX neutral. Contribution margin was 39%. We held 10 destination conferences in the first quarter as planned.

Q1 consulting revenue was $119 million compared with $140 million in the year ago period. Consulting contribution margin was 31% in Q1. Labor-based revenue was $90 million. Backlog at March 31 was $201 million. In contract optimization, we had $147 million of revenue on an LTM basis, about flat compared with Q1 of 2025.

On a 2-year CAGR basis, revenue was up about [ 15%. ] As you know, our contract optimization revenue is highly variable.

EBITDA for the first quarter was $395 million, up 6% from last year as reported and 1% FX neutral. We outperformed expectations in the first quarter through effective expense management and a prudent approach to guidance. Adjusted EPS in Q1 was $3.32, up 11% compared to Q1 last year. We had 70 million shares outstanding in the first quarter. This is an improvement of about 8 million shares or approximately 10% year-over-year. We exited the first quarter with 68 million shares on an unweighted basis.

Free cash flow remained strong in the first quarter, up 29% year-over-year. Free cash flow on a rolling 4-quarter basis was $1.3 billion. Adjusting for several items detailed in the earnings supplement, free cash flow was 20% of reported revenue, 79% of adjusted EBITDA and 145% of GAAP net income.

At the end of the first quarter, we had about $1.7 billion of cash. This includes about $500 million for running the business and around $1.2 billion available to deploy on behalf of shareholders.

Our March 31 debt balance was about $3 billion. Our reported gross debt to trailing 12-month EBITDA was under 2x.

We repurchased $535 million of stock during the first quarter, reducing our share count by more than 4%. Last week, the Board increased the buyback authorization to about $1.2 billion. We expect the Board will refresh the amount as needed.

We are updating our full year guidance to reflect recent performance and trends, including FX. For Insights revenue in 2026, our guidance reflects Q1 contract value. The revenue outlook is operationally unchanged as we had modeled in the NCVI performance we saw in the quarter. We increased the outlook for FX. For conferences, we are basing our guidance on the 56 in-person destination conferences we have planned for 2026. We have good visibility into current year revenue with the majority of what we've guided already under contract.

For consulting, we have reflected a prudent view for the balance of the year based on the Q1 results. Contract optimization has had several very strong years and the business remains highly variable. For 2026, we expect consolidated revenue at or above $6.405 billion, which is updated from last quarter and is FX-neutral growth of 1%.

We now expect full year EBITDA at or above $1.545 billion, up $30 million from our prior guidance. This reflects full year margins at or above 24.1%, also up from last quarter. We expect 2026 adjusted EPS at or above $13.25, an increase from last quarter that primarily reflects the increase in the EBITDA outlook and a lower share count.

For 2026, we expect free cash flow at or above $1.16 billion. This reflects a conversion from GAAP net income of 137%. Our guidance is based on 69 million fully diluted weighted average shares outstanding, which incorporates the repurchases made through the end of the first quarter.

We exited Q1 with about 68 million fully diluted shares.

For Q2, we expect EBITDA at or above $425 million. Our profit and cash flow results in Q1 were ahead of expectations, and we've increased the EBITDA, adjusted EPS and free cash flow guidance for 2026.

Contract value ex Fed grew 3.5% in the quarter and total CV growth improved from the fourth quarter of 2025. We are positioned to accelerate CV growth in 2026, and we expect to deliver adjusted EPS on a compound basis above 12% over the next 3 years.

We'll also deploy our capital on stock 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?

[Operator Instructions] First question comes from the line of Jeff Mueller with Baird.

Yes. So it makes sense that the selling environment would be tougher in March. Can you give any perspective on if that has started to convert in April, the things that kind of slipped out of March by some indications, maybe the environment is getting a little bit better. And then just any differentiation on new business sales trends between new logo versus upselling in the base, which I think had been lagging?

Okay. Jeff, it's Gene. I'll get started. So in terms of -- again, as I said in my prepared remarks, we had really good January and February, March decision slowed down. By and large, clients and prospects told us, we still want to buy from you, but we can't make a decision today. To your point, as a role to April, we're seeing many of those deals actually closed where clients delayed in March, but actually be came through and closed in April.

And then Jeff, on the mix between new logo and existing client growth, the what we saw through the first 2 months where we did see nice year-over-year growth that was broad-based across both new logo and with existing clients. And then with the challenging -- more challenging environment in March, it was also broad-based across new logo and existing clients. And so as we continue to see some of those things, as Gene just mentioned, come through, it's a mix of new logo growth and growth with existing accounts.

Got it. And then on -- good to hear overall engagement of both in person and digital. Just anything you can give us on the evolution of AskGartner, either usage statistics or any meaningful changes in, I guess, user experience, either from something new with the foundational models that underpin it or any adjustments that you've been making to it?

Yes. So as Gartner is just one part of our value proposition. Obviously, there's a whole lot of other pieces of Gartner like people buy. We have a start and it's important we will make it competitive. The client usage continues to increase and the amount of repeat client usage continues to increase. And so we're seeing increasing engagement with AskGartner. We do a new release every 2 weeks. Clients -- we have a telesales you want a button on there and they do, plus we do market research. And every 2 weeks, we have new releases. As Craig and I mentioned in our remarks, we've added sort of support for 25 languages. You can now create PowerPoints directly from the from with AskGartner, and there's all series of other kinds of upgrades. And we're upgrading every 2 weeks, so it's too numerous to actually talk about over the course of the quarter.

Yes. And Jeff, it's a common -- those upgrades are a combination of feature enhancements and incremental proprietary data that the tool is going from as well. And so we are very quickly rolling out new features, as Gene mentioned, every 2 weeks, and we'll continue to do that as there's demand for it, as the models improve and as our clients give us feedback on what they want from the tool.

Our next question is from Faiza Alwy with Deutsche Bank.

Yes. I wanted to follow up on the geopolitics comment. And I'm curious if you could give us some regional color. Did you see slowing sort of across the board? Or if there was any differentiation regionally? I'm assuming maybe you saw some slower decision-making outside the U.S., but just would love some additional color there.

So there was a slowdown across the board by by industry. It was worse in some places than others. So if you could imagine, with airlines and transportation companies, it was worse in financial institutions, for example. And. It was worse in the country's directly impact such as the Gulf Cooperation Council countries than it was in places that were less impacted like in the U.S.

Okay. Understood. And then I'm curious if you're reevaluating any pricing strategies, maybe just thinking about the overall price point just as virtually every company is trying to figure out AI, but maybe they can't afford your services at -- or your subscription at the price point that it is. So just curious how you're thinking about any changes around pricing.

We talk to our clients a lot about price and understand how they think about pricing, weather we're priced appropriately or not. And the feedback we get from our clients today is that their pricing is very appropriate where they expect. They're very comfortable with it. We have different price points. So if a client -- we have our community guide the products was the highest price than our guided products and our advisory products and our reference products. And when clients have price sensitivity, we give them an option they can go for a different level of service. So same content with a different level of service with those, and that's what clients choose to do. As we look within each of those groups, we feel like we're priced at property. Again, we talk we bench work with clients to see if that's the case. We also look when clients say I'm not going to buy a price is a major issue. And price is not the issue, it's potentially, if they're not going to buy, the CFO said, we have to cut all expenses 50%. And so whether we're at 4 points or 8 points higher isn't tissue at all, it's kind of a broader cost cutting that organization is going through.

And Faiza, it's important to remember who we're targeting and focusing on from a go-to-market perspective and a strategy perspective, which is really the top of the org chart and each of the functions that we serve. And so again, we are going in and targeting the CIO, the Chief Information Officer or the CFO or the Chief Supply Chain Officer, et cetera, and their teams. And so we're starting at the top of the pyramid where there tends to be much less price sensitivity around those things. And again, we have, as Gene articulated, an architecture where if there is price sensitivity, there are offerings that we can provide to the clients if they're not willing to sign up for a guided product. They'll go to adviser product. If they're not willing to go with the adviser product to go with the reference pros and so on.

And the other thing to think about is that, it's a very small part of their budget. So even our smallest clients would have $100 million of revenue. And so individual executive likes to have a $10 million budget and their service card might be $100,000 out of that $10 million budget. So the -- whether it's $100,000 or $104,000 isn't big issue, it's about the value they had.

Our next question comes from the line of Andrew Nicholas with William Blair.

I wanted to ask on the U.S. federal government business, in particular. I think it was 250 basis point headwind in the quarter. Maybe a little bit more than I would have thought because I thought you had lapped most of that. Can you just level set for us where you sit in that kind of renewal cycle post kind of some of the government approach changes early last year? And maybe at what point would you expect that headwind to alleviate as we move through '26?

Andrew, it's Craig. On the U.S. Federal side, as we talked about through most of last year, the DOGE impacts, we really didn't start feeling them until March of last year. And so Jan and Feb were, let's just say, semi normal month from a selling environment perspective. And then when the DOGE activities kicked in, that was really March and April and then forward from there. And so I think as we roll into Q2, we really do start to then lap the significant challenges that we had there.

From a U.S. federal CV perspective, we exited Q1 with about $114 million worth of U.S. federal CV spread across GTS and GBS, the bulk of that actually in GBS -- GTS, I'm sorry, the bulk of that in GTS, I should say. What we saw from a renewal rate perspective in the quarter was obviously a significant improvement on a year-over-year basis. we are renewing a lot of business. We are writing new business, but we really do start to lap the significant challenges starting in Q2 with the U.S. Fed clients.

Perfect. Very helpful. And then for my follow-up, I just kind of want to go to the headcount growth. I think you had outlined low single-digit growth for GTS and in mid-singles for GBS as kind of your targets for this year. Is that still the case? And any color you could give us on the cadence of the slope of that ramp would be great.

Yes, Andrew. So the target still remain. You articulated them correctly. That is what we are gunning for over the course of the year. We typically do see a little bit of a step back in the numbers in Q1 just because we do a lot of our promotions in the first quarter from a frontline seller to manager. It does -- we try and get ahead of that from a hiring perspective, but it often does take a little bit of time to catch up on some of that hiring. As we noted, the hiring we're doing in 2026 is really about 2027 and 2028 and beyond. We've got ample capacity in 2026 to deliver on that CV acceleration that we've been talking about. The other note I'd mentioned is we are hiring more incremental new business developers than AEs. It's not one or the other, but we definitely have a bias towards hiring incremental BDs right now as opposed to hiring incremental account managers going forward. And that's baked into those year-end numbers you talked about, and that's all baked into our OpEx guide as well.

Our next question comes from Jason Haas with Wells Fargo.

I'm curious for the ex federal government CV, did that accelerate from the 3.5% that you reported for 1Q in April? And how are you expecting that to trend through the year? Do you expect an acceleration in ex federal government CV growth?

Jason, it's Craig. So we're not giving any stats on April yet. We've barely closed the books on that. So I can't quite comment on that. I think the answer on the CV trend is we expect the whole CV base to accelerate over the course of 2026 and then continuing onward, which would be a combo of the U.S. Fed recovery and then also the non-U.S. Fed base accelerating as well.

Okay. Great. And then do your pre-existing long-term targets still hold? Or are those no longer in place?

That's a great question. So there's no change to the medium-term objectives. I would say those objectives really do apply to a normal operating environment, and you can still find those medium-term objectives in our Gartner 101 presentation, which is on the Investor Relations site. I do think as we think about where we are today, and both Gene and I articulated this, we expect in the current environment for our CV growth to accelerate. We're committed to driving compound annual growth at or above 12% to our EPS number. We continue to have a great and very large addressable market and a compelling client value proposition. Those 2 things are unchanged. We've rebaselined the EBITDA margin now based on our updated guidance of 24.1%, and we would expect our margins moving forward over the medium term to expand from there. And then obviously, with the great free cash flow engine that we have, we expect to generate a significant amount of free cash flow. As CV growth accelerates, we'll get more towards the higher end of our typical conversion levels of net income to free cash flow or EBITDA to the free cash flow. And obviously, we'll have all that free cash flow to put to use on behalf of our shareholders as well.

Our next question, it comes from Surinder Thind with Jefferies.

When looking ahead, when we think about the acceleration in CV growth, any color there where you can maybe disaggregate the drivers? Is the expectation maybe a bit more new business development? Or should we expect wallet retention to continue to improve and maybe a bit more upsell at existing clients? And then maybe I assume it's also underpinned by just normalized annual price increases that are normally embedded.

The reason we're expecting CV to accelerate is, we're expecting -- so we're making a bunch of changes in visit we talked about. So Craig talked about how we're driving engagement, and we expect engagement to go up. And in fact, engagement has been rising just as Craig outlined. We expect that to continue because we've got a big focus on it. When we get more engagement, we expect that our retention will increase as well. And so our CV retention will increase with our increased engagement. In addition to that, we're making a bunch of changes in BTI and I articulated all the changes we're making. And we expect that's going to lead to more and better insights that again leads to even more engagement and also help support new business growth. And so as we look forward through the year, we expect that our new business growth and our retention both improving as we go through the year. Based on all the changes we're making and the leading indicators, which Craig and I talked about that indicates that these things are causing increased engagement with our clients, which ultimately should result in more more business, more retention and higher growth.

And Surinder, you should see that come through, obviously, in the CV growth rate but also in the lot retention number, which is the measure of net growth from clients that stay with us. And so the more that clients stay with us, the more new business opportunities we have with that. The more that they stay with us, the more opportunity we have to expand the relationship and so on and so on. So we would expect the CV acceleration to read through both, obviously, to the top line CV growth, but also on the [indiscernible] retention line as well as we will be selling more new business to existing clients over that time frame as well.

Got it. And then just on the management of costs, can you maybe provide a bit more color there just relative to your expectations versus just kind of normally being conservative when you initially guide, just any update where maybe there's a bit more benefits from even if it's AI or just other things that are going on and the opportunity for any potential structural change in the outlook for margins at this point? Or is it just one small step forward each quarter at this point?

Yes, it's a great question, Surinder. So as we look at the OpEx number, I'd say a couple of things. So 1 is we're obviously very focused on making sure that we're delivering on our commitments from both EBITDA profitability perspective and a free cash flow perspective, and we are tuning our OpEx model as we go. The second thing I'd say is we're very focused on making sure that we keep our run rates aligned with our CV growth expectations, which are essentially what drive future revenue growth. And again, we want to make sure that we not only deliver strong earnings and free cash flow in current year, but that we're setting ourselves up to continue to do that into the future.

Third thing I'd say is we are always focused on continuous innovation and continuous improvement and driving operational efficiencies through the business. we can leverage AI for some of that. We can leverage other technologies for other things. We can improve processes as well, and we will continue to do that. And then the fourth thing I'd say is we're doing all that while also making sure we're making investments that we believe will drive future medium- and long-term growth for us.

And so under the covers, we'll be investing in places and we may be harvesting benefits and efficiencies in other places so that we can reinvest in the places that we know drive value. So we know we need analysts in our business and technology insights business. We're not going to stop investing there. We know adding QBH drives long-term growth we're going to be adding there. It may mean that we are driving significant operational efficiencies in other areas, and we'll continue to do that so that we free up the appropriate resources to invest in the things that we believe will drive long-term growth.

Our next question comes from Josh Chan with UBS.

I guess, as we think about sort of the selling environment on a year-over-year basis, it's obvious that in Q1 it was worse than last year. But as we go into Q2, you lap Liberation Day in the prior year, et cetera. How do you think about the year-over-year selling environment comparison as we kind of go through the rest of the year?

So what I'd say, Josh, is it kind of depends on how the world evolves. As I sit here today, as I mentioned, a lot of the deals that clients in March said, let's wait and revisit this in a couple of weeks actually closed in April. In fact, one of the things that will an interesting is that a lot of these companies think airline shipping companies, other energy-intensive industries and geographies. And basically that normally a functional leader like a CIO, which have [indiscernible] decision, when times are tough, what will happen is I'll say we're going to escalate that maybe even the CEO depending on how have the decision with the company. And so we saw more of those kind of escalations. They got escalated, they said you the values there and then they closed. It just took longer to close. And so I think that what happens in the rest of the year is going to depend on kind of what the environment looks like.

The one thing I'd add, Josh, though, is we pride ourselves on adapting. And so yes, the environment is crazy and continues to remain a little bit chaotic, but we're making sure that our sales and our service people are armed with the right tools, contracts back up, et cetera, to be successful in any sort of environment. We'll see how the world evolves, but we're going to make sure that we keep -- we're going to make sure that sales and service from our perspective are armed to deliver value, highlight the value for prospects, continue to deliver the value for clients, et cetera, moving forward.

Yes. To build on Craig's point, one of the things that I talked about both the last and on this call is we made more change in the last year than we've ever opened Gartner in terms of increasing value to clients. And those -- the [indiscernible] speed farm is going to be tough going forward. And we want to make sure we're resilient in that environment. And I think what we're seeing here is that selling cycles are longer, but they're still buying. And so that's kind of what we saw happen in March. So again, January and February, actually, we had great very robust new business growth that is Greg and I talked about. Decisions then took longer starting March. And so I think there are good signs overall for what the selling environment, but it's probably going to take longer decision cycles if the environment continues to have the uncertainty in does today.

Sure. Sure. That makes a lot of sense. And I appreciate the color there. And then maybe on your EPS CAGR outlook, can you talk about the drivers behind that 12%? I mean, obviously, revenue growth, at least currently is not probably at that level, so you're going to need some margins or buybacks. Can you just talk about what contributes to that level of EPS growth?

Yes, Josh, happy to. So again, over a 3-year period, where our expectation is CV growth will reaccelerate, which will drive future revenue growth. As we noted earlier and have noted for a while, we're committed delivering strong margins and margin expansion over time as well. And then obviously, on top of that, we have significant capital to put to use on behalf of our shareholders. Over the last 12 months, I think we've bought back like $2.4 billion, $2.5 billion worth of stock, reducing the share count significantly. And obviously, our intention will be to continue to do that, and that's obviously, one of the bigger drivers to that EPS CAGR as well.

Our next question comes from Toni Kaplan with Morgan Stanley.

Gene, just a strategic question. A number of the other info services firms have been starting to use large LLM providers as like an additional distribution channel. And I know your business is different being more weighted towards advisory, but you still have proprietary data that people want. And so I was wondering if -- is there a sort of broader data distribution that you would consider? Or do you think that, that dilutes your value proposition too much because, obviously, a lot of the value isn't talking to the research analysts and the network and everything like that?

Yes. Toni, I think you're at the nail on the head, which is what clients rule out us for is for us to proactively go to them and say, given your mission-critical priorities, here's the things you should be worried about, things you may not have thought of, things that you might be surprised by. And so what they rely on us for is to be very proactive as opposed to wait and answer a question. So that's not our plan to work with us. That's not our value proposition. And then in addition to that, there's a big human component, and so we have our executive partners, which can function as advisers to our clients, with our analysts, which are world-class experts. And while they publish, obviously, a lot of content and insights, the kind of rule that we have, that's only like 5% of what they know that could be active and valuable. It's our -- when they do it an inquiry with our analysts, clients get access to that other 95% that actually isn't -- we have a vast content library, but again, that's only a portion of what our analysts actually know. And then we have our conferences that they go to which clients get to interact live, we have peer interactive. And so if you think about it, the -- that piece of it is just a small piece of our overall value proposition. And so we want to focus on what clients want from us the most value, which is a whole tell us what I'm not seeing, help you see around corners, tell how world is going to evolve so that I can be successful in this uncertain environment. And that doesn't really fit well with feeding into an LLM that is really answering questions, which is we have as Gartner. That's not the majority of what we do that's all my clients [indiscernible].

Yes. That makes sense. I wanted to shift to consulting. I know both the labor-based and contract optimization was down a bit year-over-year, and contract optimization can be volatile and the comp was tough. But on the labor base, any -- do you just attribute the slowdown there to just normal macro slowdown? You mentioned a lot that March was slower, or do you think that there's something structurally worse going on right now given AI?

Yes. Toni, I don't think if there's something structurally worse. And again, this is a different behavior than we saw in Q4. So it's not something that has been kind of a long-term thing. I think basically, it's what you said, which is the American environment changed a lot, and that affects both the -- it effective differently, both the labor part of the business as well as CFC -- FX CFC, because if a client was going to buy something, and they postpone that decision. We get paid when they buy something. And so with CFC, you had both a very tough comp, as Greg went through. In addition, if clients, and we saw this, say, "Hey, I was going to do that big software deal. I've decided to push the decision of for a month," that puts us getting paid off as well.

Our next question comes from the line of George Tong with Goldman Sachs.

I wanted to take a step back on CV performance. Can you provide more details on the reasons why CV growth is coming below historical levels in the high single, low double-digit range? Specifically, can you outline how much of the slower growth is due to tariff affected industries, government spending, the macro environment and other potential unnamed factors?

George. So I think; one, the first obvious headwind is the U.S. federal business, which we talked about in detail and is a 250-basis-point headwind in the quarter alone. That business, we believe, is rebaselined. Our current assumptions are for it to be flat in 2026 and grow from there going forward. And so that is a temporary headwind. Obviously, we've been dealing with it for since really March of last year, but that certainly remains the most dominant headwind that we have going forward, or that we have had that have impacted the results and should write itself going forward.

In terms of the other areas, I think it's a combination of -- the macro has been really, really, really challenging over the last several quarters and whether it's the DOGE impacts that started in March of last year, josh referred to Liberation Day, which I remember was April 2 of last year to lots of other geopolitical challenges over the course of the year to where we sit today. I think the short answer is, we fully expect our CV growth rate to accelerate over the course of 2026. As I mentioned earlier, we expect it to increase across the board. So yes, we expect the U.S. Fed growth rate improve as we lap some of the more challenging areas, but we also expect the non-U.S. Fed business to accelerate. That includes tariff affected and nontariff affected, that includes software companies and IT services companies, et cetera. And so I think from where we sit today, we expect CD growth to reaccelerate over the course of 2026. And again, we believe the combination of that CV growth reacceleration, our operating expense management, our ability to invest in the right areas that drive and support future growth will allow us to drive significant free cash flow and earnings per share growing at a 12% compound a growth rate.

Got it. That's helpful. And then following up on the CV growth expectations. So you noted acceleration over the course of the year. What are your CV growth expectations exiting the year? And do you expect the improvement to be relatively linear from 1Q?

So we don't guide to CV growth, George, and we're going to continue to not do that. What I can tell you is we expect to accelerate over the course of this year. I did note in my prepared remarks that Q1 happens to be a heavy renewal quarter and our smallest new business quarter. As we roll into Q2 and Q3, we see increasing levels of new business dollars, and we just have less CV that is up for renewal in those quarters. And so that certainly helps. CV though, is a rolling 4-quarter number. And so we expect to continue to see improvements across the year. And we don't believe that we're done at the end of this year. But right now, we're focused on making sure we're driving engagement, making sure we're delivering on all the transformations Gene outlined, and all those things should lead to CV growth accelerating over the course of this year. And again, that should benefit us as we roll forward in 2027 and beyond.

Our next question is from Jeff Silber with BMO Capital Markets.

You mentioned a couple of times your goal to have compounded adjusted EPS growth, I think, over -- at or above 12% over the next 3 years. What kind of headcount growth do you need to get there both from a sales force perspective and an analyst perspective?

Yes, Jeff. I mean, I think it's all baked into our ability to drive the margin to get the desired results that give us that 12% CAGR. Our operating model with QBH or sales headcount, is unchanged, so grow at roughly [ 300 ] bps slower than what we're growing or our expectation around CV growth. That framework still -- we're still operating with that framework going forward. And on the analyst side, it's really demand-driven. And because we've got such a good finger on the pulse of what our clients are most interested in, we're actually able to predict where that demand is and make sure that we've got the appropriate analyst levels and analyst count to handle that. And so it's not a specific number. And we'll do all that while also driving efficiency and improvement across the rest of the business. And so the combination of those three things is what gives us the [indiscernible] the operating result levers to get to that 12% EPS CAGR over time.

Okay. That's great. And just to clarify something, the base here that you're talking about, is that 2025 or 2026?

That base year is 2025. It's a great question. Thanks for clarifying that, Jeff.

And our next question is from Jasper Bibb with Truist Securities.

Again, I know you don't guide for CV, but I think you've mentioned on a couple of earlier questions that CV should reaccelerate those total and ex fed through the year and helpful context to around the seasonal payments of renewals and new business. I just wanted to clarify, like, do you think we see a reacceleration in the ex Fed CV growth number next quarter? Or maybe are we still a little bit further away from the acceleration in ex Fed CV?

Jasper, so all I'll tell you without getting into too many details is we expect the CV growth rate to accelerate over the course of the year. We're not going to get into the details of expectations by segment of business per quarter. We'll tell you all about that when we report our Q2 results. but the headline should be that we expect CV growth to accelerate.

Got it. And then maybe following up on the early pricing question. I think there was some speculation intra-quarter if sales teams have made offers to sign on below the normal $50,000 ASP for new LUs, I guess can you just clear up kind of in response to that, like if there's anything that's changed on your approach to pricing or offering discounts?

Yes. So we do not offer discounts. Our pricing strategy and focus and mechanics are unchanged. We put through our normal annual price increase on November 1 of last year. That has been in place since then. And we are -- despite -- well, of course, you may be hearing, I could assure you we are not -- there's no change in our discounting posture or philosophy.

And our next question comes from Scott Wurtzel with Wolfe Research.

Just one for me. Just wondering if you can talk a little bit about just the puts and takes on client versus wallet retention in the quarter with client retention ticking down a little bit, but wallet retention ticking up. Just wondering if there was any incremental, I guess, price realization or upsells that drove that expanding wallet retention will client ticked down?

Yes. Scott, great question. I think it's largely a function of those are both rolling 4 quarter numbers. In the first quarter, as I noted earlier, it's our smallest new business dollar quarter, which implies it's our smallest new business enterprise quarter as well. And so we added new enterprises there. But as always, there is a lot of churn within our small tech clients. That's -- it's improved over the last couple of years, but that's still the most significant impact on that client retention number. And because those are typically lower spending clients, does not have as big of an impact on the wallet retention number.

With wallet also, we are lapping some of the challenges from last year, but also we are holding on to more dollars than we have historical -- than we did last year as well. And so I think that's manifesting itself in that modest improvement in the wallet retention number as well.

And our next question is from Ashish Sabadra with RBC Capital Markets.

I just wanted to focus on the tech vendor conversation. I was wondering if you could provide any color on that front, how is that trending? And also, if you could talk about some of the challenges that software companies are facing, has that influence any of that conversation?

So on the tech vendor side, I think what we're seeing is consistent with what we saw in the last couple of quarters where our business with software companies and services companies is growing at high single-digit growth rate, and other elements of our tech vendor client universe are not performing as well, most notably, I'd say, hardware providers and telecom carriers, which we classify as part of that that tech community. But the bulk of our CV sits with software and services and the software and services business continues to grow at high single-digit growth rates.

That's very helpful color. And then on the quota-bearing headcount, I just wanted to follow up on the prior comment around hiring more incremental new business developers than account managers. How should we think about the overall QDH growth going forward, but also how do we think about that mix shift going forward and influence on productivity.

Yes, it's a great question. So again, it's not binary 1 or the other. We're obviously -- as we are successful with our BD and they sell more new business, we do need to hire account managers to catch that business, retain it and going forward. But what we've been doing is driving productivity and efficiency out of our account management teams by adding incremental clients to their territories. And again, we've studied this really intently to make sure that we're not going too far on any of those, and we feel really good about the productivity gains we've driven there. And what that does is free up incremental for us to invest in business developers. And when you think about the size of the addressable market opportunity, the fact that there are roughly 140,000 enterprises that we think to be clients of Gartner, and we're currently doing business with 14,000 of them, the way we capture that market -- that incremental market is really through business developer investment.

It's a slow shift in mix, though, because, yes, the bias is towards hiring incremental BDs, but it's not like a student body left or a student right. And so that mix will move moderately over time but we think it's the right combination of being able to manage, retain and grow the existing client base while having the right-sized engine to be the new logo addition and incremented growth going forward as well. So we think we've got the right mix there going forward, and we'll continue to update our investors and the investment community on that incremental investment and the mix of that investment going forward.

The vast majority of our sales force today is account executives. They do a lot of new business growth as well, and we expect that to continue. And even given with our accounts executives under the covers, we changed territories all the time. So if there's less demand in the U.S. federal government, then what we'll do is reduce territories there and move those over to places where there's higher demand. And so there's more change when under the covers to actually improve productivity as well.

And our last question comes from Wahid Amin with Bank of America.

Just one for me. On an earlier remark, you talked about sometimes clients and budgets are tight, maybe the selling environment is much longer than expected. How would you classify the customers that want to keep a Gartner subscription, but may consider down selling or using a different user experience? Are you seeing a huge influx of that?

It's a great question. So in all times, we have some clients that are upgrading some upgrading, there are some that are downgrading clients. Because while there's more concern today because of so much political things. Any time there's always clients, sometimes they are doing well and some that aren't. And so to your point, we often see clients that are doing really well, so they want to upgrade and get more value. They try it at lower price points and more value. Similarly, we often see clients say, "Hey, my CFO says cut half expenses, I won't keep Gartner, so let's go with the lower service level unless we still keep partner. Those things actually tend to balance out. And so we see about as many upgrades as downgrades, which is why we don't talk about it that much because it actually -- the 2 balance out almost exactly.

Ladies and gentlemen, this will conclude the Q&A session. I will pass it back to Gene Hall for closing comments.

Well, here's what I'd like to take away from today's discussion. Gartner has an unparalleled and enduring value proposition. We're the best, most trusted source for executives who want to succeed with their mission-critical priorities. We're transforming our business and technology insights organization processes to deliver even more client value. Clients engage ritually with our insights receive greater value and retain higher weights. Gartner is the best source for clients looking to achieve success upon their AI journeys. We are incredibly optimistic about our future. And looking ahead to the rest of the year, we expect contract value will accelerate.

We will continue to grow our strong free cash flow that we can put to use to drive incremental shareholder value. And we expect to deliver adjusted EPS on a compound annual basis above 12% over the next 3 years. Thanks for joining us today, and I look forward to updating you again next quarter.

And this concludes our conference. Thank you for participating, and you may now disconnect.

My name is Wahid Amin, and I'm part of the business and information services team here at BofA. This session will be on Gartner. I'm pleased to have David Cohen here, who runs Investor Relations at Gartner. We're going to structure this session as a fireside conversation, and then we'll field questions towards the end if time permits. So David, I appreciate you joining us today.

Thanks for having me. Thanks to everyone in the room and those of you who are listening on the webcast.

Awesome. So let's start off with a question that we're asking all information services companies this quarter or this year. And across the info services space, there's been a debate amongst investors regarding the defensibility of the Insights business by LLMs. Given that LLMs are trained on vast amount of public data, how do you define the moat around Gartner's proprietary research in an area where AI can synthesize general business advice into?

Yes. So thanks. It's an important place to start because it's a top of mind focus for investors. And I think understanding how we're positioned starts with the client value proposition. It's our long-standing client value proposition, and it remains very compelling. And we're very focused on helping senior operating executives make better decisions when they're addressing their strategic priorities. When I talk about senior operating executives, think about the direct reports to a CEO. So we're helping the Chief Information Officer, the Chief Supply Chain Officer and across the other major enterprise functions. The problems that they're looking to us to help address are complex multidimensional challenges. They don't lend themselves to, hey, I've got a question, give me an answer. And more important, perhaps, they don't lend themselves to answers that are based on publicly available.

And the foundation of the value proposition starts really with our 2,400-plus experts. These are often former practitioners. They've got lots of knowledge, lots of experience. And so they offer tremendous value. When you combine that with more than 500,000 client interactions a year, more than 20,000 vendor briefings every year and several terabytes of proprietary data, there's a really important moat. In addition, our clients have confidence that the insights that we're providing to them are independent, they're objective, they're unbiased.

And so if you're a Chief Information Officer and you're looking to provide reassurance to your Board of Directors, for example, about your information security strategy, there's no way to benchmark that with publicly available data. Companies don't disclose their information security architecture, they're spending the skill set and so on. These are hard complicated problems and questions where our clients are looking to us for help. And so that's the foundation really for, why we continue to be extremely helpful to our clients, extremely relevant as they're addressing their strategic priorities.

Awesome. So we've talked about why there is more on Gartner's proprietary data, but -- let's switch to how gen AI is helping the business. So management has described gen AI as a huge opportunity for both internal efficiency and for client demand. On the client side, are you seeing AI inquiries replace traditional optimization research? Or is AI acting as a massive top of funnel driver that is bringing entirely new type of business leaders to Gartner?

Yes. The first place where AI is important to us is that it's important to our clients. So roughly 40% of our content in 2025 was related to AI. A similar percentage of our client interactions were related to AI. Across all of the major enterprise functions, IT, finance, legal, AI is an important topic. And we're uniquely positioned to help our clients navigate how they can and should be addressing AI in their organization. We've got a database of several thousand use cases, because clients are coming to us and saying, well, I've made some investments in AI, I'm not seeing the returns that I wanted. Am I doing something wrong? Is somebody else doing something differently? And because of the network benefit of the extensive number of clients we have and the interactions we have with our clients, we can bring that visibility. We can bring that perspective to help these senior operating executives think through their AI strategy.

It's also a really important topic with our technology vendor clients. One of the ways that Gartner has talked about AI is that there are 2 races being run: there's a vendor race, which is an all-out sprint. And then there's the enterprise consumption of AI, which is moving at a more measured pace. Obviously, there's a wide range with some people out front, more early adopters, other people taking a more gradual approach. But with the technology vendors, every time there's an incremental or even step function change, the tech companies need to think about the competitive landscape they're facing, the product road map, how fast do they need to introduce features? What are their clients saying about their needs from an AI perspective. And so we're able to add a lot of value, not just for the enterprise function leaders, but for the technology companies as well.

I would point out, part of our long-standing value proposition is that we're going to help our clients with their priorities no matter how they may shift and change over time. So we serve individuals and roles within the functions. We don't price or sell products discretely by a given topic. There's no AI module because the value proposition is that, if you're a Gartner licensed user, we're going to help you, whether the topic is AI or information security, developing the next generation of leaders or whatever else it might be. So that's the first area, serving our clients from an AI perspective, really, really important, really going well because they need to help. And again, we're uniquely positioned to provide that.

The next place I would point to from an AI perspective is that we're leveraging gen AI. We've created a front end to gartner.com. So when you subscribe to the Gartner Insights, you can log in and you'll get information about topics that are trending among your peers. You can pick up where you've left off. There's a long-standing search capability. But now with AskGartner, you can ask a natural language question. And by the way, it doesn't have to be in English. We're seeing increasing use of AskGartner in other languages. The natural language answer will also offer you questions that you didn't ask, but that you should consider. We're going to give you access to the underlying written content pointers to all of that as well.

And so we started to roll out the beta release in mid-2025. We finished the beta rollout to all of our licensed users by the end of October last year. Uptake has gone well. The adoption is growing. We've gotten very encouraging feedback. And we're seeing increased usage of the platform because of AskGartner. So the clients that are using AskGartner are spending more time at gartner.com. They're coming back to AskGartner. And so that's -- we're very encouraged, very excited about that. It's still relatively early. But during the fourth quarter, with the small sample size that we had, we saw retention rates for clients that have been using AskGartner notably better than retention rates for clients who had not yet AskGartner. So I don't want to overstate that just yet because it is a small sample size, but going well and certainly very encouraging.

Beyond improving the user experience, we're leveraging AI. And by the way, AI is a broad set of technologies, although often, I think people think about it in the context of gen AI. We've used different types of AI throughout the organization in the past. In terms of gen AI, a couple of exciting internal use cases our service people are able to be more efficient preparing for client meeting because we're able to use gen AI to synthesize for our service people, what our clients have been reading. We've had very good success with training our salespeople with the tool that we built leveraging AI.

The sale of the Gartner product is a consultative sale. And one of the ways that we train our sellers is a [ real-time ] approach. Well, being able to leverage gen AI frees up the colleagues who had historically been supporting the training of the new sellers, and that's been going quite well. And so we've got more selling capacity time because we've freed people up by leveraging AI. For our -- we've got a neural network-based demand sensing tool that helps our experts prioritize and focus their time on the topics that matter most. There's been a lot of focus on reinforcing best practices at Gartner around making sure that the content we're creating is maximally impactful, that it's as timely as it needs to be, and that we've got the breadth of coverage to be able to serve and support all of our clients. So we're finding lots of opportunities, as I mentioned, serving clients, delivering insights to clients and then looking for ways to get better at doing what we do internally.

Awesome. And a point you brought up was AskGartner, I just want to unpack that a bit more. Gartner analysts remain the human element of the value proposition. How does the role of the Gartner analysts evolve when the client can use AskGartner for the what and the how, what does the add value come beyond that?

Yes. As I mentioned earlier, our experts are the foundation for all of the insights that we're providing to our clients. Probably 90% or so of our contract value comes with products where the clients will have access to speak to our experts. So there's a tremendous amount of value that our experts are able to deliver, and that's critically important to our clients in being able to go deeper, dig down, optimize the insights for their specific needs. Our experts have lots of knowledge in their head. that doesn't sit within the written product. It doesn't necessarily sit within the proprietary data sets that we have. And so there's always going to be a critical role for our experts, both in terms of creating the insights as well as in delivering the insights to our clients.

As we think about AskGartner, one of the things that we've started to see is that, because our clients are able to find the insights that they need faster than they had historically. And one of the things that clients have told us in the past is that we have so much valuable content that historically, it was sometimes a challenge to find exactly what they needed. AskGartner has gone a long way to helping the clients find what they need. And so I think we're starting to see the clients leveraging AskGartner and then going into the discussions that they have with our experts at a whole deeper level. And so to the extent that our clients are able to get up to speed on a lot of the insights more quickly, our view is that they can have a much more impactful conversation than perhaps they would have in the past. And so we see a lot of value that AskGartner is bringing at an underlying level to helping really enhance the value of the expert.

Great. I know we've talked a lot about AI. So let's switch a little bit to contract value. Total CV growth has moderated to, let's say, low -- flat to low single-digit growth recently. It's a departure from the historical double-digit growth algorithm. While the macro environment is always a factor usually this time of the year, how much of the deceleration is a timing issue of when new sales hires reach full capacity versus before?

Yes. I think people sometimes forget that during 2024, contract value had been reaccelerating, right? So the growth had gotten better as we were moving to '24. We went into 2025, hoping for a normal year, right? It's been a long time, I think, since the world has had a normal year. But -- and we felt really good about the opportunity to continue to accelerate in 2025. And then to your point about the macro, I'll broaden it to external factors. The U.S. federal business was about 5% of contract value at the start of 2025, and it finished the year a little bit less than half of that. The DOGE and related initiatives put a lot of pressure on that U.S. federal business. That was unrelated to the client value proposition. This was essentially an external force within the federal government, essentially dictating that the spend with Gartner needed to be reduced.

Our client, the licensed users continued to see the value, oftentimes pushed back and said, no, this is really important because if the mission of DOGE is to leverage technology to make government more efficient, there are very few ways, if any, to look to leverage technology to make government more efficient outside of the Gartner subscription for a very reasonable price point. It's an annual subscription, you get access to all of the insights. And so the value proposition is very compelling. The drag to the growth was not related to the value proposition. It wasn't people saying, I'm not sure where the value is. Our clients understand the value that we're able to deliver.

It was also a more difficult selling environment on the commercial side. So downstream of the federal government, there's a lot of belt tightening going on. The tariff dynamic affected different industries in different ways. About 40% of Gartner's contract value comes from enterprises within tariff-affected industries. So this is another example where it was not about the Gartner client value proposition, which remains compelling throughout the year, it was companies looking to tighten their belt. Because if you're a CEO or a CFO in a tariff-affected business, when the tariffs hit and they've been pretty dynamic in terms of the levels and where they apply, if you can't pass those costs along, you have to manage your other expenses very aggressively. And that just made for longer sales cycles, more escalations, and that became a headwind to growth in 2025 that we hadn't expected at the start of the year.

I think we finished the year with mid-single-digit growth in contract value, excluding the Federal business, which I think reflects the level of resilience that it's not Gartner historical growth rates. It's not the Gartner growth rates that we know we're capable of delivering. But it was a pretty resilient performance in the face of a much more challenging selling environment, in particular, more challenging than we'd expected at the start of the year.

Okay. And then just on the topic of businesses tightening the belts and the budget constraints, how would you describe sort of the client engagement with those type of clients? And as those contracts are coming up for renewals, are you seeing a higher level of engagement bringing some of those conversations towards the finish line?

Yes. In terms of client engagement, client engagement increased in 2025 versus 2024. We measure engagement across many different variables, things like AskGartner, which we talked about earlier, analyst inquiries, conference attendance. And so broadly, engagement levels improved in 2025. And they've been tracking consistent with historical levels. I think there's a spike back in 2020 when everybody went home because of the pandemic, and then we had a renormalization. And so engagement tends to be a leading indicator of retention.

One of the things that Gene talked about on the last earnings call related to efforts we're making to drive improvements in the content because we know that, that will drive improvements in engagement. And we're looking for even higher-than-normal improvements in engagement to be able to drive improving retention. In an environment where there are these external factors, we recognize that we need to be delivering even more value than normal to offset sort of those Gartner, not related to Gartner spending constraints that companies might feel that there on.

Okay. On that last point, when there are times of uncertainty. Then Gartner view that sometimes as countercyclical. During these times, clients need more data, more information to decide what to do. When you have these conversations, how are they like on the defensive side versus when they're on the offense?

Yes. Well, I mean, I think we've got a track record of being resilient in the face of external factors, macro, geopolitical. If you look back to the financial crisis, if you look back to the pandemic, contract value growth was resilient. We're not immune to these factors. But because we've got the ability to serve our clients and help them in good times and in challenging times, we're adding a lot of value regardless of where they are. There are going to be times when the budget constraints are such that it's harder to drive incremental licenses within the existing clients. And in 2025, we saw slightly less than normal levels of upsell. We saw slightly higher levels of down sell because of these budget constraints. Historically, what we've seen is that when external factors drive budget constraints, we tend to see win backs of those licenses.

In any event, we've got insights related to things like cost optimization. When the pandemic started, we rolled out pandemic-related insight. In 2025, we rolled out tariff-related insights beyond the content that we already had. Our teams are nimble, they adapt, and we're very commercially oriented, prioritizing the topics that matter most to our clients. And we've got an ability to adapt and pivot to changing needs of the client. So if a client is moving from growth mode to cost -- in cost discipline mode, we've got the ability to support them with benchmarking and best practices, context perspective and deep insights to help them.

Got it. Okay. So just shifting over to the other parts of your business. The Conferences segment, shown strong pricing power and attendance recovery post-COVID. Do you view the attendance at a conference as a leading indicator for future Insights CV growth, I think as a proof of concept for future prospects?

Yes. The Conferences business is a really important complement to the Insights business. It's one of the ways that we really bring the Insights to life. We -- our strategy for Conferences is to have a conference for each of the roles we serve within the Insights business replicated across geographies. The Conferences business is a great tool for delivering insights and value to our clients. It's an opportunity for them to network with peers, engage with vendors. There's really tremendous value that we have to offer. It's a great tool for retention as well as for driving new business with perspectives. It reinforces the strength of the Gartner brand. In some ways, it's a marketing function that we run with 50% gross margins. So it's a really good business. The team had a good year as they usually do in 2025. The results were good. Ex-Fed, the attendance was good across the Conferences portfolio. And we're excited for another good year in 2026 for the Conferences business.

Awesome. And then just touching a little bit on the Consulting business, some variability, particularly in the contract optimization side. how much of the consulting performance is currently tied to clients asking for help specifically with AI implementation road maps versus traditional IT cost?

Yes. The Consulting business is another important complement to the Insights business. The primary goal is to support clients on technology strategy and technology project management, when they want to go beyond the scope of an Insight subscription, they want to engage with us on an extended project basis. About 3/4 of the Consulting business relates to IT, labor-based strategy and project management work. We don't do any software development. We don't do any system integration work there. And certainly, we're helping clients with things like their AI strategies. There continues to be important engagement around things like legacy modernization, migrating to the cloud, cost optimization, digital transformation. So there's a wide range of topics, including AI, where we're helping our clients think through their strategies.

The other part of the Consulting segment, we call [ cont-opt ], contract optimization. That part of the business, it's very good, but it's highly variable. We're helping our clients save money when they're negotiating contract with their vendors. And we're getting a percentage of the savings. That business -- part of the business has been very strong for several years. Aside from the variability that's inherent in the timing of when the revenue comes in based on when we help our clients. It's a very good business. It's generally going to be a cyclical, maybe even a little bit counter-cyclical.

Okay. Just switching topics here. Many investors look at Gartner as a proxy for the global IT economy. Gartner is the canary in the coal mine? And what is the canary telling us right now about the health of IT spending over the next few years?

Yes, it's an interesting question. There's often a perception that our business is tied to IT spending. We certainly help both the vendors and the enterprise consumers of technology with decision-making. But because of the nature of the value proposition, we're probably more closely tied to global expense trend broadly rather than tech spending itself. So for example, in 2025, our growth was slower than our typical level.

If you looked at, for example, and I use this not because it represents the whole client base, but because the numbers are readily available, at the S&P 500, EBITDA expense growth moderated. I think the Gartner's view is that technology spending is and will remain strong. It was strong in '25. It will remain strong in '26. And so I don't think there's any reason sitting here today, to think that there's some read-through for tech spending, partly because, again, we're not a direct player on tech spending. If we were, it wouldn't make sense that we've been wildly successful in supply chain and HR and finance and all these other areas. And so I think the outlook from the Gartner experts is continued strength in technology spending, demand for technology broadly across industries, across sectors, across companies.

Awesome. And then just before we open the floor for questions, we're asking those who are presenting with us today to do a quick word association.

Okay.

So tell me the first thing that comes to mind when I say the following.

When you say what?

When I say the following.

Okay.

CV stabilization.

Imminent.

Okay. proprietary data.

Foundational to the Gartner business.

Workflows.

An important way where we have outcome.

Tech spending.

We just talked about tech spending. Tech spending is good.

And the last one for you, Gene Hall.

Extraordinary leader.

Awesome. Okay. We'll open up to questions for now. If anyone have any.

I'll kick it off. Yes. So thanks, David, for being here. So you're saying so tech spending, I'm just trying to get a better sense on the correlation, especially with AI spend certainly impacting how companies are thinking when you referenced S&P 500 expenses that have moderated here. So is it more maybe tied to corporate headcount? So in other words, if banks are saying we can cut our headcount by 15% over the next 5 years because of AI, and we'll see on maybe the retail side versus wholesale. What impact would that mean for your business if headcount actually starts to come down or at least moderate from here?

Yes, it's an important question. And just for the webcast, if you couldn't hear, the question had to do with headcount as a potential factor in the growth outlook for Gartner. We sell to the senior operating executives within an enterprise. So think about C level and 1 or 2 down. So the CIO, his or her direct reports, their direct reports. That's our primary focus and client base. The average client today has about 5 licenses. We're not selling to the frontline programmers or accountants that I think people are wondering if those jobs might be at risk. So we have an individual licensed user go-to-market sales model, but it's not sort of the broad-based model that you might find with lots of software businesses.

In terms of what drives the growth, there's a very large underpenetrated addressable market opportunity. There are millions of senior operating executives that don't have a Gartner license today, but have overlapping priorities with the clients that we're serving and supporting and helping right now. And so really, the Gartner growth opportunity is about retaining the existing clients and then going and selling to all of those who don't yet realize how much they can benefit from a Gartner license.

Maybe just a follow-up question. So as some companies are in information services are potentially looking going from a seat-based model to maybe more of an enterprise model. It doesn't sound like that's necessarily an issue with Gartner just because the number of seats are very consolidated at the top. But I don't know, is there any rethinking on that? And again, you referenced earlier partnerships. Is that maybe on sales model? Do you need more partnerships to maybe address that TAM opportunity?

Yes. So the question was about some info services companies maybe exploring enterprise models, would Gartner consider that? And then a little bit about potential partnerships and how we go to market. On the first point, I think our view has long been and remains that we're delivering value to the individual license user. It's really important for us to stay close to them to understand what their priorities are to make sure that we can help them address those priorities. So that individualized relationship becomes very critical to how we deliver the insight.

The creation of the content is scaled on the back end. We get the benefit of scale and network effects, but the value delivery ends up being individualized. So I think that model remains the right one for Gartner sitting here today. I certainly understand how there might be other businesses where the model might need to change over time depending on how things play out.

From a go-to-market perspective, it's a product that's an intangible. It's not a replacement. It's very much of a consultative sale. It takes feet on the street. It takes our excellent frontline salespeople interacting with a prospect, understanding their mission-critical priorities and mapping how we can help them with those priorities. So that direct sale model is also very important to how we go to market. The value that we're able to deliver to our clients, again, highly individualized in the realization, and having that direct relationship with the clients is very important and very valuable, both to us and to the client.

Thank you. I think we have time for one short question before we end.

You mean, a short answer, I think, is what you mean.

All right. With that, well, David, I appreciate your time. Thank you so much, and thank you all for joining us.

Thank you for having us.

Good morning, everyone. Welcome to Gartner's Fourth Quarter 2025 Earnings Call. I'm David Cohen, SVP of Investor Relations. [Operator Instructions] After comments by Gene Hall, Gartner's Chairman and Chief Executive Officer; and Craig Safian, Gartner's Chief Financial Officer, there will be a question-and-answer session.

We ask that you limit yourself to 1 question in order to give all our analysts a chance to participate in the call. Please be advised that today's conference is being recorded.

This call will include a discussion of fourth quarter 2025 financial results and Gartner's outlook for 2026 is disclosed in today's earnings release and earnings supplement, both posted to our website, investor.gartner.com.

On the call, unless stated otherwise, all references to EBITDA are for adjusted EBITDA, with the adjustments as described in our earnings release and supplement. Our contract values and associated growth rates we discuss are based on 2025 foreign exchange rates. All growth rates in Gene's comments are FX neutral, unless stated otherwise.

All references to share counts are for fully diluted weighted average share counts unless stated otherwise. Reconciliations for all non-GAAP numbers we use are available in the Investor Relations section of the gartner.com website.

As set forth in more detail in today's earnings release, 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 2024 annual report Form 10-K and quarterly reports on Form 10-Q as well as in other filings with the SEC. I encourage all of you to review the risk factors listed in these documents.

Now I will turn the call over to Gartner's Chairman and Chief Executive Officer, Gene Hall.

Good morning. Thanks for joining us today. Fourth quarter revenue, EBITDA, margins, EPS and free cash flow were ahead of expectations, we continue to deliver great value to our clients. We were agile in managing expenses. And we repurchased more than $2 billion of Gartner stock in 2025. 2025 was a unique year due to a range of external market forces. Department of government efficiency or dose-related initiatives affected our U.S. federal clients. Evolving trade policies create complexity for tariff-impacted enterprises. Funding changes affected our state and local government and education clients, tech companies that are not in or adjacent to AI experienced a shifting landscape. And there were country-specific factors in several geographies. These external market forces led to increased scrutiny, elevated deal approval authority and extended buying cycles.

Over the past few years, including 2025, the rate of change and volatility in the external environment has increased significantly. Executives have responded to this by slowing and deferring everything possible. This makes for a much tougher selling environment. The value bar is higher, but it's also a huge opportunity for us. Clients know they need help with these issues. Gartner is an insights business. Our high-value, forward-looking insights help clients on their journeys to achieve their mission-critical priorities.

The key to capture an opportunity, while operating under deferred decision-making and higher value standards is to help clients engage more frequently with our insights. Clients who engage frequently with our insights, receive greater value and retain at higher rates. This was true in 2025 and every year prior, and it's still true today. Client engagement increased modestly throughout 2025, but in today's world, client engagement levels need to be even higher because the rate of change is faster than ever, driving incremental improvements on our standard practices wasn't enough. To achieve step change improvements, we needed to rethink many of our processes and practices. So we've been driving transformation across business and technology insights. We covered some aspects of this transformation on previous earnings calls.

Today, I'll share a comprehensive view of what we're doing. We're transforming business and technology insights along 4 dimensions: impact; volume; timeliness; and user experience. Beginning with impact. Our insights provide tremendous value to clients today, and we know we can get even better. Our objective is to ensure insights are always on the topics our clients care about most right now. The biggest example today is AI. AI is transforming the world. It's our highest demand topic. During 2025, we expanded our AI insights. We have more than 6,000 AI-related documents in our library. We've documented more than 1,000 unique use cases. In 2025, we conducted more than 200,000 in-depth client conversations on AI, and we answered more than 500,000 AI-related questions through AskGartner.

Based on our analytical measures, the impact of our insights is improving at a rapid pace by increasing the impact of our insights, we can ensure our clients get even more value on the topics they care most about at any given time.

The second dimension is volume. We serve clients of every size in every industry and every enterprise function in 90 countries. This diverse set of clients have different mission-critical priorities. Our objective is to increase the number of insights, to accommodate the broadest range of client priorities. To achieve this, we're applying automation, streamlining processes and upgrading and upscaling our analyst teams. We developed a neural network AI model to quickly and systematically determine the topics our clients care about most. As of the end of 2025, our Active Insights library has grown by approximately 50%. By increasing volume, we can better accommodate the full range of our clients' mission-critical priorities.

The third dimension is timeliness. The pace of the world continues to accelerate. Some say the rate of change will never be this slow again. We're ensuring our insights to keep pace with the ever accelerating pace of the world. We've introduced insight types that have produced the same day as important events occur in the world, such as a major security breach, where clients need immediate guidance. or in the rapidly evolving world of AI, where major changes happen every day.

To support this, we've made 2 other innovations. First, we introduced new processes to create insights as quickly as the same day. Second, for insight types that are highly valued by our clients, such as Magic Quadrants, we reduced our average insight creation time by 75% compared to 2024. So we'll continue to ensure our insights keep pace with the ever accelerating pace of the world.

The fourth element is user experience. If we produce great insights, but our clients can't find them, they won't receive value from them. Historically, the single biggest feedback from our clients was, Gartner produces tremendous insights, but I can't always find them. We're ensuring our clients can easily access the insights that are most relevant to them when they need them the most. As Gartner leverages AI to quickly identify and summarize the right high-value insights across our vast library. It leverages role, function, mission-critical priorities, insight viewership histories and more to make user responses even more relevant to each license user.

We began rolling out AskGartner in August of last year. We completed the rollout in October. Licensed users who use AskGartner had substantially higher renewal rates than those who did not even with the same levels of engagement. We'll continuously improve and innovate AskGartner's capabilities. Separately, we're identifying role-specific insights each week that are particularly valuable and broadly applicable. Our goal is to ensure clients have every opportunity to engage with these uniquely valuable insights.

We're also changing how we deliver insights in terms of format and access to meet today's client preferences. Conferences are an important way clients engage with our insights. Destination conferences provide high value to clients. But not all our clients can attend our destination conferences. For these clients, we launched Gartner C-level communities. Gartner C-level communities are local, peer-driven one-day events where C-level executives can gain access to our insights. We're continuing to expand both our destination conferences and Carter C-level communities in 2026 and beyond. We'll continue to improve the user experience to ensure our clients can access the insights they need to achieve their mission-critical priorities.

So we're driving transformation across business and technology insights along 4 dimensions: impact; volume; timeliness; and user experience. We began driving these transformational improvements during 2025 and will continue during 2026 and beyond. We believe this transformation will provide a step change in the value to our clients over the next few years.

In addition, we'll drive continuous improvement and innovation across the rest of the business.

During 2025, we also took several shareholder value-enhancing actions, including repurchasing $2 billion of Gartner stock, increasing leverage with a successful inaugural investment-grade bond offering to support even more share repurchase capacity. Adding 2 new directors who bring unique and valuable skills to our Board, rotating our Board committee chairs and entering into a definitive agreement to sell our digital markets business.

In summary, the world is changing more than ever before. This represents a huge opportunity for us. Gartner is an insights business that guides the leaders who shape the world. The key to capturing our opportunity while operating under a challenging selling environment is to help clients engage more frequently with our insights.

In 2025, we began transforming business and technology insights along 4 dimensions: impact, volume, timeliness and user experience. These transformations will allow us to thrive in a world with greater change and uncertainty than ever. We expect to see the impact over the next few years, and we'll continue to keep you updated on our progress.

With our unparalleled value proposition, continued transformation in business and technology insights and responsible reinvestment in our business, contract value will accelerate, as contract value accelerates, our P&L and free cash flow conversion will follow, we will continue to create value for our shareholders by generating free cash flow in excess of net income and returning capital to our share repurchase program.

With that, I'll hand the call over to our Chief Financial Officer, Craig Safian.

Thank you, Gene, and good morning. Today, I'm going to walk you through fourth quarter and full year 2025 results, and I will introduce our 2026 guidance. Financial results in the fourth quarter were better than expected. For the full year, revenue increased from 2024 and EBITDA margins finished well ahead of our initial guidance from last February. Our return on invested capital continues to be above 20%, highlighting the strength of our business model and our ongoing ability to create long-term value.

We increased leverage with a successful bond offering, our first as an investment-grade rated credit. We generated significant free cash flow and bought back about $2 billion of stock. And last week, we entered into a definitive agreement to sell the digital markets business, which allows us to focus even more on delivering insights to help our clients address their mission-critical priorities.

Fourth quarter revenue was $1.8 billion, up 2% year-over-year as reported and unchanged FX neutral. For the full year, revenue was $6.5 billion, up 4% of reported and 3% FX neutral. Fourth quarter contract value or CV grew 1% year-over-year. Outside the U.S. federal government, CV grew 4%. In the quarter, total contribution margin was 67%, up 85 basis points from last year.

EBITDA was $436 million, up 5% as reported and 1% FX neutral. Adjusted EPS was $3.94 and free cash flow was $271 million. For the full year, EBITDA was $1.6 billion. EBITDA margins were 24.8%, well above the initial guidance we gave at the start of the year. Adjusted EPS was $13.17. Free cash flow was $1.2 billion and ROIC was strong at around 24%.

The Insight segment is our largest, most important business. It's subscription-based with strong retention, recurring revenue and excellent contribution margins. We get paid upfront, which allows us to generate strong free cash flow well in excess of net income. Insights revenue in the quarter grew 3% year-over-year as reported and 1% FX neutral. Fourth quarter Insights contribution margin was 77%, up 59 basis points versus last year. Full year Insights revenue increased 5% as reported and 4% FX neutral. For 2025, Insight's contribution margin was 77%, up 14 basis points from 2024.

Contract value was $5.2 billion at the end of the fourth quarter, up 1% versus the prior year. Outside the U.S. federal government, CV growth was about 330 basis points faster at around 4%. Global NCVI in the quarter outside the U.S. federal government was positive $147 million. The vast majority of our U.S. federal contracts came up for renewal during 2025. At December 31, we had $126 million of U.S. Federal CV. Outside the U.S. Fed, we delivered CV growth across practices, industry sectors, company sizes and geographic regions. By sector, energy, banking and technology led to growth. CV grew at high single-digit or mid-single-digit rates across all commercial enterprise sizes. All but 2 of our top 10 countries grew in 2025 with 1 growing double digits. And we had more than $400 million of new business in the fourth quarter.

Global Technology Sales contract value was $3.9 billion at the end of the fourth quarter, about flat compared with the prior year. GTS CV outside the U.S. federal business grew 4% in the quarter. Tech vendor CV increased mid-single digits, with services and software growing low double digit or high single digits. Wallet retention for GTS was 96% for the quarter. GTS new business of more than $300 million was down about 5% outside the U.S. federal government. The change in GTS quota-bearing headcount was consistent with our expectations. We managed our territory changes and investments based on the balance of expense discipline and opportunities to invest for growth. We've optimized territories with growth directed towards business developers and new logo and new business opportunities. BD productivity has remained strong, which is a foundation for our investment in adding BDs. Our regular full set of GTS metrics can be found in our earnings supplement.

Global Business Sales contract value was $1.2 billion at the end of the fourth quarter, up 3% year-over-year. Outside the U.S. federal government, GBS CV grew about 200 basis points faster at around 6%. Growth was led by the sales, supply chain and legal practices. CBS and CVI was positive $16 million in the fourth quarter. Outside the U.S. federal government, GBS and CVI was positive $21 million. Wallet retention for GBS was 99% for the quarter, outside the U.S. federal business, wallet retention was over 100%. CBS new business of more than $100 million was down 4% compared to last year. The change in GBS quota-bearing headcount was consistent with our expectations.

Similar to GTS, we managed our territory changes and investments based on the balance of expense discipline and opportunities to invest for growth. BD productivity has remained strong, which is a foundation for our investment in adding BDs. As with GTS, our regular full set of GBS metrics can be found in our earnings supplement.

As we do each year at this time, we've also provided quarterly historical contract value data updated to 2026 FX rates on Page 21 of the earnings supplement. As you build your 2026 models, please remember to use the updated data as the baseline for your forecasting. The U.S. dollar weakened significantly over the course of 2025, causing this adjustment to be larger than most years. We've also provided several quarters of historical data to reflect the updated financials for the digital markets divestiture on Page 22 of the earnings supplement.

Conferences revenue for the fourth quarter was $286 million. On a same conference basis, revenue growth was around 8% FX neutral. Contribution margin was 51%. We held 14 destination conferences in the fourth quarter as planned. Full year conferences revenue grew 11% to $645 million. FX-neutral growth was 9%. Contribution margin was 50%. Q4 consulting revenue was $134 million compared with $153 million in the year ago period. FX was a benefit of about 300 basis points in the quarter. Consulting contribution margin was 27% in Q4. Full year consulting revenue was $552 million compared to $559 million in the prior year. Contribution margin was 34%.

Consolidated cost of services on a GAAP basis was $573 million in the quarter or 32.7% of revenue. For the full year, cost of services was $2 billion or 31.6% of revenue. SG&A on a GAAP basis was $798 million in the quarter or 45.5% of revenue. For the full year, SG&A was $3 billion or 47.2% of revenue. We continue to balance disciplined cost management, while ensuring we can invest in key areas such as expert talent, AI, the customer experience and frontline sellers. As a percentage of revenue, our costs are well below historical highs.

EBITDA for the fourth quarter was $436 million, up 5% from last year's reported and 1% FX neutral. We outperformed in the fourth quarter through modest revenue upside, effective expense management and a prudent approach to guidance. EBITDA margins were 24.9%, up about 60 basis points from last year's Q4. Full year EBITDA was $1.6 billion, up 4% of reported and 2% FX neutral. EBITDA margins were 24.8%, consistent with last year.

Depreciation in the quarter was $28 million. Full year depreciation was up 5%. Net interest expense before deferred financing costs in the quarter was $18 million, increasing by $7 million versus the fourth quarter of 2024 due to lower interest income on our cash balances. The full year net interest expense before deferred financing cost was $56 million, favorable by $10 million versus 2024 due to lower interest expense and higher interest income on our cash balances.

The Q4 adjusted tax rate, which we use for the calculation of adjusted net income, was 20% for the quarter. This compares to last year's benefit of 25%. The tax rate for the items used to adjusted income was 3% for the quarter. The full year tax rate for the calculation of adjusted net income was 22%, in line with our expectations. The prior year tax rate benefited from favorable tax planning. Adjusted EPS in Q4 was $3.94. Full year adjusted EPS was $13.17. We had 72 million shares outstanding in the fourth quarter. This is an improvement of about 6 million shares or approximately 8% year-over-year. We exited the fourth quarter with 71 million shares on an unweighted basis. Operating cash flow for the quarter was $295 million. This compares with $335 million in Q4 2024. CapEx was $24 million, flat year-over-year.

Fourth quarter free cash flow was $271 million. This compares with $311 million in Q4 of 2024. For the full year, operating cash flow was $1.3 billion. CapEx was $115 million, and free cash flow was $1.2 billion. Free cash flow on a rolling 4-quarter basis was 161% of GAAP net income and 73% of EBITDA. As we previously noted, there were 2 items that affect rolling fourth quarter net income and free cash flow, including a real estate lease termination payment in Q2 2025 and we also had a noncash goodwill impairment charge related to digital markets business in Q3 2025.

Last week, we signed a definitive agreement to divest digital markets. Adjusting for these items, free cash flow on a rolling 4-quarter basis was 18% of revenue, 74% of EBITDA and 136% of GAAP net income. At the end of the fourth quarter, we had about $1.7 billion of cash. Our December 31 debt balance was $3 billion, of about $500 million from Q3 as a result of our most recent bond offering. Our reported gross debt to trailing 12-month EBITDA was 1.9x. Our expected free cash flow generation, available revolver and excess cash remaining on the balance sheet provide ample liquidity to deliver on our capital allocation strategy. Our balance sheet is very strong with $2.7 billion of liquidity, low levels of leverage and 100% fixed interest rates. We repurchased about $500 million of stock during the fourth quarter and $2 billion during the full year. Last week, the Board refreshed our authorization, bringing the total to about $1.2 billion. We expect the Board will continue to refresh the authorization as needed. As we continue to repurchase stock, we create value for shareholders through EPS accretion and increasing returns on invested capital.

Before providing the 2026 guidance details, I want to discuss our base level assumptions and planning philosophy for the year. We've not included the digital markets business in the outlook. For Insights revenue, our guidance reflects Q4 2025 contract value and our CV growth rate accelerating over the course of 2026. First quarter and first half NCVI are important inputs to calendar 2026 revenue growth. We have taken a prudent view of NCVI phasing because Q1 is a seasonally important quarter for renewals. As always, we have high visibility into our Insights revenue based on our ending 2025 contract value.

For conferences, we are basing our guidance on the 56 in-person destination conferences we have planned for 2026. We expect similar seasonality to what we saw in 2025 with Q4 the largest quarter, followed by Q2. We expect gross margins in the second quarter to be the highest of the year for the Conferences segment. We had a strong advanced bookings quarter in Q4, which provides very good visibility into 2026 revenue. We have a majority of what we've guided already under contract. This is ahead of where we were at the same time last year.

For consulting, we have more visibility into the next quarter or 2 based on the composition of our backlog and pipeline as usual. Contract Optimization has had several very strong years and the business remains highly variable. Our base level assumptions for consolidated expenses reflect the run rate from the fourth quarter and merit increases scheduled to go into effect April 1 as usual. We recommend thinking about expenses sequentially with notable seasonality driven by the conferences calendar and annual merit increases.

For GTS, we expect low single-digit QBH growth in 2026 with a focus on growth in our business developers. For GBS, we plan to grow QBH mid-single digits this year with an emphasis on growth in business developers. We have the recruiting capacity to go faster depending on how the year plays out. We continue to prudently manage our expenses, in part to create alignment with recent CV trends, and we are driving efficiencies wherever we can through automation, process improvements and leveraging technology. We are also prioritizing sensible investments to drive future growth and returns, which include key areas like business and technology insights analysts, artificial intelligence, the customer experience and sales capabilities, efficiencies and QBH. These investments are fully reflected in our 2026 guidance.

Based on January FX rates, we expect revenue growth to benefit by about 110 basis points and EBITDA growth to benefit by about 170 basis points for the full year. As a reminder, about 1/3 of our revenue and operating expenses are denominated in currencies other than U.S. dollar. Our 2026 guidance is as follows: we expect Insights revenue of $5.9 billion or more, which is FX-neutral growth of about 1%. We expect Conferences revenue of $695 million or more, which is FX-neutral growth of about 7%. We expect consulting revenue of $570 million or more, which is growth of about 3% FX neutral. The result is an outlook for consolidated revenue of $6.455 billion or more, which is FX-neutral growth of 2%. We expect full year EBITDA of $1.515 billion or more. This reflects full year margins of 23.5% or more.

As we move through the year, our strong visibility will get even better. For net interest expense, we expect higher interest costs as a result of the increase in leverage. Interest income will be affected by interest rates and the deployment of cash for repurchases made during 2025. In addition, we have not assumed interest income on excess cash that could be deployed on share repurchases. Notably, however, our share count for 2026 only assumes repurchases to offset dilution. This means in the adjusted EPS guidance, we effectively assume both less cash on the balance sheet and more shares outstanding than we are likely to have. We expect 2026 adjusted EPS of $12.30 or more.

As I just noted, EPS would see a significant positive impact through a combination of fewer shares and/or greater interest income. For 2026, we expect free cash flow of $1.135 billion or more. This reflects a conversion from GAAP net income of 140%. Our guidance is based on about 71 million shares outstanding, again, only reflecting share repurchases to offset dilution. For Q1, we expect adjusted EBITDA of $370 million or more. Our financial results in Q4 were ahead of expectations. In particular, margins were strong and better than we guided at the start of 2025. We had another year of very strong free cash flow. ROIC continues to be excellent. We made significant accretive share repurchases, reducing our shares outstanding by 8% in the year. Contract value outside the U.S. federal business grew 4% in the quarter, and we are positioned to accelerate CV growth throughout 2026.

As Gene detailed, in 2025, we began driving transformation across business and technology insights along 4 dimensions: impact, volume, timeliness and user experience. The investments to continue the transformation through 2026 are fully reflected in our guidance.

Finally, we'll continue to deploy our capital to drive shareholder value and contribute to strong ROIC. Our capital allocation strategy remains focused on share repurchases, which will lower the share count over time and 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?

[Operator Instructions]

Our first question comes from Jeff Meuler with Baird. PAUSE.

On the expected contract value acceleration as '26 unfolds, I guess there's going to be a mathematical benefit from moving past the peaking and lessening federal government headwind. Are you expecting acceleration beyond that on a ex government or federal government basis? And I imagine you expect some benefit from the step function operational changes. But just if you can give us a update on what you're seeing in terms of any leading indicator KPIs. You had talked about a lot of things last quarter like in quarter renewal rates. Just wondering if those have continued to make progress.

Yes, Jeff. Yes, we are expecting CV to accelerate throughout the year and not just because of lesser headwinds within the federal government, u.S. federal government. Basically, as you said, we made more changes in the second half of last year with this transformation program and we expect those changes to begin hitting throughout -- or hitting in the building throughout 2026 and into '27. And so it's really -- that's what's driving the acceleration of CV over the year -- over '26 and then '27.

And on some of the leading indicators and what you were seeing on things like in-quarter renewal rates?

So leading the way that we're approaching the transformation is, we know that, if our clients engage with us more, they renew at higher rates. And so we're looking at leading indicators that say they're going to engage more with our content. And so there's things like -- again, the important I talked about we've changed our content. One of the indicators we have is the conferences where we presented those new content. In our conference scores, we ask clients to rate each of the presentations as well as the overall conference. And those conference orders were up significantly and more than we've ever seen in the past for the conferences were held in the second half and particularly in Q4 of last year, but we have a lot of conferences.

And so that's kind of one of the immediate indicators that we see. As I mentioned also, engagement actually has been rising. And as the engagement rises, doesn't -- when engagement goes up, it doesn't affect you today. But when that client comes up renewal over the next, depending whether it's a single or multiyear contract, when they come up over the next 12 or 24 months, they're much more likely to redo. So we see a positive impact from that as well.

And so there's indicators like that that are telling us -- both our -- the transformation we're meeting BPI in terms of driving more engagers working. And in fact, we're seeing the beginnings of higher engagement as well. I mentioned another one as well, which is the uptake of -- I'm sorry, the impact to AskGartner, much coins get access -- much better access to content that they've been able to do in the past. And as I mentioned, we only rolled it out to all of our clients in October of last year. So our clients didn't have that much cash to use it. But for those clients that used it and then renewed last year, their renewal rates were actually significantly higher. I think it's a combination of both better access and also a transformation changes that we talked about earlier. So if we look at leading indicators, we think that actually that we're on a good track. And again, these things will take because of -- they have to use the content, they have to renew and that renewal takes place over a 12- to 24-month period. It's going to take a while for all these again, but I'd say the leading indicators, we view is very positive.

Our next question comes from Andrew Nicholas with William Blair.

Just want to follow up on the same kind of line of questioning, a couple of quarters ago, you talked about your hopes to kind of get back to the high single-digit range in terms of CV growth here in 2026. Just wondering, now a couple of quarters past that, how you're thinking about that kind of line of thinking? And the factors that you outlined at that time between the federal government business, tech vendors accelerating, tariff-related industries or tariff-impacted industries normalizing some and your own internal adaptations, is there any changes to kind of the magnitude of those benefits that you would speak to today versus 6 months ago?

Andrew, it's Craig. So sort of headline answer, I'd say, is and just reiterating what Gene just said, with the prior question is, we do expect CV and the CV growth rate to accelerate over the course of 2026 and that's obviously within our U.S. Fed portion of the business. Just lapping the significant headwinds and also the balance of the business accelerating as well.

As you know, our normal course practice is not to guide specifically to CV. But we do fully expect all the factors that we've been discussing in the details, Gene provided to support driving that CV growth and also all the factors we talked about are those different buckets, we expect to have an impact as well into 2026. And so I think part of this is the environment still remains pretty chaotic. And we want to see what the environment looks like as we move our way through 2026. But baked into our guide and for all of our operating assumptions is the CV growth rate accelerating over the course of 2026.

Our next question comes from Faiza Alwy with Deutsche Bank.

So just to follow up on that, Craig, I think you talked about the quarterly phasing of CV growth. I'm curious if you expect sort of that quarterly phasing to be similar to what we have seen historically? Or you could sort of put a finer point on that? I imagine you're expecting that some of the internal initiatives that you're taking will kind of help more towards the back half of the year, but any further perspective would be helpful.

Yes, great question, Faiza. Thank you.

And so as we look at the way our exploration SKU looks like for 2026. It looks pretty consistent with what we've seen historically. And so a little bit overweighted in terms of coming up for renewal in Q1 and Q4. I'm so a little bit more than 25% in each of those quarters and obviously a little bit less than 25% that implies in the middle quarters Q2 and Q3.

As you know -- and again, and our sort of NCVI build, as we think about it, we believe should be roughly consistent to what we've seen over the last several years. That all said, the revenue guide is obviously most sensitive to where we ended 2025, net contract value amount as we roll into 2026 and then the phasing of the NCVI.

To your point, one is we tend to generate much more of our NCVI in the second half of the year historically and then to emphasize your point and Gene's points too, is that the transformation that we've been doing, again, these are not just started on Gen 1, we've been working through these for the last few quarters. But certainly, we'll have more of an impact on the second half of the year than on the first half of the year.

Our next question comes from Josh Chan with UBS.

I guess stepping back from the numbers, it seems like in recent months, you have taken some more kind of strategic steps, including the divestiture of the non-sub business. I think we understand you had an organizational realignment perhaps. So could you just talk about what drove these kind of more longer-term type actions and kind of how you're thinking about those actions versus kind of the environment that you're sitting in.

Josh, great question. The last year, there were a lot of changes. In fact, over the last 2 or 3 years, there's been a lot of changes between what's happened with AI, the U.S. federal government, tariffs, all the things I kind of go in my talk. And so during the first half of last year, we came the conclusion that we should assume that the world is going to be like this forever, that there's going to be a lot more disruption in chaos. And we don't know what those things are going to be, but we need to be prepared for them. And so to do that, we've decided the best way to impact it in our business was to focus on our core BTI business. And on top of that -- and within that, the way to optimize that business is to get more client engagement.

As I mentioned in my remarks, the more clients engage with us, the higher the retention is. And the high retention is, obviously, the faster business grows. And so we're really driving engagement and driving retention. And the way we're doing that is through with the transformation program. And we did a lot of analysis to understand what drives engagement. And it's the 4 things I talked about. It's the impact of our insights, the number of insights we cover all the mistrial priorities they have interest in, how fast we get it to them, especially in today's where things change so quickly. The user experience so they actually get access to them, whether it be through AskGartner or through enhanced conferences as I mentioned.

The changes we made in the second half of last year were more change than we've ever done at Gartner. I've been here 20 in that entire time, it's more case we've ever done. And it's in a reaction to position the business so that even if the world does get better, that we can get back to the kind of growth rate that we've had historically meaning double-digit growth, even in a really bad environment because we've enhanced our BTI helping so much.

And so as a result of that, 2 of the things you mentioned were as result of that. So one of them we decided that our digital markets business didn't fit in that vision. And so we made the decision after careful analysis, that didn't make sense. And so we made an arrangement we think is a very good owner report. And then the second thing is there were some staff changes, as we assess the BTI transformation, any transformational find that people that don't have the tolls today that you need going forward. And so for those people, we had -- unfortunately, we had an action that we took so that we could basically reposition skills, we have the skills we need going forward, not the skills could do in the past. And that was really one small part of the transformation but that was a part of the transformation. So this has nothing to do with the cost or something like that. It had to do with making sure we had the skills to address the impact, volume timeliness of user experience that we need as a business to thrive in any economic environment.

And then, Josh, one last thing I'd add is you know we're obviously very focused on doing shareholder value-enhancing initiatives. The #1 way we do that is to drive value for our clients, which then translates through the P&L and free cash flow statement. But obviously, we're focused on timing and maximizing shareholder value as well. And you know our capital allocation strategies around buybacks and potential value-enhancing M&A, tuck-in M&A.

And so on the buybacks, as you saw noted, you have about $2 billion worth of shares repurchased over the course of 2025 taking advantage of the debt markets and transforming, if you will, our balance sheet, so that we have a little bit more leverage and more capacity to deploy our capital on behalf of our shareholders. And then we do typically talk about M&A, but divestitures can be ways to drive shareholder value as well.

And as Gene outlined, I think we came to the -- through deep analysis through the recognition that digital markets was not a core part of the business. And so we look to drive value, sell it to a more natural owner and then from a shareholder value perspective, that allows us to use those proceeds, but also to focus on the core, which is really driving value out of the BTI business or the Insights business, I should say.

Our next question comes from Jason Haas with Wells Fargo.

I'm curious, as part of some of the internal improvements you're making, are there any changes to try to institutionalize some of the process that your analysts go through to collect proprietary insights from your customers? Because our understanding is there's a treasure trove of data that your analysts are collecting. And I'm curious how much of that is coming through just sort of informal questioning? Or is there really a process around that to drive the questioners insights?

Jason, it's a great question. And that is actually a core part of the BGI transformation as well. To your point, we have hundreds of thousands of conversations with our clients every day, I mean, every year. And with also with technology vendors, we have out of conversations. We have a lot of peer interactions where peers interact we get all that data, which a proprietary surveys.

One challenge we have is with our 2,400 analysts, how do we get all the right information to those analysts. And so as a part of this transformation action, we've developed some very sophisticated systems that let us get -- get the insights that matter most to the analysts that are going to be actually working on particular topical area like cybersecurity or something like that.

And it starts with this neural network-based system I talked about before, it starts there because, one of the most important cities we make is what do we actually write content on, what insights you want to write on, this neural network based system I talked about takes all of that input and says, what's trending, what are the things that people are most interested in the way it's updated on a real-time basis. So this week, what are our clients interested in? And then what assets do we have that can actually create incredible insights that will be a high value to those clients.

And so your point is actually a key part of the transformation is, the way we worked many years ago was a bunch of analyst sat in the room and said, hey, what do you hear, what I hear. With thousands of analysts and hundreds of thousands of conversations, we can't work that way. And so we've leveraged technology, including AI, so that we can actually go right on the right topics by using the store model and then get all the right assets that will help those analysts write really insightful research into the hands of the right people.

And so it's a core part of it.

Our next question comes from Toni Kaplan with Morgan Stanley.

Wanted to get a sense of in the fourth quarter if AI sort of entered the renewal conversations a little bit more in terms of client decision-making around adding or removing seats and things like that? And I know you've got a lot of feedback from your clients. So I just wanted to hear sort of what you're hearing from them? And is the environment getting maybe a little bit better? Like I just wanted to get a sense of sort of the client environment and feedback.

Yes, Toni. So the single biggest issue we are helping our clients with its AI across every function. So our clients really understand. They know they have challenges with it. And again, it's our single high span item. And as I've talked about in the past, with our salespeople, we ask each salesperson to document any concerns clients have. And one of the specific ones we ask them to document is if a client brings up that AI might be a substitute.

And in addition to that, we have a help desk. And so any salesperson, that basically says, hey, the client said, I'm thinking about using AI instead of Gartner, we try to document, train salespeople. And by the way, they use the system right because it also tracks competitive threats and things like that. And so it is regular use perspective, probably half our salespeople use it in any given year.

And so they're familiar with it and we train them on it. And we have this help desk in case somebody has an AI question and help desk is like the main repair man, which is to say that that has not been -- we have a lot of challenges with clients in terms of their own internal budgets that as we talked about. But one that we do not hear frequently is that they're thinking about using AI and some way the substitute for Gartner.

And again, to your point, I think our salespeople is not -- if anything, Q4 is less of an issue or less confirmed than even before. But we try to track it very carefully. We're trying to get eyes open about it, and we don't see it as something that is restraining our growth as opposed to clients that have tariffs and budget problems and the federal government those things. Those are real problems that we have that we see every day.

Do you see those problems getting better, the Doge and tariff problems and things like that?

So we'll approach it 2 different ways. So in terms of Doge, as we had touched about, all of our federal government clients, U.S. federal government contracts, virtually all of them are 1-year contracts, and so any client that wanted to cancel because of Doge after Q1, we'll have already had the chance to cancel. And so we believe -- and there's still tremendous demand. What's going on the government is we provide valuable services.

The clients that are actually using our services like Chief Information Officers, et cetera, highly going on to use our services. They have tight budgets, they're getting direction for. And so in some cases, they cancel our contracts, which is why you've had care renewal rates. We believe that the ones that are going to cancel will have gone through it once we get through Q1 and that going forward, it would be more to a normal environment with the U.S. federal government, we had short value that we provide a lot of value.

We have a lot of clients who want to buy it from us. And so that's kind of what we're expecting there. Outside of federal, tariff industries, it's down to the BDI transformation I talked about earlier, where we may -- as I mentioned, we've made more changes in second half of last year than ever before. And the whole idea is we need to increase value to our clients. We're going to do that by increasing engagement, more they engage, the higher value they get, the more they redo.

And we know if we get engagement rates up even modestly, it has a material impact on real rates and then our growth rate. And so we're -- the federal government, we're going to hopefully get through all the contracts with people that are going to cancel. And again, for everyone else, and in fact, the federal government going forward, we're increasing the value right to our clients at a much higher rate through that I talk to impact volume timeliness and user experience.

Our next question comes from Surinder Thind with Jefferies.

Gene, could you maybe talk about your willingness to kind of maintain the medium-term guidance here. It seems like we've had a number of challenging years where there's always something that disrupts your ability to hit that medium-term guidance. And given the pace of change, what gives you confidence that you can achieve medium-term guidance? It just seems like disruption is in the air at this point.

So beyond the current narrative here?

Yes. As I mentioned earlier, we're taking a view that the world is always going to be more challenging than it was prior to a couple of years ago. And so because of that, we needed to really up the value provide to clients a lot. And so we have a program to do it. As I mentioned earlier in the call, actually, the early indicators are good. It's going to take time because, again, clients, we have to produce -- we are to make the changes I talked about. Clients going to have to use them. Then that contract has to come up for renewal. And so it's going to take a couple of years before we get the full benefit of programs that we're just talking about.

But I have confidence that our CV will continue to accelerate over the time period because of the changes that we're making.

And Surinder, it's Craig. I think you kind of go back to every way we look at it, there is still a very large addressable market that we continue to figure out ways and unlock ways to go after that addressable market. The value we provide to our clients is unparalleled and unmatched. And again, all the things Gene outlined will allow us to continue to enhance and increase that value proposition.

And then if you think about the 4 elements that Gene mentioned. All of those things, we believe, will allow us to better penetrate and hold on to that huge addressable market opportunity. And so there's really no change in our view on the market. We know the value we provide to clients. We're focused on continuing to enhance that value. And we believe that all those things are unchanged in terms of the opportunity for us going forward.

That's helpful. And just a quick clarification here. I think, Gene, you mentioned this idea that to realize the full benefit of the investments that you're making maybe a few years. So is that the time frame then for kind of getting to your medium-term guidance targets? I just wanted to clarify that.

So basically, as I mentioned, the way we're going to get the benefits is we make the changes. And again, we made a lot of change last year. It's not going to stop. We're going to continue making changes this year and the same for as I talked about. Then clients have to use and benefit from the have to actually get our insights and see the advantage to it. Then they come up for renewal, it's just the nature of our business because it's the subscription-based business. It can take a couple of years until you get the whole benefit of everything we're talking about.

And just to underscore that, Surinder, I mean the guide, as we said, implies or overtly has contract value growth rate reacceleration over the course of 2026. We don't expect to be done with that in 2026. And so we believe all the things that we are doing. We continue to make sure we're -- as both Gene and I mentioned, prioritizing the right kinds of investments to drive that reacceleration and drive strong returns on those investments in the future. And so as we mentioned, no change in our view on the market.

We're doing all the right things, we believe, in terms of enhancing the value that we deliver to our clients and then with continued reacceleration, we believe we can drive lots of incremental shareholder value over the short, medium and long term.

Our next question comes from Manav Patnaik with Barclays.

This is Brendan on for Manav. I just want to ask for some more -- you talked about some of the rapid change internally. And I also noted you mentioned this 75% time reduction for insights. So I guess just any clarity on what exactly that means? And just anything else on the internal changes to drive this better retention?

Yes, Brendan. As I mentioned, we're making these internal changes on impact line time-use experience. One important part of timeliness is actually how fast we can produce insights. And as we did this in-depth analysis in terms of how we produce insights, we've developed -- we basically decided in today's world where things happen so quickly. Again, you look at like AI or cybersecurity where things happen on a daily basis, we weren't operating at that kind of pace.

And so beginning in July of last year. So these are not changes that happened like in January, beginning of July of last year, we looked at how could we take time out of the process and actually it involved a couple of things. First is new content types. So actually, we don't have content types like being called First take that is, if something happens today, you need to do about today, we get that first take out immediately because our clients do a big decisions about it.

The second area was actually been changing the process, and in fact, we found that we had too many people in parts of the process at the back part of the price, so not the creative part, but the editing part. And so we actually downsized the -- that part of the process. When we change process as a product, so it was better. And the third thing we did is an automation and part of the automation is AI. And so between those 3 factors, different content types restructure the process and what is jobs are and then provide a lot of automation, including AI, allowed us to shrink the production time, which, again, in today's world is really, really important.

As I mentioned earlier, we started making these changes in July. And so these are part of -- I mentioned -- we had more change than ever before in the second half of last year. This is one of those changes were again, it involves restructurings as well as process changes as well as substantive changes.

Our next question comes from Scott Wurtzel with Wolfe Research.

You've talked a lot about sort of expanding the breadth of your offerings, the velocity of the insights and the ease of use improvements as well. Just wondering if you can maybe talk about if there's any changes to your sales strategy, your go-to-market strategy that you're thinking about for this year? And then if you can also help us with how we should think about sort of the phasing of your quota-based headcount, quota-bearing headcount growth across GTS and GBS for '26.

Yes, Scott. So I did not focus as much on sales because the BTI transformation is so much -- such a step and a huge change for us. We've always done a lot of innovation in sales, and we continue to do those innovations. And so like -- and I'll give you some examples. So one of them is that we know that our salespeople they come in, they have not typically been the C-level clients that they're selling to. So we need to make sure they have the skills of the confidence. We have various sensitive training programs. One of the things we've done to enhance that, which has actually worked out better than we expected actually is use AI-based role play tools so that we can put a sales person situation with these AI tools or they are talking to a prospect or a client about things like what's the value, how -- what questions they might have, if you like to just count -- why don't I give where those questions might be, that our sales feeling practiced ahead of time.

We have always some old place, but adding AI-based tools has allowed us to exponentially explain those better role place. And the sales teams love these tools because it makes it so much more proficient. The second thing we're doing is there's content that if you look at all the content groups, we produce tons of it. What we've been doing is taking each week what is the content that would be most valuable for a salesperson in their role, whether they're selling CHROs it would be one set of content. If there's so CIOs a different set. If they're selling CFO, a different set. So for that week, if they had to be from one piece of conduct, what would it be we do it ever week.

So what we're doing is actually identifying that content, and we have a whole process to get it up to our sales force and explain why they need to about that content, how they should talk up with clients, et cetera. It equips them to actually be much more substantive with our clients and confident on the issues that, that link are the most important, which is another piece we're doing.

Another piece we're doing is expanding the role of business developers. And so we have a very modest sales force expansion planned for 2026. One of the things that we found even last -- even last year, our business developer productivity has been actually quite strong over time. So while we had a lot of challenges last year with existing clients, actually selling prospects, which are business developers do, was actually -- they were very strong. And so because the -- of our sales productivity strength there, that's the one place that we have added to our sales force going into 2026, which we think positions us well. Both 2026 and '27 is take time for people to full productivity.

There's a lot of other changes that gives you a flavor for -- you didn't talk about a lot. We are continuing to innovate and maybe pick up the pace of innovation in sales and services as well.

Our next question comes from Jeff Silber with BMO Capital Markets.

You guys always give us a lot of data, specifically on the retention side. And I know there's a lot of noise in that number because of federal government, et cetera. But I'm just curious, are you seeing clients keeping their relationships with you, but maybe cutting back on seats or taking a lower level of service? And if that's happening, how do you counter that?

Yes. So let me get started on it. So basically, what you said is exactly right, which is, we see very 2 clients actually outline casted us. Of course, we lose clients because there's virtues of acquisitions, some small companies go out of business, things like that. We make a stake sometimes, but if we look at '24 to '25, most of the retention issue we had was a client who has times saying, well, because of budget problems, I'm going to go down to 9 states. And that's kind of been the retention program issue that we faced.

So that has been clients saying, well, I would go buy the Gartner. It's kind of -- it's been more -- I get a lot of Gartner. It's tough times, in fact, what often happens is clients have turnover. So somebody will leave a job, let's say they retire. They may not fill that position immediately. That's the most real see -- if someone leaves the job, changes companies or retires whatever. And it happens to sort of budget and they basically say, I've got 10 seats, one of them, so there's no one there right now because they left the company, so why don't we cut that seat out and then we'll revisit it when we get the position build. That's the most common thing we face in today's world.

And Jeff, just on the metric side of that, you can see, if you look at just the total global sales, client retention rates are up about 100 bps year-over-year. And so not only are we holding on to that, we're holding on to more of them on a year-over-year basis. The challenges all the things that Gene highlighted. And again, we believe all the things we're doing around the insights transformation are the things that are actually going to help change the outcome there from a retention perspective.

And again, if you think about the investment in BD that Gene just talked about, all the things we're doing in the transformation business, continued process automation and process improvement, all of those things are what we believe will sort of bridge the gap and allow that contract value growth rate to accelerate in 2026..

Our next question comes from Ashish Sabadra with RBC Capital Markets.

You mentioned the tougher selling environment. I was just wondering, based on what you've seen in Jan, any thoughts or based on the feedback that you might have received for the sales people, how do you think about the sales environment in '26? what in particular, if you can talk about the demand environment and the budgets, how are shaping up? And color on those external market forces by industrial, that any particular industry like the tariff impact to industry if you have seen any lessening of pressure on that front?

So we're certainly assuming that this year 2026, that the selling environment is going to be no better anticipated in 2025, that there's still going to be lots of challenges. So that's kind of our assumption. What I will say is that there are areas that are worse. So for example, when you're -- we sell to every industry, including, for example, oil producers. And if you look from oil prices going down, they have a tougher environment than I did even last year with lower oil prices. On the other hand, a lot of the tariffs have stabilized. So some of the companies that had turnover tariffs are kind of -- and with 15% tariffs, if that's where it stays at, we can live with that. And so I think it's a mixed bag in sort of every part of the economy.

And so there are some parts that are a little bit better and there are other parts, I think, that are worse. So -- but again, we're assuming behind is not going to get better at all.

Our next question comes from George Tong with Goldman Sachs.

This is Sami on for George. Your margin guidance suggests a step down from 2025. Is this the new baseline for the business since the incremental investments seem more PAUSE structural? Or do you view the decline as temporary and margins should return to that 25% level fairly quickly?

So as we built the plan for 2026, I'd say a couple of things. So one is we've been managing our run rate into 2026 over the course of 2025. And we talked about this a little bit in our prepared remarks, basically ensuring our cost base is aligned with CV growth and also with the corresponding revenue growth. And so some of the actions we took 2025, we got benefit in '25 -- 2026 Those were really for 2026. So that would be the first point to make.

Second point I'd make is we've got our assumed operating expense plan, if you will, for 2026. Growing at about 5% year-over-year. And there's a little bit of FX in there. So on an FX net basis, growing around 4% year-over-year. That's basically our merit increase plus some selected investments, which we talked about in our prepared remarks. And then the third thing I'd say is, yes, we do believe that, that 23.5% is the new baseline, if you will, and we should be able to expand our margins going forward.

Now again, with faster CV growth, as Gene highlighted, that certainly helps from a revenue growth perspective, EBITDA flow through free cash flow perspective, et cetera, and ultimately margin perspective. But again, we baked in accelerating CV growth into our plan for 2026. As you know, the revenue does lag that. And so that's also part of the margin bridge story from '25.

I'm showing no further questions at this time. I'd like to turn the call back over to Gene Hall for closing remarks.

So here's what I'd like you to take away from today's call. Q4 financial results were ahead of expectations. Margins and free cash flow were strong. We reduced our shares outstanding by 8% in the year. In 2025, we began transforming business and technology insights on 4 dimension: Impact, volume, timeliness and user experience. These transformations will allow us to thrive and will it greater change and uncertainty. We expect to see the impact over the next few years, and we'll continue to keep you updated on our progress.

Looking ahead, we're well positioned to accelerate CV growth throughout 2026. We will continue to create value for our shareholders by providing timely objective insight, guidance and tools for our clients, responsibly investing for future growth, generating free cash flow well in excess of net income and returning capital to our shareholders through our repurchase program.

Thanks for joining us today, and we look forward to updating you again next quarter.

Thank you for your participation. You may now disconnect. Good day.

Good day, and welcome to Gartner's Third Quarter 2025 Earnings Conference Call. This call may be recorded.

I would now like to turn the call over to David Cohen, Senior Vice President of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to Gartner's Third Quarter 2025 Earnings Call. I'm David Cohen, SVP of Investor Relations. [Operator Instructions] After comments by Gene Hall, Gartner's Chairman and Chief Executive Officer; and Craig Safian, Gartner's Chief Financial Officer, there will be a question-and-answer session. Please be advised that today's conference is being recorded. This call will include a discussion of third quarter 2025 financial results and Gartner's outlook for 2025 as disclosed in today's earnings release and earnings supplement both posted to our website, investor.gartner.com. On the call, unless stated otherwise, all references to EBITDA or for adjusted EBITDA with the adjustments as described in our earnings release and supplement. Our contract values and associated growth rates we discuss are based on 2025 foreign exchange rates. All growth rates in Gene's comments are FX neutral, unless stated otherwise. Our references to share counts are for fully diluted weighted average share counts unless stated otherwise. Reconciliations for all non-GAAP numbers we use are available in the Investor Relations section of the gartner.com website. As set forth in more detail in today's earnings release, certain statements made on this call may constitute statements 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 2024 annual report on Form 10-K and quarterly reports on Form 10-Q as well as in other filings with the SEC. I encourage all of you to review the risk factors listed in these documents.

Now I will turn the call over to Gartner's Chairman and Chief Executive Officer, Gene Hall.

Good morning, and thanks for joining us today. Gartner's Q3 financial results were ahead of expectations. The macroeconomic environment remains dynamic with -- changes in the federal government and evolving tariff policies. We made operational adaptations that are starting to yield results. We continue to deliver great value to our clients. Enterprise client retention remained strong and contract renewal rates improved from the second quarter. Finally, we repurchased more than $1 billion of stock in the quarter, reducing share count by 6% year-over-year. AI will be one of the most innovative and pervasive technologies in history. We're seeing unprecedented demand for help with AI, and we're meeting that demand. We're helping tens of thousands of clients in thousands of enterprises across every function, every sized enterprise, every geography and every industry determine how best to use AI. We've developed indispensable AI insights that are captured in more than 6,000 documents, and our insights are growing every day.

To put this into perspective, if you read 10 documents per day, it would take about 2 years just to get through our current library. While enterprise leaders are excited about the prospects of AI, they continue to chase returns on those investments. We've cataloged more than 1,000 AI use cases, spanning roles in industries that outline which have the highest ROIs and why. These are [ inspensible ] insights. In addition, our entire client base has access to our AI drone tool, AskGartner. AskGartner enables quick access and generates in-depth summaries of our business and technology insights. We continue to accelerate and enhance AskGartner's capabilities at a rapid pace. Our insights are derived from Gartner's vast pool of proprietary data that is unique, highly differentiated and not available in the public domain. This includes data from Gartner IT key metrics, which is the industry's largest key metrics database. Our vast online peer network of more than 139,000 unique users, our more than 500,000 one-on-one client discussions annually and our more than 3 million ratings and reviews of technology and software services, all of this and more uniquely positions Gartner as the best source for helping clients determine the right AI tools, applications and benefits.

We're also leveraging AI to improve productivity and effectiveness internally. Gartner's data science team is using our sophisticated proprietary AI model to quickly and systematically determine the topics of greatest interest to our clients. We've provided our experts with advanced proprietary AI tools for content production. The amount of content published per analyst is up 31% year-over-year. Over time, we expect this will have a meaningful impact on retention, and we've reduced our average publishing time by 75% compared to last year. This allows us to respond to changes in the market faster than ever. Our service delivery teams are leveraging our AI tools to be better prepared for client discussions, and our sales teams are using AI to hone their selling skills.

As we continue to navigate the dynamic external environment, our adaptations are beginning to yield results. Client engagement is a leading indicator of future retention. Client engagement was up in the quarter. Client retention is higher than last year. Productivity of our business development executives who sell to new enterprises is strong. And across GTS and GBS, our new business pipeline is up double digits.

Gartner Conferences is also an important indicator of client value. Licensed users who attend our conferences retain at higher rates. Prospects to attend our conferences convert to clients at higher rates. Attendee ratings of our conferences are reaching all-time highs. I recently returned from our 35th Annual IT Symposium Expo in Orlando, Florida. We hosted more than 7,000 technology leaders over the 4-day in-person conference. You can't find this many senior technology executives gathered together anywhere else. Attendance at the conference was up 8% year-over-year, excluding the U.S. Federal Government in Canada. Attendees get the conference a very strong Net Promoter Score of 75, about 1/3 of the nearly 600 sessions on-site covered the topic of AI. Our opening keynote framed the AI journey across 2 dimensions: AI readiness and human readiness. Gartner analysts discussed how CIOs can navigate vendor choices, reimagine the workforce and redefine organizational identities to be agents of change. It was our highest-rated keynote ever. Looking ahead, advanced exhibitor bookings for our 2026 conferences are strong.

In summary, while the macroeconomic environment remains dynamic, Gartner's Q3 financial results were ahead of expectations. We made operational adaptations that are starting to yield results. We continue to deliver great value to our clients. Enterprise client retention remains strong and contract renewal rates improved for the second quarter, and we repurchased more than $1 billion of stock in the quarter. AI will be one of the most innovative and pervasive technologies in history. Gartner is the best source for clients to determine the right tools and applications for their environments. And of course, we continue to help in other mission-critical priorities such as cybersecurity. We're also leveraging AI to improve productivity and effectiveness internally, compelling client value, strong demand, operational adaptations and modest normalization of the external environment give us a clear path back to long-term sustained double-digit growth over the medium term.

With that, I'll hand the call over to our Chief Financial Officer, Craig Safian.

Thank you, Gene, and good morning. Third quarter contract value or CV grew 3% year-over-year. Excluding the U.S. federal government, CV grew 6%. Financial results in the third quarter were better than expected, and we are increasing our guidance for the full year. Our client value proposition is unique and compelling. Our Insights products are subscription based. They help senior operating executives make better decisions on their journeys to address their strategic priorities. Because we sell to leaders across all major enterprise functions in every geography, industry and company size, we have a long runway for growth in a large addressable market. We see a unique opportunity to create long-term value for our shareholders by repurchasing our stock at an attractive price point. In the third quarter, we bought $1.1 billion of stock. We will generate more free cash flow and have fewer shares outstanding over the course of the next several years. This, coupled with accelerating growth in 2026 and beyond will create significant value for shareholders.

Third quarter revenue was $1.5 billion, up 3% year-over-year as reported and 1% FX neutral. In addition, total contribution margin was 69%, up 90 basis points from last year. EBITDA was $347 million, up 2% as reported. FX was a 3-point benefit in the quarter. Adjusted EPS was $2.76, up 10% from Q3 of last year, and free cash flow was $269 million as our year-to-date performance remains strong. During the quarter, we made a change in our segment reporting structure. Most of the Insights non-subscription revenue is now reported as other revenue in the P&L. Insights, which is almost 100% recurring subscription revenue, remains our largest, most profitable operating segment. In the earnings supplement, we provided several quarters of historical data for the new Insight segment. Insights revenue in the quarter grew 5% year-over-year as reported and 4% FX neutral. Third quarter Insights contribution margin was 77%, up 30 basis points versus last year.

Contract Value was $5 billion at the end of the third quarter, up 3% versus the prior year. Excluding the U.S. federal government, CV growth was about 270 basis points faster at around 6%. Global NCVI in the quarter, excluding U.S. federal government, was positive $62 million, a sequential increase of $49 million from Q2. This $49 million improvement is larger than the sequential improvement from Q2 to Q3 last year. CV growth was broad-based across practices, industry sectors, company sizes and geographic regions. Across our combined practices, all the industries except public sector grew at mid-single-digit rates, energy, transportation and banking led the growth. CV grew at high single-digit or mid-single-digit rates across all commercial enterprise [ sizes ]. We drove double-digit or high single-digit growth in more than half of our top 10 countries. We had more than $240 million of new business in the quarter, which is down about 4% year-over-year, excluding U.S. Fed. Outside of U.S. Fed contracts, in-quarter renewal rates improved from Q2. This largely reflects benefits from the adaptations we've been making. Nearly all of our U.S. federal contracts will come up for renewal during 2025, with more than 85% having transacted in the first 3 quarters of the year. Dollar retention year-to-date was around 46%. At September 30, we had approximately $165 million of U.S. Federal CV.

Global Technology Sales contract value was $3.8 billion at the end of the third quarter, up 2% versus the prior year. Excluding the U.S. federal government for both periods, GTS CV grew about 300 basis points faster or 5% in the quarter. Tech vendor CV increased mid-single digits, with small tech vendor growth continuing to improve. For tech subsectors unaffected by tariffs, such as software and services, the CV growth was low double digit or high single digits. While retention for GTS was 98% for the quarter, excluding the U.S. federal business, wallet retention was more than 100%. In quarter contract renewal rates improved from Q2 to Q3. GTS new business was down 12% compared to last year and down about 4%, excluding the U.S. federal government. GTS quota-bearing headcount was up 1% year-over-year as we continue to optimize our territories. Our regular full set of GTS metrics can be found in our earnings supplement.

Global Business Sales contract value was $1.2 billion at the end of the third quarter, up 7% year-over-year. Excluding the U.S. federal government, GBS CV grew about 160 basis points faster at around 9%. Half of the major GBS practices grew at double-digit or high single-digit rates. Growth was led by the sales, legal and finance practices. GBS and [ CVI ] was positive $17 million in the third quarter. Excluding the U.S. federal government, GBS and CVI was positive $25 million. While retention for GBS was 102% for the quarter, in quarter contract renewal rates, excluding the U.S. federal government, improved from Q2 to Q3. GBS new business was down 10% compared to last year. Excluding the U.S. federal government, new business was down about 4%. GBS quota-bearing headcount was up 5% year-over-year. As with GTS, our regular full set of GBS metrics can be found in our earnings supplement.

Conferences revenue for the third quarter was $75 million. On a same conference basis, revenue growth was around 6% FX neutral. Contribution margin was 37%. We held 10 destination conferences in the third quarter as planned. Q3 consulting revenue was $124 million compared with $128 million in the year ago period. FX was a benefit of about 200 basis points in the quarter. Consulting contribution margin was 29% in Q3. Labor-based revenue was $94 million. Backlog at September 30 was $195 million. We had 1 large project which slipped out of Q3, affecting revenue and backlog.

In Contract Optimization, we delivered $30 million of revenue in the quarter, up 12% versus Q3 of last year and 11% FX neutral. Our contract optimization revenue is highly variable. Consolidated cost of services was about flat year-over-year in the third quarter as reported and down 1% FX neutral. SG&A increased 7% year-over-year in the third quarter was reported and about 6% on an FX-neutral basis. SG&A increased in the quarter compared with 2024 as a result of headcount growth and 2025 merit increases. EBITDA for the third quarter was $347 million, up 2% from last year as reported. FX contributed almost 3 percentage points. We outperformed in the third quarter through modest revenue upside, effective expense management and a prudent approach to guidance. Depreciation in the quarter of $31 million was up 6% compared to 2024. Net interest expense, excluding deferred financing costs in the quarter was $15 million. This is favorable by $2 million versus the third quarter of 2024 due to lower interest expense and higher interest income on our cash balances. The Q3 adjusted tax rate, which we use for the calculation of adjusted net income, was 23% for the quarter. This compares to last year's rate of 26%. The tax rate for the items used to adjust net income was 14% for the quarter. Adjusted EPS in Q3 was $2.76, up 10% compared to Q3 last year. We had 75 million shares outstanding in the third quarter. This is an improvement of about 3 million shares or approximately 4% year-over-year. We exited the third quarter with 73 million shares on an unweighted basis.

Operating cash flow for the quarter was $299 million. This compares with $291 million in Q3 2024, adjusting for last year's $300 million of conference cancellation insurance proceeds. CapEx was $29 million, up about $4 million year-over-year. This was primarily due to real estate related costs and in line with our expectations. Third quarter free cash flow was $269 million. This compares with $265 million in Q3 2024, adjusting for last year's insurance proceeds. Free cash flow on a rolling 4-quarter basis was 137% of GAAP net income and 76% of EBITDA. As we previously noted, there were several items that affect rolling fourth quarter net income and free cash flow, including cash taxes on the insurance proceeds in Q4 of 2024, 2 real estate lease termination payments and tax planning benefits. We also had a noncash goodwill impairment charge in Q3 2025. This relates to the digital markets business, which now sits in the other segment. Adjusting for these items, free cash flow on a rolling 4-quarter basis was 20% of revenue, 83% of EBITDA and 154% of GAAP net income.

At the end of the third quarter, we had about $1.4 billion of cash. Our September 30 debt balance was about $2.5 billion. Our reported gross debt to trailing 12-month EBITDA was well under 2x. Our expected free cash flow generation, available revolver and excess cash remaining on the balance sheet provide ample liquidity to deliver on our capital allocation strategy. Our balance sheet is very strong with $2.1 billion of liquidity, low levels of leverage and almost 90% fixed interest rates. We repurchased $1.1 billion of stock during the third quarter. Year-to-date through the end of September, we have purchased around $1.5 billion of our stock. Our repurchase authorization is about $1.3 billion. We expect the Board will refresh the authorization as needed. As we continue to repurchase stock, we create value for shareholders through EPS accretion and increasing returns on invested capital. We are increasing our full year guidance to reflect recent performance and trends. Based on October FX rates, we expect revenue growth to benefit by about 80 basis points and EBITDA growth to benefit by about 165 basis points for the full year. As a reminder, about 1/3 of our revenue and operating expenses are denominated in currencies other than U.S. dollar.

For Insights revenue in 2025, our guidance reflects Q3 Contract Value, which provides very high visibility for the fourth quarter. For Conferences, we are basing our guidance on the 53 in-person destination conferences we have planned for 2025. We have good visibility into current year revenue with the majority of what we've guided already under contract. For Consulting, we have more visibility into the next quarter or 2 based on the composition of our backlog and pipeline as usual. Contract Optimization has had several very strong years and the business remains highly variable. Our updated 2025 guidance is as follows: we expect Insights revenue of at least $5.06 billion, which is an increase from last quarter and is FX-neutral growth of about 4%. We expect Conferences revenue of at least $630 million, which is an increase from last quarter and is FX neutral growth of about 6%. We expect Consulting revenue of at least $575 million, which is growth of about 2% FX neutral. This is unchanged from last quarter. We continue to expect at least $210 million of other revenue. The result is an outlook for consolidated revenue of at least $6.475 billion, which is an increase from last quarter and is FX-neutral growth of 3%. We now expect full year EBITDA of at least $1.575 billion, up $60 million from our prior guidance. This reflects full year margins of 24.3%, up from last quarter. We expect 2025 adjusted EPS of least $12.65, an increase from last quarter. For 2025, we expect free cash flow of at least $1.145 billion. This reflects a conversion from GAAP net income of 165%. Our guidance is based on 76 million fully diluted weighted average shares outstanding, which incorporates the repurchases made through the end of the third quarter. We exited Q3 with about 73 million fully diluted shares. For Q4, we expect adjusted EBITDA of at least $400 million.

Our financial results in Q3 were ahead of expectations, and we've increased the guidance for 2025. Contract Value, excluding the U.S. federal business grew 6% in the quarter. Third quarter contract renewal rates, excluding the U.S. federal government, improved from Q2, and we saw a year-over-year increase in our sequential NCVI improvement. We are positioned to accelerate CV growth in 2026, on a path to long-term sustained double-digit growth in 2027 and beyond. We'll also 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?

Our first question comes from Jeff Meuler with Baird.

I heard positive callouts, I think on business development, productivity of the new enterprises [ in-quarter contractor new ] rates and pipeline. Can you just comment, I guess, on upselling and down-selling ex federal government trends? And are you starting to see improvement there? Or are there challenges from like elevated seat-based churn as we look to the 2026 expected acceleration in CV?

Jeff, it's Gene. So what I would say is that the selling environment is -- has improved modestly. And you [ mentioned the areas ] that I think are the most impacted. So if you look at new sales to new enterprises, those we've been doing quite well. And there are other parts of the business that are also doing well, as you mentioned. If you look at -- a lot of our business comes from upselling the existing enterprises. That's the place that we've [ been hurt the ] most is where we have an existing enterprise instead of getting growth there, maybe we'll lose a seat. But I'd say overall, the -- environment improved as we -- to Q3.

But are you starting to see any sort of change in some of the leading indicators for upselling to existing?

I think the -- we are seeing changes. I'd say first, as I mentioned on the call, our engagement is going up. So the amount of documents people are reading and the amount of one-on-one conversation with our experts that we're having, conference attendance, conference ratings, we look at all those as being leading indicators of future demand and all those indicators are up significantly. And we're very happy to see that. I think it does bode well for the future.

Sorry, Jeff, the one other thing I'd add is the other key indicator that aligns with and correlates to upsell is retention. And as we noted on the call a few times, the in-quarter retention rates improved from Q2 to Q3. And I'll state the obvious, much easier to upsell an account when they're renewing than when they're not. And so I think very positive also that we saw an in-quarter improvement in the renewal rates.

Our next question comes from Andrew Nicholas with William Blair.

[ It sounds like the selling environment ] [indiscernible] better than last quarter, some positive trends. I think last quarter, you talked about tariff-impacted industries specifically. Can you give an update on maybe CV growth there relative to the rest of the business?

Andrew, so the non-tariff-affected industries as we track them continue to perform about 200 basis points faster from a CV growth perspective than the tariff effected. So maybe a little -- better than the gap we saw in Q2, but by and large about the same performance wise compared to Q2.

Okay. I guess just as a follow-up to that. Does that give you any pause in terms of your expectations for improvement next year? I think part of the ramp back up to high single-digit plus in Contract Value growth in '26 is alleviation of that headwind. Just kind of curious how you're thinking about that or if we should be applying some -- services into that number given [ how ] things have trended over the past couple of months.

So I'd say the selling environment with tariff-impacted companies is starting to improve when there was more -- even more uncertainty but tariffs. If we went back a few months ago, companies [indiscernible] make purchase decisions. And what we see now is there's more certainty with regard to tariffs in certain geographies. And because of that now, our clients are starting to make decisions they were unable to make for. And so I'd sort of characterize as the tariff impact industries actually, I think next year, I expect we'll be actually doing better because there's more tariff certainty and clients are -- how do you deal with it. [ And they still need ] help with AI, cybersecurity [indiscernible]. And so I'd say there's a [ market ] improvement in the tariff impact to industries ability to make decisions to [ buy ].

Our next question comes from Faiza Alwy with Deutsche Bank.

I wanted to follow up on the improvement on the renewal rate. And I'm curious if you think that just a function of the macro environment? Or is it more a function of if you're selling differently or some of the new sort of strategies or services that you talked about, like cost optimization last time. So would love some additional color around what was the improvement?

Yes. I think it's 2 factors primarily. One is that we have made a lot of adaptations in terms of accelerating the pace of our research, [ is the quantity of ] our research, et cetera. And so I think [ a lot of how ] we're selling, how we're training our salespeople, so we've made a number of adaptations that I think, improve our ability to sell those clients. And then on top of it, as I mentioned, especially in the tariff [ impact of industries, ] there's less uncertainty in certain geographies. And so for those geographies now, clients are making decisions about [ buying cross ]. .

Understood. Okay. And then just a follow-up around sort of it sounds like you've had pretty good expense management. So curious if you can talk a bit more about that and sort of how sustainable that is and how you're sort of balancing investments versus cost optimization?

It's Craig. Thanks for that question. So on the expense side, and we've been doing this all year long, just ensuring that we are appropriately balancing both the OpEx in the year and also the exit run rate for next year, while also making sure that we are investing in core areas that we know our ingredients that support, catalyze or lead to double-digit growth in the future. And so I think we've been very disciplined on the expense side. We're looking to drive productivity in lots of areas, automate wherever possible, leverage lower-cost geographies wherever possible. All those things are play that we've been running for a really long time. [ We've amped ] those plays up. And again, we've amped it up even -- we've amped up so that we can afford to make investments in key areas. And so we fully expect next year to accelerate our CV growth and we fully expect next year also continue to make investments that catalyze that CV growth and sustain that CV growth into the future.

Our next question comes from Toni Kaplan with Morgan Stanley.

I actually wanted to follow up on that last question. Just in light of the environment, what are your expectations for sales headcount growth in '26 for both the segments, please?

So we're in the midst of hard core operational planning for next year. There's obviously a wide range of scenarios and outcomes that we are planning around, and we've got a wide range of potential investment scenarios that comes out of that as well. I think the base level assumption though should be that we'll grow our headcount 3 to 4 points slower than our expected CV growth. Again, back to that outlook or that algorithm, if you will, going forward so that not only do we fully expect to reaccelerate CV growth based on the people we have in seat today or we exit the year with, the investments we make next year will be to sustain that growth as we've grown to '27, '28 and beyond. And so expectation around continuing to invest in sales force at a rate, call it, 3 to 4 points lower than the expected CV growth rate is what you should expect.

That's great. And then just as a sort of broader question, in an environment where we're seeing some large headcount reductions at corporations and also AI potentially driving efficiency, so maybe you do need fewer employees. Like I think -- like does that sort of change your view on the seat-based model? And would you ever consider going more towards an enterprise-based model? I know that's not been the preference in the past, but just given those dynamics. I just wonder your views on that.

Toni, so if you look at who our clients are, the -- first we sell to the C-level executives that report to the CEO. So the Chief Information Officer, the Chief Financial Officer, the Chief HR Officer, the Head of Supply Chain, the General Counsel and so forth. And then we sell to the people that report to them. And so if you think about like the Head of Data and Analytics and an IT department, and the cybersecurity or the Head of IT Operations. And so if you look at those -- those are our target client roles. And so as companies have headcount reductions, they still have a CFO. They still have a Head of a County. They still have a CIO. They still have a Head of Cybersecurity. They have a Head of Data Analytics, they have Head of IT Operations. And so the staff reductions that clients are taking doesn't directly affect our clients. In fact, [indiscernible] clients -- help figuring out how they get more effectiveness out of technology, which plays right to our strengths in terms of helping to achieve those broader headcount reductions.

Our next question comes from George Tong with Goldman Sachs.

I wonder if you can elaborate on what your expectations are for how the trajectory of CV improves if you expect essentially a bottoming in the fourth quarter and then the acceleration across all of 2026 exiting the year in the high single digits. Just some additional color on the trajectory and pacing of improvement would be great.

George, it's Craig. So we'll provide more color on 2026 in February when we do our Q4 earnings and do our initial guide for 2026. You're right from a headline perspective in terms of our expectations, which is to reaccelerate over the course of 2026 into the high single-digit growth rates. And then obviously, our job is not just that 1 year, but to continue to accelerate the CV beyond that back into double-digit growth and then ultimately into our medium-term objective range. As we've talked about in the past, the growth can be lumpy, just it's based on math and based on ups and downs and businesses that push -- business that pushes or business that comes in sooner than we expect. Obviously, that compares in the first half of the year are favorable from a CV growth perspective. But we fully expect to accelerate over the course of 2026 into the high single-digit range.

Got it. That's helpful. And then sticking with CV, could you give some details on how tech vendors performed?

Yes, George, I'll start, and if Gene has anything to add in, we can throw that in. So we're seeing basically 2 trends within our tech vendor business. And I alluded to some of this during the prepared remarks. And so if you look at tech vendor broadly, there are subsectors that are not tariff affected like software and services. And there are subsectors that are impacted by tariffs like hardware, semis, et cetera. And when we look at the tech sector, it's inclusive of all those things. And so what we're seeing is in the software and services side of the house, our CV growth is high single, low double-digit growth rates, and that's been improving. We've seen improvement across that portfolio with a particular improvement in small tech software, which has improved probably the most over the last 12 months. But that is somewhat muted by what we're seeing from the tariff effective pieces of the tech subsector like hardware and semiconductors.

Our next question comes from Jason Haas with Wells Fargo.

I'm curious as -- I know it's early, but as your clients start to use AskGartner, I'm curious if that's changing the types of reports that they're consuming. And then do you plan to change how your analysts are writing reports or [indiscernible] reports that do better and are more suited for an environment where you're seeing more of your customers use AskGartner?

Jason, I think that in terms of what AskGartner doing is not changing what content clients are reading, but it does actually get them to use more content, which we know when they read more content, it actually results in higher retention. So it's driving not different readership, but more readership.

And the second part in terms of changing sort of how we write, we look at this all the time, which is we look at how do clients want to consume documents, like do they want both [ the structure of the document ], how long it is, et cetera. And so we're always fine-tuning that. And I'd say that it's a continuous thing. So AskGartner will impact that as we look at it. But it's not like we never did that. We always look at, say, what link do people want, do they want a summary upfront and so forth, what topics do they want to cover, what kind of standard document types like [ Magic Quadrants ] do they want to have, and that's just constantly evolving [indiscernible] more input into that constantly evolving process.

Got it. That make sense. And then another follow-up. Just could comment on the nonsubscription business. You mentioned and we've seen the release that it's been moved to the other segments. So I'm curious how you're thinking strategically about that business and I know it's been softer recently. So if you could talk about your plans to reaccelerate that, that would be very helpful.

Yes. So that business helps small businesses identify the right software for their business. There are literally millions of small businesses in the U.S. And then there are many millions were outside [indiscernible] both those markets. And when you think about things like funeral homes, for example, there's funeral home -- [ ERP sources basically ] management software. And they're obviously a lot of funeral homes around the world and they -- that software helps to run the business more effectively. So there's -- but if you're a funeral manager, you're not a software expert, you're not a technology expert, [indiscernible]. And so they need to -- out what software they want to have.

Conversely, if you're making software for one of these segments, it's hard to find the clients. And so we've -- the value we provide there is we write all the software and then we figure out we help the end users [ coverage ] software is best suited for their needs. And then we help [ the vendors ] actually connect with those people that are the best fits. So it adds value to both the end users and the technology vendors, and that's a lot of [ value ] to them. So that's kind of the strategic role of the business.

Our next question comes from Surinder Thind with Jefferies.

Following up on the earlier question about just the enterprise model and your target clients, what would be the downside of trying to maybe move to an enterprise model where maybe you can get a little bit more penetration? Or if there's maybe a bit more usage, more broadly within the firm that maybe things would be a little bit stickier.

Yes. So the -- as I mentioned before, our target market are the C level executives that report to the CEO and then their direct reports, and in some cases, their direct reports as well. So [indiscernible] as a couple of levels down the organization. That's a small group of people. So if you've got an IT department that has 5,000 people and our target audience wouldn't be all 5,000 people, now that doesn't -- we couldn't -- mean we couldn't in the future develop products that are designed for that larger group. And we certainly are considering that because it gives us another avenue of growth.

But right now, our target clients are more in the senior executives. And so if we -- if an enterprise license, it doesn't really add -- because our [ content ] is targeted at those specific individuals, if you're, for example, an individual developer and organization, content on how a CIO organizes their department isn't really useful to you. And so that's kind of why we don't do that today. Again, that's certainly a growth avenue that we're open to in the future.

That's helpful. And then maybe, Craig, when I think about just kind of the cost management side of the equation, I see a little bit of lower stock-based comp, maybe some more CapEx. How much of that is kind of onetime related to this year? And then how much of that is maybe going to continue on into or benefit 2026?

Surinder, great question. So in terms of the OpEx management, we've obviously been -- as I think I noted earlier, managing the P&L so that we deliver on our commitments for 2025, but we're also very mindful of making sure that as we enter 2026, we've got strong profitability, strong free cash flow set up as well. [ And what we've been ] doing is less about the onetime benefits of things and more about the ongoing benefits of things.

Again, the real key for us, as we've been managing this is less about [ what we save ], in 2025, more about what is our exit run rate for 2025 look like, so that, again, we've got the right people in the right place as aligned against the right strategic priorities. As we roll into 2026, again, with an expectation that CV growth will reaccelerate during 2026. And obviously, the revenue growth will follow that despite lag. But overall, it's really more about permanent savings so that we can deliver on our profitability and free cash flow targets and goals going forward.

Our next question comes from Manav Patnaik with Barclays.

My first question, Craig, was it's helpful to -- obviously, you called out the growth in the non-tariff impacted being better than the tariffs impacted. Just to frame it, like how much of your, I guess, total business is tariffs impacted like the mix? And then within, I guess, [indiscernible] since you called that out, too.

Yes, sure. So on the total business, about 40% of our Contract Value falls into the intersection that we've identified as tariff affected. So about 40% of the CV. On the tech vendor side, I don't have that number completely handy. It's probably in the 20% to 30% range would be on the tariff-affected side. Obviously, several hardware, semi, et cetera, companies are long-standing, great clients of ours, but the bulk of the business sits with -- in software and services.

Got it. And then just -- and this might be just be a definitional clarification, but you guys talked about pipelines up double digits and things looking -- improving. And then -- but then you had the new business down 4%. So can you just help bridge that gap?

Yes, sure. So as we talked about, obviously, pipeline is an indication of new business performance, but it's not a guarantee of new business performance. What I'd tell you, and which we talked about coming out of last quarter, it's certainly better to be in a position where our new business pipeline is up and up significantly on a year-over-year basis. It does 2 things for us.

One, it reinforces that there continues to be significant demand. And so these are not just random opportunities. When we look at the pipeline, it's actually a factored pipeline with named opportunities where a seller has had at least 1 conversation and usually multiple conversations with the potential end users. And so the demand is still there. Two, it does remain a challenging selling environment. May be modestly better in third quarter than second quarter, but still pretty darn challenging. And so we're seeing longer sales cycles. That has continued. We're seeing things kicked up for higher levels of approval, that has continued. But the good news is if we keep building that pipeline and keep working it, we have a high degree of confidence that a significant portion of it will turn into new business for us.

And then the other thing I'd note, again, this is why the year-over-year compare is really important. Obviously, we're in the midst of our largest conference season, and we leverage those conferences across the board as retention vehicle, a brand-building vehicle [ and where it is vehicle ] but also as a new business vehicle for us as well. And so the pipeline being up, especially in a quarter where it's a huge number just because of the volumes we drive in the fourth quarter. And it's in support of our busiest and largest conference season, I think is very promising for us.

Our next question comes from Josh Chan with UBS.

So jumping off of the last comment that you made Craig, about Q4, I guess, usually, it is a big selling season for you guys. Could you just kind of compare the environment now to like a normal year or last year? What similarity or differences do you see in the selling environment in this particularly large quarter of selling for you guys?

So it's -- some of the things we've talked about in the past, which is, again, there's still challenges in the U.S. federal government. The [ dose ] challenges have not gone away. There are still challenges with tariff impact to industries. But I'd sort of say, again, as I mentioned earlier, it's better than it was earlier in the year, worse than last year, but better than it was early in the year because now there's some certainty in certain geographies with tariffs, and that's allowing companies to make decisions. So that's a better selling environment for us. And then you have companies that are not impacted by tariffs directly, but they are indirectly impacted because they're often selling to the [indiscernible] companies where they have some [ small amount of materials that are tariff ] impact [indiscernible]. And so they're being more careful about their spending. [ But I try to say ] all that together, it's a better environment than it was earlier in the year, which, again, [indiscernible] as Craig said, our pipeline is up double digits. And we're feeling like it's again, not as good as last year, but [indiscernible] this year.

And then I would just add to that, Josh. The adaptations we've been making, we feel like will yield benefits as well, have started deal benefits in Q3 and will yield benefits in Q4. And then also, fourth quarter, as you noted and I noted earlier, is by far our largest new business quarter, our largest NCVI quarter. It corresponds with our sales in quota year-end. So we have an amazing sales force, and they are all very motivated to finish the year strong, and they have a lot of reasons and incentives to face the year strong as well. And so that all align to what we think should be a strong finish to the year.

That's great color on that. And then I guess if you think about the reacceleration in 2026 and the different components that drive that, I know some of it is just math. But for the ones that are not masked, which ones are you more or less confident in standing here at this point driving the acceleration in CV in 2026?

Yes, Josh. I think we wouldn't keep banging the drum that we have a high degree of confidence if we didn't have a high degree of confidence in the ones that are more mechanical or math and the ones that are adaptation or market related. And so again, as we look at that reacceleration, it's the same big 4 categories we talked about last quarter.

The good news is on the more speculative ones that we talked about last quarter, which was really the adaptations and things of that nature, we did start to see some benefit in the third quarter. [indiscernible] still challenging selling environment, right? So that is still the macro situation or dynamic selling environment. That's the macro situation. But the combination of the mechanical improvements like U.S. Fed, the continued acceleration of our tech vendor business, [ tariff being tariff affected being ] even modestly better than what we've been dealing with this year, and then all the other adaptations that we've already made and will be making is what gives us confidence on that reacceleration next year.

Our next question comes from Jeff Silber with BMO Capital Markets.

I just was wondering if you can talk about the pricing environment, if you can remind us when you institute pricing increases in terms of expectations of pushback, et cetera.

Jeff. So our -- the bulk of our price increase globally goes into a -- went into effect a couple of days ago on November 1. As we've done historically, our normal price increases -- our normal price increase is around 3% to 4%. We've been over that in some years when inflation was significantly higher, particularly wage inflation, but we're more normalized now. So expectation around 3.5% went into effect earlier this week.

And Jeff, we don't get a lot of pushback on price increase. If you think about -- we've got a client that's spending $200,000 a year with us, and [ increased prices to 3% or 4%, you're talking out $600,000 ] and so their decision isn't about the $6,000 or $7,000. It's what's the value I'm getting from Gartner.

Okay. I appreciate that. I know in your prepared remarks, you broke out ex federal government, but we've had a government shutdown in the past month or so. Have things gotten worse, have things slowed down because of that?

Yes. It's a little bit, Jeff. Obviously, we are still conducting business with the federal government. We signed deals during the month of October while the government was shut down. It sort of requires that the people on the other side be deemed as essential employees and then we can get things done. We're hopeful that this resolves itself.

The good news is it's our smallest renewal quarter. We just came off the federal fiscal year-end, which was Q3. So we only have about 15% of the CV we started the year with remaining to go in the fourth quarter. And as I mentioned, we have secured renewals and new business over the course of October, but it is dependent on whether the agency is deemed as [ essential ] or the people we're dealing with their teams as essential and are working. If they are, we get the deal. If they're not, we're waiting for the deal.

Our next question comes from Jasper Bibb with Truist Securities.

Hoping to get an update on AskGartner. Can you share some early indications on customer engagement there? And also, I just wanted to confirm whether that's going to be part of normal license access and not a separate charge because I got a few questions on that this morning. So I just wanted to make sure we clarify there.

Yes. So AskGartner has now been rolled out to all of our licensed users. So 100% of our [indiscernible] There is no additional fees included in the base package. And the key impact it's had on our clients is that it's [indiscernible] used by them and [ has increased ] their overall usage of [indiscernible] overall engagement with us. And so we think it will help with retention as they used to have more engagement.

Got it. And then client [indiscernible] a little bit quarter-over-quarter again. Is that primarily on the small tech vendor piece? And do you expect client count to stabilize or increase in '26 if small tech vendor picks up?

Jasper, it's Craig. So the story on the client count remains small tech vendor churn. That's the bulk of it. We're still adding lots of small tech vendors, but continue to churn through some as well that are either going out of business, losing funding, et cetera. Over the medium term to get back to double-digit CV growth and ultimately 12% to 16% CV growth, we would expect to see over that period, stabilization and then modest growth in the enterprise count. It's not necessarily required given that we have historically generated huge amounts of growth in new business from existing clients, we could drive a lot of growth that way. But to get us into the 12% to 16% range, we certainly need a significant contribution from new -- as well. So we would expect that number to go up over time.

Our next question comes from Scott Wurtzel with Wolfe Research.

Just 1 for me. I just wanted to get a little bit more color on the quota-bearing headcount trends, just seeing kind of the increase quarter-over-quarter in GTS and down quarter-over-quarter in GBS, just given that kind of GBS as being a kind of stronger growth engine for the business. Just wondering if you can talk about the dynamics going on there.

Yes. Sure, Scott. So on a quarter-by-quarter basis, I wouldn't read too much into the numbers. It's really dependent on when people leave and when new people come on board to replace them. And so there can be a little choppiness there. I think the 2 things I would highlight is you're looking at net numbers. And so we, as an example, did recalibrate or resize our U.S. federal sales force, and have been continuing to do that to make sure it aligns with the new reality of the business there. And so you're looking at a net number on the ex U.S. Fed, obviously, the headcount growth would be a little bit higher.

And then the second thing I'd say is, as we've talked about in the past, we are always optimizing where that QBH goes. And so whenever we have turnover, we're analyzing the territory that was vacated to determine what the next best action should be with that territory. In some cases, it's a fruitful territory. It's profitable. And so we replace [indiscernible] like-for-like. Other times, we are reallocating within our overall portfolio to make sure that we are aligning our assets and sellers to go after the most profitable, most fruitful opportunities. And so within the numbers, just note, it's not a stable -- these people are calling on the same exact accounts as we had a year ago, we're constantly optimizing to make sure that we are optimizing essentially our investment in sales to go after the most profitable long-term opportunities from a growth perspective.

And our last question comes from Ashish Sabadra with RBC Capital Markets.

Just kind of a broader question. As you've had more conversations with customers and prospects, how often does the LLM, if any, comes up in those conversations as an alternative to Gartner?

Yes. So when we talk to clients, the main thing that comes up with regard to AI is helping them with their -- getting value [indiscernible] ROI out of AI. And so that's [indiscernible] comes up. If you look at like on a deal level, how many deals does the client say, hey, I'm thinking about using AI instead of using Gartner, it would be extremely small. We track -- as I talked in the past, in our system, we actually ask our salespeople to track it. We have follow-up calls, we have a lot of interactions. And basically, in terms of when a client actually says, hey, I'm thinking about using Gartner versus literally AI, that comes off a very, very, very small number of transactions.

That's great color. And then as we think about the different [indiscernible] access [indiscernible] versus guided, have you seen a difference in retention trend or new business growth across any of those tiers?

So historically, we've had different levels of [indiscernible] guided. Those traditional trends have held. They're very similar. So there's no kind of different than what we've seen historically.

Thank you. There are no further questions at this time. I'd like to turn the call back over to Gene Hall for closing remarks.

Well, here's what I'd like you to take away from today's call. While the macroeconomic environment remains dynamic, our Q3 financial results were ahead of expectations. We made operational adaptations that are [ starting to get ] results. We continue to deliver great value to our clients. Enterprise [ client ] retention remains strong and contract renewal rates improved for the second quarter, and we repurchased more than $1 billion of stock in the quarter. AI will be one of the most innovative and pervasive technologies in industry. Gartner is the best source for clients to determine the right AI tools and applications for their environments. And of course, we continue to help [indiscernible] such as cybersecurity. We're also leveraging AI to improve productivity effectiveness internally. Compelling client value, strong demand, operational adaptations and modest normalization of the external environment give us a clear path back to long-term sustained double-digit growth over the medium term.

Thanks for joining us today. We look forward to updating you again next quarter.

Thank you for your participation. You may now disconnect. Everyone, have a great day.

Good morning, everyone. Welcome to Gartner's Second Quarter 2025 Earnings Call. I'm David Cohen, SVP of Investor Relations. [Operator Instructions]

After comments by Gene Hall, Gartner's Chairman and Chief Executive Officer; and Craig Safian, Gartner's Chief Financial Officer, there will be a question-and-answer session. Please be advised that today's conference is being recorded.

This call will include a discussion of second quarter 2025 financial results and Gartner's outlook for 2025 is disclosed in today's earnings release and earnings supplement, both posted to our website, investor.gartner.com.

On the call, unless stated otherwise, all references to EBITDA are for adjusted EBITDA with the adjustments as described in our earnings release and supplement. Our contract values and associated growth rates we discuss are based on 2025 foreign exchange rates. All growth rates in Gene's comments are FX neutral, unless stated otherwise. All references to share counts are for fully diluted weighted average share counts unless stated otherwise. Reconciliations for all non-GAAP numbers we use are available in the Investor Relations section of the gartner.com website.

As set forth in more detail in today's earnings release, 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 2024 annual report on Form 10-K and quarterly reports on Form 10-Q as well as in other filings with the SEC. I encourage all of you to review the risk factors listed in these documents.

Now I will turn the call over to Gartner's Chairman and Chief Executive Officer, Gene Hall.

Good morning, and thanks for joining us today. There are 2 things I'd like you to take away from today's discussion. First, AI is an important opportunity for Gartner across several dimensions. And second, we're making adaptations that give us a clear path back to double-digit growth. AI is one of the most pervasive changes happening around the world. It was the single largest demand area across all the topics we cover for virtually every role. Clients see large potential in AI, and they need help in determining the best way to capture that potential. Across functions, geographies and industries, clients are looking to Gartner to provide that help, and we're the best solution to support clients' AI journeys.

While AI was the largest single topic, there were others that were mission critical to clients, including cybersecurity, cost optimization, data governance and management, IT strategy and digital transformation, risk management, finance transformation, HR talent planning and more.

We also experienced some headwinds during Q2. Measures of CEO confidence fell to recessionary levels, among the fastest drops ever recorded. And in a Gartner survey, 78% of CEOs indicated they're implementing cost-cutting measures to safeguard performance. We have a high degree of confidence in what caused these headwinds because we track the reason for every loss for both renewals and potential new business.

The largest headwind in Q2 was with the U.S. federal government. Initiatives from the Department of Government Efficiency, or DOGE, made it more challenging for clients to purchase or renew many of our products. In addition, there were impacts from tariff policies.

With the prospect of higher tariffs, many companies implemented strong cost-saving measures. Even companies not directly impacted by tariffs began implementing these measures. Purchase decisions that were previously made by functional leaders are now being escalated to the CFO or even the CEO. These changes occurred at a record pace, impacting our performance during Q2.

One of Gartner's core strengths is agility in responding to change. So we're making adaptations to accelerate our performance going forward. With the U.S. federal government, we're ensuring we stay aligned to the changing priorities, especially improving efficiency. Of course, we'll also continue to support critical issues such as cybersecurity, and we're working with our clients to adjust to new procurement processes. We're also adapting to industries impacted by changing tariffs. A portion of our clients are always interested in cost optimization. We have great expertise in helping clients on this topic. Clients highly value our guidance because it results in quantifiable cost savings.

Now with tariff changes, the number of clients interested in cost optimization has increased dramatically. So we've expanded our capabilities, including certifying our client-facing associates on delivering these services. We're also helping clients determine how to optimally reconfigure supply chains for tariff changes. Even industries not directly impacted by tariffs will get strong value from enhanced cost optimization capabilities.

We're making several other changes to reaccelerate growth. In research, we redesigned our insight processes to ensure we create content relevant to the broadest possible audience and that delivers the biggest impact. We're also incorporating additional proprietary data to enhance the value clients receive from our insights. We've begun rolling out Ask Gartner, an AI-powered tool for our clients to access trusted insights from Gartner. Ask Gartner has been in development for almost 2 years to ensure clients get the high-quality results they expect from Gartner. It's based on best-in-class large language models. Ask Gartner quickly breaks down a client's question into topic and intent and provide structured answers through natural language processing. Answers contain direct references to our distinctive insights.

Unlike other AI tools, which provide answers based on public information from the Internet, Ask Gartner's responses are fully grounded in our world-class proprietary independent and objective insights. Ask Gartner also provides users with relevant images and recommends follow-up questions, making our insights more discoverable and fully immersing clients in the Gartner platform.

Ask Gartner is unique because it marries the power of Gartner insights with AI, and our teams are focused on making sure it gets better and better. We've been testing it with internal teams and a pilot group of clients. One client referred to Ask Gartner as, "a game changer for Gartner." Some mentioned time savings of up to 75% on the platform.

We're also leveraging AI internally. We've introduced more than 50 applications that use AI to improve associate productivity and effectiveness.

Finally, we appointed a strong tenured Gartner leader to head up our research organization. We're also making adaptations in sales and services to accelerate growth. We recently launched a new program to better equip client-facing associates with comprehensive knowledge on hot topics, including AI and cost optimization, and we're certifying our associates on these critical topics to ensure a high level of capability. Not all of our clients are aware of the full suite of high-value capabilities they're entitled to. So we're training our teams to ensure clients benefit from the full range of services.

We're also expanding and refining our sales development program, which we've discussed before. This is an apprentice type program that pairs early career talent with experienced sales professionals. Program graduates then take on their own sales territories and have higher productivity than those hired directly into role. We expect these and other adaptations will get us back to double-digit growth.

Gartner's strategy and the foundation of our business is to guide executives on their journeys to achieve their mission-critical priorities. Addressing these priorities usually requires long complex journeys. Through our high-value proprietary business and technology insights, we got our clients at every stage of their journeys.

Gartner Insights are derived from a vast pool of highly proprietary data. Every year, we hold more than 500,000 2-way conversations with more than 80,000 executives across every major function and in every industry. We learn what they care about most, what's working and what isn't. All of this amounts to several hundred terabytes of highly proprietary data.

We also conducted more than 27,000 briefings annually with technology provider executives. This gives us unique insights into the technology industry that no one else has. We supplement this data with additional terabytes of information from proprietary surveys, tools, models, benchmarks and more. Our data is real time and continuously updated, reflecting the latest information and challenges our clients are experiencing.

Our more than 2,500 world-class experts use this vast proprietary data in highly developed processes to create unique and valuable insights. These insights aren't available anywhere else. We know we need to get better every year. So we continually develop new proprietary data sources and constantly innovate our processes. The segment that develops these insights has historically been called Research. To better describe the value we deliver, we're changing the name of the segment. Going forward, our Research business will now be called Business and Technology Insights, or Insights for short.

Summarizing, there are 2 things I'd like you to take away from today's discussion. First, AI is an important opportunity for Gartner across several dimensions. It's the highest demand topic that we're helping our clients with today. We [indiscernible] Gartner to provide faster, easier access to your insights, and we're improving internal efficiency with AI tools. And second, we're making adaptations that will give us a clear path back to double-digit growth.

With that, I'll hand the call over to our Chief Financial Officer, Craig Safian.

Thank you, Gene, and good morning. Second quarter contract value or CV grew 5% year-over-year. Revenue, EBITDA, adjusted EPS and free cash flow were better than expected. We remain highly focused on delivering extraordinary value to our clients. The challenging Q1 selling environment, which was affected by DOGE and tariff-affected industry spending changes continued through the second quarter. We are updating our guidance to reflect the Q2 results and the outlook for the balance of the year. With our disciplined expense management, we will continue to deliver strong profitability and free cash flow.

Since the end of the first quarter, we increased the pace of share repurchases. We bought $274 million in Q2 and an additional $282 million since the end of the second quarter. This brings the year-to-date repurchase total to approximately $720 million. We will generate more free cash flow and have fewer shares outstanding over the course of the next several years. This, coupled with return to double-digit growth, will create significant value for shareholders.

After reviewing the results for the second quarter and updating the guidance, I will take you through some of the numbers related to our path back to double-digit CV growth that Gene highlighted. Second quarter revenue was $1.7 billion, up 6% year-over-year as reported and 5% FX neutral. In addition, total contribution margin was 68%, up 70 basis points from last year. EBITDA was $443 million, up 7% as reported and 5% FX neutral versus the second quarter of 2024. Adjusted EPS was $3.53, up 10% from Q2 of last year. And free cash flow was $347 million, another strong performance.

As Gene just highlighted, we renamed the Research segment to Business and Technology Insights or Insights to reflect the nature of the value we provide to clients. Insights revenue in the quarter grew 4% year-over-year as reported and 3% FX neutral. Subscription revenue grew 5% FX-neutral. Nonsubscription Insights revenue continues to be affected by shifts in traffic volumes. Second quarter Insights contribution margin was 74%, up 20 basis points versus last year.

Contract value was $5 billion at the end of the second quarter, up 5% versus the prior year. Contract value and CV growth are FX-neutral. Excluding the U.S. federal government, CV growth was about 150 basis points faster at around 6%. The Global NCVI in the quarter, excluding the U.S. federal government, was positive $13 million.

CV growth was broad-based across practices, industry sectors, company sizes and geographic regions. Across our combined practices, all the industries except public sector grew at high single or mid-single digit rates. Energy, banking, transportation and health care led the growth. CV grew at mid-single or high single-digit rates across all commercial enterprise sizes.

We drove double-digit growth in half of our top 10 countries. CV declined on a year-over-year basis in Canada and Australia, which combined represents around 6% of global contract value. Nearly all of our U.S. federal contracts will come up for renewal during 2025 with over 60% having transacted in the first half of the year. Dollar retention year-to-date was around 47%. At June 30, we had approximately $200 million of U.S. Federal CV.

Global Technology Sales contract value was $3.8 billion at the end of the second quarter, up 4% versus the prior year. Excluding the U.S. federal government for both periods, GTS CV grew about 180 basis points faster or 5% in the quarter. The U.S. Federal business NCVI was negative $26 million. While retention for GTS was 99% for the quarter, excluding the U.S. federal business, while retention was over 100%. GTS new business was down 8% compared to last year. GTS quota-bearing head count was up 3% year-over-year. Our regular full set of GTS metrics can be found in our earnings supplement.

Global Business Sales contract value was $1.2 billion at the end of the second quarter, up 9% year-over-year. Excluding the U.S. federal government, GBS CV grew about 60 basis points faster at around 10%. All of our major GBS practices grew at double-digit or high single-digit rates. Growth was led by the sales, finance and legal practices. GBS NCVI was positive $14 million in the second quarter. Excluding the U.S. federal government, GBS and CVI was positive $18 million. Wallet retention for GBS was 104% for the quarter. GBS new business was down 3% compared to last year. GBS quarter-bearing head count was up 10% year-over-year. As with GTS, our regular full set of GBS metrics can be found in our earnings supplement.

Conferences revenue for the second quarter was $211 million, increasing 14% as reported and 12% FX neutral compared to Q2 of 2024. Adjusting for the 3 conferences, which moved from Q1 or Q3 last year to Q2 this year, revenue growth was around 6% FX neutral. Contribution margin was 57%, consistent with typical Q2 seasonality. We held 19 destination conferences in the second quarter as planned. Q2 consulting revenue was $156 million compared with $143 million in the year ago period, up about 9% as reported and 6% FX neutral. Consulting contribution margin was 40% in the second quarter.

Labor-based revenue was $110 million. This part of the segment was up 3% versus Q2 of last year's reported and about flat FX neutral. Backlog at June 30 was $191 million, down about 2% year-over-year FX neutral.

In contract optimization, we delivered $46 million of revenue in the quarter, up 26% versus Q2 of last year and 24% FX neutral. The quarter was ahead of our expectations. Our contract optimization revenue is highly variable.

Consolidated cost of services increased 4% year-over-year in the second quarter as reported and 2% FX neutral. The biggest driver of the increase was higher compensation costs. SG&A increased 9% year-over-year in the second quarter as reported and about 8% on an FX-neutral basis. SG&A increased in the quarter as a result of head count growth.

EBITDA for the second quarter was $443 million, up 7% from last year's reported and up 5% FX neutral. We outperformed in the second quarter through modest revenue upside, effective expense management and a prudent approach to guidance. Depreciation in the quarter of $31 million was up 11% compared to 2024. Net interest expense, excluding deferred financing costs in the quarter was $11 million. This is favorable by $8 million versus second quarter of 2024 due to higher interest income on our cash balances. The modest floating rate debt we have is fully hedged through the third quarter of 2025.

The Q2 adjusted tax rate, which we use for the calculation of adjusted net income was 24% for the quarter. This compares to last year's rate of 23%. The tax rate for the items used to adjust net income was 25% for the quarter. Adjusted EPS in Q2 was $3.53, up 10% compared to Q2 last year. We had 77 million shares outstanding in the second quarter. This is an improvement of about 1 million shares or approximately 1% year-over-year. We exited the second quarter with just under 77 million shares on an unweighted basis.

Operating cash flow for the quarter was $384 million, up 4% compared with last year. CapEx was $36 million, up about $7 million year-over-year. This was primarily due to real estate related costs and in line with our expectations.

Second quarter free cash flow was $347 million, up 2% compared with Q2 in 2024. Free cash flow on a rolling 4-quarter basis was 119% of GAAP net income and 95% of EBITDA. As we noted previously, there were several items that affect rolling fourth quarter net income and free cash flow, including after-tax insurance proceeds in 2024, 2 real estate lease termination payments and tax planning benefits last year. Adjusting for these items, free cash flow on a rolling 4-quarter basis was 20% of revenue, 83% of EBITDA and 157% of GAAP net income.

At the end of the second quarter, we had about $2.2 billion of cash. Our June 30 debt balance was about $2.5 billion. Our reported gross debt to trailing 12-month EBITDA was well under 2x. Our expected free cash flow generation, available revolver and excess cash remaining on the balance sheet provide ample liquidity to deliver on our capital allocation strategy of disciplined share repurchases and strategic tuck-in M&A. Our balance sheet is very strong with $2.9 billion of liquidity, low levels of leverage and effectively fixed interest rates.

We repurchased $274 million of stock during the second quarter. Since the end of June, we have bought back an additional $282 million worth of shares, bringing us to about $720 million year-to-date. Last week, the board increased the repurchase authorization to about $1 billion. We expect they will refresh the authorization as needed. As we continue to repurchase stock, we create value for our shareholders through EPS accretion and increasing returns on invested capital.

We are updating our full year guidance to reflect recent performance and trends. We are remaining agile in managing our cost structure while also ensuring we have enough selling capacity now and in the future. This includes QBH and other sales-related roles, which are key inputs into our algorithm for future sustained double-digit growth.

Based on July FX rates, we expect revenue growth to benefit by about 95 basis points and EBITDA growth to benefit by about 190 basis points for the full year. As a reminder, about 1/3 of our revenue and operating expenses are dominated in currencies other than the U.S. dollar.

For the Insight subscription revenue in 2025, our guidance reflects an expectation that Q2 trends for new business and retention continue through the second half. At this point in the year, we have very high visibility into the Insight subscription revenue for calendar 2025. We've also incorporated the information we have about U.S. federal spending decisions to date. In addition, we've taken a prudent view of the outlook.

While the selling environment remains challenging, and we've seen longer sales cycles, we entered Q3 with double-digit year-over-year growth in both GTS and GBS new business pipelines.

For the nonsubscription part of the Insight segment, we've built a continuation of recent traffic and pricing trends into the guidance.

For conferences, we are basing our guidance on the 53 in-person destination conferences we have planned for 2025. We have good visibility at the current year revenue with the majority of what we've guided already under contract.

For consulting, we have more visibility into the next quarter or 2 based on the composition of our backlog and pipeline as usual. Contract optimization has had several very strong years and the business remains highly variable.

Our updated 2025 guidance is as follows. We expect Insights revenue of at least $5.255 billion, which is FX-neutral growth of about 2%. This reflects subscription Insights revenue growth of about 4%. We expect around $210 million of non-subscription revenue. We expect conferences revenue of at least $625 million, which is FX-neutral growth of about 5%. This is unchanged from last quarter. We expect consulting revenue of at least $575 million, which is growth of about 1% FX neutral. This is also unchanged from last quarter. The result is an outlook for consolidated revenue of at least $6.455 billion, which is FX-neutral growth of 2%.

We now expect full year EBITDA of at least $1.515 billion, down $20 million from our prior guidance. This reflects margins of 23.5%, consistent with last quarter's outlook despite the lower revenue guidance. We expect 2025 adjusted EPS of at least $11.75, an increase from last quarter.

For 2025, we expect free cash flow of at least $1.145 billion. This is unchanged from our prior guidance and reflects a conversion from GAAP net income of 141%. Our guidance is based on 77 million fully diluted weighted average shares outstanding, which incorporates the repurchases made through the end of the second quarter. For Q3, we expect adjusted EBITDA of at least $300 million.

Our financial results through June were modestly ahead of expectations, underscoring the resilience of our business model. We've updated the revenue guidance to reflect continued challenges in the selling environment. Our EBITDA margin outlook remains higher than it was at the start of the year. We have successfully navigated challenging environments before and know the right things to do. We are adapting by making operational changes and renewing focus on leveraging our proven sales best practices. This will drive the return to historical levels of productivity. Some of the headwinds are related to temporary external factors, including the U.S. federal government and tariff affected industries. As productivity gets back to historical levels, we will accelerate QBH to capture the very large addressable market opportunity we have.

Before we go to questions, I will take you through some of the numbers related to our path back to double-digit CV growth. If recent retention and new business trends continue in the second half, we would exit this year with CV growth in the low to mid-single digits. This reflects DOGE, tariff-affected industry dynamics and tech vendors only part of the way back to normal spending. There are 4 primary categories, which will drive the return to double-digit growth.

First, most of our U.S. federal contracts will have come up for renewal this year. Removing the DOGE headwinds with no assumption for net growth next year will add back around 200 basis points of CV growth in 2026.

Second, as companies and tariff-affected industries get more clarity around trade policies, we expect them to get back to normal course planning and spending. This should add at least 100 basis points to growth.

Third, tech vendor remains on a path back to double digits. We are encouraged, in particular, with the improvement in the small tech vendor part of the business.

Within large tech vendors, the overall trend remains positive. The second quarter was affected by the timing of a few larger deals getting delayed and tariffs affecting some parts of the hardware subsegment. Continued reacceleration of tech vendor CV would add back another 100 basis points to growth.

Finally, we are focused on improving our operations to drive faster growth, even in challenging selling environments. This includes more focus on cost optimization insights, the continued rollout of Ask Gartner, the initiatives Gene discussed and more. We expect to add as much as 100 to 200 basis points to growth from these initiatives and better overall execution. All these factors would get us to at least high single-digit growth in 2026, well on our way back to double-digit growth in 2027 and beyond.

Another take on the opportunity is to recognize that as the sales teams return towards historical levels of productivity, we will return to double-digit CV growth. With around 5,000 sellers, we can generate enough NCVI to grow high single to low double digits next year. This is the case with outgrowing QBH and even at productivity levels lower than the historical $110,000 to $120,000 per seller. We are implementing programs to support the sales teams to drive client and prospect engagement and to grow our sales and sales support teams outside of direct frontline quota-bearing headcount.

Based on recent trends, as I mentioned, CV growth this year will be in the low to mid-single digits. With the adaptations we are making and with the stabilization of our most acutely impacted end markets, we expect growth to accelerate next year and again in 2027. Based on this outlook, our overall medium-term growth algorithm, including double-digit revenue growth and modest margin expansion remains unchanged. We'll also 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?

[Operator Instructions] Our first question coming from the line of Andrew Nicholas with William Blair.

Appreciate the build on the return to high single-digit or even double-digit CV growth. I wanted to ask specifically on the tariff-impacted industry piece. Is there anything you can do to kind of size what you've determined to be the tariff affected industries? How much that represents in terms of CV? I think you said 100 basis points improvement next year from kind of some normalization there. Any more color or quantification on that front would be helpful.

Yes. Andrew, thank you for the question. The way we've defined tariff impact in industries is not perfect, I will tell you. We've looked at industries that rely heavily on importing and exporting and we've looked at really ones focused here in the U.S. and those where the U.S. is a major trade partner. When we rolled that up around 35% to 40% of our CV fell into that category across both GTS and GBS.

Okay. And then on the AI topic, I want to maybe focus on the operational efficiency piece. Again, just asking, is there anything you can do to kind of quantify that? I understand that improving the product was one part of the top line growth acceleration. But if we think about later this year or into '26 and '27, is there anything that you can say about what those internal efficiencies might do for the cost structure or margin profile broadly?

Andrew, it's Gene. So we've implemented about 50 internal applications where we're using AI. Most of those are custom applications, I mean it's not just using a commercial tool. We make that available as well, but we have a bunch of -- majority of this application would be custom AI applications. And while the -- I'd say there are some of those applications that have promising early results, it's too early to say that they're going to have -- what impact they're going to have over the long term on our cost structure.

Our next question coming from the line of Toni Kaplan with Morgan Stanley.

Thank you for the comments on Ask Gartner in the prepared remarks. And also the clarification on sort of the proprietary data and processes that you have. I was hoping -- I know AI has been a topic that has been most frequent for you coming in from customers. Just what are the most common questions or topics that clients come to you for understanding, just better and how you help them like that? And I think my main purpose in asking the question is trying to figure out what is it that can't be addressed by sort of deep research AI tools that you're able to help with that clients are seeing the value in?

Toni, so if you look at Gartner, let me just start with the -- what's differentiated for us, which it sounds like is that a [ part ] of your question. Is that right?

Yes.

Okay. Yes. So the first thing is that we help clients with what we call mission-critical priorities, which are things like building the cybersecurity capability, how to fully leverage AI within their organizations. You'll leverage technology for a finance transformation. These kinds of initiatives, what we call mission-critical priorities, are things that take a lot of effort, a lot of investment typically over a period of years. Those are the things that we're helping our clients with. So the first thing to understand is we're not kind of just answering a simple question. We're actually helping clients on a journey to accomplish these high leverage, high-impact initiatives. And we're joined with the senior roles, executives in the company. So think about it, again, Chief Information Officer, Chief HR Officer or Chief Financial Officer. And so they're relying on us to help them take -- set them through those journeys and make sure they're successful with these relatively large complex projects.

And so again, we're not answering a simple question. We're actually helping them with these complex journeys. And then the way we do that is actually by several terabytes of proprietary data. And what we have is we have, as we mentioned in the past, something like 500,000 one-on-one conversations between our analysts and clients each year, those conversations cover things like what are their mission ciritical priorities? What are the challenges? What's working? What's not working? And in addition to [indiscernible], we have -- when it comes to software, which is a big part of a lot of solutions, we have 27,000 briefings from technology vendors where typically senior leaders of those technology vendors will brief our analysts on what the strategy of the company is, how they're trying to compete, et cetera.

We then combine that with proprietary research that we do, things like surveys of our clients, things like peer actions, things like that. But again, isn't public available, but it's helpful in solving these kinds of problems. And we have world-class experts that take all that information and synthesize it and then come out with how do clients -- what's the best way for clients to go on these journeys to solve these very difficult mission-critical priorities.

And so when you think about it, we're -- and then on top of that, of course, we're unbiased, independent objective, et cetera. And so those are the key elements about the kind of problems we have our clients with and how it's differentiated from other alternatives.

That's very helpful. And then I wanted to ask if you're getting any different feedback from clients in terms of either why they are -- like I assume when a client is at renewal period, if there's any sort of difference in trend, like if there's clients that are cutting seats because of either the macro or other things? And how much insight you get from them in terms of the reasons why if they are happening to cut a seat or 2 or something like that? Do they give you reasons in terms of why they're doing that? And if you've seen any change?

Yes, Toni. So we're in contact with our clients every single day. And we track -- we have done this for years. We track every single deal at the deal level. And so if we win a deal, we ask the client, we ask the salesperson, why did we win? If we lose a deal, we do the same thing. And again, this is not just for renewals, it's for new business as well. And one of the things that we've seen this year, particularly in Q2 is with client -- I'm sorry, with tariff impact industries that purchase decisions were getting escalated. Normally a Chief HR Officer or Chief Information Officer can make a decision to buy an additional license with Gartner or a couple of extra license with Gartner. That's what their purchase authority.

One of the things that we saw was a dramatic change in Q2 is that got escalated to the CFO or even the CEO. That tends -- and the reason the client tell us was because they're worried -- especially the tariff impacted industries, they're worried the tariffs are going to lower their profitability, they won't be able to pass on all the cost to their clients. And so they have massive cost cutting initiatives across the enterprise, which is why you see decisions [indiscernible] small purchases getting escalated to the CFO or the CEO. This is behavior that we've seen in every recession. So we saw the exact same behavior in the pandemic back in 2021. We saw this in behavior back in 2009 during the Great Recession. Whenever companies are under cost stress, one way they control those costs is they put a [indiscernible] of the process by making if you escalate it to the CFO or CEO. The implication for us is it stretches out selling cycles. So selling cycles went up substantially in terms of the amount of time it takes a close deal because of having this additional room [indiscernible].

At the end of the day, it doesn't necessarily change our close rate, but it does make it so that we have to do more work and it takes more time to get the deals closed. So the biggest single change we saw in Q2 outside of the public sector was this escalation.

The other thing is on Q2 is, and we didn't see this in Q1 is for companies that weren't impacted by tariffs, many of their clients are companies that aren't impacted by tariffs. And so they started this as well. And our growth rate was higher with companies that were not impacted by tariffs. We saw the beginnings of the same kind of escalation that we're seeing in tariff impact on histories.

And then lastly, as we talked about there's the impact in the U.S. federal government with DOGE, Department of Government Efficiency, where, again, the changes they made to improve government efficiency made it much harder for our clients to buy from us. We still have strong demand, but we're having to work our way with our clients through showing the value that we have. And we're confident in the long term, we'll be able to do that. There's just more scrutiny than there was a year or 2 ago.

Our next and coming from the line of George Tong with Goldman Sachs.

You provided very helpful renewal metrics on federal government clients in the quarter. Can you talk a little bit more about how new purchases among these government clients are performing? Have they come to a full standstill? Or are you seeing some trickle in?

George, yes, we mentioned the dollar retention rate that we've been achieving, which is just a shade under 50% on a year-to-date basis, pretty consistent both Q1 and Q2. We actually are writing some new business, but I would underscore what Gene just highlighted about the contracting process is not simple or easy, but we are writing new business. And again, I think we talked about on the call last quarter, our clients really do value everything they get from Gartner and they want to keep us. In some cases, they are unable to do that because of dictates from above or just really challenging hurdles that you have to go through from a contracting perspective.

In the clients where we are retaining but not driving new business, we are staying close to them. so that when things do stabilize, we will be able to win back business that we may have lost. And then also, we continue to work with all our clients. A lot of our value proposition is very well aligned with driving efficiency. Our cost optimization assets are our first rate and 100% aligned with government efficiencies. So while the dollar retention rate has been just below 50%, we are writing some levels of new business. It's obviously weigh down on a year-over-year basis, as you'd expect, but we are writing some levels of new business.

Got it. That's helpful. And then with respect to tariff industries, you mentioned it represents about 35% to 40% of CV spread across both GTS and GBS. Is there any way you can provide some sort of spread between how much of that impact is in GTS? How much of that impact is in GBS? So that it's possible to ascertain how much headwind across both of those segments one should expect from tariffs?

Yes. It's a really good question. I think in GBS because supply chain is, if not our largest practice, top 2 in terms of size, that's going to be much more concentrated with "tariff affected industries." I don't think it changes the distribution wildly, but GBS is probably a little bit more reliant on or has a little higher proportion of tariff affected clients in CV than GTS.

Our next question coming from the line of Manav Patnaik with Barclays.

This is Brendan on for Manav. I just want to ask on the tariff commentary. I mean we've had a lot of companies report and it seemed like the view was that confidence that kind of returned by the end of the quarter, even though there was definitely some concerns earlier in the quarter and not necessarily huge strategy changes outside maybe a couple of industries. So just in like kind of what's different about your business in this environment right now?

I guess what I'd say is that we saw with our clients [indiscernible] earlier. And this didn't change at the end of the quarter, which is that companies worried about -- even with 15% -- on the low end of tariffs, a 15% increase in tariffs that they do not believe they could necessarily pass all that on to their clients. And so we wanted to cut costs so that they could help maintain both the client pricing as well as their margins. And so we saw clients very widely basically saying, look, we need to cut costs so that we can maintain our revenues and our margin structure. And again, that didn't change through the quarter.

Okay. And then on the new business pipelines, I guess what's driving that? Is it new logo, upsell, cross-sell or seats or some mix of all?

So as Craig mentioned in his remarks, our new business was up at very solid double-digit rates for both GTS and GBS. It was the pipeline, yes, pipeline. Pipeline was up at very good double-digit rate for GTS and GBS. And we basically see that as, again, there's demand for -- high demand for our services. The biggest single area is in helping clients figure out how to use AI, but also other traditional things as well like cybersecurity and things like that. And so our pipeline is up because there's strong demand out there for our services.

And Brendan, it's balanced across additional licenses with existing clients, new logos, et cetera.

Our next question coming from the line Josh Chen with UBS.

I guess, considering the magnitude of the slowdown in the expat business, I guess, what's your level of conviction that this is really tariff-related versus clients just pulling back and blaming tariffs because I can't imagine the existence of tariffs is that much of a surprise in Q2 versus Q1? So I guess what's your confidence about tariffs being the precise driver there?

Again, we track every single deal. And again, we have a well-developed system. We've done this for a long period of time, where we track every single deal, and we ask the clients, we ask our salespeople kind of what was the reason we won or what was the reason we lost. We get quite good detail. And so that's why we have confidence that what's driving this is and the tariff [indiscernible] are real focused on reducing costs because that's what our clients are telling us. And we also track escalations. And again, as I mentioned, whenever people focus on costs, one of the first things they do is make clients escalate things from the functional leaders, the CHRO, the CFO, CIO to the CEO or the CFO, and that's exactly what we're seeing. We just -- again, we've seen that, as I mentioned before, in both the pandemic and the recession in 2009, that's what we're seeing right now.

And sorry. And Josh, one other just add-on thing. As we're talking about the dynamics of the business, I wouldn't characterize us saying the slowdown was completely attributable to tariffs and to affected industries. We're just trying to provide incremental color around what we're seeing in the business and because a large part of the economy and a large part of our client base are impacted by tariffs. We wanted to make sure we provide that incremental color around the business.

And again, due to the performance of the tariff affected industries, it's much worse than the nontariff affected industries.

That's helpful. That makes a lot of sense. And then maybe my follow-up question. I'm sure you're aware of the narrative that AI could be having some sort of impact on the demand of your services. I was just wondering how you would respond to that and how you would kind of ring fence any impact on the negative side from AI?

Ladies and gentlemen, please standby. Our speakers are having technical issues. [Technical Difficulty]

No, we're good. Did you not get that response? [Technical Difficulty]

Okay. Our next question coming from the line of Jeff Meuler with Baird.

Gene, we did not get the response, and I think a lot of us have a similar question. So yes, if you could try to ring-fence the AI risk, including from my perspective, just what you're hearing on pipeline conversion and if that's coming up as an issue at all for those that may not understand the richness of the Gartner value proposition as well.

Jeff, sorry, you didn't get that response. So basically, first, our pipeline, as I mentioned, is up at robust double-digit rates for both GTS and GBS. I mean that's the best indicator of kind of what demand is like. And what we're seeing with the pipeline is that we track the number of days from one, when the deal enters [indiscernible] the number of days it closed. The time required to close deals down has gone up. And the reason it's gone up is that it takes more time -- I mentioned earlier that a lot of deals will be escalated from the functional leader like a CIO or CHRO up to the CFO or CEO. It takes more time in the selling process because there are [indiscernible] estimated business case that it just takes time organizationally to get that done. And so what I say we're seeing is there's not reduced demand, but closing deals takes longer because the purchasing processes have been stretched out. And that's pretty pervasive in what we see in recessions in the past.

And I think, Jeff, the other thing I would just add and just sort of harking back to Gene's prepared remarks where he talked at length about the different types of incremental value that you get from Gartner, all of the proprietary insights that we have behind our firewalls that are completely independent objective and proprietary to us. And then I think perhaps most importantly, the fact that we're helping our clients with our complex multi-quarter, often multiyear journeys on their most important mission-critical priorities. And I think there is a -- sometimes a misconception around what the value is of Gartner for our clients in both GTS and GBS. But fundamentally, it's helping our executive clients solve their complex multi-quarter, multiyear mission-critical priority journeys.

And we believe, and I think as Gene just highlighted, our pipeline reflects we are the best, most value-oriented solution to be able to help our clients accomplish those types of things. And we're going to keep improving what we do and keep growing the number of terabytes of data and eventually, [ petabytes ] of data that we have behind our firewalls that inform the insights that help our clients with their mission-critical priorities, and we're going to keep improving our products. As Gene highlighted, the rollout of our Gen AI tools as Gartner is a step high in that direction. That's not the only thing we've done from a product innovation perspective, but it's certainly one worth highlighting.

And so we're going to continue to bang away at those things to make sure that we are the best, most cost-effective way to help our executive clients accomplish their mission-critical priorities.

Jeff, the other thing I'd add is we are training all of our sales and service delivery people on how to -- if the client has a question like that on how to answer that question directly and the way Craig just described so that prospect or a client understands kind of what we're used for and why it's so valuable.

Got it. And then just for Ask Gartner, can you help us better understand like what service tiers it's going to be available in? And just what exactly is the rollout process or time?

Yes. So Ask Gartner is a Gen AI tool that clients can use to get access to our research. Again, it uses our research only. And so it's a great reflection of helping clients on their mission-critical priorities, like I talked about. Yes. And to any event, so we've -- as I mentioned on my prepared remarks, we've had it in trial for some period of time. We want to make sure it was great. Clients love it, the clients have been using it. So we're rolling out as fast as we can. And you can think about it being rolling out at several thousand clients per month until we get all of our clients on, which we expect will be by the end of the year. By the way, the client sort of says, "Hey, it's important to me to have it." We'll move in to the top of the queue and get them in there, even they work slated to a later point in time.

But I guess what I'm wondering, is it available for like the read-only Gartner digital subscribers? Or is it only available for the higher service tiers where they have access to live engagement with analysts?

So it's available to all of our licensed users. Again, they have been -- we rolled it out to named license users. Again, there are some product carve-outs where it won't be enabled, but that's a small fraction of our contract value. So by the end of the year, our goal is to have all of the licensed users that we want enabled with Ask Gartner.

Our next question coming from the line of Surinder Thind with Jefferies.

Just following up on the idea of the behavior of clients around tariffs. Just any color around any differences that you might have seen between perhaps your U.S. versus your international clients? I noticed you specifically called out Canada and Australia.

So the -- I'd say in terms of companies impacted by tariffs, there's no difference between whether they're an automotive company in Europe or Japan or in the U.S. They're basically all [indiscernible] the same way which we described earlier. There's a [indiscernible] of things going on, which is Craig mentioned Canada and Australia. In Canada, what's going on is there's been a -- first, the [indiscernible] change the procurement processes some time ago to make it more difficult to buy. We're working our way through with clients there. And there's -- we're working with the clients on that. There has been, in some cases, particularly in the public sector, a reaction against some of the U.S. policies and reactions that maybe we shouldn't buy from American companies.

In the case of Australia, there's an election recently in May. And whenever there's election in Australia, it is often that there are a lot of changes in the government. And so purchases and renewals stop for a few months while they get the new -- they call it the [ Machinery of Government ] in Australia, while they get the new Machinery of Government in place. So it's kind of different issues that are largely unrelated to the tariffs.

That's helpful. And then when we think about just headcount, head count expectations, any incremental color there? It sounds like you're at a good head count perspective. But there was anticipation of maybe growth later in the year. How should we think about that in light of just current trends continuing through the end of the year?

Surinder, it's Craig. From a QBH perspective, which I assume when you're saying headcount, you're focused [indiscernible]. We have invested a lot in growing the capacity of our QBH over the last several years and last decades actually, if you go back. And we're at a point now where we've got over 5,000 frontline QBH in both GTS and GBS. And we fundamentally believe that there is a lot of productivity upside across both GTS and GBS that will be part of that pathway back to double-digit growth in CV that both Gene and I highlighted.

We are, of course, remaining very agile in our planning around where we invest and where we do contract. As you'd imagine, we have reduced the number of sales territories in the U.S. Fed just because there's less business there now. But we're keeping our best people and keeping them fully engaged and they're still working with their clients and prospects across U.S. Fed, but we've taken the territories down there in line with the declines that we've seen in that business.

Across the rest of the portfolio, we have a practice, which we call territory optimization, which is every time we see turnover, we take a look to see if there's a better investment for us to make. And so we are very focused on doing that with the thinking being that trading out core performing territories or less profitable territories for territories with more opportunity activity in the short, medium and long term is a no brainer to do. And so while it may appear head count or territories are flat, know that under the covers, we are always doing this optimization of shutting down lower-performing and less profitable territories and reinvesting in what we believe to be higher opportunity and higher profitability territories. That all said, our expectation for this year is to end the year roughly flattish from a QBH perspective. And then as we start to reaccelerate across 2026 and into 2027, we will then turned back on the QBH growth that we know is an important input into driving sustained double-digit growth in 2027, 2028 and beyond.

Our next question coming from the line of Jason Haas with Wells Fargo.

There were some comments in the prepared remarks about focusing the sales force to ensure that your customers are getting the full value of the Gartner subscription. Is there any way to dimensionalize like what percentage of your customers do you see now is not getting the full value of the Gartner subscription?

Jason, when you subscribe to Gartner, you get access to our content. You get also access to our experts. You can call the experts. We also -- in many of our products, you get a ticket for a conference. You have the ability to do meet peers, both in person as well as electronically. We have a thing called contract reviews, which basically allow a client who's there buying something to say, am I getting the right terms, do I have the right bill of materials, all those kinds of things. And then we have some tools that are very helpful at maturity models. Those are examples because we have quite a suite of services. And not all of our clients use all of those services, even though many of them are very high value. And so one of the things we're doing now is to make sure that our sales and service delivery people know the full suite, even if they were new to Gartner, they've been here 3 months whatever that we train [indiscernible] on that. And if they can go out and talk to clients, especially the ones that may not be using all those extra services.

A good example actually is in peer where we have tens of thousands of clients that use our peer interactions. They value incredibly highly. And again, you can do it electronically or in person. And what we have tens of thousands use it, we have to thousands that could use it and aren't yet generally because they just haven't been made aware of it. And so we're trying to make sure clients to have all these sources of value, of which a lot of them are very high, even though they're not using it today.

Got it. That's very helpful. And then as a follow-up question, just came up a few times. You talked about the fact that every time you have a cancellation, you'll find out what the reason why was. Are you able to give us any sense what percentage of folks are citing usage of like a publicly available large language model and therefore not continuing theit Gartner subscription? Is that coming up at all? What percentage is that?

Yes. That's one of the options, and it's not material. It's basically -- it's essentially unmeasurable.

Our next question coming from the line of Jeff Silber with BMO Capital Markets.

I know it's late. I'll just ask one. I wanted to focus on the number of client enterprises. It's been going down at least in GTS for the past couple of years and now we're seeing it in GBS. Is it just that clients are maybe centralizing the decision-making process and buying as one entity as opposed to multiple entities. I know there's probably some federal government impact this past quarter, but it's been going down for a while. So any color would be great.

Jeff, it's Craig. The biggest driver that we've seen on the enterprise count has been small tech vendor. And while small tech vendor, our small tech vendor business is improving and accelerating, there's still higher than average churn amongst that client base. As you know with enterprises, every one counts as one regardless of spending. And so we just see very high churn amongst our small tech vendors. That's the biggest thing driving that enterprise count that you're looking at.

And I'm showing there are no further questions in queue. I will turn the call back over to Gene Hall for any closing remarks.

So summarizing, there are 2 things I'd like to take away from today's discussion. First, AI is an important opportunity for Gartner across several dimensions. It's the highest demand topic that we're helping our clients with today, who will ask Gartner to provide faster, easier access to our insights, and we're improving internal efficiency with AI tools. Second, we're making adaptations that will give us a clear path back to double-digit growth. Thank you for joining us today, and I look forward to updating you again next quarter.

This concludes today's conference. Thank you for your participation, and you may now disconnect.

All right. Good afternoon, everybody, and welcome to the Gartner presentation. I'm Andrew Nicholas, and I'm the business services analyst here at William Blair. Before we get started, I'm required to inform you that for a complete list of research disclosures or potential conflicts of interest, please visit our website at williamblair.com.

With that out of the way, I'm very pleased to welcome Gartner CFO, Craig Safian, to the 45th Annual Growth Stock Conference. That's it. That's my intro, and I'll let you take the wheel.

Thank you, Andrew. And just to -- this is not my 45th time at the conference, just to sort of lay it out there for everybody. But thank you for joining us today. Thanks for taking the time. Really appreciate it. So for the next 29-ish minutes, I'm going to take you through the Gartner story. We have a breakout session scheduled right after this for any questions you might have. But let us dive right in.

And just before I start. With me on the team today, David. They'll also be joining us in the breakout session. And again, as always, if you have any questions going forward that you don't get to ask during the breakout session, David Cohen leads Investor Relations for us and is always available for inquiries, questions, et cetera.

So similar to Andrew, there are some forward-looking statements I may be making. I'm not going to ask you to read the slide.

But let's start with who we are and what we do. And I think fundamentally, this is super important, super critical to understand, the core value proposition that we offer operating executives. And so what we do is deliver actionable objective insights that help make smarter decisions and drive stronger performance on an organization's and an individual's, what we call, mission-critical priorities or MCPs. And you're going to hear me talk about MCPs a lot. It is how we go to market, is how we serve our clients, understanding what is most important to our clients. And then mapping our value proposition to those most important things is what makes us go from both a retention perspective and a new business perspective.

In terms of who we serve, it's actually a fairly unique story because we serve a very diversified set of clients. And it's diversified from a geographic perspective. So we're operating in every major region and country you would imagine. It's diversified from an industry perspective. So we serve financial services, manufacturing, retail, banking, public sector, private sector, not-for-profit, et cetera. And again, broadly, we do that. And then we're diversified from a size perspective as well. So we're serving the largest companies and enterprises in the world down to, on our technology business, serving pre-revenue technology companies, and on our end user -- our enterprise user-focused businesses, serving companies roughly with at least $100 million or more with the thinking being we serve clients or we target clients who are large enough, complex enough and have enough budget to get value and benefit out of multiple Gartner subscriptions.

And why we do it, and we'll double-click on this a little bit later, it's really about making sure that we are helping our clients achieve their most important mission-critical priorities. That's sort of on the client side.

In terms of our investor value proposition, if you will, our story has been the same and consistent for the last several years. So one is our goal is to drive 12% to 16% research growth, which equates to double-digit revenue growth. We believe we can modestly expand margins each and every year going forward. And because of the fundamentals and foundation of our model, we can generate significant amounts of free cash flow, free cash flow well in excess of our net income that we can then put to use on behalf of our shareholders.

And then you see a snapshot of some numbers about us. So over $6 billion in revenues last year, $1.4 billion in free cash flow. We've been at this for a number of years. We've got over $5 billion of subscription contract value under contract. And the compound annual growth rate over the last decade or so has been about 14% growth consistently year after year after year.

And sort of make that point, we are a growth business, and it is people who actually fuel the business for us. And so if you sort of zoom back with us, about 70% to 75% of our operating expense base is our people-related costs. And so we are clearly a people business, but we actually productize and monetize it in very efficient and effective ways with about 80% of our business being tied up in our, quote/unquote, Research business, which is an annual subscription model.

On the top chart, you can see the CAGR I referred from 2014 through 2024. As important to us and to you hopefully is the free cash flow performance on the bottom of the slide as well, where you can see a 16% compound annual growth rate, 2014 to 2024, with a significant step-up in our free cash flow generation really starting in 2020 into 2021.

And along the way, we've significantly grown our team, both in terms of the direct sellers that are going out and selling and retaining our products and services as well as the experts that we have on staff that develop all the insights and actually help our clients achieve those mission-critical priorities.

So when we think about Gartner overall and the culture we have and because we are so people dependent, the culture that we've built and driven is super important to us. And again, if you look at accolades that we've gotten around our associate value proposition or how

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Gartner, we've gotten those accolades year after year after year after year. And here on this slide, you can see several elements of how we define our culture and our ethos. And again, I think these are reflective of 20 years of developing this culture so that we can sustain double-digit top line growth well into the future.

I'll pull out a couple of them. We talked about the first one, which is impacting clients' mission-critical priorities. We do good in the world. We are supporting the initiatives of our clients across the board. And we can feel really good and our team can feel really good about helping our clients with things that actually positively impact their business and generally positively impact the world as well.

We have a no-limits mindset. And so one of our core operating philosophies is you got a challenge, we're going to break it down, figure it out and then iterate and innovate our way through it. We prioritize in doing that. You can see a bunch of the other things.

And I think one of our secret sauces, if you will, and why were so hard to compete against is on the bottom row, the middle one, is we win as a team. I think we have this concept of team NCVI. So NCVI or net contract value increase is probably the most important metric we have. What it is, is it's measuring the dollar value of contract value growth in a period, a year, a month, what have you. And think about NCVI as basically the numerator in calculating contract value growth. And as I mentioned, we have this concept around we're all members of team NCVI. And so whether you're on the finance team, the sales team, the research team, kind of doesn't matter. We're all about making sure that whatever we're doing is in support of sales and our clients in driving and supporting NCVI.

And again, I think when we do run into competitive situations, which is definitely in a minority of our deals, our competitors find it really, really, really difficult to compete against us. There's a lot of reasons why that is, but one of the core reasons is because we bring a team to the solution and we fight and win as a team.

And so we were founded in 1979 to cover the technology industry. The technology industry in 1979, now I don't remember. I was just in elementary school at that point. Yes, everyone cool with that? Okay. Good. No objection. But the technology industry at that point was really IBM, right? And so we were created as a resource to study and provide value about IBM. Obviously, technology exploded beyond IBM. And we've been serving technology executives since 1979 on all of their most important mission-critical priorities.

In 2009 going into 2010, we got into the supply chain business through an acquisition of a small company based in Boston called AMR Research. And AMR Research was originally created as a Gartner competitor. They found it too hard to compete against Gartner, and so they veered into supporting supply chain professionals. And so we bought AMR at the very end of 2009 and has been a core to our supply chain business ever since then, which has been a really strong and significant grower for us going forward. That acquisition though proved to us that all of the best practices that we had developed in running our technology business from a go-to-market perspective, from a creating insights perspective, from a servicing perspective worked just as well on supply chain as it did in IT. And put a pin in that because that's a really important point as we move forward.

In 2012, we launched organically a service serving marketing professionals, really focused on digital marketing, and again, with understanding that all of the best practices we have developed in serving IT professionals and now supply chain professionals would work in marketing. And marketing had a wonderful growth spurt as well and really contributed to our overall growth.

In 2017, we were presented with an opportunity to buy a company called CEB, which used to be known as the Corporate Executive Board. And what CEB had built was practices serving all of the other functional areas outside of the ones we had already either created or stood up. And so while there was a little bit of overlap in marketing and IT, what CEB brought was expertise in creating insights for professionals in the HR function, in the finance function, in the sales function, in the legal function.

And so what you can see on the bottom of this page is sort of the result of a combination of really smart and strategic M&A and some organic launches where we now serve leaders across every major function in the enterprise, across every geography and industry, as we talked about earlier, with a similar business model across all of them, similar product architecture, similar product elements, similar pricing, similar contractual elements, contractual terms, same sales systems, same sales processes, et cetera.

And then again, in the middle, you can see that, how we do it and what we're doing. So we've got more than 2,500 experts across all these areas who are generating actionable objective insights for our clients. If reading the research or the insights is not enough and you want to speak to an expert, we actually -- if you subscribe at a certain tier of service, you get access to what we call inquiry, which is you pick up the phone and you get on a Teams call or a Webex call or whatever it may be with one of our experts. Clients find this incredibly valuable.

So imagine you read a really interesting article in whatever publication you find interesting, and you really want to learn more and talk to the author of that article. Generally, you can't do that unless you're very well connected or have friends in high places. Here, if you subscribe to it, we get you directly connected to the right people at the right time with the right insights, et cetera.

And then on top of that, we have tools and templates and graphics and things like that, that actually help you come to the right decision better. So if you think about sources of value, it's the insights that our experts are creating. It's access to those experts through inquiry. And it's tools and templates, et cetera, that we have developed over the years that really help those executives achieve and accomplish their most important mission-critical priorities.

And then when you think about the value proposition, and some of you may be Gartner Invest clients. If so, thank you. That said, you are not our core audience, and our value proposition is different than the value proposition for Invest clients. And if you think about -- put yourself in the shoes of an operating executive. And so in this case, it's so on and so on. All those things are challenges, and they roll up into what you see on the right of the page, mission-critical priorities. So if I'm the Chief Information Officer, my mission-critical priorities might be build out my cybersecurity framework, significantly enhance user experience of all our client-facing applications and build the data and analytics infrastructure that will support AI and machine learning development into the future.

Okay. So those are 3 big things. How do we help them? Well, if you think about it, there are dozens, hundreds or thousands of inputs and data points that go into developing the right cybersecurity strategy: benchmarking the skill sets of your cybersecurity professionals, selecting applications, developing the right cybersecurity governance structure. We help on all of that.

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hard to find help on that anywhere else, especially at the price point that we are talking about.

And so on average, a license to Gartner costs about $50,000 per user per year. For that $50,000, you get access to all of the relevant insights for your role. For that $50,000, you get the ability to get on the phone as many times as you want with an expert to do inquiry, to further your understanding and experience in support of those mission-critical priorities. For that $50,000, you get the ability to attend one of our industry-leading conferences in the geography of your choice. You get to network with peers. You get access to peer reviews of software and other applications. You get access to all the things you need.

And then if you think about the sources of value, it goes back to what I talked about a little bit earlier. So it's the written insights that come from our 2,500 leading industry experts. It's talking to an expert through inquiry. It's networking with peers to understand what they're doing. It's going to a conference and really immersing yourself in all things related to your mission-critical priorities. It's leveraging our tools and templates to get to better outcomes and really drive support and success around your specific mission-critical priorities.

And so my simple rubric for thinking about the value proposition are these 5 elements. And it's not the most elegant or articulate way to discuss the value prop, but it's helpful for me. It's actually -- I've been working at Gartner for almost 23 years. My mom, God bless her, still has no idea what Gartner does. This slide is the closest I've gotten to explaining to Judy Safian what Gartner does. So I consider this really gold because my mom now has a basic understanding of what Gartner does.

So if you think about it, it breaks down to really 5 components. We save time. We help people get to the right decision more quickly. There's huge economic value in doing that. We save people money. We actually will look at your proposals from technology vendors. So not only do we help you get to the right decision on picking the right application or provider or integration partner or whatever it may be. We can actually help you get the best pricing and terms on that. Huge, demonstrable, quantifiable economic value.

We help you manage risk. Cybersecurity is the perfect example. It's hard to put a return on your investment in cybersecurity. But we know that if you are smart and thoughtful about it and do all the right things, you are minimizing and mitigating risk along the way. So we help you manage risk. You can't afford to have 2,500 experts on your payroll. We can. And so we have the experts on our staff so that when you need it on demand, you get access to that expertise.

And then lastly, you gain confidence. If you think about a CEO or a Board wanting to know, okay, you're going to spend X on a new CRM application or this is a cybersecurity framework and tools you're going with, they're going to want to know, okay, what does a third party say about it. And very often, it's the Gartner stamp of approval that actually gives operating executives, Boards and CEOs the confidence to move forward.

So save time, save money, manage risk, gain expertise and gain confidence is my simple rubric for the value we provide. And again, that exists across every function we serve. So it's the same value proposition for CFOs, same for CMOs, same for CHROs, and obviously, the same for Chief Information Officers as well. And the value that we offer is significantly differentiated from anything else out in the market.

And I'll highlight the first circle there, which is independence and objectivity. And I think this is actually really, really important. Our whole brand lives and exists and thrives because fundamentally, we are independent and objective. We do not do implementation work. We do not do integration work. We do not have strategic partnerships with technology vendors all over the place. We are agnostic in terms of what you want to deploy from a technology perspective. Very few people can make that claim. Your systems integrator may say it to you, but it's not true because they have dozens of partnerships with software providers. And so -- and their skin in the game is really around driving significant implementation and integration work.

And so that independence and objectivity is absolutely paramount to everything we do. And if you think about other sources where people could go to get information, whether it be large language models, consulting partners, whatever it may be, you have no guarantee that anything is independent or objective. And so we take this very seriously and have rigorous and significant research methodology and research process in place to ensure that we maintain our independence and objectivity.

One small anecdote, our experts cannot invest in technology stocks, right? Simple, right? Unfortunately, Congress doesn't take that same approach, but that's a story for a different day. But our experts, we don't allow them to invest in technology stocks because it would be a conflict of interest and potentially tarnish our independence and objectivity.

And then obviously, if you think about the rest of the value, we really do benefit from a significant network effect across everything we do. And so there is no one out there who matches the breadth of what we cover. And there is no one out there who matches the depth of what we cover. And then on top of that, we have the network benefit of hundred -- like roughly 100,000 licensed users who are interacting with Gartner on a frequent basis, and we know what they're thinking. We know what they're searching on. We know what they're clicking on. We know what they're doing once they click on something. Are they saving it? Are they printing it? Are they forwarding it, et cetera? We know when they go to a conference, we know what sessions they're attending.

And so we have our fingers on the pulse of a high-level, highly qualified global executive audience that reinforces the insights we actually provide. And again, you can't build that, match it or meet it. And again, just one of the many things that we have that significantly differentiates the Gartner value from any potential alternatives out there.

Our Research business is the bulk of our business. So think around 80% of our total revenue. If you think about it, it's about 80% of revenue. It's probably about 85% of contribution margin. And if you actually broke it apart from a valuation perspective, it's probably 90% to 95% of our value, right? So this is the center of the universe for us. It is our largest, most profitable segment. And we're in the other businesses essentially to complement and catalyze this business, as I'll talk about in a couple of slides.

So Research revenue, you can see the trend over the last several years, really strong growth. And you can see the margin improvement of the business as well, now nestling in, in the mid-70s from both an incremental margin perspective and an absolute margin perspective. And again, the bulk of this revenue is under contract, minimum 12-month contract. But in fact, more than 70% of our contract value is actually written in multiyear contracts, which, again, just further reinforces the stickiness of our offerings.

When we talk about growth and the overall growth algorithm, this is the way we think about it. And so basically, this is just bridging from a baseline wallet retention all the way up to total target growth, and the point being that we generate a significant amount of growth from our existing clients on top of the growth we drive from new clients.

As I mentioned, we do it across every major function in the enterprise. You can see around 75% of the contract value base is actually on the GTS side with the balance on the GBS side. GTS is solely focused on technology professionals. GBS is actually several smaller businesses that we manage as one unit underneath, but they're actually separate go-to-market teams. So the supply chain team only calls on supply chain professionals. The finance team only calls on finance professionals, et cetera.

Important to note, we have enterprise clients, but essentially, we sell and service to individuals. We call them licensed users. And we target the senior most, and then we go down from there to direct reports and direct reports of that C level. And the way we start to think about it is we serve multiple roles, and within those roles, there's a bull's eye. The center of the bull's eye for us is the C level. So it's the CIO, Chief Information Officer. It's the CHRO. It's the CFO, et cetera. That's really important because it keeps our sellers focused on where all the money is and where all the value is for us, which is really owning the C level.

But we don't just target them. We actually want to land and expand. And so when we think about the opportunity, it's, yes, the center of the bull's eye, but then if you're the CFO or you're targeting the CFO, you want to call on their controller, their Head of Financial Planning & Analysis, their Treasurer, their Head of Investor Relations, which reflects these other nodes that you can then sell to and find underneath the C level.

And then we have a very large addressable market opportunity. We estimate it conservatively at around $200 billion. That little, teeny sliver that you see on the far right of the page is our current CV. So we've got about $5 billion of that roughly $200 billion market opportunity. And now you often look at charts like this, I'm sure, and you say, okay, that's great. Who makes up the other $194.9 billion? And the shorter answer is nobody. Our direct competitors are all significantly smaller than us, probably don't add up to $1 billion in contract value in total.

And so what this is, is essentially a greenfield unvended market opportunity for us across all these major functions that we've been slowly but surely building and taking advantage of, but we're still in the really, really, really early innings of this capture. And the way we're going to get there is a combination of landing new accounts and then growing them over time, landing new accounts, growing over time, wash, rinse, repeat over and over and over again.

Conferences is a complementary business. It's a great business. The reason we're in it is to make Research better. So

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for the most part, and we've managed to figure out ways to monetize it with technology vendors, exhibitors and sponsors and also use it as a new business machine for our Research business as well. It's a great business, but the reason we're in this business is because it complements and catalyzes the Research business.

And the same thing with Consulting. It's a great stand-alone business, not nearly as attractive as the Research business. We're in this business because our larger clients want our help. And so we do this in select geographies for a select number of clients, but we only do it to complement and catalyze the Research business.

And then lastly, from a margin perspective, we expect over time to modestly expand margins, as I mentioned earlier. The way we do that is gross margin leverage from Research becoming a bigger and bigger piece of the pie, modest G&A leverage and sales costs growing about in line with revenue as we continue to invest in ensuring we can capture the market opportunity going forward.

And then last slide, in my mind, a very important one, which is the model is set up to deliver huge amounts of free cash flow. And you can see the reasons why. But on average, we expect free cash flow of around 140% to 160% of net income each and every year. Over $1 billion of free cash flow each and every year that we want to put to use on behalf of shareholders, primarily through our buyback programs and strategic value-enhancing tuck-in M&A.

That's our time today. Thank you for taking the time. We'll be moving to...

Maher for a breakout. So feel free to join us. And again, I'll echo your comments. Thanks for being here, and we'll join you in the next room. Thank you.

All right. Well, good afternoon, everyone. Thank you for joining us today. I would like to introduce next on stage, Gartner. For those of you not aware, Gartner is a leading global research and advisory firm that helps organizations make smarter, faster decisions. They provide expert insight, strategic advice and practical tools across IT, finance, HR and more. Known for the trusted research like the Magic Quadrant, that help guide businesses through complex challenges and emerging trends, empowering leaders to succeed in the rapidly changing world. I'm pleased to invite David Cohen up on stage, SVP and Head of IR at Gartner. David?

Great. Thanks very much. Can everybody hear me okay? Good.

So forward-looking statements, I might say something, we've got a safe harbor here. So Gartner provides actionable objective insight to help operating executives make better decisions when addressing their most important mission-critical priorities. We help the operating executives and their teams save time, save money and manage risk.

Investors value Gartner for 3 main points: A long-term experience of delivering double-digit topline growth, modestly expanding margins and generating very strong free cash flow. The double-digit growth is due to a model that includes strong recurring revenue, high retention rates, and a very large addressable market. Gartner is a growth company and a people business. You can see the growth here contract value with a 14% CAGR over 10 years and free cash flow, a 16% CAGR. So we start with contract value at the top, and it works its way down to the free cash flow. Contract value is our most important metric because it's the start of that process of generating cash. Contract value measures the annualized revenue under contract at a point in time.

People are at the heart of everything that we do at Gartner. People are the foundation of the insights that we provide for our clients. You can see here, we've got 10 critical aspects to our culture at the company. I'm not going to go through all of them, but they're really foundational for everything that we do in terms of serving our clients. We serve our clients through a very compelling client value proposition. Operating executives have many challenges that they face. Those challenges can shift and change. They can evolve over time, but they're always going to have a short list of the most important challenges they want to solve. Today, they could relate to AI, information security, the future of work, supply chain and business resiliency and more. These operating executives know they can turn to Gartner for help addressing those priorities.

Gartner offers a compelling proposition at a relatively low price compared to the impact that we can help our clients have as well as any potential economic alternatives. We deliver indispensable insights so that at the end of the engagement with our research with our analysts our clients are going to be able to make more effective decisions addressing those mission-critical priorities.

As I mentioned, we're helping our clients save time, save money, manage risk, gain expertise and gain confidence. Our offering is highly differentiated, the moat that we have, if you will. So we have our research experts that deliver insights based on unmatched breadth and depth of experience, expertise, knowledge. We leverage proprietary data and information. We benefit from network effects across a large client base throughout the world, across industries and across company sizes. We're also independent and objective. This is a very important differentiator because our clients know that they can count on Gartner to provide insight that's going to be targeted to helping the clients make the very best decisions in their own best interest. We're also highly instrumented. What I mean by this is that we've got proprietary processes through which we create the insights that we offer to our clients.

We deliver the insights to executives in every major function across all geographies and industries. This is something that's somewhat different because a lot of organizations are targeted towards specific verticals. But Gartner is focused on horizontal solutions. So we've got 7 major practices where we serve executives. So you can see technology is our heritage area for research. And we've over the years added finance, HR, legal, marketing, sales and supply chain.

We deliver the actionable objective insights through the work of 2,500-plus experts that are Gartner associates, often former practitioners. Our clients engage with both our written research product as well as through speaking with our experts, and they speak with our experts more than 500,000 times during the course of the year. So that's a lot of impact and a lot of value that we're having, and it also supports the network effect, where our experts are getting perspectives across a very wide range of operating executives.

We go to market with 3 reportable segments. Research is our largest, most profitable segment. Research is the part of the business where we emphasize providing the actionable objective insight that I've described. The contracts are a minimum of 1 year. The majority are multiyear. And so it's essentially a subscription model where the operating executive gets access to all of the information and insights that are relevant and appropriate for their role.

You can also see we've got very strong contribution margins running in the low to mid 70%. The way research grows is through our sales force and our algorithm works so that contracts come up for renewal in any given period. Some portion of those won't get renewed. Some will get renewed lower and many will get renewed higher. So this is an illustrative diagram. If we had $100 a year ago, if there's $18 of churn, which is probably a little bit lower than where it actually is, we increased prices, and that realizes about 3 points. We generally increase prices 3% to 4% per year, it generally tracks roughly in line with wage inflation. So when wage inflation was a little bit higher, a few years back, the price increases were higher as well. And then we sell a lot of additional licenses into our existing client base. So the net of that performance within the existing clients gets us to, in this example, about $104. So in other words, that's wallet growth. It corresponds to a metric that we publish every quarter called wallet retention. And so we're going to get 4% growth before new logos.

And then we have business developers who are responsible for what we call zero contract value accounts or new logos, and that's going to add typically about 8 additional points to grow. So this is going to get around 12%, which is the low end of our medium-term outlook. To get to the high end of 16%, it's going to be some combination of lower attrition, selling more into the existing enterprises and then selling more new logos.

We go to market through 2 sales organizations that we call Global Technology Sales, or GTS and Global Business Sales, or GBS. GTS is focused on selling to both the vendors and the consumers of technology. So think about this as Chief Information Officers, and their direct reports and their direct reports' direct reports. And then global business sales, which is the smaller of the 2 sales organizations today within GBS, our sellers sell supply chain insights to supply chain leaders and marketing insights to marketing leaders and finance insights to finance leaders. So in other words, we're going to market by function in parallel.

When we're selling, we're selling to individuals we call licensed users. So we're not selling enterprise licenses. We're selling by design to the C level, and it's a land and expand strategy. So after we sold to the C-level, it's the senior most functional leader, I think the CIO or the Chief Supply Chain Officer, we're then looking to identify opportunities to sell licenses down a few levels to the organization. We're serving the clients, selling to individuals within specific roles, so CIO, Chief Data Analytics Officer, Chief Information Security Officer within functions. So I think this is an important point Again, it's about selling to those individuals within the roles within the functions that we serve.

One of the benefits of selling to individual users is that we understand their mission-critical priorities, and we can make sure that we're articulating how the breadth and the depth of our expertise can help them address their individual challenges. So while the inside creation is highly scaled on the back end, the value proposition can become highly individualized. Another advantage of selling to individual license users is that it gives us a significant market opportunity just within the enterprises that we serve. So as I showed earlier, with the illustrative algorithm, about 2/3 of our gross growth is going to come from those existing enterprises.

Not only do a large addressable market within the enterprises that we serve, we also have a vast market opportunity in aggregate. So while we've got contract value of around $5.1 billion, we've got an addressable market that we've identified at around $200 billion. There's a brief video at investor.gartner.com that goes into a little bit more detail about the bottom-up and how we've approached assessing the size of the addressable market. As you can see, it crosses all of the major enterprise functions that we serve. And we've got a very long runway such that if we were to grow our contract value at a 14% CAGR for 14 years, we'd have only captured a little bit more than 14% of the addressable market.

Beyond the Research segment, our Conferences segment provides an opportunity for clients to immerse themselves in Gartner Research, engage with peers and interact with technology vendors. Our goal with the Conferences business is to produce must-attend conferences for the leaders across the enterprise. So we'll have conferences for Chief Information Officers and conferences for Chief Information Security Officers and the conference strategy is to align with the roles we serve. The conference business is seasonal, as you can see from the revenue chart and from the margins as well. So this is a great platform that we have for clients to come and for prospects to come. And so it's an engagement tool, and it's a sales tool. And we're doing this almost a marketing function with -- on an annualized basis, around 50% gross margins.

Our Consulting segment allows clients to go on a deeper extended project basis than is possible with the research subscription. So here, we're primarily providing IT labor-based strategy and project management services. So we're not doing anything related to software development or system integration. It's really much more high level in terms of what we're providing. So that introduces the revenue.

From a margin perspective, our guidance for this year is EBITDA margins of at least 23.5%. Those margins are structurally higher than they've been in the past. So the margins had historically run sort of between 18% and 19%. After a large acquisition in 2017, we invested in the business. The margins were a little bit lower for a period. But now they're structurally higher running in the mid to -- low to almost mid-20% range.

We've got -- as you can see, our EBITDA CAGR over the 10-year horizon is faster than the revenue CAGR because of the margin expansion. And our expectation is that, in a normal environment when we're growing the top line double digits, we'll be growing EBITDA a little bit faster, expanding the margins as we go. Broadly, we've got cost of services, which should be growing a little bit slower than revenue. At a minimum, we're going to see margin expansion from mix. So over time, as the research segment grows faster with higher incremental margins, the gross margins at a consolidated level will increase.

We've got an ability to generate operating leverage from G&A, G&A growing a little bit slower than revenue. And then our sales costs, we expect to grow about in line with revenue. The sales expenses, the sales teams are the biggest way we invest for future growth. We're selling a product that's -- it's an intangible, and it's not a replacement. And so it's a consultative sale. So it takes feet on the street to go out and engage with a prospect and articulate the value proposition.

Given the size of the addressable market of $200 billion, a natural question might be, well, so why aren't you growing faster? The operational constraint to our growth comes from how fast we can build the sales force. We're -- we've got a core capability in terms of attracting and retaining talent. And so we can hire sellers, train them, deploy them and support them. But operationally, we found that there are diminishing returns beyond a certain point of growth in the sales organization. So we're built for growth. And we're very comfortable that we could be growing the sales force in the high single to low double-digit range with the benefit of price increases, that translates into 12% to 16% CV growth. But so on balance, sales costs growing in line. The net of all this is that we expect EBITDA margins to go higher over time modestly on a year-by-year basis.

So as we start to put all this together, we've got a business model that drives very strong free cash flow. I've talked about briefly, the recurring revenue nature of the business. So it's subscription, contracts, multiyear agreements, very good retention rates. And so we've got very high visibility into the revenue outlook, and we've got high contribution margins.

In addition, because our clients pay us upfront, we get a durable working capital benefit related to the upfront invoicing. It's also a low capital intensity model. So generally, we would expect CapEx as a percentage of revenue to run at around 2%. Beyond this, we're able to reinvest for growth even before we generate very strong free cash flow. So free cash flow on an annual basis is going to be north of $1 billion. And we're going to use the free cash flow primarily for tuck-in strategic value-enhancing M&A and for share repurchases. We've got a very strong balance sheet. We temporarily have excess cash on the balance sheet. We've got about $2.1 billion. We need about $300 million to $500 million to run the business. So -- and our target for leverage is for gross debt-to-EBITDA of about 2x to 2.5x, we're comfortably below that.

So there are no acquisitions out there that fit the business of size or scale. There had been one, and we did that back in 2017. So the acquisitions are likely to be tuck-ins to support the research business. That leaves most of the free cash flow for buying back shares. And as we've noted on our recent earnings calls, we are eager to buy back stock. Our approach to buybacks has been consistent for a long period of time. We look to optimize returns for shareholders by being price-sensitive, opportunistic and disciplined. So we measure the performance of the buyback program over a multiyear horizon. We run the business with a long-term perspective. And so we manage the buyback program with a long-term orientation as well. We're going to factor in valuation. We're going to factor in the stock price. We're going to look to buy more when the stock price is lower and less when the stock price is higher. So overall, 5 years from now, we expect that we'll have a lot more free cash flow and we'll have a lot fewer shares. And so you can see our track record going back over many years, very strong growth profile, revenue, adjusted EBITDA, margins and free cash flow.

And with that as an introduction, I'm happy to take a few questions. Anyone in the audience is welcome to ask a question.

How do you think about the impact of AI in large side of the model, the value proposition are [indiscernible]

Yes, it's a great question. So in case people couldn't hear it, the question was about AI and how that might affect our business. So Gartner has experts, some of the world's leading experts when it comes to AI. And so it's an area where, first and foremost, we're helping our clients. So as you might imagine, AI is an important topic across all the major enterprise functions. And so it's an area where we're able to engage and help our clients as they think through their strategy, the opportunities, the challenges, they can benchmark how far along they are. They can understand best practices and thinking through pilots and rollouts and all of those kinds of areas.

In addition, we're leveraging AI within Gartner. That's not something that's new, although obviously, generative AI is a newer version of AI. And so there are a number of use cases that we've got from an AI perspective, where we're looking to drive a little bit more efficiency within our research organization, within our services team. We're leveraging AI for things like helping to make our sales training processes more efficient.

And then from a large language model perspective, I talked earlier briefly about the Gartner differentiators. So we've got proprietary information, proprietary data, proprietary processes. And all of these are inside the firewall and unavailable through the public large language models. Perhaps more important, the kinds of problems we're helping our clients solve don't lend themselves well to sort of a Q&A with the large language models, even with the latest iteration of things like deep research. For example, if a CIO is thinking about information security, we're able to help them as they look at, do they have the right size of a security organization? Do they have the right skill set within their security organization? Is there a security architecture best-in-class? How does it compare to any possible alternatives? Those are questions that the large language model-based chatbots aren't able to answer.

[indiscernible]

The question was what's the percentage of clients on each subscription tier?

So we've got, broadly speaking, 3 levels of products. There's a reference product. There's an adviser product, which comes with access to the written research as well as to speak with our analysts. And then we have a service tier where we have a guided product that, in addition to the research and the analysts comes with the ability to have an executive partner who is a former practitioner in the role that works for Gartner that can be their concierge for all things Gartner. So the most commonly purchased product is that middle one. The price point on the reference is probably around $20,000. The price point for the mid-tier, again, the most common one is probably $45,000 to $50,000. And then at the higher end, there are different variations. They could run $75,000 to $80,000 in some cases, a little bit higher than that.

Other questions?

As you think about the total addressable market, there's still a sizable penetration opportunity. How do you think about the key drivers for growth? Obviously, you mentioned sales force and sell. But what are the core drivers beyond that? Is it functional [indiscernible].

Yes. So the question is, how do we think about the opportunity to capture more of the addressable market to drive growth. So it's about continuing to generate valuable insights, productize them, go out and sell them and then deliver value to the clients over time. About 2/3 of our contract value is in North America. But unlike some companies where they're fully penetrated in a home market and they're growing internationally, we've been global for a very long time, and we see opportunities for growth both in North America as well as in geographic markets outside.

So it really comes down to expanding the number of territories that we have over time, hiring sellers, deploying sellers into those territories. We have business developers who go after new logos. And then we have our account executives who are driving growth, retention and growth within the existing. And so most of it is about execution. So continued strong performance across all of our sales best practices.

There is going to be a macro component. So when the macro environment is more challenging, it's often going to translate into a more difficult selling environment. We'll be resilient relative to the macro environment, but not completely immune.

If there are no more questions, we'll wrap it up. Thank you very much for your time. We'll be around after if you have follow-up questions offline.