Gartner Stock

Good morning, everyone. Welcome to Gartner's Third Quarter 2026 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. [Operator Instructions] Please be advised that today's conference is being recorded.

This call will include a discussion of third 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 with the adjustments as described in our earnings release and supplement.

Our contract values and associated growth rates we discuss are FX neutral. Any 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 vine 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. Third quarter revenue, EBITDA, adjusted EPS and free cash flow were once again ahead of expectations. Contract value growth accelerated for the third quarter in a row we drove sequential improvement in total net contract value increase, or NCVI. This is consistent with typical seasonality. We again saw positive NCVI with our government clients. Demand in our U.S. federal business continued to normalize. Wallet retention across both GTS and GBS improved sequentially. Free cash flow on a rolling 4-quarter basis is strong and outpacing EBITDA growth and return on invested capital was more than 30%.

Our value proposition is stronger than ever, even as we continue to operate in a persistently dynamic external environment. We continue to improve our client value proposition through our BTI transformation. As we've discussed on previous calls, we're transforming our insights across 4 dimensions: impact, timeliness, quantity and client experience. AI continues to be the most requested topic across our client base. We're delivering unparalleled client value on the subject. Our insights proactively guide more than 75,000 senior executives on the best way to get value from AI.

We guide within 10,000 chief information officers and their teams on how to implement AI effectively, and we guide more than 5,000 technology enterprises on how to build out their AI strategies. Our clients rely on us to determine the best actions in response to the unprecedented rate of change in AI. The number of higher impact documents and our body of Insights is up mid-single digits, and we continue to grow the total number of documents at double-digit rates.

This allows us to provide powerful coverage across a broader range of mission-critical priorities. With the rapid pace of change in the world, it's essential for our clients to stay current. To meet this need, we produce insights immediately after important events occur. The number of these insights is up significantly. Finally, we continue to enhance the Gartner client experience, both digitally and through human interactions. Clients highly value our proactive engagement.

We're making continual improvements to our platform to be even more proactive. Gartner Conferences are also an important driver of client experience. Licensed users who attend our conferences retain at higher --. Prospects to [ gender ] conferences convert your clients at higher rates. Each year, we host more than 50 technology and business conferences in key destinations around the world. IT Symposium Expo is our flagship conference series.

I recently returned from our 36th Annual IT Symposium Expo in Orlando, Florida. We hosted more than 7,500 technology leaders over the 4-day in-person conference. Attendance at the conference was up double digits year-over-year. Our analysts covered a wide array of technology topics, 325 of our sessions addressed AI. Our opening keynote continued to guide leaders on their AI journeys in terms of value and risk and safety and governance. Attendees described the keynote is powerful, engaging and thought provoking. We also recently held our North American HR Symposium Expo thousands of Chief HR officers and their teams joined us for in-depth conversations on the pivotal opportunity to lead transformation in the workplace. C-level attendance and total attendance were both up.

In closing, we continue to see strong demand for our services. Our vast and growing body of high-impact to timely insights are delivering unparalleled client value, especially on the topic of AI. Our conferences continue to be highly rated and highly valued by our attendees and the number of executives who attend our conferences continues to grow. In the third quarter, contract value growth accelerated, retention improved, we drove sequential improvements in NCVI, EBITDA, adjusted EPS and free cash flow were once again ahead of expectations, and we're raising our annual guidance.

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

Good morning. Contract value growth accelerated for the third consecutive quarter, underscoring the resilience of the business. CV is the most important measure for our business and the key driver of revenue growth, profitability and free cash flow. In Q3, we expanded margins compared with last year. We continue to deliver strong free cash flow. And over the past 4 quarters, we have repurchased $1.7 billion of our stock, a benefit to the share count of close to 15% over the past year.

Senior enterprise leaders continue to deal with external factors that influence their budget and spending decisions. The business remains resilient. As Gene discussed, we are focusing on driving even greater value for our clients by delivering more insights with higher impact faster than ever before. Q3 and CVI dollars increased sequentially from Q2, about in line with historical seasonality.

Wallet retention continues to improve as downsell remained relatively stable for the second quarter in a row. In quarter retention rates increased in Q3 on a year-over-year basis, providing another important data point on the value we deliver to clients. We continue to win new business with both existing clients and new enterprises. This remains an important opportunity for us to drive stronger performance in the coming quarters. We are seeing multiple areas of above-average growth, reinforcing the value our clients place on expert insights and guidance.

For example, core GBS subscription products grew 7% in the quarter, with the sales and finance practices growing high single digits. Software and services within tech vendors grew mid- to high single digits. Mid-sized enterprises again delivered mid-single-digit CV growth in the quarter. The U.S. federal part of the business delivered strong sequential performance, ending Q3 with about $15 million of NCVI reflecting continued execution and client engagement across our sales, service and analyst teams.

As Gene discussed, we continue to make progress with the BTI transformation. A key goal of the transformation is to proactively drive engagement. The most important measure of engagement is retention, which flows through to NCVI. Clients continue to engage at historically strong levels. We look at engagement in many ways across the organization.

This quarter, I want to highlight the improvements we have seen with the Gartner mobile app. This has been a focus and support of the transformation. In the quarter, mobile engagement increased compared with the prior year as we improved usability, enabled faster response times, enhanced audio features and embedded as Gartner capabilities. across our platforms, usage of ask Gartner has continued to grow sequentially and is up year-over-year. And as I mentioned, retention increased in the third quarter. Third quarter CV grew 2.5% year-over-year.

As I mentioned, this was the third consecutive quarter of acceleration. Revenue, EBITDA, adjusted EPS and free cash flow in the third quarter were better than expected. We are increasing our full year guidance across all of these measures. In the third quarter, we reduced our share count by around 1% sequentially, buying back $138 million of stock. Rolling 4-quarter return on invested capital was 34% and and we expect to generate significant free cash flow and have fewer shares outstanding over the course of the next several years.

Third quarter revenue was $1.5 billion, up 2% year-over-year as reported and 3% FX neutral. In addition, total contribution margin was strong at 71%. EBITDA was $364 million, up 8% of reported and 7% FX neutral. Adjusted EPS was $3.59, up 30% from Q3 of last year. And free cash flow on an LTM basis was $1.3 billion, up 6% year-over-year.

Insights revenue in the quarter grew 2% year-over-year, both as reported and FX neutral. Third quarter insights contribution margin was 78%, up about 90 basis points versus last year. As we've discussed, we continue to hire analysts in the BTI organization, which will increase costs over time. The cost came out earlier in the year and will return over the next several quarters.

Contract value was $5.3 billion at the end of the third quarter, a sequential increase of about 110 basis points from Q2. Year-over-year, CV was up 2.5%, which is an 80 basis point acceleration from last quarter. Excluding the U.S. federal government, CV growth was 2.8%. We had about $240 million of new business in the third quarter as there continues to be considerable interest in Gartner's proprietary unbiased insights.

Across GTS and GBS, we saw new business dollars increase by about 1% sequentially from Q2. Global Technology Sales contract value was $4 billion at the end of the third quarter, up almost 1% sequentially and up about 2% versus the prior year, more than a 90 basis point acceleration from Q2. Excluding the U.S. federal business, CV grew 2.5%. Tech vendor CV grew low single digits and above the overall company average. Software and Services and small technology vendors grew mid- to high single digits.

Wallet retention for GTS was 98%, an improvement from the second quarter. GTS new business was down 4% compared to last year and up modestly on a sequential basis. New business with enterprise leaders increased year-over-year in Q3. Global Business Sales contract value was $1.3 billion at the end of the third quarter, up 1.8% from Q2 and up 3.7% year-over-year. Of our 6 major practices, growth was led by sales and finance, which grew high single digits.

Beyond the 6 major practices, we have several other smaller practices, which collectively delivered double-digit CV growth. Within GBS, about 90% of the CV is from core subscription products. CV from these products continue to grow about 7% year-over-year in the quarter with even faster growth from our offerings for C-level leaders, while retention for GBS was 99% for the quarter.

GBS new business was down 3% in Q3 compared to last year and up 1.5% sequentially. Our Conferences business continues to perform well. We are seeing strong demand for our insights as clients and prospects want to hear from our experts and interact with 1 another. Conferences revenue for the third quarter was $86 million. On a same conference basis, revenue growth was around 8% FX-neutral. Contribution margin was 35%. We held 13 destination conferences in the third quarter as planned.

Q3 consulting revenue was $126 million, up 2% year-over-year as reported and 3% FX neutral. Consulting contribution margin was 34% in Q3. labor-based revenue was $94 million. Backlog at September 30 was $217 million, up about 9% year-over-year. This was the second consecutive quarter with a year-over-year backlog increase.

In Contract Optimization, we had $150 million of revenue on an LTM basis, consistent with Q2 of this year. The 2-year revenue CAGR was up about 13%. As you know, our contract optimization revenue is highly variable. EBITDA for the third quarter was $364 million, up 8% from last year's reported and 7% FX neutral. We outperformed expectations in the third quarter through revenue upside, effective expense management and a prudent approach to guidance.

Adjusted EPS in Q3 was $3.59, up 30% compared to Q3 last year. Upside in adjusted EPS was driven by better-than-expected EBITDA and a lower-than-expected adjusted tax rate of about 17%. We had 64 million shares outstanding in the third quarter. This is an improvement of about 11 million shares or approximately 15% year-over-year. We exited the third quarter with 64 million shares on a weighted basis. Free cash flow in the third quarter was $275 million, up 2% year-over-year. Free cash flow on a rolling 4-quarter basis was $1.3 billion, which was 20% of reported revenue, 78% of adjusted EBITDA and 136% of GAAP net income.

At the end of the third quarter, we had about $1.6 billion of cash. This includes about $500 million for running the business and around $1.1 billion available to deploy on behalf of shareholders. Our September 30 debt balance was about $3 billion. Our reported gross debt to trailing 12-month EBITDA was under 2x. We repurchased $138 million of stock during the third quarter and $1.7 billion on an LTM basis.

Our approach to repurchases continues to be price sensitive, opportunistic and disciplined. The buyback authorization is about $1.1 billion. We expect the Board will continue to evaluate and refresh the amount as needed. We are increasing the full year revenue outlook for each of our segments to reflect recent performance and trends. for 2026, we now expect revenue at or above $6.405 billion, which is an increase from last quarter and FX-neutral growth of 1%. We now expect full year EBITDA at or above $1.615 billion, compared with our prior guidance, this is up $45 million.

This reflects full year margins at or above 25.2%, consistent with 2025 adjusted for the divestiture. We expect 2026 adjusted EPS at or above $14.65, an increase from last quarter that primarily reflects the increase in the EBITDA outlook. For 2026, we expect free cash flow at or above $1.235 billion, also an increase from the prior guidance. This reflects a conversion from GAAP net income of 136%.

Our guidance is based on 66 million fully diluted weighted average shares outstanding, which incorporates the repurchases made through the end of the third quarter. We exited Q3 with about 64 million fully diluted shares. For Q4, we expect EBITDA at or above $390 million. Our revenue, profit and cash flow results in Q3 were ahead of expectations. We've increased the guidance across these measures for 2026.

Total CV year-over-year growth improved by 80 basis points from Q2 of 2026. We are transforming BTI to deliver even more client value. As we have seen in the past, the current macro and budget-driven cycle will normalize and CV growth will continue to reaccelerate. Gartner's return on invested capital is strong at 34% on a rolling 4-quarter basis. We continue to generate significant amounts of free cash flow. We expect the conversion of GAAP net income will improve as CV accelerates. We believe this offers a durable and compelling value proposition for our shareholders.

We are positioned to accelerate CV growth. And we continue to expect to deliver adjusted EPS on a 3-year compound basis from 2025 above 12%. Over time, we'll opportunistically deploy our capital on stock repurchases, which will lower the share count 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 comes from Faiza Alwy with Deutsche Bank.

I wanted to ask about the external factors that you've talked about that senior enterprise leaders continue to deal with those sort of -- how do you think those have evolved, particularly on an ex fed basis? Because your CV growth did decelerate a little bit more. And I'm just curious if that's sort of what are you seeing there? Is it more related to the external environment and if it's in line with your expectations?

It's Greg, and then Gene will pop in, in a moment as well. I think as we sort of think about the external factors, there are a handful of things that we outlined that are going well and with the business performing well. But there are still things like the war in the Middle East as a classic example of things that got a little bit worse from a selling environment perspective in the quarter. And so as we sort of think about what's happening, nothing has changed structurally about our addressable market, the value we offer, the benefits we're seeing from the BTI transformation, et cetera, et cetera. That all said, tough environment, particularly in some very specific places.

The highlight, I would say, is Middle East, where we had and still have a really nice and it had been a very fast-growing business for us. But given what's been going on over there has been a more challenging selling and retention environment.

Our next question comes from Jeff Meuler with Baird.

Can you just comment on the GTS sales headcount trajectory? I noticed there was an uptick sequentially. And I think you have quite a bit of sales capacity. I don't know if that's just timing driven of new start class or anything else that you're seeing that we should read from that?

Jeff, obviously, sales capacity is really important to us, and we've really tracked a lot and manage it carefully. Right now, we feel like we have a lot -- plenty of sales capacity to grow for the next few quarters. When you look at kind of the -- whether it goes up a little bit or down a little bit, to your point, it really is -- it's kind of noise in that there are hiring cycles and things like that. And so to your point, what you're seeing there is more noise, it's not indicative of anything systematic.

And the other thing I'd add, Jeff, is as always, we're managing with an eye towards the future, both from a cost of sale perspective and from a growth perspective and trying to strike the balance between having the right amount of capacity for today, but also having the right amount of capacity to continue our -- see the acceleration path.

Our next question comes from Toni Kaplan with Morgan Stanley.

You've done a really nice job this year with controlling costs reflected in sort of the EBITDA beat. And so when you think about sort of 4Q and beyond in 2017. Can you talk us through some of the puts and takes for how you're thinking about margins for next year and additional areas for efficiencies and productivity that may be ahead of us.

Tony. I'd say two things. So one is, I think Gene hit on this and I hit on this earlier as well. But the one area where we are catching up on expense relates to our analyst spend. And as we've been talking about for the last few quarters, as a part of that transformation, we let go a number of people who didn't fit the bill of what we wanted from an analyst perspective, and we've been in process of hiring and that hiring will continue into the next few quarters.

And so again, we try to be really clear about that. And that's one of the areas where we will be adding back some costs as we progress through this year and head into next year. On the other side of the coin, to your point, I mean, we're obviously very mindful of delivering on our profit and cash flow, outlook and want to make sure that we are balancing the business, as I mentioned, just on Jeff's question around making sure we've got the rate amount of cost and resources so that we can fulfill and deliver on what we need to fulfill and deliver, deliver on our profit and cash flow targets, but also make sure that we've got the right amount of investments rolling forward as we continue to reaccelerate the growth.

And so I don't think there's any magic or any secrets in there. It's really just making sure that we have the right resources in the right places at the right time to fulfill our client demands make sure we're keeping up with client demands and also make sure that we are seeing around at least a little bit for future growth as well.

Our next question comes from Josh Chan with UBS.

Could you talk about the guidance raise on the Insights revenue side, especially the part that's core, not driven by I guess, was Q3 ending CV better than you had anticipated internally? Or is there some sort of conversion dynamic there in the revenue?

Great question. I think it was largely timing within the quarter more than any sort of significant deviation from what our overall forecast for the quarter was for NCBI. So it was a good, solid, strong quarter from an NCBI perspective. we got the NIC or the NCVI a little earlier in the quarter than we had anticipated, and that just basically flowed through into the modest raise we did for Insights revenue for the full year.

Our next question comes from George Tong with Goldman Sachs.

Your contract value growth is continuing to recover. Can you give us your latest thoughts on what you're seeing in terms of the impact of AI on and new business wins within Insight and how that's impacting CV?

Yes. The -- it's an interesting question, George, because we've seen a little bit of a shift in the marketplace where clients have, in many cases, gone out and done a large agreement with one of the AI vendors to get, say, for example, a particular product for all of their associates. And that has their costs, but in most cases, the vast, vast majority, there's no tangible benefits. And some of the things that we're seeing now is clients coming back to us and sort of saying, Wow, it's a lot harder than I thought to get any benefits right?

I've got the cost but of the benefits and they're asking us to help actually figure out what are the right business cases, how they manage the costs, et cetera, which is our sweet spot, that's where we really shine. And again, I sort of say, over the last 3 months or so, we've seen a real uptick in sort of that kind of demand. We've always had it, but it's just striking how of the people that sort of tried to give everyone an AI tool and not get any benefit and now they're coming back and saying, "Hey, it's a lot harder than we thought. So Carters should help us.

And George, 1 other thing I'd add is we've talked about this the last several quarters, AI broth is a topic that is a great interest across our entire client base, and so not just limited to the technologies within our client base. Chief Marketing Officers, Chief Supply Chain Officers, et cetera. In fact, when we look at what is the most popular topic across every major role we serve, AI is the #1 -- and again, that's indicative of what's going on in the market. It's also indicative of it's #1, but it's not the only one.

So CIOs are worried about in dealing with the things Gene mentioned around AI, but they're also worried about cybersecurity. They're also worried about all sorts of other things. And so AI is this pervasive thing and we're obviously meeting that demand for our clients, as it's the #1 topic. And as you'd imagine, it's a great entry point for a lot of prospect in new business conversations as well. It's usually not the only thing, but it's often a great entry point for really highlighting the uniqueness and the value of a Gartner license.

Yes, just to build on the price points, again, for every role we serve, AI is the single biggest topic people today. It's not the only one, but it's the single biggest. And if you went back a year ago, most roles as number was the biggest. Now it's really the biggest for every single role.

Our next question comes from Jason Haas with Wells Fargo.

This is [ Keegan Antico ] on for Jason. Is 4% still CV's growth still the right exit rate for fiscal year 2026. And if so, could you just talk about the puts and takes on how you'll get there?

For the question. So what I'd say is while we continue to expect overall CV growth to continue to accelerate, it's unlikely that expense CV is going to get to that 4% level at this point from everything we see. As we talked about a little bit earlier, in Q3 was roughly in line with the base case and what we expected.

We've updated our expectations based on what we saw in Q3 and what we're seeing and expecting from -- we've got a lot of the business doing well. But from where we sit today, we do not expect that CV growth rate to get all the way back to 4% by the end of the year. But again, overall CV growth we expect to continue to accelerate.

Thank you. Our next question comes from Andrew Nicholas with William Blair.

I just wanted to circle back to the selling environment broadly. Craig, you mentioned obviously, geopolitical conflicts having some impact. Maybe excluding the business in the Middle East, are you seeing any major dislocations on sales cycles or progress selling into new logos? And then kind of related to that, I think last quarter, you mentioned seeing some stability in downsell activity amongst larger clients. Any update there would be great.

Yes. As we mentioned earlier on the call, there are a number of areas where we're seeing a lot of bright spots. We look at software and IT services, face vendors, all the GPS practice, if you put the leadership can the legacy products and so forth. And so we're seeing a lot of strength areas with strength. We're also seeing new areas that are more challenged and it's what you'd expect, which is the biggest 1 being run more has affected many of our clients, as Craig mentioned, and the Gulf and then people that are down the line from them that rely on nib as well.

And so I would say that's the biggest change there's still companies that are winning and losing from AI. So there's companies that are making like equipment that goes in data centers and those are a great selling environment and companies that are more directly hit by AI, which is a tougher selling [ paper. ] The same thing for tariffs, oil prices and so forth.

And Andrew, the one other thing I'd add is, obviously, the selling market is impacted by, as an example, layoffs. And so you've seen -- again, we've seen this over the last few years, large layoffs, particularly with large technology vendors and that had quieted down for a little bit and obviously, has picked back up again. And so that makes for a more challenging selling and renewing environment when you're attempting to renew a contract or sell growth in the face of that.

And the other thing I'd say is sales cycles, as we've talked about the last couple of quarters, are -- there's no real change, but are still longer than they have historically been because of all the craziness that our clients and prospects are dealing with. We're working through that. And again, our pipelines remain strong. There's still a lot of interest in understanding more about the Gartner value proposition. We are closing a lot of those new business deals as reflected in our overall new business numbers -- but in a lot of cases, they are taking longer, just given the increased scrutiny that comes with less that comes from not having a normal sort of operating and selling environment.

Our next question comes from Manav Patnaik with Barclays.

I was hoping you just refresh us on the key components of the transformation you were referring to. I know long in the call, you mentioned the mobile app was a big focus. You talked about Oscar. I was just curious what are the other key things that we should be keeping an eye out on?

I'm sorry, Manav you just -- I missed what you said in your opening statement opening part of the question. Could you just repeat.

Yes. Just refresh us on the key components of the transformation that you've been referring to, what are some -- I think you mentioned mobile app and Oscar along the way, but what else is the key areas that we should be keeping an eye on?

So that's a great question Manav, because it's really a real focus for us. As we talked about, we have this PTI transformation, and it's in 4 main areas. The first one is the impact of our content. We use a number of tools to determine what the -- how many people read that actual document and then when they did treat it, what was the impact on their retention. And we're very focused on improving most of the number of people that red as well as the impact on the retention.

So that's the first piece. The second piece is quantity, which is just the different clients have different mission-critical rarities. And as we add more content, it allows us to cover broader redivision critical priorities.

The third area is timeliness. In today's world, timeliness has gotten ever more important. We're making a lot of changes there. As an example, we've introduced new content types that actually are designed to respond very, very quickly. And those content types are growing very rapidly, and the customer uptake has been very strong on those new customer types.

We're also really excited our trading cycles. We used to trade our client-facing associates, especially like once a month, and we've moved it to once a week. And so we're moving past eras over time so that our associates can keep up with all the changes coming the market. As we also have a lot of clients to do consultations with our analysts. And one of the things we found is that as the pace of orals accelerated -- some of those consultations, they would like to do a bunch more quickly. So we're really exciting processes in place for those clients that want to put consultation in the next couple of days, we can actually raise that where they really need it.

And so that's the time specimen. And then lastly, there's a user experience where, as you said, we continually enhance our app, the Gartner app. The client -- not all clients use it, but a significant portion of doing those to do really like it. We continue to have as Gartner. We continue to enhance the basic features on our website as well. And so those are probably the major areas that we are focused on in terms of improving the overall value of the clients did.

Our next question comes from Surinder Thind with Jefferies.

Gene, when I think about the current environment and if we assume there's kind of no change as we kind of move forward, how should we think about what's realistic for wallet retention at this point? I mean should we be continuing to think of maybe some modest improvement and then maybe ebbs and flows around 100% or just any color on how we should think about the mechanics of wallet retention from here on out?

So one, the way that we think about the wall retention is, again, it starts with all of our content and the way we deliver value to clients. And so the whole BTI transformation I just talked about a moment ago is part of making sure that clients get even more value from our content both from the actual nature of the content itself, but also how timely it is now the access and so forth. And so the first piece in terms of driving overall retention is making sure that BTI transformation proceeds, as I said, we feel like it's perceiving a good pace. As that continues, that will help retention will have, we believe more clients will retain. In addition to that, all those changes they make are just as good for new business, which helps with wallet protection. And so I see the changes we're making in terms of the PTR transformation is ultimately driving both retention and new business with then, in turn, drives the all retention.

And Sure, just to put a finer point on that point as well. The way to think about it is all the improvements we're making, largely we can talk about different engagement measures and things like that. Ultimately, it's retention. That is the ultimate measure of -- is the DTI transformation delivering value or not. And as we continue to see improvements in retention, like we highlighted this quarter, obviously, you can't grow a client enterprise if they're not retaining.

And so the way we think about it, it's worked this way in the business for 25 years is when we have happy clients who are getting huge value and retaining year year after year, that becomes easier to sell -- to take our price increase on it and to find incremental license users within the enterprise as well. And so we do expect, as a part of that CV reacceleration while retention continuing to improve as well for all the reasons Gene highlighted.

Got it. I guess just as a clarification, the idea is that you can trend towards historical, I guess that was the question, which is, or is there something structural in the current environment that keeps us below historical? Like I think that was the question I was trying to get to, rather than the rationality of it

Yes. I think that as we pivot to the future, there have been a handful of things that have impacted that measure most notably, as we've talked about in the last couple of quarters had been down sell as we've detailed in the last 2 quarters, we've seen down sell -- there's always down sell, but we've seen down sell stabilizing -- that's a very positive structural change that we're seeing as we move forward. And then all the improvements we're making, again, I can't say exactly what -- while retention will look like, 3 years from now, but we fully expect it to be a contributor to our CV reacceleration going forward.

Our next question comes from Jasper Bibb with Truist Securities.

Maybe just a follow-up on kind of the discussion around bed CV growth rate exiting the year. I guess if it won't be 4%, what's kind of a reasonable exit rate for us to think about expand at the end ?

Jasper. We have a long-standing practice of not really guiding around contract value. I mean, I think the more of the story is we fully expect the CV growth rate in total to accelerate from where we are today, fed mix up between 2% and 3% of the CV and obviously, expedites up 97% to 98% of the CV. And so we fully expect the total to continue to accelerate through the end of this year.

Our next question comes from Scott Wurtzel with Wolf Research.

Maybe just on the U.S. Fed business and the $15 million of NIC that you saw during the quarter. Wondering if you can maybe sort of split that out between what you would call maybe returning business, various incremental demand that you're seeing out of the U.S. Fed end market?

So it's a mix. Basically, I don't have the exact mix in front of me, but it is a mix which is we have some clients who after going through what they went through, decided there's a lot of value in partner made a business case to their organization and bought again. And then we also have demand we're going to pull new clients we had before. So it's actually a mix of both.

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

I was wondering if you can give us a little color on the pricing environment. If I remember correctly, you raised prices earlier this week. How did that compare to last year? And I know some of the other companies in this space are trying to extend the term of the contracts, maybe giving some pricing discounts, et cetera? Is there anything that you're doing along those lines?

Good question. On pricing, as you noted, we do our standard price increase, goes into effect on November 1 or in this case, November 2, which -- so yesterday, historically, we've run between 3% and 4% as our standard price increase. This year given the environment, we're closer to the 3% end of the range. And largely a little bit lower than last year, but sort of within rounding of what we did last year as well. And again, we continue to improve significantly the products and the offerings and the experience and the insights, et cetera.

And so generally speaking, the 3% is non-controversial to some extent. And again, if you think about an average contract size of $300,000 to $350,000 a year a 3% increase is not -- not huge dollars, and the difference between 3% and 3.5% is not used dollars either.

So we feel pretty good about the level of price increase as we roll into the last 2 months of this quarter and into next year.

Are you extending any terms or changing the terms in order to get some benefits on the pricing side?

No. It is our long-standing practice. We've built what we think to be a really strong business model, and a lot of that business model is reliant on sticking to the terms that reinforce and support that business model. And so we have a team that helps our sellers and works with our clients when there are challenges, but by and large, we are sticking to our standard terms and conditions on contracts because it's so important to the value we deliver not only to our clients but to our shareholders as well.

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

This is Bill Chi on for Sister. You've talked about holding water-bearing headcount in that 5,000 range as you look for productivity improvements over the past few quarters, we have seen some improvement sequentially there. How should we think about the threshold of productivity where you guys get comfortable again reinvesting in that headcount for longer-term acceleration.

Yes, it's a great question. I mean I think a lot of it is not necessarily the point in time result. It's more how the business is looking and flowing and what forecasts and pipelines, et cetera, look like. I do think it's really important to underscore that under the covers, we talked about this in the past, where every time we have turnover, we are looking at optimizing where we want to put the dollars associated with that turnover.

And in many cases, it is a straight backfill. But in a lot of cases, we are collapsing a territory, redeploying the accounts within it and then reinvesting in an area where we think there's better short-term and medium-term growth and profitability opportunities. And so under the covers, the headline number wouldn't change in the scenario I just outlined, but we are doing all of that redeployment under the covers, and we're doing that as aggressively or more aggressively than we've ever done it. But I think it really comes down to as we sort of run our scenarios out where we're -- where we see continued acceleration, that would give us the confidence to go back to adding incremental territories going forward.

I think while we've seen some nice sequential improvements in productivity. We obviously have a lot of latent productivity opportunity baked into the system, and we want to make sure that we're taking advantage of that and getting yield on that investment while we're looking at where are the next best territories or incremental territories are to add going forward.

Our next question comes from Curtis Nagle with Bank of America.

This is Ryan Revera on for Curtis Nagle. I was just curious, given the moderation in buybacks in 3Q and the increase in share price over the last several months, has anything changed in how you're thinking about capital allocation?

Great question. So no change in the way we're thinking about capital allocation. We, over time, plan to return capital through opportunistically price-sensitive buybacks and strategic value-enhancing tuck-in M&A. As you noted, the stock did run in August. We typically don't chase the stock what it was. That all said, over the last 12 months, we bought back $1.7 billion worth of our stock, which is more than 130% of the free cash flow we generated over that time. I think we bought back something like $7.3 billion since the start of 2021.

We were in the market in Q3, only at $138 million, so another reduction in our share count. But I think overarching short -- that's the long answer. The short answer is no change to our capital allocation strategy. We'll continue to look at deploying our capital through share repurchases by being price-sensitive opportunistic and disciplined.

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

Is what I'd like to take away from today's call. [ Gartner ] is a powerful enduring value proposition. We have a vast and growing body of high-impact only insights. These SIs guide tens of thousands of leaders in their teams in achieving their mission-critical priorities, especially on the topic bag. Our conferences continue to be highly rated, highly valued by our attendees. The number of executives with tender conferences continues to grow. In the third quarter, contract value growth accelerated, retention improved.

We drove sequential improvements in NCVI. EBITDA, adjusted EPS and free cash flow were once again ahead of expectations. We've raised our new guidance, and we remain incredibly optimistic about our future. Thanks for joining us today, and I look forward to updating you again next quarter.

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

Good morning, everyone. Welcome to Gartner's Second Quarter 2026 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 second 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. We in each case, excluding the divested operation and with the adjustments as described in our earnings release and supplement. All contract values and associated growth rates we discuss are FX neutral. 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 covered 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 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. Second quarter revenue, EBITDA, adjusted EPS and free cash flow were ahead of expectations. Return on invested capital was 31%. Client engagement improved again, up 140 basis points compared to last year. Contract value growth accelerated compared to the first quarter. midsized enterprise clients across both GTS and GBS grew mid-single digits year-over-year. We saw positive NCB with our government clients. While our retention across both GTS and GBS improved sequentially, we delivered above-average growth in several of our end markets, and we remain agile in managing expenses.

We have a strong enduring value proposition. Gartner proactively guides C-level executives and their teams across every major enterprise function in every major geography, industry and market sector on their journeys to achieve their mission-critical priorities. Our insights help clients in 4 critical areas. We identify blind spots, see round corners, fill critical information gaps and prepare for the future.

First, we leverage our vantage point across about 13,000 diverse enterprises to help leaders identify blind spots and avoid common pitfalls. Second, we help leaders see around proverbial corners, which is to say we guide leaders to understand how today's decisions can impact future performance. Third, we help clients fill critical information gaps. For example, most clients have data on their own performance but lack comparative data that helps them understand how their performance compares to others. Gartner provides access to highly detailed proprietary information, such as fast pricing databases, maturity models and cost benchmarks that are not available through public sources. Finally, using our extensive knowledge of end-user needs and vendor capabilities, we help our clients determine what the future might look like and how best to prepare.

There is no other alternative where clients can get this kind of value on the full breadth and depth of their mission-critical priorities. AI remains the single most requested topic, including with Chief Information Officers, Chief HR Officers, Chief Sales Officers, Chief Marketing Officers and more. Demand for support on AI continues to grow. Gartner proactively covers the full range of AI technologies and priorities, AI strategy, domain and multimodal models, AI cybersecurity, physical AI and robotics. AI cloud to edge processing, adoption cases and best practices and more.

Gartner is at the center of the 3 critical constituencies. We connect more than 80,000 business leaders looking to get value from AI, more than 10,000 CIOs and IT organizations implementing AI and about 5,000 technology providers building out their AI strategies. In today's world, it's difficult for executives to know which sources they can trust for critical decisions. Our analysts have deep expertise. They're independent and objective. Clients trust Gartner. We're seeing strong demand for help with AI. We also have strong demand for support on other essential priorities such as cybersecurity, cost optimization, data and analytics and more. However, in today's environment, persistent macroeconomic and geopolitical challenges are creating new and shifting budget pressures.

As a result, executives are scrutinizing expenses, escalating approval processes and delaying decisions. We're taking steps to further strengthen our value proposition to thrive in persistently challenging environments and return to historical growth rates. As we've discussed before, the heart of this change is our business and technology insights transformation. We continue to make progress on this transformation in 4 key areas: volume, impact, timeliness and user experience. The number of documents in our Insights library is up 18%, which allows us to cover a broader range of mission-critical priorities. The number of higher impact documents is also up double digits.

With the rapid pace of change in AI and other areas, it's essential for clients to stay current. To meet this need, the insights we produce immediately after important events are up significantly, making it easier for clients to access our insights increases the value they receive from us. To address this, we continue to enhance the Gartner digital experience. And we're improving our sales, services and analyst capabilities to deliver value to our clients. With the strong demand we're seeing for help on mission-critical priorities such as AI, a vast and growing library of high-impact timely insights and the transformational improvements we're making in our ability to deliver unparalleled client value, we remain optimistic about our future.

We expect contract value growth to continue to 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.

Good morning. Before updating you on the results of the quarter, I'm going to follow up on several points Gene just made. We are making significant progress on our BTI transformation with a focus on delivering even more value to our clients. Macro dynamics and AI are driving uncertainty and affecting enterprises around the world. the data we see across engagement, retention and growth in multiple end markets reinforces the enduring value of Gartner's expert-led insights. This gives us confidence that this cycle will normalize and CV growth will continue to reaccelerate. .

Client engagement continues to improve meaningfully, increasing 140 basis points versus last year across both digital and human interactions, underscoring the relevance and the value of our expert insights. digital engagement improved by more than 110 basis points year-over-year. human interactions increased more than 150 basis points year-over-year, including through improvements in the usage of analyst consultations. Wallet retention continues to improve as down cell activity stabilizes and overall retention rates improve, in quarter retention rates increased in Q2, providing another important leading indicator of future growth.

We continue to win new business with both existing clients and new enterprises. Our clients have conviction in the value we can deliver for that. We are seeing multiple areas of above-average growth. reinforcing the value our clients place on expert insights and guidance. Core GBS subscription products grew 7% in the quarter. The sales practice grew double digits. Finance and Legal grew mid-single digits and conferences revenue increased 12% year-over-year on an organic FX-neutral basis.

Midsized enterprise delivered mid-single-digit CV growth in the quarter. Government CV returned to positive NCVI in the quarter and was an important contributor to overall acceleration. We see this as a leading indicator for the broader client base navigating different but analogous spending constraints. Tech vendors, which are among the organization's closest to AI-related advancements continue to rely on Gartner for timely and actionable insights. Software and services were again our strongest performing tech vendor subsectors.

While some parts of this market are reprioritizing spending as they adapt to a rapidly evolving landscape, demand for our expertise remains healthy. Taken together, these trends demonstrate the resilience of our business model. Even as clients navigate budget pressures and evaluate AI-related investments, total company CV growth accelerated in the quarter. Second quarter contract value or CV grew 2% year-over-year. This was the second consecutive quarter of acceleration. Revenue, EBITDA, adjusted EPS and free cash flow in the second quarter were better than expected. We are increasing our EBITDA, adjusted EPS and free cash flow guidance for the full year.

In the second quarter, we reduced our share count by another 5%, buying back $547 million of stock. Rolling 4-quarter return on invested capital was 31%, and we expect to generate significant free cash flow and have fewer shares outstanding over the course of the next several years. Second quarter revenue was $1.7 billion, up 3% year-over-year as reported and 2% FX neutral. In addition, total contribution margin was strong at 71%. EBITDA was $466 million, up 6% as reported and 4% FX neutral. Adjusted EPS was $4.37, up 24% from Q2 of last year. and free cash flow was $378 million, up 9% year-over-year. Insights revenue in the quarter grew 2% year-over-year as reported and 1% FX neutral. Second quarter Insights contribution margin was 77%, up about 140 basis points versus last year.

Contract value was $5.3 billion at the end of the second quarter, a sequential increase of 30 basis points from Q1. Year-over-year, CV was up 2%, which is a 70 basis point acceleration from last quarter. Excluding the U.S. federal government, CV growth was 3.3%. At June 30, we had approximately $125 million of U.S. Federal CV. We had about $240 million of new business in the second quarter as there continues to be considerable interest in Gartner's proprietary unbiased insights. Across GTS and GBS, we saw new business dollars increase by about 10% from Q1.

As you may have seen in the earnings supplement, we implemented a minor update to how we present FX-neutral KPIs. The details are in the supplement and our Investor Relations team can answer any questions you may have. Global Technology Sales contract value was $4 billion at the end of the second quarter, about flat sequentially and up 1% versus the prior year. a 70 basis point acceleration from Q1. Excluding the U.S. federal business, CV grew 3%. Tech Vendor year-over-year growth accelerated from Q1, while retention for GTS was 97%, an improvement from the first quarter. ex-Fed, while retention was 99%. GTS new business was up 2% compared to last year and up sequentially from Q1 of this year.

Global Business Sales contract value was $1.3 billion at the end of the second quarter, up 1% from Q1 and up 3% year-over-year. ex-Fed, GBS CV grew 4%. Growth was led by the sales, legal and finance practices. Within GBS, about 90% of the CV is from core subscription products. CV from these products grew about 7% year-over-year in the quarter with even faster growth from our offerings for C-level leaders, while retention for GBS was 99% for the quarter. GBS new business was down 5% compared to last year. Q2 new business was around 20% higher than Q1.

The conferences business continues to perform well. We are seeing strong demand for our insights as clients and prospects want to hear from our experts and interact with one another. Conferences revenue for the second quarter was $244 million. On a same conference basis, revenue growth was around 12% FX neutral. Contribution margin was 59%. We held 18 destination conferences in the second quarter as planned. Q2 consulting revenue was $142 million compared to $156 million in the year ago period. Consulting contribution margin was 38% in Q2. Labor-based revenue was $96 million. This was about in line with our expectation.

Second quarter bookings increased 17% over the prior year. Backlog at June 30 was $214 million, up about 9% year-over-year. This was the first year-over-year backlog increase since Q1 of 2025. In Contract Optimization, we had $148 million of revenue on an LTM basis, consistent with Q1 of this year. The 2-year revenue CAGR was up about 9%. As you know, our contract optimization revenue is highly variable. The performance in Q2 was better than we had expected. EBITDA for the second quarter was $466 million, up 6% from last year's reported and 4% FX neutral.

We outperformed expectations in the second quarter through revenue upside, effective expense management and a prudent approach to guidance. Adjusted EPS in Q2 was $4.37, up 24% compared to Q2 last year. We had 67 million shares outstanding in the second quarter. This is an improvement of about 11 million shares or approximately 14% year-over-year. We exited the second quarter with 64 million shares on an unweighted basis. Free cash flow remained strong in the second quarter, up 9% 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 78% of adjusted EBITDA and 140% of GAAP net income.

At the end of the second quarter, we had about $1.5 billion of cash. This includes about $500 million for running the business and around $1 billion available to deploy on behalf of shareholders. Our June 30 debt balance was about $3 billion. Our reported gross debt to trailing 12-month EBITDA was under 2x. We repurchased $547 million of stock during the second quarter, reducing our share count by more than 5% sequentially. Last week, the Board increased the buyback authorization to about $1.2 billion. We expect the Board will continue to evaluate and refresh the amount as needed. We are updating our full year guidance to reflect recent performance and trends.

The update includes the effect of foreign exchange rates, reflecting a stronger U.S. dollar compared with our prior guidance from 3 months ago. For Insights revenue in 2026, our guidance is operationally unchanged. We revised the outlook to account for the stronger dollar. For conferences, we are basing our guidance on the 55 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 maintained the outlook for the full year. Contract optimization has had several very strong years and the business remains highly variable.

For 2026, we expect revenue at or above $6.375 billion, which is updated from last quarter and is FX-neutral growth of 1%. With positive NCVI in Q2, we expect Insights revenue in Q3 to be up sequentially on an FX-neutral basis. Reported results will reflect the effect of the stronger dollar. We now expect full year EBITDA at or above $1.57 billion. Compared with our prior guidance, this is up $40 million on an operational basis and up $25 million, net of the effect of the stronger dollar. This reflects full year margins at or above 24.6%, also up from last quarter.

We expect 2026 adjusted EPS at or above $14, 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 $1.185 billion, also an increase from the prior guidance. This reflects a conversion from GAAP net income of 136%. Our guidance is based on 66 million fully diluted weighted average shares outstanding, which incorporates the repurchases made through the end of the second quarter. We exited Q2 with about 64 million fully diluted shares. For Q3, we expect EBITDA at or above $315 million. Our revenue, profit and cash flow results in Q2 were ahead of expectations. We've increased the EBITDA, adjusted EPS and free cash flow guidance for 2026. Contract value ex-Fed grew 3.3% in the quarter and total CV year-over-year growth improved by 70 basis points from Q1 of 2026.

We are making progress on our BTI transformation with a focus on delivering even more value to our clients. Macro dynamics in AI are driving uncertainty and affecting enterprises around the world. The data we see across engagement, retention and growth in multiple end markets reinforces the enduring value of Gartner's expert-led insights. This gives us confidence that this cycle will normalize and CV growth will continue to reaccelerate. Gartner's return on invested capital is strong at 31% on a rolling 4-quarter basis. We continue to generate significant amounts of free cash flow. We expect the conversion of GAAP net income will improve as CV accelerates. We believe this offers a durable and compelling value proposition for our shareholders.

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. Over time, we'll opportunistically deploy our capital on stock repurchases, which will lower the share count 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 comes from Faiza Alwy with Deutsche Bank.

I wanted to ask about how your thoughts have evolved around the role of macro and AI kind of impacting your business? Because I feel like this is the first time that you've mentioned sort of AI as a factor. Historically, we've been talking more about the macro factors like tariffs. So just curious kind of what's kind of driven the change in messaging around there?

Yes, what I'd say is that during Q2, the selling environment improved -- and I'd say many of the factors that we talked about were modestly better, most notable one obviously being part of the public sector, but other sectors as well. AI actually for us is something we get a lot of demand for us, the single biggest depend from our clients. And so it's actually quite valuable to our clients. And again, we see the single biggest driver demand from [indiscernible] AI. .

Our next question comes from Andrew Nicholas with William Blair.

This is Tom Roesch on for Andrew Nicholas. I want to ask about the as Gartner solution. And I was wondering if you could provide some color on how renewal rates for users of a Gartner compared to those who don't and also any type of benefits you're seeing like in revenue, renewals, retention and you took those numbers to this point?

So I think the way to think about -- ask Gartner and Gene referenced this in the BTI transformation, it's just a piece all the things we're doing to enhance the user experience, both from a digital user experience perspective and also the experience when people do interact with our analysts and our experts. And as Gartner for us is table stakes because that's the way a lot of people are now when they're behind the firewall or working through information, they are leveraging a large language model. Our core value is really driving people there to our site proactively because we know what their mission-critical priorities are, and we know what their interests are, and we know what they should be thinking about many times before they even know they should be thinking about. And they really put a huge premium on that proactivity. And then when they do come, they are proactively brought in behind the firewall, then at Gartner is one of our many digital tools that they can utilize further enhance their experience, their insights, their intelligence moving forward on their MCPs.

It's all positive. But again, I would highlight the broader digital experience as being the more important thing and actually the broader overall engagement experience across all of the elements that Gartner delivers value is really what we're focused on. As Gartner is obviously a piece of that. but not the biggest piece of it. It's an important piece, but more broadly, we're enhancing the overall experience, making it more effective and more efficient for our clients to connect with the insights they need to accomplish the mission critical priorities.

Our next question comes from Jason Haas with Wells Fargo.

I'm curious if you're still expecting the ex-federal government CV growth to accelerate to 4% plus by the end of this year?

Jason. Yes. So along with overall CV growth continuing to accelerate this year, it's our expectation that the expense CV growth will be a part of that. So short answer is yes. We do expect the entire business to continue to accelerate ex-Fed being a piece of that reacceleration as well.

Our next question comes from Jeff Meuler with Baird.

Could you go into more detail, I guess, on your takeaway from the midsized client base growing mid-single and what's different relative to large enterprise? One thing that would come to my mind that I'd be curious on your thoughts on is like if large enterprise just has more downselling of number of seats, but I don't know if there's any other takeaways from you because I would think the initiatives that you've been implementing would benefit both client sizes generally.

Jeff, it's Gene. Great question. I think what's going on with midsize enterprises is these are enterprises that are -- again, they're typically revenues of $100 million or more. So these are not small enterprises, but they're smaller than the very large enterprises. And so the level of complexity in their environment is lower. And so when they're tackling things like AI, they actually -- it's easier for them to actually get through the -- what are the big areas that they can get a good return on, how they track the cost, all that is much easier to control with a midsized enterprise .

I think large enterprises, these very large enterprises, they're extremely complicated. And I think it's very hard for leaders to sort out all of the puts and takes in terms of both where the value is and in terms of how you manage cost. I think that's the big difference is. In the smaller enterprises, actually, it's easier to manage or other stuff to make more progress. And the larger enterprise takes a much more complex problem, but they're still wrestling with how do you actually get that ROI control cost and risk and things like that.

And I think, Jeff, the other thing I would add is in the larger enterprises, they tend to be more global in nature and so more impacted by all of the uncertainty that exists out there. The one thing I would say is -- and again, I would echo your point, all the things we're doing from BTI transformation across the board, will benefit all clients of all sizes across GTS, the end user piece, the tech vendor piece and across GBS. We did note that we are seeing down sell stabilize in the second quarter, which, again, is largely a larger company phenomenon. So we're actually seeing some improvement there.

We noted also that we are setting in quarter retention rates improve. That's a phenomenon across the entire portfolio as well. And so back to Jason's question a little bit with ex-Fed accelerating, we need the entire portfolio to accelerate, and that would be inclusive of midsized enterprises, large enterprises and our largest clients across the board as well.

Our next question comes from Josh Chan with UBS.

I guess on Gene's comment about the selling environment improving. I was wondering if you could make a comment about the ex-Fed selling environment? Do you see that improving as well through the quarter? And for you to get to the target of acceleration for the year, what kind of needs to happen on an ex-Fed environment basis, I suppose?

So I'd say on the ex-Fed selling environment, there are areas where it's gotten better, and there's areas where gotten worse. And so I sort of say there's a mix of that. And so the areas where the [indiscernible] has gotten better, I think that's performed very well and the areas with got worse, has been a little bit more challenging. And so it's sort of say that's what's going on kind of under the covers. And again, as Craig said, we expect that to accelerate over time.

And Josh, I think what it comes down to is our belief that I think a lot of people believe this that this kind of environment is sort of a new normal to some extent. And so all of the transformations we're doing and all the ways we are improving the business and focusing on execution and all of those things are meant to be able to accelerate the business in the current environment. And so again, we don't need a radical shift in the environment for the CV to continue to accelerate. We don't need a radical shift in the environment for the ex-Fed CV to accelerate. We just need to execute better, and we've got all the things in line.

And again, as I mentioned and Gene mentioned in our prepared remarks, as we look under the covers a lot of our KPIs, they are definitely trending positively. And when we see those things trend positively generally results in improved performance over time.

Our next question comes from Manav Patnaik with Barclays.

I was just hoping you could help understand the new business number. I think you said it was plus 2% in GTS and downside in GBS and kind of square that off with your commentary around increased engagement, new sales and so forth? And I guess within that, and maybe overall, just how is price tracking?

I'll start off and Gene can fill in any blanks. So I think there's a few things I'd highlight on the new business. So one is, as you know, and many of those who follow us for a while, we generally see new business dollars build from Q1 to Q2 to Q3 to Q4. So each quarter, we generally generate more new business dollars than the previous quarter. And as I noted in my prepared remarks and highlighted for both GTS and GBS, we did see a nice progression from Q1 to Q2 in new business dollars, which we view as very positive.

When we look under the covers at sales pipelines and new business pipelines, they are also trending positively. And as you know, having new business pipelines, does it immediately translate into growing new business, but certainly, it gives us a much better shot of continuing to drive that build from Q2 to Q3 and then Q3 to Q4 from a new business perspective and drive gains in new business as well.

When we look under the covers at things like engagement and things of that nature, that's really about future retention rates, but what I would say is, obviously, future retention is also a good predictor of future new business. If you're not driving strong retention rates, it's really hard to grow the clients. And so the more that we can drive higher retention rates within our existing clients, the more new business opportunities we have as well.

And again, you saw wallet retention increased sequentially that you should see build as well over time as we both drive stronger retention rates with our existing clients. And then with more clients retaining, we have more at-bats, if you will, to drive new business with existing clients as well. And so I think it's a combination of all those things. So primarily, the engagement gives us confidence about the retention rates, the retention rates give us confidence about being able to drive new business from existing clients and then you flip forward to the new business pipelines, which remain very strong and positive. That gives us confidence around the new logo contribution moving forward as well.

Our next question comes from Surinder Thind with Jefferies.

I was hoping maybe you can provide a bit more color on the wallet retention. Obviously, things got a little bit better quarter-over-quarter, but I think there was also a commentary around continued downflow pressure within the large enterprises, maybe just how you think about where downsell pressure is versus maybe where you would like it to be? And just some of the things that are the factors that you think are driving it in the near term versus structurally where we think we are longer term on that, that would be helpful.

So I think the commentary is really that we're seeing down sell stabilize. And so it didn't get worse Q1 to Q2, it is stabilizing. And if you think about when a contract comes up for renewal, there are 1 of -- 3 or 4 things that could happen. And so when there is down sell, it means we lose the upsell opportunity. And while our retention is really a function of the combination of renewing the base, obviously, there are a small amount of clients that will cancel, but you see client retention rates are improving and are at or near sort of historical highs. And so that's really not a challenge for us. But when a client decides to either hold spend or reduce spend, that is a missed opportunity for us to increase the spend, which generally translates into those higher wallet retention rates.

We believe that over time, with the better engagement levels, all the improvements we're making that Gene highlighted on BTI that will lead to stronger retention rates. That stabilizes the at retention and gives us more opportunities to grow that going forward. It could be just growth through price. It could be growth through upgrading people to higher-level services or it could be growth from finding new licensed users or finding new buying centers within those existing enterprises. But we view wallet getting more back to normal over time. as we drive all these improvements in DTI and engagement, which stabilizes the retention base and then just gives us more opportunity to grow that existing client base.

Our next question comes from Jasper Bibb with Truist Securities.

I just want to ask how you're thinking about managing quota-bearing head count in the context of this reacceleration in the second half and then in the '27, like do you expect to add more salespeople in the second half to support that CV reacceleration? Or do you think you'd get there productive?

So we basically want to add sales head count when we have great productivity. And right now, we look at it as we have a lot of capacity that is underutilized and that with the changes we're making, like the BTI transformation I talked about, the increased engagement that Craig talked about, we think that will actually drive our productivity up. We'll get a nice lift there. As that comes up, we will expect to accelerate our head count growth. And so it really depends on kind of how we see this improving the productivity development over time.

And Jasper, I would just add, we're actively managing our operating expense base so that we can remain agile and ensure we can deliver on our profit expectations, free cash flow expectations, et cetera. And then just I would reiterate what Gene said, which is we have plenty of capacity to significantly reaccelerate CV, even getting to half or 3/4 of our historical productivity levels. That will provide significant uplift to the CV growth. And again, that return to productivity would give us the confidence that Gene highlighted to reignite investment in QBH, but again, it's all about balanced managing of our OpEx base, making sure we're getting productivity out of our existing cost base. And then when we see that, that's the signal to go faster on the QBH side.

Our next question comes from George Tong with Goldman Sachs.

You talked about CV growth continuing to accelerate from current levels and highlighted several drivers. Can you rank order the key drivers you expect to fuel CV growth acceleration and what you see as a reasonable medium-term target for CV growth?

So we think, George, the thing that's going to drive CV growth the most are two factors. The first is as engagement with our clients increases, that strengthens retention and then as our client retention increases, obviously, we rotate client just crippled earlier, our opportunity to grow in that client increases. And so I think the first thing we'll see is increased engagement leads to higher retention and higher retention actually leads to more new business with our existing clients. But on top of that, as we make the changes and get higher engagement, that also makes it easier to sell new clients to -- it makes their value proposition more transonew opportunities as well. And so that will take us well. So I think those are the 3 key factors that impacted.

And George, I would just add, obviously, in the near term, the biggest impact is a combo of lapping the U.S. Fed and that business actually getting back to growth as well. And so again, I know that's baked into a lot of the way people are thinking already. And so that's fine. But mathematically, that will provide a nice lift this year. And then again, we believe that, that business, and again, both Gene and I noted on our prepared remarks that we actually drove in CVI in that space in the second quarter. So that's another piece of it as well. That sort of gets rolled into the total and will behave exactly the way Gene highlighted. But obviously, we won't have the same challenges we had in 2025 from the U.S. Fed business going forward.

And a reasonable medium-term target for CV growth?

George, you should know us better than that, that we do not provide CV guidance or medium-term growth. I think the short answer is we expect CV growth to continue to reaccelerate. We've got to go through -- to continue through the low single digits to get to mid-single digits and then get through mid-single digits and beyond, and we look forward to updating every way each quarter, but we're not going to provide a medium-term target on the CV growth as is our normal practice.

Our next question comes from Toni Kaplan with Morgan Stanley.

You mentioned in the prepared remarks, clients are reprioritizing their tech budgets. I imagine a lot of them are putting sort of more expense dollars towards utilizing large LLMs and related expenses. Is that largely what you were referring to? And are you seeing any impact in the amount that they're willing to spend with you as a result of the reprioritization?

Toni, so you're correct in that clients are reprioritizing their IT spending to shift more towards AI, LLMs is one piece of open more towards AI. What I'd say is that doesn't impact us in a negative way directly because if you look at the amount they spend with us relative to their IT budgets, we're very, very small. I think 10% are less for typical clients. And so as they reprioritize actually, as I mentioned before, the biggest single [indiscernible] demand for us for our clients, including IT, is help with AI. So we're actually helping them figure out how do they reprioritize. And so in that sense, it's actually driving demand for our products as we help them reprioritize.

And again, so they're -- again, across both within IT and across the business, typically, companies are trying to be prioritize to free up [indiscernible] for AI, and we're helping them with that.

Our next question comes from Scott Wurtzel with Wolfe Research.

Craig, just wondering if you can talk a little bit more about some of the OpEx efficiencies that you're recognizing in the context of you're excluding FX, you're raising your revenue outlook by $5 million, EBITDA by $40 million. Just wondering if you could talk a little bit more about the OpEx efficiencies?

Yes, Scott. Thanks for the question. I think it's ongoing best practice and on making sure that our in-quarter OpEx rate aligned with the revenue, but more importantly, that our run rate is aligned with our revenue, CV expectations rolling forward. So we continue to manage the business to ensure that we are delivering on our profit targets and also delivering on our free cash flow targets. What I would say is a lot of the reprioritization is to make sure that we are investing in key areas that we know will drive short-term, medium-term and long-term growth. And so there's a lot of reprioritization happening on a quarterly basis. if not always in the name of driving profitability, it is often in the name of making sure that we're able to double and triple down in the places that we think are most important for delivering value for our clients and that we think are most important for delivering long-term value for the company and our stakeholders as well.

Our next question comes from Daniel Zako with BMO Capital Markets.

This is actually Jeff Silber with BMO. Other companies in the space have talked about potentially changing economics maybe a faster move to enterprise pricing or a consumption-based model. Is that something you're contemplating? And if not, why not?

So we talked to our clients and do market research on a pretty much continual basis to understand how they will work with us and what they -- how they feel about our pricing. And what I'd say is, if you look at who we're targeting with our research, it's the typically the C level, like the CIO, CFO, their direct reports and maybe 1 level down. And so an organization that might have 1,000 people or 10,000 people or 50,000 people, we're targeting a handful of those people. And when we go back to talk to clients about how they want to pay for it, how they want to structure their contracts, they like the way we do it today is seat-based because they don't see a need to have it with all 10,000 of their associates. And if I could contrast that, there's some like software purchases when they sort of say, like, if you buy a lot of packaged software so they did it for each of our associates.

We're not in that kind of business. It's really focused on the top really 3 levels in the organization, our core clients. And when we ask them how they want to pay, they don't say we want enterprise licenses, they actually like the way that we're working today.

And Jeff, just to add to that. I mean, again, if you look at the average spend on the GTS side, it's probably about 6 licenses per enterprise on the GBS side. It's a little bit lower than that. And so again, we are really targeting to echo Gene's point, the top of the orchard that person's direct reports and in large organizations, all over or 2 down from that. We are not targeting the enterprise. We are targeting the C level. Because those are the people that have significant enterprise-wide mission-critical priorities that we can drive the most value for and that's where we're going to continue to focus and drive a lot of our growth and value.

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

I was -- maybe a quick clarifying question. Can we know what the ex-Fed [indiscernible] goes in the quarter, we get around $11 million from ex-Fed and $3 million [indiscernible]. Just wanted to confirm that. And then just a follow-up on prior responses. I was just wondering -- can you talk about which areas are you seeing continued pressure? Are there certain industries? Or for example, tariff-impacted industries were impacted last year? Do you see easy comps going into this year?

Ashish, I'll start with the computational stuff, and then we can dive into the more macro question. So ex-Fed [indiscernible] in the quarter was about positive $4 million. So that's the math on that. In terms of -- do you want to cover the tariff in fact...

Again, companies that have tariffs imposed have much tighter cost constraints for that company and ones that don't. And so that's clearly a macro factor that continues to impact just for those companies that tariffs. As I mentioned before, and Craig mentioned this as well, we're assuming that the world is going to be like that on a go-forward basis. And so we're restructuring our business, especially with the BTI transformation so that our value goes up. So even in industries where there's a big macro dislocation actually, they see the value in our products and are going to want to buy and grow with us.

And Ashish, just the one thing I'd also just highlight is it's really the uncertainty. There are lots of different macro factors that are popping up on a daily, weekly, monthly basis. They ebb and flow, but it's causing just lots of uncertainty around the enterprises that we serve globally, and we're adapting and transforming so that we can perform better given all that uncertainty.

Our next question comes from Curtis Nagle with Bank of America.

Just switching gears a little bit, just on consulting. I think you said the backlog is through 14 or so, first increase in about a year or so. I guess where are you seeing incremental demand? What's driving that improvement?

Yes. It's -- I think it's a little bit better execution across the board a little bit of just driving better focus with our core anchor clients. There's no like one thematic around, we sold a lot of this kind of project or this kind of engagement. I think the team has just been laser focused on, one, delivering on the backlog that we have; and two, generating the pipeline and turning that into bookings, so that we've got more backlog to or in the future. Obviously, in Q2, we had a very strong bookings quarter, again, no uber trend among the type of business that we did end up selling, but it's just a matter of staying close to our clients, understanding where they have needs. and then our consulting team diving in to meet those demands and meet those needs.

And so we feel good now about the full year outlook, particularly on the labor-based side, given the strong bookings quarter, and we need to follow it up with another strong bookings quarter so that we keep the backlog growing so that we can return that business to growth over the medium term.

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 in closing, with the strong demand we're seeing for help on mission-critical priorities such as AI, our BaaS and growing library of high-impact [indiscernible] insights and the transformational improvements we're making in our ability to deliver unparalled client value, we remain optimistic about our future. We expect contract value growth to continue to accelerate. We will continue to drive strong free cash flow that we put to use to drive incremental shareholder value, and we expect to deliver adjusted EPS on a compound annual basis of above 12% over the next 3 years. Thanks for joining today, and I look forward to updating you again next quarter.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.

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.