Q2 2023 Gartner Inc Earnings Call

Speaker 2: Good morning, everyone. Welcome to Gartner's second quarter 2023 earnings call. I'm David Cohen, SVP of Investor Relations. At this time, all participants are in a listen-only mode. After comments by Jean Hall, Gartner's chief executive officer, and Craig Safian, chief financial officer, there will be a question and answer session.

Speaker 2: Please be advised that today's conference is being recorded. This call will include a discussion of second quarter 2023 financial results and Gartner's outlook for 2023 as disclosed in today's earnings release and earnings supplement, both posted to our website investor.gartner.com.

Speaker 2: 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. All contract values and associated growth rates we discussed are based on 2023 foreign exchange rates and exclude contributions related to the first quarter divestiture and the 2022 Russia exit.

Speaker 2: All growth rates and teens comments are FX neutral unless stated otherwise. All references to share counts are for fully diluted weighted average share counts unless stated otherwise.

Speaker 2: Reconciliations for all non-GAAP numbers we use are available in the investor relations section of the Gartner.com website.

Speaker 2: To set forward 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 2022 Annual Report on Form 10-K and quarterly reports on Form 10-Q , as well as on other filings with the FCC.

Speaker 2: I encourage all of you to review the risk factors listed in these documents. Now I will turn the call over to Gartner's Chief Executive Officer, Gene Hall.

Speaker 2: of you to review the risk factors listed in these documents. Now I will turn the call over to Gartner's Chief Executive Officer, Gene Hall. Good morning and thanks for joining us today.

Speaker 3: Gartner drove another strong performance in 2-2. We delivered double-digit revenue growth and high single-digit growth in contract value. EBITDA, EBITDA margins, and adjusted EPS came in above expectations as a result of modest revenue upside and disciplined cost management.

Speaker 3: Free cash flow in the quarter was excellent. The environment remains highly uncertain. The tech sector continues to adjust to post-pandemic demands.

Speaker 3: The banking industry is grappling with rising interest rates. The industry is continuing to be impacted by supply chain challenges and more.

Speaker 3: Enterprise leaders and their teams need actionable, objective insight.

Speaker 3: Gartner is the best source for the insight, tools, and advice that make the difference between success and failure for these leaders and the enterprises they serve. We're helping our clients make better decisions whether they're thriving, struggling, or anywhere in between. We do this through consistent execution of operational best practices.

Speaker 3: Research continues to be our largest and most profitable segment.

Speaker 3: We guide leaders across all major enterprise functions.

Speaker 3: Our market opportunity is vast across all sectors, sizes, and geographies.

Speaker 3: We estimate our opportunity at around $200 billion.

Speaker 3: 95% of our addressable market is with enterprise function leaders like chief information officers, CFOs, heads of supply chain and more.

Speaker 3: The balance of the market opportunity is with technology vendors.

Speaker 3: In the second quarter, we helped clients with a wide range of topics, including cybersecurity,

Speaker 3: Data analytics.

Speaker 3: Artificial intelligence, remote work.

Speaker 3: cost optimization and more. Research revenue for 7% in Q2.

Speaker 3: Subscription revenue grew 9% on an organic basis.

Speaker 3: Total contract value growth was 9%.

Speaker 3: Contract value for enterprise function leaders continued to grow at double-digit rates.

Speaker 3: We serve executives and their teams through distinct sales channels.

Speaker 3: Global Technology Sales, or GTS, serves leaders and their teams within IT. GTS also serves leaders at technology vendors, including CEOs, chief marketing officers, and senior product leaders.

Speaker 3: GTS contract value grew 7%. GTS sales to enterprise function leaders performed well in the quarter.

Speaker 3: GTS sales to leaders and technology vendors were affected by technology sector dynamics and tough your viewer comparisons.

Speaker 3: We expect sales to technology vendors will return to our target growth rates over the medium term.

Speaker 3: Global Business Sales, or GBS, serves leaders and their teams beyond IT. This includes HR, supply chain, finance, marketing, sales, legal, and more. GBS contract value grew 15%.

Speaker 3: Through relentless execution of proven practices.

Speaker 3: We're able to deliver unparalleled value to our clients.

Speaker 3: Our business remains resilient, despite a persistent, complicated external environment and tough compares for the technology vendor market. Partner conferences deliver extraordinarily valuable insights to an engaged and qualified audience.

Speaker 3: This will be the first full year of in-person conferences since 2019, and we're off to a great start.

Speaker 3: Attendant is strong.

Speaker 3: Exhibitor bookings are at record levels.

Speaker 3: And feedback continues to be excellent.

Speaker 3: We had a great first half and the outlook for the year is strong.

Speaker 3: Gartner Consulting is an extension of Gartner Research.

Speaker 3: Consulting helps clients execute their most strategic initiatives through deeper, extended project-based work. Consulting is an important complement to our IT research business.

Speaker 3: Consulted revenue for 6% in the second quarter. We updated our 2023 guidance, increasing EBITDA and free cash flow.

Speaker 3: We've revised our non-subscription research revenue to reflect technology vendor dynamics and our outlook for conferences is higher.

Speaker 3: Craig will take us to the details.

In closing, Gartner achieved another strong quarter of growth. We deliver unparalleled value to enterprise leaders and their teams across every major function, whether they're thriving, struggling, or anywhere in between. We're exceptionally agile and continuously adapt to the changing world.

We know the right things to do to be successful in any environment.

Looking ahead, we are well positioned to continue our sustained record of success far into the future.

Our client value proposition and addressable market opportunity will allow us to drive long-term, sustained, double-digit revenue growth.

We expect margins will expand modestly over time, and we generate significant free cash flow well in excess of debt income.

Even as we invest for future growth, we'll return significant levels of excess capital to our shareholders.

This produces shares outstanding and increases returns over time.

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

Thank you, Jean, and good morning. Second quarter results were strong, with high single-digit growth in contract value and double-digit FX neutral revenue growth. EBITDA, EBITDA margins, and adjusted EPS were better than expected as a result of modest revenue upside and disciplined cost management. Free cash flow in the quarter was excellent. With good visibility into the balance of the year, we are increasing our 2023 EBITDA growth

Total contribution margin was 68% compared to 69% in the prior year as we caught up on hiring during 2022. EBITDA was $384 million ahead of our guidance and about in line with last year. Adjusted EPS was $2.85 consistent with Q2 of last year.

and free cash flow was $410 million. We finished the quarter with 20,104 associates, up 12% from the prior year and 1% from the end of the first quarter. We remain well-positioned from a talent perspective, with low levels of open territories and our new associates coming up the 10-year curve.

We will continue to carefully calibrate headcount and operating expenses based on near-term revenue growth and opportunities to invest for the future. Research revenue in the second quarter grew 6% year-over-year as reported and 7% on an FX neutral basis.

Subscription revenue grew 9% on an organic FX neutral basis.

Second quarter research contribution margin was 73% compared to 74% in the prior year period as we have caught up on hiring and returned to the new expected levels of travel.

Contract value, or CV, was $4.6 billion at the end of the second quarter, up 9% versus the prior year.

The second quarter last year was one of our strongest research quarters ever, with outstanding performance on nearly every metric we provide.

Tp growth is ffectx neutral and exclues the first quarter of 2023. divestiture DV from enterprise function leaders across GTS and gb through a double-digit rates.

EV from tech vendors grew low single digits, compared to mid-teens growth in the second quarter of 2022. Quarterly net contract value increase, or NCBI, was $41 million. As we've discussed in the past, there's notable seasonality in this metric.

Across our combined practices, the majority of industry sectors grew at double digit rates, again led by the transportation, retail, and public sectors. We had high single digit growth across all of our enterprise size categories other than the small category, which grew mid single digits. This category has the largest tech vendor mix.

We also drove double-digit or high single-digit growth in the majority of our top 10 countries.

Global technology sales contract value was $3.5 billion at the end of the second quarter, up 7% versus the prior year.

GPS had quarterly NCVI of $14 million.

Wallet retention for GTS was 102% for the quarter, which compares to 107% in the prior year, when we saw a record high for this metric. IT enterprise function leaders' wallet retention remained above historical GTS levels during the second quarter. GTS new business was down 4% versus last year.

New business with IT enterprise function leaders increased high single digits compared to the prior year against the tough compare. TTS quota bearing headcount was up 13% year over year, reflecting the catch-up hiring we did in 2022.

We will continue to manage hiring based on both short-term performance and the medium-term opportunity. Our regular full set of GTS metrics can be found in the appendix of our earning supplement.

Global business sales contract value was $1 billion at the end of the second quarter, up 15% year over year, which remains towards the higher end of our medium term outlook of 12 to 16%.

All of our GBS practices grew with double digit or high single digit rates, again led by supply chain and HR.

GVSCV increased $27 million from the first quarter.

While retention for GBS was 109% for the quarter, which compares to 115% in the prior year when we saw one of the highest ever results for this metric.

PBS new business was up 2% compared to last year against a strong compare.

GBS quota-bearing headcount was up 15% year-over-year. This excludes headcount associated with the Q1 divestiture. As with GTS, our regular full set of GBS metrics can be found in the appendix of our earnings supplement.

Conferences revenue for the second quarter was $169 million, ahead of our expectations as we saw strong performance with both exhibitors and attendees.

Contribution margin in the quarter was 58%, consistent with typical seasonality.

We held 17 destination conferences in the quarter, all in person.

Second quarter consulting revenues increased by 5% year over year to $126 million. On an FX neutral basis revenues were up 6%.

Consulting contribution margin was 37% in the second quarter.

Labor-based revenues were $104 million, up 9% versus Q2 of last year and up 11% on an FX mutual basis.

Backlog at June 30th was $172 million, increasing 17% year-over-year on an FX neutral basis with continued booking strength.

Our contract optimization business is highly variable. We delivered $22 million of revenue in the quarter, and the pipeline for both contract optimization and labor-based revenues remain strong.

Solidarity cost services increase 15% year-to-year in the second quarter as reported and on an FX neutral basis.

The biggest driver of the increase was higher headcount to support our continued strong growth.

We also saw an increase in cost year over year with the return to in-person conferences.

STNA increased 12% year-over-year in the second quarter as reported and 14% on an FX mutual basis. STNA increased in the quarter as a result of headcount growth. EBITDA for the second quarter was $384 million compared to $389 million in the year-ago period.

Second quarter EBITDA upside to our guidance reflected revenue exceeding our expectations in conferences and prudent expense management.

Appreciation in the quarter of $24 million was up modestly compared to 2022.

Net interest expense, excluding deferred financing costs in the quarter, was $23 million. This was down $5 million versus the second quarter of 2022 due to higher interest income on our cash balances.

The modest floating rate that we have is fully headstream turning.

The Q2 adjusted tax rate, which we used for the calculation of adjusted net income, was 25% for the quarter. The tax rate for the items used to adjust net income was 27% for the quarter.

Adjusted EPS in Q2 was $2.85, in line with last year. We had 80 million shares outstanding in the second quarter. This is a reduction of close to 1 million shares, or about 1% year-over-year. We exited the second quarter with about 80 million shares on an unweighted basis.

Operating cash flow for the quarter was $436 million, of 5% compared to last year.

GapX for the quarter was $26 million, up 21% year over year as a result of an increase in technology investments.

Free cash flow for the quarter was $410 million. Free cash flow as a percent of revenue on a rolling four quarter basis was 17% of revenue and 66% of EBITDA.

Adjusted for the after-tax impact of the Q1 divestiture, free cash flow conversion from Gap Net income was 119%.

Our free cash flow conversion is generally higher when CV growth is accelerating.

At the end of the second quarter we had about $1.2 billion of cash.

Our June 30th debt balance was about $2.5 billion.

A reported gross debt to trailing 12-month EBITDA was under two times.

Our expected free cash flow generation, available revolver, and excess cash remaining on the balance sheet provide ample liquidity to deliver on our capital allocation strategy of share purchases and strategic token M&A.

Our balance sheet is very strong with $2.2 billion of liquidity, low levels of leverage, and effectively fixed interest rates.

We repurchased $132 million of stock during the second quarter.

We had about $830 million remaining on our share of purchase authorization at June 30th.

We expect the Board to continue to refresh the repurchase authorization as needed going forward.

As we continue to repurchase shares, our capital base will shrink. Over time, this is accretive to earnings per share and combined with growing profits also delivers increasing returns on invested capital over time.

We are increasing our full-year conferences, EVA. and free cash flow guidance to reflect the strong Q2 performance.

We are updating our research revenue guidance to reflect tech vendor market dynamics on a non subscription part of the business.

For research, we continue to innovate and provide a very compelling value proposition for clients and prospects.

We've got tough compares across most of the segment for another quarter. We expect stronger growth from subscription business than the non-subscription part of the segment, as we indicated last quarter. The non-subscription part of the business has direct exposure to tech vendor spending.

The outlook continues to be based on all of our 47 destination conferences for 2023 running in person.

There is seasonality to the business based on the conference's calendar, which is different than the historical pattern.

We still expect Q4 to be the largest quarter of the year. We expect Q3 will be the smallest revenue quarter of the year, as I noted in May.

For consulting revenues, contract optimization remains highly variable. We had a very strong year in 2022, especially in contract optimization in the fourth quarter.

We will continue both to manage expenses prudently to support future growth and deliver strong margins.

Our updated 2023 guidance is as follows. We expect research revenue of at least $4.855 billion, which is FX mutual growth of about 6%, or 7% excluding the Q1 divestiture. The update to research revenue guidance reflects the effect of tech vendor market dynamics on the non-subscription part of the business.

We expect conferences revenue of at least $490 million, which is growth of about 26%.

We have increased our outlook for conferences by $20 million. We expect consulting revenue of at least $505 million, which is growth of about 5% effect neutral, consistent with the outlook we gave in May. The result is an outlook for consolidated revenue of at least $5.85 billion, which is effect neutral growth of 7%.

Okay, thank you. Thank you. We're moving for our next question. And our next question coming from the line up, Heather Bolton with Bank of America, you'll let us open. Hi, thank you very much. You just kind of talked about your enterprise business and how it's holding up strong and you talked about it running up double digits this quarter. I'm just curious quarter to quarter, I guess two Q versus one Q, you know, how that business is trending. Are you, you know, where you see demand going in the current environment.

Okay, that's helpful. Thank you. And with regards to your outlook for the tech vendors, you talked about that you see it returning to sort of your normalized run rate growth over the midterm. And then I think you just mentioned that it's probably more of a short-term trend. I'm just curious, kind of, are you seeing any signs of potential improvement as you move to the year or even to 2024? Or just curious why you're talking more over the midterm versus the short-term. Thanks.

Hey Heather, Gene. So what I'd say is on a short-term basis, no change to one of Q2 in terms of tech-finder demand, very similar with the exception of the non-safety business, which is what we've talked about. It's our perspective that what happened was going to tech industry is that demand got pulled forward during the recession during the pandemic and that. So there was some demand that was already filled with.

And demand will get back to trend once sort of a little time elapses. How long does it take? We don't know, but we believe the technology will get back to trend in the median term.

And then we'll get back to trend one sort of a little time elapses. And how long does it take? We don't know, but we believe the technology that's going to be back to trend in the median term. Appreciate it. Thank you.

Thank you. And our next question coming from Delina, Tony Kaplan with Morgan Stanley . Yelena's open. Thanks so much. I was hoping that you could talk about the current client spending appetite. If you're seeing cost cutting or if you're seeing just business as usual, it sounds like the subscription business is performing well.

Yes, so, hey Tony, so as you pointed out, contract value for enterprise function leaders continue to grow at double digit rates. I will say while we're growing there that there are more decisions getting escalated and there's more scrutiny than there was like a year ago. So it's a tougher environment in terms of more escalations. But at the end of the day, people say our value in five, which is why we've had that great performance.

Terrific. I wanted to ask about whether AI could actually be a help for you with regard to adding additional seats across the enterprise. Are you thinking that corporations will start to need an AI strategy?

and similarly within GTES could that lead to additional seats as well. Or do you view this as being sort of similar to prior technology trends like cloud. And so therefore it's just a change of topic.

I expect this a little bit in between actually, that it is a change of topics, but there's more kind of intense interest in the topic VI than there was in such a short period with cloud. Keeper flavor of it, we did more than 22,000 interactions in the first half.

you know, one-on-one calls with our experts on the subject of AI, which is, you know, is higher than any other single topic, and the rate of growth is very high. We're seeing a lot of demand with enterprises that we hadn't, you know, seen before, where they're saying, hey, please come in and talk to us about AI. So we expect that that will be a positive for our business.

on the subject of AI, which is higher than any other single topic and the rate of growth is very high. We're seeing a lot of demand with enterprises that we hadn't seen before where they're saying, hey, please come in and talk to us about AI. We think that that will be a positive for our business.

And sorry Tony, the only thing I'd add is just underscore your point on the broad applicability of AI being a little bit different than some other topics because to your point, finance leaders care about it, legal leaders care about it, HR leaders care about it, in addition to IT leaders and their teams.

caring about it. So there is the potential that it is a little more broad based, to your point, than prior technology is.

Thanks so much. Thank you. And our next question coming from the line up said, Weber with Wells Fargo, you're on its open.

Hey, good morning guys. I wanted to ask just about the implied EBITDA margin raise for the year. Is that just a function of mix or is there something else that's supporting the stronger margin outlook for the year? Thanks.

Good morning, Seth. On the margins, as we've talked about, the margins can pop around a little bit from quarter to quarter depending on spending trends and where the revenue is trending as well. And so our margins were a little bit higher than we had initially anticipated in the first half of the year.

prudently managing our op-acts as we work our way through the year. So again, margins can pop around. There's no mega trends there, I would say, other than a little bit of modest revenue upside and us making sure that, again, we talked about in our prepared remarks.

really carefully calibrating our headcount levels and our opex levels to ensure that we deliver consistently strong margins.

Got it. Thanks, Craig. And then just on the big ramp in the quota bearing headcount, can you just talk to where you think you are from an efficiency perspective for the new hires? Are they kind of on track?

Any kind of metrics that you can call out as far as efficiency or productivity goes with the new hires. Thanks. Yeah, so to your point, we've ramped up our Salesforce with the lowest number of opens we've had in a long time. And it's talented. We've been hiring if you look at how we track the quality of the talent is very, very high.

And we were at the firing the most last year. So these people are starting to get a little bit of tenure under their belt. And we expect over the next three years, as they get up to full tenure, that actually the productivity will be very good. And we're seeing the rank we'd expect at this point.

Got it. Thank you, guys. And our next question coming from the line-off, the Navita type with Bart Leisiel and his open.

Thank you. I was just, you know, on the margin front, Craig, I think in the call you mentioned, you know, T&Es back to normal or something of that effect. So I was just curious, you know, are we at, you know, those normalized levels where your thoughts are kind of the long-term margin being in the low 20s, or is there more, you know, normalization to occur still, you know, overall with all the different moving pieces?

Yeah, good morning, Manav. It's a great question. So, we are back to what we believe to be roughly the new normal from both the T&E perspective and last year in particular, we were playing catch up on hiring throughout the course of the year. And so, as you look at our operating expenses now, I think we're...

is normal seasonality from an OPEX perspective with our new normal levels of T&E, modest headcount growth to make sure that we're investing for the future, et cetera, kind of baked in. So I think it is a good normalized, if you will, OPEX level that we're working off of this year. Got it. Okay. And then just on the second half, a little bit more specifically, can you just –

Seems a little conservative, but maybe there's some things we're missing here. Yeah, I think there's a few things in there, Manav. So one is the seasonality with our conferences business. We are performing really, really well in conferences. And Q4 is by far our largest conference quarter. And that means you generally

that spikes from the fourth quarter as well, which again is sort of back to our typical seasonality that we had from an OPEX perspective pre-pandemic. So if you think about OPEX, it's relatively flattish from 2Q to Q3. It's a little bit of a step down because it's a later conference supporter.

And then a pretty big step up in OpEx from Q3 to Q4, driven by the conferences calendar, significant travel to support our conferences calendar, and marketing to support the conferences calendar and the close of our year as well. We are running a number of scenarios, and we are planning in a very...

So, we're maintaining our improvement capacity and we're ready to tune those dials up or down depending on what the second half of the year looks like predominantly from a contract value growth perspective. Got it. Thank you, Craig. Thank you. And our next question coming from the line up. Josh Chen with UPS. The line is open. Hi. Good morning. Thanks for taking my questions. I guess on GTS, obviously, the wallet retention is impacted by the overall environment. I was just wondering what you think the trajectory of the GTS wallet would be.

to disaggregate the enterprise function leader portion of GTS and the tech vendor portion of GTS. So the overall we are still well over 100% on wild retention. And that's with the enterprise function portion of our...

GTS while retention being above historical averages. And so, we expect that to continue. The tech vendor side, while retention is a rolling four quarter metric, and so we'll have these more challenging quarters in the number for a little while.

But I would say, we don't forecast while retention or I shouldn't say we don't forecast it. We don't guide while retention or contract value, but given that the enterprise function leader part of the GTS business is the predominant part of it. You know, call it.

Yeah, the main thing we look at is what our CD growth is. So we look at what our bookings are and how sales are going. We want to make sure we match our head count growth to the amount of the bookings that we have. And that kind of helps ensure that our firms who business going forward in the right space from both a growth viewpoint as well as a margin viewpoint.

Great, thank you for the color. Thank you in our next question coming from Delina. Stephanie Moore with Jeffries, you're on a cell phone.

Okay, great. Thank you both for the color. Thank you. And our next question coming from Delilah. Stephanie Moore with Jefferies. Your line is open. Hi, good morning. Thank you.

I wanted to touch on the research pricing environment. I believe you tend to increase those in the fall of the year. So, I just wanted to get an update on how you're thinking about price increases for this year into next. What's going on Australian market to risk for Investors?

Yeah, good morning, Stephanie. So I think, you know, one of our core goals with pricing is to make sure that at a minimum, we are offsetting our projected wage inflation. And so, you know, in the past few years, when we were seeing higher wage inflation, we went a little bit stronger on the price increase.

This year, again, the labor market or the type of people that we are recruiting is still relatively strong, but the wage inflation, we expect to be a little bit more muted. We're still working through all the details of the price increase, which again, to your point goes into effect in November , but I would suspect it's a little bit lighter.

than what we've done the last two years, just given the, you know, the inflationary environment, particularly wage inflationary environment, has abated a little bit.

Great, that's really helpful. I'll give it a thought. Thank you.

Thank you. One moment for our next question. And our next question coming from the line of George Toml with Goldman Sachs. Your line is open.

Hi, thanks. Good morning. Following up on some of the tech vendor non-subscription trends, can you talk about which products specifically are seeing reduced demand due to a slowdown in tech vendor marketing spend? And generally, is the non-subscription demand leading to a eclipse of interest in the market?

coincident or lagging with broader client IT spend.

Hey George, I just want to clarify your question. So it was which products are most impacted? Is that what the question was? Yeah, within your non-subscription focus.

products. Yeah, sure. So, um,

You know, within the non-subscription part of business, which again, you know, represents around 8%, or less than 10%, let's call it a overall research revenue. You know, the predominant way we derive revenue there is through lead generation or tech vendors, and really focus on the...

I call it non-enterprise IT market. So smaller businesses, etc.

And so, you know, our GTS business is really focused on enterprise tech companies, whereas the non-subscription business is really focused on a combination of enterprise and really small business focused.

technology companies. And so you know that's where we've seen on the small technology companies, the companies most focused on selling into into small businesses, that's where we've seen the biggest challenge. You know again you've covered all the things that are happening in the in the tech market from funding and

and the overall dynamics there. But as those companies are recalibrating their operating expenses, clearly marketing in lead gen is a place that they often love to get a big handle on and I think that's what's happening.

That said, they are still spending and spending well in that business. And as Gene mentioned earlier, and I think I mentioned too, we fully expect once the market is recalibrated, it will get back to growing. But it's predominantly around the lead gen stuff and the focus on lead gen in smaller businesses.

Okay, got it. That's helpful. And then, separately, could you talk about how the tech vendor non-subscription performance trended over the course of the quarter? Did you see a bottoming? Did you see further deterioration as you moved through the quarter? And does your updated guide...

assume trends stabilize from 2Q levels or worsen from 2Q levels? Yes, great question. I think it's been relatively consistent with normal levels of volatility.

week to week and actually even day to day, but trend is pretty consistent Q1 to Q2. And what we've modeled into our guide is essentially stabilization from those Q2 levels for the balance of the year. Thank you.

to week and actually even day to day, but trend's pretty consistent Q1 to Q2. And what we've modeled into our guide is essentially stabilization from those Q2 levels for the balance of the year. Got it. Very helpful. Thank you.

Thank you. And our next question coming from the line of Jeff Silver with BMO Capital Markets. Your line is now open.

Thanks so much. I'm sorry to keep on focusing on the non-subscriptions piece. Normally, can you just tell us from a breakdown perspective what percentage comes from tech vendors and what percentage comes from enterprise customers? And if we could just focus in on the enterprise customers component of that, you talk about how that's trending.

Jeff, 100% of the revenue comes from tech vendors in the non-subscription piece that's part of the business.

So, 100% of that, less than 10% of our overall research business is tech vendor focused.

Now I'm showing no further questions in the queue at this time. I will now turn the call back over to Mr. Gene Hall for any closing remarks. So here's what I'd like you to take away from today's call. Gartner drill another strong performance in Q2.

We deliver unparalleled value to enterprise leaders and their teams across every major function, whether thriving, struggling, or anywhere in between.

We're exceptionally agile and continuously adapted to changing the world. We know the right things to do to be successful in any environment.

Looking ahead, we're well positioned to continue our sustained regular success far into the future.

Our Client Value Proposition and addressable market opportunity will allow us to drive long-term sustained double digit revenue growth.

with quick margins which will expand modestly over time. and we generate significant free cash flow, well in excess of that income.

Even as we invest for future growth, we'll return significant levels of excess capital for shareholders.

This produces shares outstanding increases returns over time