Q4 2023 Gartner Inc Earnings Call

Operator: At this time, all participants are in a listen-only mode. After comments by Gene Hall, Gartner's 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 fourth quarter 2023 financial results and Gartner's Outlook for 2024, 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 are for adjusted EBITDA with the adjustments as described in our earnings release and supplement. Additionally, all contract values and associated growth rates we discuss are based on 2023 foreign exchange rates and exclude contributions related to the first quarter divestiture and the 2022 Russia exit. All growth rates and genes comments are FX neutral, unless stated otherwise. All references to share counts are for fully diluted weighted average share counts, unless stated otherwise.

At this time all participants are in a listen only mode. After comments by Gene Hall, Gartner as Chief Executive Officer, and Craig Safian Partners' Chief Financial Officer, there'll be a question and answer session.

Please be advised that today's conference is being recorded.

Speaker Change: This call will include a discussion of fourth quarter 2023 financial results at gardeners outlook for 2024 as disclosed in today's earnings release and earnings supplement posted to our website investor deck Gartner Dot com.

Speaker Change: 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 2023 foreign exchange rates and exclude contributions related to the first quarter divestiture and the 2022, Russia exit.

Speaker Change: All growth rates in Gene's comments are FX neutral unless stated otherwise all references to share counts are fully diluted weighted average share counts unless stated otherwise.

Operator: 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 2022 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'll turn the call over to Gartner's Chief Executive Officer, Gene Hall. Good morning, and thanks for joining us today.

Speaker Change: Reconciliations for all non-GAAP numbers, we use are available in the Investor Relations section of the Gartner Dot 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 2022 annual report on Form 10-K, and quarterly reports on Form 10-Q, as well as in other filings with.

Speaker Change: The SEC encourage all of you to review the risk factors listed in these documents.

Speaker Change: Now I will turn the call over to Gardner Chief Executive Officer Gene Hall.

Eugene A. Hall: Good morning, and thanks for joining us today.

Eugene A. Hall: Gartner delivered another strong performance in the fourth quarter. We delivered high single-digit growth in contract value. Revenue, EBITDA, adjusted EPS, and pre-cash flow came in above expectations. Gartner delivers incredible client value in any macroeconomic environment. In 2023, the world experienced multiple disruptions.

Eugene A. Hall: Gardner drove another strong performance in the fourth quarter.

Eugene A. Hall: We delivered high single digit growth in contract value.

Eugene A. Hall: Revenue EBITDA, adjusted EPS and free cash flow came in above expectations.

Eugene A. Hall: Gartner delivers incredible client value in any macroeconomic environments.

Eugene A. Hall: In 2023, the world experienced multiple disruptions.

Eugene A. Hall: They impacted enterprises in a dramatically different way. For example, high interest rates impacted capital intensive industries and financial institutions such as regional banks. High inflation rates had an outsized effect on industries such as health care. Geopolitical polarization and conflict drove increases in military and defense spending while affecting supply chains. Shifts in how and where people work affected real estate, live events, and entertainment, and other industries. Cyber security attacks became even more frequent, while getting stronger and more disruptive.

Eugene A. Hall: Impacted enterprise has been dramatically different ways.

Eugene A. Hall: For example, high interest rates back to capital intensive industries and financial institutions, such as regional banks.

Eugene A. Hall: High inflation rates and an outsized effect on industries, such as healthcare.

Eugene A. Hall: Geopolitical polarization in conflict drove increases in military and defense spending while impacting supply chains.

Eugene A. Hall: More shifts and how and where people work affected real estate life events and entertainment and other industries.

Eugene A. Hall: Cyber security attacks became even more frequent we're getting stronger and more disruptive.

Eugene A. Hall: And we saw a significant leap in the capabilities of artificial intelligence or AI, which fueled even more complex. We serve leaders in every enterprise, across every industry, and every geography. They know they need help, and they know Gartner is the best source for the help they need. Gartner delivers actionable, objective insight that drives smarter decisions and stronger performance on an organization's mission-critical priorities. We guide the leaders who shape the world.

Eugene A. Hall: And we saw a significantly and the capabilities that artificial intelligence or AI, which fueled even more complexity.

Eugene A. Hall: We serve leaders in every enterprise across every industry and every geography.

Speaker Change: They know they need help.

Speaker Change: And they know Gartner is the best source for the help they need.

Speaker Change: Gartner delivers actionable objective insights to drive smarter decisions and stronger performance on an organization's mission critical priorities.

Speaker Change: We got the leaders to shape the world.

Eugene A. Hall: Our insights often make the difference between success and failure, for the leaders we work with, and the enterprises they serve. As we move into 2020-24, our ability to execute operational best practices consistently is the strongest it's ever been. We have the lowest proportion of open positions ever.

Speaker Change: Our insights often make the difference between success and failure the leaders, we work with and the enterprises they serve.

Speaker Change: As we move into 2020 'twenty four.

Speaker Change: Our ability to execute operational best practices consistently is the strongest it's ever been.

Speaker Change: We have the lowest proportion of open positions ever.

Eugene A. Hall: Our recruiting capability and capacity are world-class. We have a strong associate value proposition, and our teams have higher tenure than in 2023, which will allow us to drive strong performance well into the future. Research continues to be our largest and most profitable segment. Our market opportunity is vast across all sectors, sizes, and geographies. Our business remains resilient in a complex external environment.

Speaker Change: Our recruiting capability and capacity are world class.

Speaker Change: We have a strong associate value proposition.

Speaker Change: And our teams have higher tenure than in 2023.

Speaker Change: Which will allow us to drive strong performance well into the future.

Speaker Change: Research continues to be our largest and most profitable segments.

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

Speaker Change: Our business remains resilient in a complex external environments.

Eugene A. Hall: Through relentless execution of proven practices, we're able to deliver unparalleled value to our clients. In the fourth quarter, we helped clients with a wide range of topics, including cybersecurity, data analytics, artificial intelligence, remote work, cost optimization, and more. Research revenue grew 5% in Q4. Subscription revenue will represent more than 75% of our consolidated global revenue in 2023. We delivered subscription revenue growth of 8% on an organic basis in the fourth quarter. Additionally, total contract value growth was 8%.

Through relentless execution, a proven practices, we're able to deliver unparalleled value to our clients.

Speaker Change: In the fourth quarter, we help clients with a wide range of topics, including cyber security.

Analytics artificial intelligence remote work cost optimization and more.

Speaker Change: Research revenue grew 5% in Q4.

Speaker Change: Subscription revenue represented more than 75% of our consolidated global revenue in 2023.

Speaker Change: We delivered subscription revenue growth of 8% on an organic basis in the fourth quarter.

Speaker Change: Total contract value growth was 8%.

Eugene A. Hall: Across GTS and GBS, contract value from enterprise function leaders grew at a double-digit rate. New business with enterprise function leaders also grew at double-digit rates. Gartner serves executives and their teams through a distinct sales process. [inaudible] TTS also serves leaders at technology vendors, including CEOs, Chief Marketing Officers, and Senior Product Leaders.

Speaker Change: Across GTS and GBS contract value from enterprise function leaders grew at double digit rates.

Speaker Change: New business with enterprise function leaders also grew at double digit rates.

Speaker Change: Garner serves executives and their teams through distinct sales channels.

Speaker Change: Global technology sales or GTS serves leaders and their teams within it.

Speaker Change: Cts also source leaders at technology vendors, including Ceos, Chief marketing officers and senior product leaders.

Eugene A. Hall: GTS contract value grew 6%, led by growth with IT's enterprise function leaders. GTS sales to leaders and technology vendors continue to be affected by the technology sector dynamics. Ending the year, we began to see some improvement. New business with tech vendors grew at high single digits. We expect new business to lead retention and contract value growth.

GTS contract value grew 6% led by growth with Itg's enterprise function leaders.

Speaker Change: GTS sales leaders that technology vendors continue to be affected by technology sector dynamics.

Speaker Change: Exiting the year, we began to see some improvement.

Speaker Change: New business with Tech vendors grew at high single digits.

Speaker Change: We expect new business to lead retention and contract value growth.

Speaker Change: Global business sales or GBS serves leaders and their teams beyond it.

Speaker Change: This includes HR supply chain finance marketing legal sales and more.

Eugene A. Hall: GVS contract value grew 13%, and GPS New Business was double-digit. Gartner conferences deliver extraordinarily valuable insights to an engaged and qualified audience. 2023 was the first full year of in-person conferences since 2019. We had a great year, and we drew a strong finish in the fourth quarter.

Speaker Change: GBS contract value grew 13%.

Speaker Change: GBS, new business was up double digits.

Speaker Change: Gartner conferences deliver extraordinarily valuable insights to an engaged and qualified audience.

Speaker Change: 2023 was the first full year of in person conferences since 2019.

Speaker Change: We had a great year.

Speaker Change: And we drove a strong finish in the fourth quarter.

Eugene A. Hall: In Q4, we held some of our largest destination conferences, including IT Symposium in Orlando and Barcelona and Reimagining HR in Orlando. These conferences were spectacular. Across all our destination conferences, attendance was up year over year, with many at or near capacity. Looking ahead to 2024, advanced bookings continue to be very strong, and feedback continues to be excellent. Gartner Consulting is an extension of Gartner Research.

Speaker Change: In Q4, we held some of our largest destination conferences, including symposium in Orlando, and Barcelona, and re imagine HR in Orlando.

Speaker Change: These conferences were spectacular.

Speaker Change: Across all of our destination conferences attendance was up year over year with many at or near capacity.

Speaker Change: Looking ahead to 2020 for advanced bookings continue to be very strong and feedback continues to be excellent.

Speaker Change: Gartner consulting is an extension of Gartner research.

Eugene A. Hall: Consulting helps clients execute their most strategic initiatives through deeper, extended, project-based work. Consulting is an important complement to our IT research business. Consolidated revenue grew 8% for the full year. We saw growth in labor-based consulting and record results in contract optimization for the full year. We are introducing 2024 guidance, which we view as achievable across a wide range of economic and geopolitical scenarios with opportunity for upside. In closing, Gartner achieved another strong quarter of growth. We deliver incredible client value, whether our clients are struggling, thriving, or anywhere in between. We're exceptionally agile and continuously adapt to the changing world. And we know the right things to do to be successful in any environment.

Speaker Change: Consulting helps clients execute their most strategic initiatives through deeper extended project based work.

Speaker Change: Consulting is an important complement to our research business.

Speaker Change: Consulting revenue grew 8% for the full year.

Speaker Change: We saw growth in labor based consulting and record results in contract optimization for the full year.

Speaker Change: We are introducing 2024 guidance, which we view as achievable across a wide range of economic and geopolitical scenarios with opportunity for upside.

Speaker Change: In closing Gartner achieved another strong quarter of growth.

Speaker Change: We deliver incredible client value, whether our clients are struggling driving or anywhere in between.

Speaker Change: We're exceptionally agile and continuously adapt to the changing world.

Speaker Change: And we know the right things to do to be successful in any environment.

Eugene A. Hall: Looking ahead, we're 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 to expand modestly over time, and we generate significant free cash flow, well in excess of net income. As we invest for future growth, we'll return significant levels of excess capital to our shareholders. This reduces shares outstanding and increases returns over time. With that said, I'll hand the call over to our Chief Financial Officer, Craig Safian. Thank you, Gene, and good morning.

Speaker Change: Looking ahead, we're well positioned to continue our sustained record success or into the future.

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

Speaker Change: We expect margins will expand modestly over time.

Speaker Change: And we generate significant free cash flow well in excess of net income.

Speaker Change: As we invest for future growth will return significant levels of excess capital to our shareholders.

Speaker Change: This reduces shares outstanding and increases returns over time.

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

Craig W. Safian: Thank you gene and good morning.

Craig W. Safian: Fourth quarter revenue EBITDA, adjusted EPS, and free cash flow were better than expected, as we continue to execute very well in a complex environment. Our financial performance for the full year 2023 included global contract value and consolidated revenue growth of 8%, EBITDA of $1.5 billion, diluted adjusted EPS of $11.33, and free cash flow of $1.1 billion.

Craig W. Safian: Quarter revenue EBITDA, adjusted EPS and free cash flow were better than expected as we continued to execute very well in a complex environment.

Craig W. Safian: Our financial performance for the full year 2023 included global contract value and consolidated revenue growth of 8%.

Craig W. Safian: EBITDA of $1 5 billion.

Diluted adjusted EPS of $11 33, and free cash flow of $1 1 billion we.

Craig W. Safian: We are introducing 2024 guidance, which we view as achievable across a wide range of economic and geopolitical scenarios with opportunity for upside. Fourth quarter revenue was $1.6 billion, up 5% year-over-year as reported and 4% FX neutral. In addition, total contribution margin was 67%. EBITDA was $386 million, ahead of our guidance primarily as a result of disciplined cost management. Adjusted EPS was $3.04.

Craig W. Safian: We are introducing 2024 guidance, which we view as achievable across a wide range of economic and geopolitical scenarios with opportunity for upside.

Craig W. Safian: Fourth quarter revenue was $1 6 billion up 5% year over year as reported and 4% FX neutral.

Craig W. Safian: In addition, total contribution margin was 67%.

Craig W. Safian: EBITDA was $386 million ahead of our guidance, primarily as a result of disciplined cost management.

Craig W. Safian: Adjusted EPS was $3.04.

Craig W. Safian: And free cash flow was $196 million. We finished the quarter with 20,237 associates, up 5%, excluding the 2023 divestiture, and about the same as Q3. We have a great team across Gartner, driven by a very compelling associate value proposition. Moving into 2024, we are in an excellent position from a talent and tenure perspective.

Craig W. Safian: And free cash flow was $196 million.

Craig W. Safian: We finished the quarter with 20237 associates up 5%, excluding the 2023 divestiture and about the same as Q3.

Craig W. Safian: We have a great team across Gardner driven by a very compelling associate value proposition.

Craig W. Safian: Moving into 2024, we are in excellent position from a talent and 10 year perspective.

Craig W. Safian: Research revenue in the fourth quarter grew 6% year-over-year, as reported, and 5% FX neutral; subscription revenue grew 8% on an organic FX neutral basis. Non-subscription revenue performance in the quarter reflects a shift to higher quality traffic. While this action has a short-term effect on revenue, we expect it will drive higher prices and increase revenue over time. Fourth quarter research contribution margin was 74%, consistent with the prior year period as we have caught up on hiring and returned to the new expected levels of travel. For the full year 2023, research revenues increased by 6%, both as reported and FX neutral. The gross contribution margin for the year was 74%.

Craig W. Safian: Research revenue in the fourth quarter grew 6% year over year as reported and 5% FX neutral.

Craig W. Safian: Subscription revenue grew 8% on an organic FX neutral basis.

Craig W. Safian: Non subscription revenue performance in the quarter reflects a shift to higher quality traffic.

Craig W. Safian: While this action has a short term effect on revenue, we expect it will drive higher prices and increase revenue over time.

Craig W. Safian: Fourth quarter research contribution margin was 74% consistent with the prior year period, as we have caught up on hiring and return to the new expected levels of travel.

Craig W. Safian: For the full year 2023 research revenues increased by 6%, both as reported and FX neutral.

Craig W. Safian: The gross contribution margin for the year was 74%.

Craig W. Safian: Contract value or CV was $4 $8 billion at the end of the fourth quarter up 8% versus the prior year.

CV growth is FX neutral and excludes the first quarter 2023 divestiture.

Craig W. Safian: We expect new business to be a leading indicator for retention and in turn contract value growth.

Craig W. Safian: Contract value, or CV, was $4.8 billion at the end of the fourth quarter, up 8% versus the prior year. CV growth is FX neutral and excludes the first quarter 2023 divestiture. We expect new business to be a leading indicator for retention and, in turn, contract value growth. We had the highest one month of new business dollars ever in December 2023.

Craig W. Safian: We had the highest one month of new business dollars ever in December 2023.

Craig W. Safian: For the fourth quarter CV from enterprise function leaders across GTS and GBS grew at double digit rates.

Craig W. Safian: <unk> business with enterprise function leaders increased double digits as well.

CV from Tech vendors was about flat versus the prior year and up sequentially.

Craig W. Safian: Tech vendors CV continued quarterly improvement we saw in Q3.

Craig W. Safian: Tech vendor new business was up high single digits in Q4, marking the first year over year increase in 2023.

Craig W. Safian: Quarterly net contract value increase or and CVI was $180 million.

Craig W. Safian: For the fourth quarter, CV from enterprise function leaders across GTS and GBS grew at double-digit rates, and new business with enterprise function leaders increased double digits as well. CV from Tech Vendors was about flat versus the prior year and up sequentially. Tech Vendor CV continued the quarterly improvement we saw in G3. Tech Vendor new business was up high single digits in Q4, marking the first year-over-year increase in 2023. The quarterly Net Contract Value Increase, or NCVI, was $180 million. As we've discussed in the past, there is notable seasonality in this metric.

Craig W. Safian: As we've discussed in the past there is notable seasonality in this metric.

Craig W. Safian: CV growth was broad based across practices industry sectors company sizes and geographic regions.

Craig W. Safian: Across our combined practices the majority of the industry sectors grew at double digit or high single digit rates led by the energy manufacturing and public sectors.

Craig W. Safian: We had high single digit growth across almost all of our enterprise size categories.

Craig W. Safian: Small category, which has the largest tech vendor mix grew modestly.

Craig W. Safian: We also drove double digit or high single digit growth in the majority of our top 10 countries.

Craig W. Safian: CV Growth was broad-based across practices, industry sectors, company sizes, and geographic regions. Across our combined practices, the majority of the industry sectors grew at double-digit or high single-digit rates, led by the energy, manufacturing, and public sectors. We had high single-digit growth across almost all of our enterprise size categories. The small category, which had the largest tech vendor mix, grew modestly.

Global technology sales contract value was $3 7 billion at the end of the fourth quarter up 6% versus the prior year.

Craig W. Safian: GTS CV increased $134 million from the third quarter.

Craig W. Safian: Wallet retention for GTS was 101% for the quarter, reflecting net growth even before the addition of new clients.

Craig W. Safian: In the fourth quarter enterprise function leaders wallet retention was consistent with historical GTS levels.

Craig W. Safian: GTS, new business increased 12% versus last year.

Craig W. Safian: New business with enterprise function leaders increased mid teens compared to 2022.

Craig W. Safian: We also drove double-digit or high single-digit growth in the majority of our top 10 countries. Global technology sales contract value was $3.7 billion at the end of the fourth quarter, up 6% versus the prior year. GTSCV increased $134 million from the third quarter. Wallet retention for GTS was 101% for the quarter, reflecting net growth even before the addition of new clients. In the fourth quarter, IT enterprise function leaders' wallet retention was consistent with historical GTS levels.

Craig W. Safian: New business with tech vendors increased high single digits in the quarter.

Craig W. Safian: GTS quota bearing head count was about flat year over year.

Craig W. Safian: With a dynamic territory planning, we introduced a few years ago. The catch up hiring we did last year and our teams moving up 10 year curve, we're well positioned for growth moving into 2024.

Craig W. Safian: Operationally, we are continuously allocating resources to the best near term opportunities even as we ensure we are well positioned to capture the large addressable market opportunity overtime.

Craig W. Safian: Our regular full set of GTS metrics can be found in the earnings supplement.

Craig W. Safian: Global business sales contract value was $1 $1 billion at the end of the fourth quarter up 13% year over year.

Craig W. Safian: GTS new business increased 12% versus last year. New business with IT enterprise function leaders increased mid-teens compared to 2022. New business with tech vendors increased high single digits in the quarter. GTS quota-bearing headcount was about flat year over year.

Craig W. Safian: The majority of our GBS practices grew at double digit rates.

Craig W. Safian: Growth was led by supply chain legal and HR.

Craig W. Safian: GBS CV increased $46 million from the third quarter.

Craig W. Safian: Wallet retention for GBS was 107% for the quarter, reflecting strong net growth with our existing clients.

Craig W. Safian: GBS, new business was up 13% compared to last year.

Craig W. Safian: With the dynamic territory planning we introduced a few years ago, the catch-up hiring we did last year, and our team's moving up the tenure curve, we're well-positioned for growth moving into 2024. Operationally, we are continuously allocating resources to the best near-term opportunities, even as we ensure we are well-positioned to capture the large addressable market opportunity over time. A full set of GTS metrics can be found in the earnings supplement.

Craig W. Safian: GBS quota bearing head count was up 8% versus the fourth quarter of 2022.

Craig W. Safian: This excludes head count associated with the Q1 divestiture.

Craig W. Safian: As with GTS, a regular full set of GBS metrics can be found in the earnings supplement.

Craig W. Safian: As we do each year at this time, we have provided two years of quarterly historical contract value data updated to 2020 for FX rates in the appendix of the earnings supplement.

Craig W. Safian: Conferences revenue for the fourth quarter was $214 million up 14% year over year.

Craig W. Safian: Contribution margin in the quarter was 50% consistent with typical seasonality, we held 11 destination conferences in the quarter all in person.

Craig W. Safian: Global business sales contract value was $1.1 billion at the end of the fourth quarter, up 13% year-over-year. The majority of our GBS practices grew at double-digit rates. Growth was led by supply chain, legal, and HR. GBSCV increased $46 million from the third quarter.

Craig W. Safian: For the full year 2023, we delivered an all time high revenue of $505 million, which was an increase of 30% on a reported basis and 29% FX neutral.

Craig W. Safian: Gross contribution margin was 50%.

Craig W. Safian: Fourth quarter consulting revenues were $128 million compared with $138 million in 2022, when we saw a record performance in the contract optimization business.

Craig W. Safian: Wallet retention for GBS was 107% for the quarter, reflecting strong net growth with our existing clients. GBS new business was up 13% compared to last year. GBS quarter-bearing headcount was up 8% versus the fourth quarter of 2022. This excludes headcount associated with the Q1 divestiture. As with GTS, a full set of GBS metrics can be found in the earnings supplement.

Craig W. Safian: Consulting contribution margin was 27% in the fourth quarter affected by revenue mix and growth hiring.

Craig W. Safian: Labor based revenues were $99 million up 3% versus Q4 of last year as reported and on an FX neutral basis.

Craig W. Safian: Backlog at December 31 was $162 million, increasing 21% year over year on an FX neutral basis with continued booking strength.

Craig W. Safian: As we do each year at this time, we've provided two years of quarterly historical contract value data updated to 2024 FX rates in the appendix of the Erving Supplement. Conference's revenue for the fourth quarter was $214 million, up 14% year-over-year. Contribution margin in the quarter was 50%, consistent with typical seasonality. We held 11 destination conferences in the quarter, all in person.

Craig W. Safian: We delivered $29 million of contract optimization revenue in the quarter.

Craig W. Safian: This part of our business is highly variable.

Craig W. Safian: For the second half of 2023 revenues were $62 million up from the second half of 2022, when we delivered our largest ever quarter in Q4.

Craig W. Safian: Full year consulting revenue was up 7% on a reported basis and 8% FX neutral gross.

Craig W. Safian: Gross contribution margin was 35% compared to 39% in 2022.

Craig W. Safian: For the full year 2023, we delivered an all-time high revenue of $505 million, which was an increase of 30% on a reported basis and 29% FX neutral. Gross contribution margin was 50%. Fourth quarter consulting revenues were $128 million, compared with $138 million in 2022, when we saw record performance in the contract optimization business. Consulting contribution margin was 27% in the fourth quarter, affected by revenue mix and growth hiring. Labor-based revenues were $99 million, up 3% versus Q4 of last year as reported and on an FX-neutral basis. Backlog at December 31st was $162 million, increasing 21% year-over-year on an FX-neutral basis with continued booking strength.

Craig W. Safian: Consolidated cost of services increased 11% year over year in the fourth quarter as reported and 10% on an FX neutral basis.

Craig W. Safian: Biggest driver of the increase was higher head count to support our future growth.

Craig W. Safian: SG&A increased 9% year over year in the fourth quarter as reported an 8% on an FX neutral basis.

Craig W. Safian: G&A increased in the quarter as a result of head count growth.

Craig W. Safian: EBITDA for the fourth quarter was $386 million compared to $421 million last year.

Craig W. Safian: Fourth quarter EBITDA upside to our guidance, primarily reflected disciplined expense management.

Craig W. Safian: EBITDA for the full year was almost $1 5, billion% to 1% increase over 2022 on a reported basis and up 2% FX neutral.

Craig W. Safian: Depreciation in the quarter of $26 million was up modestly compared to 2022.

Craig W. Safian: Net interest expense, excluding deferred financing costs in the quarter was $19 million.

Craig W. Safian: We deliver $29 million of contract optimization revenue in a quarter. This part of our business is highly variable. For the second half of 2023, revenues were $62 million, up from the second half of 2022 when we delivered our largest ever quarter in Q4. Full-year consulting revenue was up 7% on a reported basis and 8% FX-neutral. Gross contribution margin was 35% compared to 39% in 2022. Consolidated cost of services increased 11% year over year in the fourth quarter as reported and 10% on an FX-neutral basis.

Craig W. Safian: This was down $9 million versus the fourth quarter of 2022 due to higher interest income on our cash balances the.

Craig W. Safian: The modest floating rate debt, we have is fully hedged through maturity.

Craig W. Safian: The Q4 adjusted tax rate, which we use for the calculation of adjusted net income was 24% for the quarter.

Craig W. Safian: <unk> rate for the items used to adjust that income was 15% for the quarter.

Craig W. Safian: The full year tax rate for the calculation of adjusted net income was 22%.

Craig W. Safian: Adjusted EPS in Q4 was $3.04 compared with $3 70 last year.

Craig W. Safian: We had 79 million shares outstanding in the fourth quarter.

Craig W. Safian: This is a reduction of about 1 million shares or about 1% year over year.

Craig W. Safian: We exited the fourth quarter with about 79 million shares on an unweighted basis.

Craig W. Safian: The biggest driver of the increase was higher headcount to support future growth. SG&A increased 9% year-over-year in the fourth quarter, as reported, and 8% on an FX-neutral basis. SG&A increased in the quarter as a result of head cow growth. EBITDA for the fourth quarter was $386 million, compared to $421 million last year. Fourth quarter EBITDA was upside to our guidance, primarily reflected disciplined expense management. EBITDA for the full year was almost $1.5 billion, a 1% increase over 2022 on a reported basis and up 2% FX neutral. Depreciation in the quarter of $26 million was up modestly compared to 2022. Net interest expense, excluding deferred financing costs in the quarter, was $19 million.

Craig W. Safian: For the full year adjusted EPS was $11 33 up modestly from 2022.

Craig W. Safian: Operating cash flow for the quarter was $224 million up 10% compared to last year.

Craig W. Safian: Capex for the quarter was $28 million down $4 million as a result of catch up spend on technology investments in 2022, which normalized this year.

Craig W. Safian: Free cash flow for the quarter was $196 million up 19% compared to last year.

Craig W. Safian: Free cash flow for the full year was almost $1 1, billion% to 6% increase versus 2022.

Craig W. Safian: Free cash flow on a rolling four quarter basis was 18% of revenue and 71% of EBITDA adjusting.

Craig W. Safian: Adjusting for the Q1 divestiture, our full year free cash flow conversion from GAAP net income would have been 138%.

Craig W. Safian: Our free cash flow conversion is generally higher when CV growth is accelerating.

Craig W. Safian: This was down $9 million versus the fourth quarter of 2022 due to higher interest income on our cash balances. The modest floating rate debt we have is fully hedged through maturity. The Q4 adjusted tax rate, which we used for the calculation of adjusted net income, was 24% for the quarter. The tax rate for the items used to adjust that income was 15% for the quarter. The full-year tax rate for the calculation of adjusted net income was 22%.

Craig W. Safian: We have a new slide in the earnings supplement which shows the conversion from both EBITDA and GAAP net income to free cash flow on a rolling four quarter basis.

Craig W. Safian: The past few years have had some unusual items affecting the conversion, including insurance proceeds related to pandemic conference cancellations and the 2023 divestiture.

Craig W. Safian: We expect about four to six point difference between EBITDA margin and free cash flow margins in a typical year.

Craig W. Safian: The normal free cash flow conversion from GAAP net income is 140% to 160%.

Craig W. Safian: Adjusted EPS in Q4 was $3.04 compared with $3.70 last year. We had 79 million shares outstanding in the fourth quarter, a reduction of about 1 million shares or about 1% year over year. We exited the fourth quarter with about 79 million shares outstanding on an unweighted basis.

Craig W. Safian: At the end of the fourth quarter, we had about $1 3 billion of cash.

Craig W. Safian: Our December 31 debt balance was about $2 $5 billion.

Craig W. Safian: Our reported gross debt to trailing 12 month EBITDA was under two times.

Craig W. Safian: Our expected free cash flow generation available revolver and excess cash remaining on the balance sheet provides ample liquidity to deliver on our capital allocation strategy of share repurchases and strategic tuck in M&A.

Craig W. Safian: For the full year, Adjusted EPS was $11.33, up modestly from 2022. Operating cash flow for the quarter was $224 million, up 10% compared to last year. CapEx for the quarter was $28 million, down $4 million as a result of catch-up spend on technology investments in 2022, which normalized this year. Free cash flow for the quarter was $196 million, up 19% compared to last year.

Craig W. Safian: Our balance sheet is very strong with $2 $3 billion of liquidity low levels of leverage and effectively fixed interest rates.

We repurchased $158 million of stock during the fourth quarter and more than $600 million for the full year.

Craig W. Safian: At the end of December we had about $1 billion of authorization for repurchases remaining and we expect the board will continue to refresh the repurchase authorization going forward.

Craig W. Safian: 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.

Craig W. Safian: Free cash flow for the full year was almost $1.1 billion, a 6% increase versus 2022. Free cash flow on a rolling four-quarter basis was 18% of revenue and 71% of EBITDA. Adjusting for the Q1 divestiture, the full-year free cash flow conversion from Gap Net Income would have been 138%.

Speaker Change: Before providing the 2024 guidance details I want to discuss our base level assumptions and planning philosophy for 2024.

Speaker Change: For research, we continue to innovate and provide a very compelling value proposition for clients and prospects executives and their teams face uncertainty and challenges and a recognized how gartner can help regardless of the economic environment.

Craig W. Safian: Our free cash flow conversion is generally higher when CV growth is accelerating. We have a new slide in the Earnings Supplement that shows the conversion from both EBITDA and Gap Net Income to free cash flow on a rolling four-quarter basis. The past two years have had some unusual items affecting the conversion, including insurance proceeds related to pandemic conference cancellations and the 2023 divestiture. We expect about a four to six point difference between EBITDA margin and free cash flow margins in a typical year. The normal free cash flow conversion from Gap Net Income is 140 to 160 percent.

The outlook for 2020 for research revenue growth is a function of three primary factors first 2023 ending contract value.

Speaker Change: In the timing of growth bottoming in the slope of the Reacceleration and third the performance of non subscription revenue.

Speaker Change: Starting with the research subscription revenue, which was 76% of 2023 consolidated revenue.

Our guidance reflects CV bottoming and re accelerating during 2024.

Speaker Change: First quarter and first half and CVI are important inputs to calendar 2020 for revenue growth.

Speaker Change: We've taken a prudent view of N CVI phasing because Q1 is a seasonally important quarter for tech vendor renewals.

Speaker Change: With the majority of our contracts being multi year, some haven't come up for renewal during the tech sectors Recalibration.

Craig W. Safian: At the end of the fourth quarter, we had about $1.3 billion of cash. Our December 31st debt balance was about 2.5 billion dollars. I reported gross stat to trailing 12-month EBITDA was under two times.

Speaker Change: And research subscription revenue will likely bottom about one quarter after our contract value growth thoughts.

If new business continues to perform well our retention is better than we've incorporated into the plan there would be upside to our guidance.

Craig W. Safian: 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 tuck-in M&A. Our balance sheet is very strong, with $2.3 billion of liquidity, low levels of leverage, and effectively fixed interest rates. We repurchased $158 million of stock during the fourth quarter and more than $600 million for the full year.

Speaker Change: The non subscription revenue was about 6% of consolidated revenue in 2023.

Speaker Change: In this part of the business, we help small business buyers find the best software for their needs and help sellers find customers.

Speaker Change: This adds a lot of tangible value for both groups.

Speaker Change: Outlook built into the 2024 guidance reflects a shift to higher quality traffic sources as I mentioned this affects revenue in the short term, but we expect it to drive higher prices and increase revenue over time.

Speaker Change: For conferences, which was about 9% of 2023 revenue we are basing our guidance on the <unk> 51 in person destination conferences, we have planned for 2024.

Craig W. Safian: At the end of December, we had about $1 billion of authorization for repurchases remaining, and we expect the board will continue to refresh the repurchase authorization 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. Before providing the 2024 guidance details, I want to discuss our base level assumptions and planning philosophy for 2024. For research, we continue to innovate and provide a very compelling value proposition for clients and prospects. Executives and their teams face uncertainty and challenges, and they recognize how Gartner can help regardless of the economic environment. The outlook for 2024 research revenue growth is a function of three primary factors. First, the 2023 ending contract value. Second, the timing of growth bottoming and the slope of the reacceleration.

Speaker Change: We expect similar seasonality to what we saw in 2023 with Q4, the largest quarter followed by Q2.

Speaker Change: We have very good visibility into 2020 for revenue with the majority of what we've guided already under contract. This is consistent with last year and ahead of historical levels.

Speaker Change: For consulting which was also about 9% of 2023 revenue we have more visibility into the first half based on the composition of our backlog and pipeline as usual.

Speaker Change: Contract optimization has had several very strong years, it's also seasonally slower in the first quarter and remains highly variable.

Speaker Change: We've incorporated a prudent outlook for this part of the segment.

Speaker Change: We remain focused on aligning expense growth with CV growth. This is the best way for us to balance short term margins, while investing for long term sustained double digit growth.

Speaker Change: Our base level assumptions for consolidated expenses reflect a more typical cadence than we've seen in a while.

We are investing for future growth, even as we have taken a prudent view of the timing of revenue flowing into the P&L.

Speaker Change: We recommend thinking about expenses sequentially with notable seasonality driven by the conferences calendar and merit increases.

Craig W. Safian: And third, the performance of non-subscription revenue, starting with research subscription revenue, which was 76% of 2023 consolidated revenue. Our guidance reflects CV bottoming and re-accelerating during 2024; first quarter and first half NCVI are important inputs to calendar 2024 revenue growth. We've taken a prudent view of NCVI phasing because Q1 is a seasonally important quarter for tech vendor renewal.

Speaker Change: Our plan for mid to high single digit sales head count growth for 2024 reflects our commitment to invest for future growth, while delivering on our margin targets.

Speaker Change: We have the recruiting capacity to go faster depending on how the year plays out and we have other levers like increased tenure to support CV growth in 2024.

Speaker Change: At current rates FX will be approximately neutral to growth for the full year.

Speaker Change: Our guidance for 2024 is as follows.

Speaker Change: We expect research revenue of at least 515 billion.

Speaker Change: Which is FX neutral growth of about 5%.

Speaker Change: The research revenue guidance reflects a prudent plan for CVI performance and a recalibration of not subscription part of the business.

Craig W. Safian: With the majority of our contracts being multi-year, some haven't come up for renewal during the tech sector's recalibration, and Research Subscription Revenue will likely bottom about one quarter after contract value growth bottoms. However, if new business continues to perform well and retention is better than we've incorporated into the plan, there would be upside to our guidance. The non-subscription revenue is about 6% of consolidated revenue in 2023. In this part of the business, we help small business buyers find the best software for their needs and help sellers find customers.

Speaker Change: The guidance reflects subscription revenue growth in the high single digits.

Speaker Change: We expect conferences revenue of at least $560 million, which is FX neutral growth of about 10%.

Speaker Change: We expect consulting revenue of at least $530 million, which is growth of about 3% FX neutral.

Speaker Change: The result is an outlook for consolidated revenue of at least $6 to $4 billion, which is FX neutral growth of 5%.

Speaker Change: We expect full year EBITDA of at least 1.435 billion, which results in an EBITDA margin of at least 23%.

Craig W. Safian: This adds a lot of tangible value for both groups. The outlook built into the 2024 guidance reflects a shift to higher quality traffic sources. As I mentioned, this affects revenue in the short term, but we expect it to drive higher prices and increase revenue over time. For conferences, which is about 9% of 2023 revenue, we are basing our guidance on the 51 in-person destination conferences we have planned for 2024.

Speaker Change: We expect 2024, adjusted EPS of at least $10 55 per share.

For 2024, we expect free cash flow of at least $1.065 billion. This.

Speaker Change: This reflects a conversion from GAAP net income of above 140%.

Speaker Change: Our guidance is based on 79 million shares, which only assumes repurchases to offset dilution.

Speaker Change: Finally for the first quarter of 2024, we expect to deliver EBITDA of at least $335 million.

Craig W. Safian: We expect similar seasonality to what we saw in 2023, with Q4 being the largest quarter, followed by Q2. We have very good visibility into 2024 revenue, with a majority of what we've guided already under contract. This is consistent with last year and ahead of historical levels. For consulting, which was also about 9% of 2023 revenue, we have more visibility into the first half based on the composition of our backlog and pipeline, as usual. Although contract optimization has had several very strong years, it's also seasonally slower in the first quarter and remains highly variable.

Speaker Change: We performed well this year, despite continuing global macro uncertainty and a dynamic tech vendor market.

Speaker Change: Global CV grew high single digits in the quarter with enterprise function leaders CV growing double digits.

Speaker Change: Revenue EBITDA and EPS performance exceeded our expectations and we introduced achievable guidance with opportunity for upside.

Speaker Change: We repurchased more than $600 million in stock during 2023 and more than $3 billion in the past three years, we remain eager to return excess capital to our shareholders. We will continue to be price sensitive opportunistic and disciplined.

Speaker Change: Looking out over the medium term, our financial model and expectations are unchanged with 12% to 16% research CV growth, we will deliver double digit revenue growth.

Craig W. Safian: We've incorporated a prudent outlook for this part of the segment, and we remain focused on aligning expense growth with CV growth. This is the best way for us to balance short-term margins while investing for long-term sustained double-digit growth. Our base level assumptions for consolidated expenses reflect a more typical cadence than we've seen in a while. We are investing for future growth, even as we have taken a prudent view of the timing of revenue flowing into the P&L. We recommend thinking about expenses sequentially, with notable seasonality driven by the conference's calendar and merit increase.

Speaker Change: With gross margin expansion sales costs growing about in line with CV growth and G&A leverage we will expand EBITDA margins modestly over time.

Speaker Change: We can grow free cash flow at least as fast as EBITDA because of our modest capex needs and the benefits of our clients paying us upfront.

Speaker Change: And we'll continue to deploy our capital on share repurchases, which 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.

Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced.

Craig W. Safian: Our plan for mid to high single-digit sales headcount growth for 2024 reflects our commitment to invest for future growth while delivering on our margin target. We have the recruiting capacity to go faster, depending on how the year plays out. And we have other levers like increased tenure to support CV growth in 2024. At current rates, FX will be approximately neutral to growth for the full year.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of Jeff Mueller with Baird. Your line is now open.

Jeffrey P. Meuler: Yes. Thank you just wanted to dig in first I know, it's not a huge business, but on the research non subscription headwind the need for Recalibration.

Jeffrey P. Meuler: I know, it's been weak all year, but I was.

Jeffrey P. Meuler: Interpreting that previously more as like the cyclical headwinds.

Craig W. Safian: Our guidance for 2024 is as follows. We expect research revenue of at least $5.15 billion, which is FX-neutral growth of about 5%. The Research Revenue Guidance reflects a prudent plan for NCVI performance and a recalibration of the non-subscription part of the business. The Research Revenue Guidance reflects a prudent plan for NCVI performance and a recalibration of the non-subscription part of the business. The guidance reflects subscription revenue growth in the high single digits.

Jeffrey P. Meuler: Now it seems like Youre responding.

Jeffrey P. Meuler: More operationally to drive higher quality traffic. So just I guess I don't know if there was like a business review or I guess, the why now.

Jeffrey P. Meuler: Sure.

Jeffrey P. Meuler: Locality of the business versus.

Jeffrey P. Meuler: Where there is an opportunity for operational improvement.

Speaker Change: Hey, good morning, Jeff Thanks for the question.

Speaker Change: I'll give it a start and then Jim will chime in as well.

Speaker Change: And I think.

Speaker Change: Starting with the fact that the non sub not.

Jim: Non subscription part of the business was about 6% of 2023 revenue obviously, we have had.

Jim: Tech market pressure for the full year and the way that mostly manifested itself through our results was real pressure on pricing throughout the full year and we saw that we adjusted coming out of Q2 earnings and the good news is <unk>.

Craig W. Safian: We expect conference revenue of at least $560 million, which is FX-neutral growth of about 10%. We expect consulting revenue of at least $530 million, which is growth of about 3% FX-neutral. The result is an outlook for consolidated revenue of at least $6.24 billion, which is FX-neutral growth of 5%. We expect full-year EBITDA of at least $1.435 billion, which results in an EBITDA margin of at least 23%. We expect 2024 adjusted EPS of at least $10.55 per share. Additionally, for 2024, we expect free cash flow of at least $1.065 billion. This reflects a conversion from Gartner income of above 140 percent. Our guidance is based on 79 million shares, which only assumes repurchases to offset dilution.

Jim: <unk> has been roughly stable.

Jim: Since we made that adjustment.

Jim: In Q4, though one of the things we're always focused on is making sure that we are providing the highest value to both sides of the equation.

Jim: With these offerings, we are essentially small business buyers are coming to our site to learn more about what software to buy and we actually help them.

Jim: <unk> reviews and ratings.

Jim: Research and things of that nature.

Jim: And then we're matching them to the sellers and again, so tangible value as we mentioned on both side of equation, we're always focused on driving even more value for our clients and so one of the things. We've done is really shift our focus and prioritization to higher quality forms.

Craig W. Safian: Finally, for the first quarter of 2024, we expect to deliver EBITDA of at least $335 million. We performed well this year despite continuing global macro uncertainty and a dynamic tech vendor market. Global CV grew high single digits in the quarter, with Enterprise Function Leader CV growing double digits. Revenue, EBITDA, and EPS performance exceeded our expectations, and we introduced achievable guidance with opportunity for upside. We repurchased more than $600 million in stock during 2023 and more than $3 billion in the past three years. We remain eager to return excess capital to our shareholders. We will continue to be price sensitive, opportunistic, and disciplined. Looking out over the medium term, our financial model and expectations are unchanged.

Jim: And.

Jim: Again short term impact on revenues, but over the long term. We think this is good for clients on both sides of the equation will drive higher pricing over time, which will drive higher revenue, which is good for everybody, but one thing I would say just about the guidance as we've modeled in a real focus on higher quality.

Jim: <unk> traffic, we have not modeled in.

Jim: And a real uptick in the pricing again over the long term, we expect that to happen. We did not want to model that and we actually see that manifesting itself in reality.

Jim: Okay.

Jim: And then I hear you loud and clear on the better.

Jim: Tech vendor new business sold trends.

Jim: Maybe talk through more on the retention for tech vendor just like how youre thinking about the tail that has not yet renewed in a more difficult environment or just what's the typical lag time from when you've seen prior inflections that new business like how long it kind of takes further retention trend.

Craig W. Safian: With 12-16% research CV growth, we will deliver double-digit revenue growth. With gross margin expansion, sales costs growing about in line with CV growth, and G&A leverage, we will expand EBITDA margins modestly over time. We can grow free cash flow at least as fast as EBITDA because of our modest CapEx needs and the benefits of our clients paying us up front. And we'll continue to deploy our capital on share purchases, which lower the share cut over time, and on strategic value creation, Tukey, and M&A. With that, I'll turn the call back over to the operator, and we'll be happy to take your questions. Operator? Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced.

Similarly improved.

Eugene A. Hall: Hey, Jeff It's gene.

Eugene A. Hall: One of the biggest issue we have is in the small check vendors and a lot of the small tech vendors are in markets that have changed and they have difficulty getting funding.

Eugene A. Hall: And for those vendors, if they signed a two or three year multi year, a year or two ago. When that comes up for renewal. They don't have any funding that communications that are out of business and so what's happening there is.

Eugene A. Hall: Biggest driver of the tech sector in terms of retention the larger companies as you've seen are still laying off tens of thousands of people and so they haven't announced restructuring as we mentioned overall new vessels to supplement in the tech sector.

Eugene A. Hall: Digital Alere.

Eugene A. Hall: That's a leading indicator of that retention will follow once we work our.

Eugene A. Hall: Our way through these.

Operator: [inaudible] Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeff Mueller with Baird. Your line is now open. Yeah, thank you. I just want to dig in first.

Eugene A. Hall: Particular of these companies that have gone out of business since may find fee agreement.

Eugene A. Hall: And today by the way this reversal of very robust interest a different set of companies now theyre getting funding I think AI.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is now open.

Jeffrey P. Meuler: I know it's not a huge business, but on the research non-subscription headwinds and need for recalibration, you know, I know it's been weak all year, but I was interpreting that previously more as like cyclical headwinds. And now it seems like you're responding more operationally to drive higher quality traffic. So just, I guess, I don't know if there was like a business review or the why now in terms of the cyclicality of the business versus where there's an opportunity for operational improvement. Hey, good morning, Jeff.

Toni Kaplan: Thank you.

Actually maybe following on a similar line to the last question.

Toni Kaplan: Commentary around new business in the prepared remarks, and this is beyond tech vendors in general are the enterprise new business sounded very good.

Toni Kaplan: Even the tech vendor improvement in new business sounded good.

Toni Kaplan: Just wanted to understand.

Toni Kaplan: If there was anything that.

Toni Kaplan: Good.

Speaker Change: That is a risk.

Craig W. Safian: Thanks for the question. I'll give it a start, and then Gene will chime in as well. You know, I think, starting with the facts: the non-subscription part of the business was about 6% of 2023 revenue. Obviously, we have had tech market pressure for the full year, and the way that mostly manifested itself through our results was real pressure on pricing throughout the full year. And we saw that.

Speaker Change: That started starting to flow through a contract value in the next few quarters.

Speaker Change: And how quickly you could expect to see.

Speaker Change: That shifted and contract value I know you mentioned in the prepared remarks that youre expecting an inflection this year. Thanks.

Speaker Change: Hey, good morning, Toni Thanks for the question.

Speaker Change: Lay out.

Speaker Change: So to your point.

Craig W. Safian: We adjusted coming out of Q2 earnings, and the good news is that pricing has been roughly stable since we made that adjustment. In Q4, though, one of the things we're always focused on is making sure that we are providing the highest value to both sides of the equation. And with these offerings, we are essentially, you know, small business buyers are coming to our sites to learn more about what software to buy, and we actually help them with reviews and ratings and research and things of that nature. And then we match them to the sellers.

Speaker Change: GTS EAC vendor part of the business New business grew at high single digit rates.

Speaker Change: The end user or enterprise function later part of GTS grew new business mid teens year over year in GBS was up 13% over prior year on new business. So we actually saw pretty strong new business results across all of the markets we sell into in.

Speaker Change: In the fourth quarter.

Speaker Change: As we mentioned, we view new business as a real leading indicator for what's happening in the market in the moment so to speak.

Speaker Change: So again, we saw modest improvement in new business from Q2 Q3 that continued from Q3 Q4 with tech vendor actually growing for the first time in 2023 in the fourth quarter.

Craig W. Safian: And again, so tangible value, as we mentioned, on both sides of the equation. We're always focused on driving even more value for our clients. And so one of the things we've done is really shift our focus and prioritization to higher quality forms of traffic.

Speaker Change: As you know and CVI.

Speaker Change: CV growth are a function of the combination of new business and retention.

Speaker Change: And as we talked about in our prepared remarks and also in response to.

Craig W. Safian: And, you know, again, a short-term impact on revenues, but over the long term, we think this is good for clients on both sides of the equation and will drive higher pricing over time, which will drive higher revenue, which is good for everybody. But one thing I would say about the guidance is that we've modeled in a real focus on higher quality traffic. We have not modeled in any real uptick in pricing.

Speaker Change: To Jeff's question, there is still a lot of pressure and Jim alluded to this as well so a lot of pressure on our retention in the small vendor part of the market and we still have a lot of renewals that havent been types are coming renewals that hasn't been touched since the tech sector really start to recalibrate call. It.

Speaker Change: Third and fourth quarter of 2022, so still a little bit of retention pressure. However, new business, we definitely view as a leading indicator again, that's part of what gives us confidence to say that we expect CV to bottom during 2024 and <unk>.

Eugene A. Hall: Again, over the long term, we expect that to happen. However, we did not want to model that in until we actually see that manifesting itself in reality. Okay, and then I hear you loud and clear on the better tech vendor new business old trends; maybe talk through more on retention for tech vendors, just like how you're thinking about the tail that has not yet renewed in a more difficult environment, or just what's the typical lag time from when you've seen prior inflections in new business, like how long it kind of takes for the retention trend to similarly improve. Hey, Jeff, it's Gene

Speaker Change: Start to Reaccelerate.

Speaker Change: As well.

Speaker Change: Thanks, a lot of sense and then just for a follow up I wanted to ask about head count.

Speaker Change: The I guess what are your expectations.

Speaker Change: Patients for head count growth and 24, and just wanted to understand a little bit more about it seems like head count growth has been slowing the last two quarters till like below normal levels.

Speaker Change: I know there was a catch up in <unk>.

The prior prior year earlier in 2003, so I guess.

Eugene A. Hall: So one way, you know, the biggest issue we have is in small tech. A lot of small tech vendors are in markets that have changed, and they have difficulty getting funding. And for those vendors, if they signed a two or three or multi-year contract a year or two ago, when that comes up for renewal, they don't have any funding. In fact, in many cases, they're out of funding.

Speaker Change: Is the slower head count sort of helping.

Speaker Change: Manage margin or is it.

Speaker Change: I guess, an indicator that there is I don't think you are saying there is less opportunity, but just wanted to understand the startup below normal.

Eugene A. Hall: And so what's happening there is that that's our biggest drag on the tech sector. The larger companies, as you've seen, are still laying off tens of thousands of people, and so they haven't finished restructuring. As we mentioned, overall new business is up in the tech sector, mid-single digits, and so we're thinking that's a leading indicator that retention will follow once we work our way through these companies that have gone out of business since they signed the agreement today. And by the way, that's still a very robust business. It's just a different set of companies now that are getting funding. Think AI.

Speaker Change: Count growth levels that we're seeing now.

Speaker Change: Tony.

There's a very enormous market opportunity.

Speaker Change: We intend to capture that market certainly over the next many years part of our core strategy to capture that opportunity is growing our head count to capture it the headset brokerage of either faster or slower depending on the actual selling capacity of the team. We have right now we believe we have a lot of selling capacity.

Speaker Change: Embedded actually in the catastrophe at today over time, though that is going to grow as we grow our business.

Speaker Change: And as we mentioned during our prepared remarks, we've actually got dialed into our planned combination GTS GBS quota bearing head count growth of mid to high single digits and as always we're prepared to go faster.

Jeffrey P. Meuler: Got it. Thank you. Thank you. Our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is now open.

Toni Michele Kaplan: Thank you. Actually, maybe following on a similar line to the last question, the commentary around new business in the prepared remarks, and this is beyond tech vendors, so just in general, the enterprise new business sounded very good. Even the tech vendor improvement in new business sounded good. Just wanted to understand if there was anything that could, you know, that is a risk to that sort of starting to flow through contract value in the next few quarters and, you know, how quickly you could expect to see that shift in contract value. I know you mentioned in the prepared remarks that you're expecting an inflation rate increase this year. Thanks. Good morning, Toni.

Speaker Change: As both John and I mentioned, we have recruitment capacity to go faster if we want to and so we've got dialed in mid mid to high <unk>.

Speaker Change: <unk> digit growth in GTS, and GBS quota bearing head count and we can go faster, if we see that rebound coming faster.

Speaker Change: Well.

Speaker Change: Terrific. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Heather <unk> with Bank of America. Your line is now open.

Speaker Change: Heather Your line is open please check your mute button.

Speaker Change: Hi.

Heather: Sorry about that thanks for taking my question I wanted to go back.

Heather: The renewal.

Heather: CAC vendor side.

Heather: Ask you.

Craig W. Safian: Thanks for the question. Just to lay out, you know, the facts. So, to your point, GTS, the AT vendor part of the business, new business grew at high single-digit rates. The end-user or enterprise function leader part of GTS grew new business mid-teens year over year, and GBS was up 13% over the prior year on new business. So, we actually saw pretty strong new business results across all of the markets we sell into in the fourth quarter. And as we mentioned, you know, we view new business as a real leading indicator for what's happening in the market at the moment. So, it's... And so, again, we saw modest improvement in new business from Q2 to Q3. That continued from Q3 to Q4, with TechVendor actually growing for the first time in 2023 in the fourth quarter.

Heather: Are there any I mean, obviously it companies are calling on Guy there is nothing you can control there but.

Heather: What you can do on that front.

Heather: And can you help us with respect and how material. The wave of renewals are I know that's something that's very simple.

Heather: Curious about.

Heather: Again.

Heather: If you look at the larger companies in the market renewals are going kind of normally it's a little slower than usual because again they are laying off tens of thousands of.

Heather: People, we expect that will change there's plenty of demand again, we expect.

Heather: She spent initiative provide 7% to almost five trillion so.

Heather: So fleet demand there over time that will normalize and so the real issue in rejection of these very small tech vendors, which are over time, a great market for us, but there's a shift going on now from.

Heather: What used to get funding now.

Heather: As I mentioned, there's a real focus on AI and so those companies that are in less.

Craig W. Safian: As you know, NCVI and CV growth is a function of the combination of new business and retention. And as we talked about in our prepared remarks and also in response to Jeff's question, there's still a lot of pressure, and Gene alluded to this as well, still a lot of pressure on retention in the small tech vendor part of the market. And we still have a lot of renewals that haven't been touched, or coming renewals that haven't been touched since the tech sector really started to recalibrate, you know, call it the third or fourth quarter of 2022. So still a little bit of retention pressure.

Heather: Less popular segments for funding these days.

Heather: Funding and successful commercially David it requires a lot of business in which case our retention our retention.

Speaker Change: The other thing I would add Heather just on the larger tech clients typically what we see it is.

Speaker Change: Combination of maybe modestly less growth than we would normally buy are normally see through renewal cycles.

Speaker Change: Or modest cuts a reduction to spend but they maintain a pretty significant gartner presence always.

Speaker Change: And what we then do is make sure that we are there to win back that business and it actually does help.

Speaker Change: Yes drive the growth coming out of tougher macro environment.

Speaker Change: What we've always seen a tough macro environment tech vendor arise, where we'll take some mix from a retention perspective, but stay embedded still delivering huge value to our clients and then went back and grow that business over the long term.

Toni Michele Kaplan: However, new business is definitely a leading indicator. Again, that's part of what gives us confidence to say that we expect CV to bottom during 2024 and start to reaccelerate during 2024 as well. It makes a lot of sense.

And then.

Speaker Change: Just kind of ask you. Another version is probably something you already said and the same question.

Craig W. Safian: And then just for a follow-up, I wanted to ask about headcount. You know, the I guess, what are your expectations for headcount growth in 24? And just wanted to understand a little bit more about it seems like headcount growth has been slowing the last two quarters to below normal levels. You know, I know there was a catch up in, you know, sort of the prior year and earlier in 23.

Speaker Change: You were talking about.

Speaker Change: EV on the tech vendor side normalizing last quarter, you talked about normalizing for 12 to 18 months.

Speaker Change: Is that really your outlook.

Speaker Change: And what you saw in the fourth quarter, how are you thinking about that.

Speaker Change: So our long term view on this segment of the business is unchanged. We believe it can grow in line with our medium term objectives.

We still believe that we are going to see reacceleration of this business over time.

Toni Michele Kaplan: So I guess, you know, Is this lower headcount sort of helping manage margin, or is it? I guess an indicator that there's, I don't think you're saying there's less opportunity, but just wanted to understand the sort of below-normal head count growth levels that we're seeing. Tony, we look at it as there is a very enormous market opportunity. We intend to capture that opportunity over the next many years. Part of our core strategy to capture that opportunity is growing our headcount to capture it. That headcount growth is going to be faster or slower depending on the actual kind of selling capacity of the team we have. And right now, we believe we have a lot of selling capacity embedded in the capacity we have today.

Speaker Change: Whether it's nine to 15 months or 12.

Speaker Change: 18 or 24 it.

Speaker Change: It will be in that range that we actually see that reacceleration, but.

Speaker Change: The market here is still really strong our offerings still drive really huge value for our clients in this segment and over the medium term. There is no reason why this can't yes.

Speaker Change: So 12% to 16% growth consistent with our medium term objective.

Speaker Change: Business.

Speaker Change: Got it thanks.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Seth Weber with Wells Fargo. Your line is now open.

Seth Weber: Hey, guys good morning.

Seth Weber: I think maybe first just a clarification when you talk about your research revenue guide.

Toni Michele Kaplan: Over time, though, that's going to grow as we grow. And as we mentioned during our prepared remarks, we've actually got dialed into our plan combination GTS, GBS, quarterly-varying headcount growth of mid to high single digits. And as always, we're prepared to go faster. As both Gene and I mentioned, we have the recruitment capacity to go faster if we want to. And so we've dialed in mid to high single-digit growth in GTS and GBS, with quarter-varying headcount. And we can go faster if we see that rebound coming faster as well.

Seth Weber: I think backing into it it kind of implies a non subscription.

Seth Weber: Revenue growth of down like download double digits is that the right way to think about what's baked into your into your model.

Speaker Change: Yes that is the correct math you got it.

Speaker Change: Okay. Thank you and then just on the.

Speaker Change: The strong new business wins can you just frame that a little bit I mean.

Speaker Change: Is that a function of comps are easier.

Speaker Change: Productivity is better or are you actually seeing or hearing better sentiment from your customers as are the sales cycles getting shorter.

Heather Nicole Balsky: Terrific, thank you. Thank you. Our next question comes from the line of Heather Balsky with Bank of America. Your line is now open. Heather, your line is open. Please check your mute button.

Speaker Change: It just seems like the new business wins are just really strong and I'm just trying to tie all these things together with your guidance. Thanks.

Heather Nicole Balsky: Hi, I was muted. Sorry about that. Thanks for taking my question. I wanted to go back to the renewals on the tech vendor side and just ask you, are there any? I mean, obviously, if companies are going under, there's nothing you can control there. But, you know, what you can do on that front, and can you help us get a perspective on how material the wave of renewals is? I know that's something investors have been curious about. You know, again, if you look at the larger companies in the market, which are, over time, a great market for us, but there's a shift going on now from what used to get funding to now what does get funding. As I mentioned, there's a real focus on AI.

Speaker Change: Yeah. So first I'd say is we have a strong value proposition and so when clients see the value they get from our offerings. They want to buy it so thats whats thats fundamentally what's driving demand and on top of that we're always focused on things impact sales productivity there.

Speaker Change: Things that I think things like the tools that we've just done the process. We have and then as Craig mentioned his remarks tenure convention as well, we're having a modest improvement in the tenure as well and so but the fundamental thing that's driving it is really intrinsic demand for clients because they have the need.

Speaker Change: Need for our services.

Speaker Change: Sure.

Speaker Change: Right, but that has sentiment has customer sentiment changed at all over the last quarter has it gotten gotten better or have the sales cycle has changed or anything you'd call out for the acceleration of new business wins here.

Heather Nicole Balsky: And so those companies that are in less popular segments for funding these, I can't get funding, and if I haven't been as successful commercially, they either get acquired or go out of business, in which case, our retention, it affects our... And, you know, the other thing I'd add, Heather, just on the larger tech clients, typically, you know, what we see is a combination of maybe modestly less growth than we would But they maintain, you know, a pretty significant Gartner presence at all times.

Speaker Change: I would say.

Speaker Change: For selling environment modestly improved throughout 2023.

Speaker Change: Okay, Alright, Thank you guys I'll pass it on.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Andrew Nicholas with William Blair. Your line is now open.

Andrew Owen Nicholas: Hi, good morning, Thanks for taking my question.

Andrew Owen Nicholas: I wanted to touch on artificial intelligence.

Andrew Owen Nicholas: Driver of new business.

Eugene A. Hall: And what we then do is make sure that we are there to win back that business. And it actually does help drive growth coming out of, you know, tougher macro environments. And that's sort of what we've always seen in tough macro environments, tech vendor or otherwise, where we'll take some, you know, nicks from a retention perspective, but stay embedded, still delivering huge value to our clients, and then win back and grow that business over the long term. And, and then I'm just kind of asking another version of probably something you've already said, and the same question, but you were talking about CV Is that still your outlook based on what you saw in the fourth quarter? How are you thinking about that?

Andrew Owen Nicholas: It was one of the topics.

Andrew Owen Nicholas: Gene that you outlined.

Andrew Owen Nicholas: At the front just kind of curious is there any way to kind of quantify or maybe even subjectively talk about AI.

Andrew Owen Nicholas: As a driver of new business cross sell new conversations with clients I understand it's part of <unk>.

Andrew Owen Nicholas: Ever evolving tech landscape, but I'm just wondering if there's been any boost our notable boost from.

Andrew Owen Nicholas: On that topic, specifically as it relates to new client wins and new business.

Speaker Change: Okay. So Andrew.

Andrew Owen Nicholas: We surplus of a wide variety of areas as you know and they get value at all of those areas. AI has had a lot of publicity over the last year and so there is throughout the.

Andrew Owen Nicholas: Et cetera, and so.

Andrew Owen Nicholas: Narrowed as unusually high level of interest understanding what AI is an outcome effect.

Andrew Owen Nicholas: Our clients businesses I'd say.

Andrew Owen Nicholas: It's just like the other things that we help our clients with its not something thats, causing like an extra 20.

Andrew Owen Nicholas: 20% of demand or something.

Andrew Owen Nicholas: And the area that is one of the things we cover the clients of interest yet just client clients that have caused problems. Maybe there are some cost optimization as opposed to <unk>.

Craig W. Safian: So, you know, our long-term view on this segment of the business is unchanged. We believe it can grow in line with our medium-term objectives. We still believe that we are going to see re-acceleration in this business over time, whether it's 9 to 15 months or, you know, 12 to 18 or 24. It'll be in that range that we actually see that re-acceleration.

Andrew Owen Nicholas: So it kind of depends on the situation of individual client, but it is certainly an area of robust demand.

Speaker Change: Great and then for my follow up I, just wanted to hone in on the CV growth bottoming.

Speaker Change: Part of your guidance I recognize that first quarter and first half and CVI are important inputs and you've been conservative.

Heather Nicole Balsky: But, you know, we, the market here, is still really strong. Our offerings still drive really huge value for our clients in this segment. And, you know, over the medium-term, there's no reason why this can't get back to 12 to 16% growth, consistent with our medium-term objective.

Speaker Change: Gene I think in the press release, you said that you had an opportunity for upside.

Speaker Change: And that guidance is achievable across a wide range of economic scenarios. So just kind of putting all these pieces together is it fair for us to assume that the TV growth is bottoming in the second half and in your guidance and then upside would be from that happening earlier or is there. Some other way for us to think about the underlying assumptions there. Thank you.

Seth Robert Weber: Thank you. Our next question comes from the line of Seth Weber with Wells Fargo. Your line is now open.

Speaker Change: Yes, good morning, good morning, Andrew.

Speaker Change: I think.

Speaker Change: Yeah, the way to think about.

Seth Robert Weber: Hey guys, good morning. I think maybe first just a clarification: when you talk about your research revenue guide, I think backing into it, it kind of implies a non-subscription revenue growth of down, like download double digits. Is that the right way to think about what's baked into your model? Yes, that is the correct math, Seth. You got it.

Speaker Change: The CV and the revenue and obviously.

Speaker Change: Our revenue guide for the research.

Speaker Change: Segment and the subscription revenue piece the revenue is always going to lag the contract value recovery and on top of that as you know first half changes to UN CVI are going to have a bigger impact on 2024 revenue run out than fixed.

Craig W. Safian: Okay, thank you. And then just on the strong new business wins, can you just frame that a little bit? I mean, is that a function of comps for easier?

Speaker Change: Step ups in Q3, and Q4, which are great and drive great cash flow and we will drive.

Seth Robert Weber: Is productivity better? Or are you actually seeing or hearing, you know, better sentiment from your customers? Are the sales cycles getting shorter? You know, it just seems like the new business winds are just really strong. And I'm just trying to tie all these things together with your guide.

Speaker Change: Revenue, but have minimal impact on.

Speaker Change: On 2020 for revenue so we're not guiding to a revenue RCD number for the year nor are we pointing.

Speaker Change: Specifically.

Speaker Change: Where the bottom is.

Speaker Change: But we have baked into our outlook, a bottoming of that CVA and a reacceleration of that CV over over the course of.

Eugene A. Hall: Yeah, so the first thing to say is that we have a strong value proposition. And so when clients see the value they get from our offerings, they want to buy. So that's what's, fundamentally what's driving demand. And on top of that, um, you know, we're always focused on things that impact sales productivity. Uh, there are things that, uh, and there are things like the tools that we give them, the process we have.

Speaker Change: Over the course of 2024.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Manav Patnaik with Barclays. Your line is now open.

Hi, This is brendon on for Manav, just wanted to ask how you guys think about getting back to double digit CV growth.

Brendon: Obviously, if your <unk> is mid to high single digit.

Brendon: Your new business is still it's still pretty strong. So it seems like really it's just like a wallet retention higher cancellation issue for now is it just that that.

Seth Robert Weber: And then, as Craig mentioned in his remarks, tenure can affect you as well. We were having modest improvements in tenure as well. And so, but the fundamental thing driving it is really, uh, intrinsic demand for clients because they have the, uh, need for our services to add a lot of value. Right, but has customer sentiment changed at all over the last quarter? Has it gotten better, or have the sales cycles changed, or anything you'd call out for the acceleration of new business wins here? I'd say the sort of selling environment has modestly improved throughout. All right. Thank you, guys. I'll pass it on.

Brendon: Kind of goes away over time or do you actually expect to even more kind of new.

Brendon: New business productivity, if you will from from QVC H or I guess, how do you guys think about that.

Speaker Change: Good morning, Brendan I mean, the biggest thing impacting contract value and contract value growth right. Now is the tech vendor part of the business and so as we mentioned the enterprise function leader part of our business.

Speaker Change: Grew at double digit growth rates in the fourth quarter and actually hasn't been a consistent double digit grower through the course of 2023 and so if you look at that seven 7% overall contract value growth. The reality is the enterprise function leader portion of the business, which is more than 75%.

Andrew Owen Nicholas: Thank you. Our next question comes from the line of Andrew Nicholas with William Blair. Your line is now open. Hi, good morning.

Speaker Change: <unk> of total CV is growing at double digit growth rates and the tech vendor portion of the business as we mentioned in our prepared remarks was essentially flat for the year and so as we start to see reacceleration of the tech vendor business.

Andrew Owen Nicholas: Thanks for taking my question. I wanted to touch on artificial intelligence as a driver of new business. I realized it was one of the topics, Gene, that you outlined at the front.

Speaker Change: Which again is a little less than 25% of total CD that obviously has an impact on the overall CV growth. The other piece that I think obviously super important as we caught up on our hiring quite a bit over the course of 2022 and so what that meant is over the course of 2020.

Eugene A. Hall: Just kind of curious, is there any way to kind of quantify or maybe even subjectively talk about AI as a driver of new business, cross-sell, and new conversations with clients? I understand it's part of an ever-evolving tech landscape, but I'm just wondering if there's been any boost or notable boost from that topic specifically as it relates to new client wins and new business. So, Andrew, we serve clients in a wide variety of areas, as you know, and they get value in all those areas. AI has had a lot of publicity over the last year, and so there is, you know, throughout the media, etc.

Speaker Change: Three we had a lot of people very early in the Gartner sales careers and as you know as people come up and your curve their productivity increases and so we feel confident that we've got enough capacity from a selling perspective heading into 2024, given the combination.

Speaker Change: <unk> of tech sector rebound and probably more importantly, our salespeople coming up to 10 year curve that should provide the right amount of.

Speaker Change: Fuel if you will.

Andrew Owen Nicholas: And so there is an unusually high level of interest in understanding what AI is and how it can affect our clients' businesses. I'd say it's just like the other things that we help our clients with. It's not something that's causing, like, an extra, you know, 20% of demand or something. It's an area that is one of the things we cover that clients have interest in, just, you know, client clients that have cost problems, maybe you're some cost optimization as opposed to AI. So it kind of depends on the situation with individual clients, but it's certainly an area of robust growth. Great. And then for my follow-up, I just wanted to hone in on the CV growth bottoming part of your guidance. I recognize that the first quarter and first half of NCBI are important inputs, and you've been conservative.

Speaker Change: To drive contract value growth in 2024, and we're growing our GTS GBS at mid to high single digits. During 2024, and that's really about sustaining accelerating sustaining that growth as we roll into 2020 bonds like places.

Speaker Change: Okay, and then just any callouts or growth rates, you can give us within GBS, obviously, it's still performing pretty well. So is there anything any other color you can give us.

Yes.

Speaker Change: It's still 12, 9% or 13% year over year growth on a on a bigger base and so you are getting bigger and bigger and sustaining growth within our our medium term.

Speaker Change: <unk> four for this segment as I mentioned in my prepared remarks.

Craig W. Safian: Gene, I think in the press release you said that you had an opportunity for upside and that guidance was achievable across a wide range of economic scenarios. So just kind of putting all these pieces together, is it fair for us to assume that CV growth is bottoming in the second half of your guidance, and the upside would be from that happening earlier, or is there some other way for us to think about the underlying assumptions there? Thank you. Yeah, good morning, Andrew.

Speaker Change: Supply chain.

Speaker Change: Legal and HR are the three fastest growing pieces of the segment.

But obviously all pieces have to be growing nicely for us to register or 13% year over year CD.

Speaker Change: Alright. Thanks.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Josh Chan with UBS. Your line is now open.

Hi, good morning, Thanks for taking my questions.

I know that you don't guide to CV trajectory or in CVI, but I guess it sounds like you are emphasizing more the tech vendor renewal dynamic here, so I guess a REIT.

Andrew Owen Nicholas: You know, I think, you know, the way to think about the CV and the revenue, and obviously, you know, our revenue guide for the research segment and the subscription revenue piece, revenue is always going to lag the contract value recovery. And on top of that, you know, as you know, first half changes to NCBI are going to have a bigger impact on the 2024 revenue run out than, you know, big step-ups in Q3 or Q4, which are great and drive great cash flow and will drive, you know, future revenue but have a minimal impact on, you know, 2024 revenue. So we're not guiding to a revenue or CV number for the year, nor are we pointing to, you know, specifically where the bottom is. But we have baked into our outlook a bottoming of that CV and a reacceleration of that CV over the course of the year and the course of 2020. understood. Thank you. Thank you. Our next question comes from the line of Manav Patnaik with Barclays. Your line is now open. Hey, this is Brendan on Fromanov.

Joshua K. Chan: To interpret that as there being more of an impact of that on Q1 than normal can you just kind of explain the rationale behind calling of that specific dynamic out the way you did.

Speaker Change: Yes, good morning, Josh Thanks, Great question.

Speaker Change: So we're always looking at the skew of.

Speaker Change: Contract end dates and contract value associated with that and as we've talked about in the past generally speaking, we're pretty evenly across the year.

Speaker Change: This year.

Speaker Change: We actually have a little bit of a bubble and not a huge one but just a little bit more than average in with our tech vendor clients in the first quarter and so.

Speaker Change: You may have heard us use the word prudent several times.

Speaker Change: During our prepared remarks.

Speaker Change: We just want to make sure that our guidance reflects our most recent performance and what we know about the next couple of quarters coming up and so we've taken a prudent view on our first half and CBI to take that into account.

Speaker Change: That said again I'll reiterate we do expect CV growth overall to bottom during 2024 and begins to Reaccelerate.

Manav Shiv Patnaik: I just want to ask how you guys think about getting back to double-digit CV growth. Obviously, if your QBH is mid to high single-digit, your new business is still pretty strong, so it seems like really it's just like a wallet retention and higher cancellation issue for now. Is it just that that kind of goes away over time, or do you actually expect even more of this new business productivity, if you will, from QBH? How do you guys think about that? Good morning, Brendan.

Speaker Change: Even with that.

Speaker Change: First quarter focus.

Speaker Change: Tech vendor renewals.

Speaker Change: Okay I appreciate the color that's really helpful.

Speaker Change: If I can shift over to margins could you talk about the different drivers of margins year over year I mean, you have.

Speaker Change: Positive revenue growth you have re.

Speaker Change: Accelerating CV cost structure seems to be in.

Speaker Change: Spot so.

Speaker Change: Are there more margin pluses and minuses and how does that reconcile with the guidance. Thank you.

Craig W. Safian: I mean, the biggest thing impacting contract value and contract value growth right now is the tech vendor part. And so, as we mentioned, the enterprise function leader part of our business grew at double-digit growth rates in the fourth quarter and actually has been a consistent double-digit grower through the course of 2023. And so, if you look at that 7.7% overall contract value growth, the reality is that the enterprise function leader portion of the business, which is more than 75% of total CV, is growing at double-digit rates. And the tech vendor portion of the business, as we mentioned in our prepared remarks, was essentially flat for the year.

Speaker Change: Sure. Thanks, Josh.

Speaker Change: The simplest way to think about it is that.

Speaker Change: With.

Speaker Change: Our targeted head count growth in GTS, and GBS of mid to high single digits.

Speaker Change: And think about that not the only place that we're actually growing but growing a little bit elsewhere, combined with normal merit and wage inflation combined with.

Speaker Change: A growing conferences business.

Speaker Change: You look at the implied operating expense in the guidance is up about eight or 9% year over year.

Speaker Change: Aligns with the head count growth in the conference growth that we've got dialed into the guidance and so yeah. As we mentioned a much more quote unquote normal cadence of operating expense.

Craig W. Safian: And so, as we start to see the re-acceleration of the tech vendor business, which again, you know, is a little less than 25% of total CV, that obviously has an impact on the overall CV growth. The other piece that I think's, you know, obviously super important is that we caught up on our hiring quite a bit over the course of 2022. And so, what that meant was, over the course of 2023, we had a lot of people very early in their Gartner sales careers. And as you know, as people come up the tenure curve, their productivity increases.

Speaker Change: 2024, as compared to prior years, where we are behind and we're catching up et cetera, et cetera, so much more normal quarter to quarter build of our operating expense.

Speaker Change: The biggest thing that drives our revenue for 2024 is the ending contract value for 2023.

Speaker Change: And obviously as we talked about.

Speaker Change: On Andrew's question, the revenue will lag the recovery in contract value and so the reality is and again we've been.

Speaker Change: You're not guiding but pointing this way for the last several quarters that this was going to be the reality for 2024, which is we're going to get back on our normal cadence of investing for the future and growing our sales force and growing other areas. We are dealing with the CV deceleration through.

Craig W. Safian: And so, you know, we feel confident that we've got enough capacity from a selling perspective heading into 2024, given the combination of the tech sector rebound and, probably more importantly, our salespeople coming up the tenure curve. That should provide the right amount of fuel, if you will, to drive contract value growth in 2024. And we're growing our GTS-CVS headcount mid to high single digits in 2024, and that's really about accelerating and sustaining that growth as we roll into 2025. Okay, and then just any callouts or growth rates you can give us within GBS, obviously it's still performing pretty well, so just anything, any other color you can give us. Yeah, I mean, you know, it's still 12.9 or 13% year-over-year growth on a bigger base.

Speaker Change: 2023, and obviously that has an impact on two.

Speaker Change: 2024 revenues, obviously, the non subscription revenue performance also mute the overall revenue as well as does the consulting growth rate with while still within our medium term guidance, given we had such a strong year and contract optimization where b.

Speaker Change: Thoughtful about.

The growth rates, there and so it's a little bit of all of those factors impacting the top line with what I would consider quote unquote normal operating expense growth baked into the 2024 got it.

Speaker Change: Perfect. Thanks for that color, Craig and thanks for your time.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Surinder <unk> with Jefferies. LLC. Your line is now open.

Thank you.

Surinder: Just taking a step back if we look at the big picture and what I would call the relative strength of the economy.

Manav Shiv Patnaik: And so, you know, getting bigger and bigger and sustaining growth within our medium-term objective for the segment. As I mentioned in my prepared remarks, supply chain, legal, and NHR are the three fastest-growing pieces of the segment. But obviously, all pieces have to be growing nicely for us to register 13% year-over-year growth. All right, thanks.

Surinder: Why do you think the clients on the tech side arent spending more at this point.

Surinder: I guess in your conversations.

Surinder: What would get them to commit like what are they looking for at this point.

Sundar: So sundar.

Sundar: On the Tech side I think it's.

Sundar: Really the retail so it's a combination of the recalibration of that market and also when I say recalibration down to the things gene was talking about where we actually have a really healthy business on the small end of tech.

Joshua K. Chan: Thank you. Our next question comes from the line of Josh Chan with UBS. Your line is now open. Hi, good morning.

Craig W. Safian: Thanks for taking my questions. I know that you don't guide to CV trajectory or NCVI, but I guess it sounds like you are emphasizing the tech vendor renewal dynamic here. So I guess are we to interpret that as there being more of an impact of that on Q1 than normal? Can you just kind of explain the rationale behind calling that specific dynamic out the way you did? Yeah, good morning, Josh.

Sundar: Yes, there is funding flowing but it's not flowing through the same places that it may have been a year or two or three ago and so we're just dealing with that and again, we're going after the opportunities.

Sundar: Where the money is and we're fishing, where the fish are.

Sundar: But as you've seen there are still large tech sector layoffs happening.

Craig W. Safian: Thanks. A great question. So, you know, we're always looking at the skew of, you know, contract end dates and contract values associated with that. And as we've talked about in the past, generally speaking, we're pretty evenly skewed across the year. This year, we actually have a little bit of a bubble, and not a huge one, but just a little bit more than average in revenue with our tech vendor clients in the first quarter. And so, you know, you may have heard us use the word prudent several times during our prepared remarks.

Sundar: A year or almost 15 months since they began.

Sundar: And selling into that environment. When they are in the process of cutting tens of thousands of jobs is a little more challenging than it would be.

Sundar: If they are completely recalibrated. So yes, I think we're still in.

Sundar: We're still driving use value for the clients. They are still very important clients for us we're going to be there to help them as they rebound and come through the recalibration.

Joshua K. Chan: You know, we just want to make sure that our guidance reflects our most recent performance and what we know about the next couple quarters coming up. And so we've taken a prudent view on our first half NCBI to take that into account. That said, again, I'll reiterate, you know, we do expect CV growth overall to bottom during 2024 and begin to reaccelerate, with even that first quarter focus on tech vendor renewal. I appreciate the color there.

Sundar: It is just going to take a little bit of time, but we're confident in the value. We provide we're confident as I mentioned earlier in the long term or medium term growth prospects for this part of the business.

Sundar: The fact is they are still significantly recalibrating and we are along for that rises.

Speaker Change: Got it.

Speaker Change: Please continue.

Speaker Change: When when you are selling into a company that is actively making layoffs.

Speaker Change: <unk> of People's focus on who they are going to lay off or whether in fact, they're going to get laid off and so it takes a little while that's a much tougher that's kind of a tougher selling environment they'll get through that it will return to normal that's the large retinal it's fallen Craig described very well.

Craig W. Safian: That's really helpful. If I can shift over to margins, could you talk about the different drivers of margins year over year? I mean, you have positive revenue growth, you have re-accelerating CV, and the cost structure seems to be in a good spot. So are there more margin pluses than minuses, and how does that reconcile with the guidance? Short thing, Josh, you know, the simplest way to think about it is that, you know, with targeted headcount growth in GTS and GBS of mid to high single digits. And think about that.

Speaker Change: Got it and then I guess if we.

Speaker Change: Think about that.

Speaker Change: Our events that line of thinking.

Speaker Change: So if you kind of more broadly think about the business and all of these clients that you serve.

Speaker Change: So is there arguably more I guess cyclicality or potential volatility today in your business than maybe in prior cycles with maybe the reason because theres more PE VC backed firms now that Theyre, just got larger part of the ecosystem. So.

Joshua K. Chan: Not the only place that we're actually growing, but you know, growing a little bit elsewhere, combined with normal merit and wage inflation, combined with a growing conference business. You know, if you look at the implied operating expense in the guidance, it's up about eight or nine percent year over year, which aligns with the headcount growth and the conference growth that we've got dialed into guidance. And so, as we mentioned, a much more quote-unquote normal cadence of operating expense in 2024 as compared to prior years where we fell behind and we're catching up, etc., etc. So a much more normal quarter-to-quarter build of our operating expense. We are, you know, the biggest thing that drives our revenue for 2024 is the ending contract value for 2020. And obviously, as we talked about in Andrew's question, revenue will lag recovery and contract value.

Theyre, just more willing to make quicker strategic pivots or spending decision changes or.

Speaker Change: Other things is there something structural perhaps that debt.

Speaker Change: We should be aware of or at least we should be thinking about.

Speaker Change: So our perspective is there's nothing structural about it what happened was during the pandemic.

Speaker Change: There was a pull forward of tech spending.

Speaker Change: The tech companies, probably most of them assumed that was going to last forever turned out or forward. Another just adjusting to getting back to normal.

Speaker Change: With that so unless pandemic become cyclical I think we're in pretty good shape, yes, I also think surrenders.

Speaker Change: Just sort of underscore that point, when we talk about the overall business or market opportunity.

Speaker Change: I'll focus on the market opportunity, so roughly $200 billion market opportunity $190 billion of that is outside of the tech vendor opportunity.

Speaker Change: So we remain very focused on that Big prize of 190, plus $1 billion market opportunity serving enterprise function leaders across.

Craig W. Safian: And so the reality is, and again, we've been, you know, not guiding, but pointing this way for the last several quarters that this was going to be the reality for 2024, which is we're going to get back on our normal cadence of investing for the future and growing our sales force and growing other areas. We are dealing with the CV deceleration through 2023, and obviously that has an impact on 2024 revenues. Obviously, the non-subscription revenue performance also mutes the overall revenue as well, as does the consulting growth rate, which while still within our medium-term guidance, given we had such a strong year in contract optimization, we're being, you know, thoughtful about, you know, the growth rates there. And so it's a little bit of all of those factors impacting the top line with what I would consider, quote unquote, normal operating expense Perfect.

Speaker Change: <unk> GTS and GBS and again, we're confident that the tech vendor markets are really strong market, but the reality is 190 and about $200 billion market opportunity is enterprise function liter opportunity.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Jeff Silber with BMO capital markets. Your line is now open.

Jeffrey Marc Silber: Thanks, I know, it's late I'll just ask one multipart can we talk about the pricing environment can you just remind us what price increases you've put in for this year are you getting any pushback and others. In this space have been providing some breaks for extending the length of the term is that something youre doing as well. Thanks.

Speaker Change: Hey, good morning, Jeff Thanks for the.

Speaker Change: Quick question on the pricing side.

Speaker Change: We're a little over 4% we did our price increase in November of this year, which is when we typically do a little bit lower than what we did in.

Speaker Change: 'twenty, one and 'twenty two largely because we've seen inflation come down a little bit and most importantly wage inflation come down a little bit and so we're in that.

Joshua K. Chan: Thanks for the call, Craig, and thanks both for your time. Thank you. Our next question comes from the line of Surinder Thind with Jeffreys LLC. Your line is now open.

Speaker Change: Around 4%, a little bit more than 4% I think clients by and large are not pushing back on it again remember the average spend per client is.

Surinder Singh Thind: Thank you. Just taking a step back, and what I would call the relative strength of the economy, why do you think the clients on the tech side aren't spending more at this point? In your conversation, what would get them to commit? Like, what are they looking for?

Speaker Change: Order of magnitude $250000. So the difference between a 3% or 4% increases is pretty de Minimis and again, we're very focused on making sure that our products and services have incremental value each and every year.

Speaker Change: And we're continuing to sell with our upfront invoicing and a real focus on that we're continue to sell more and more multi year contracts with our focus on that and so I would say, yes. The environment has been a little tougher, but we've been managing to stick to our guns on the things that we know drive huge X.

Craig W. Safian: So Surinder, you know, on the tech side, I think it's really the recalibration. So it's a combination of the recalibration of that market. And also, when I say recalibration, you know, down to the things Gene was talking about, where we actually have a really healthy business on the small end of tech. And, you know, there is funding flowing, but it's not flowing to the same places that it may have been a year or two or three ago. And so we're just dealing with that.

Speaker Change: <unk> value for the business, which is sticking to our pricing guidance not discounting selling multiyear contracts and making sure we get the invoicing done upfront and I think our teams have done a phenomenal job of sticking to our core getting there.

Eugene A. Hall: And again, we're going after the opportunities, you know, where the money is, or we're fishing where the fish are. But, you know, as you've seen, there are still large tech sector layoffs happening, a year or almost even 15 months since they began. And, you know, selling into that environment when they're in the process of cutting tens of thousands of jobs is a little more challenging than it would be if they had completely recalibrated. And so, you know, I think we're still in. We're still driving huge value for those clients. They're still very important clients for us, and we're going to be there to help them as they rebound and go through the recalibration.

Speaker Change: Alright, thanks, so much.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of George Tong with Goldman Sachs. Your line is now open.

George K. Tong: Hi, Thanks, good morning.

George K. Tong: Mentioned <unk> tech vendor renewals are especially important because of a little bubble. There can you help quantify that how much concentration is there compared to other quarters in the year.

George K. Tong: Yes, I think I mean again remember our tech vendor CV is a little less than 25% of total CD.

George K. Tong: Normally Q1.

George K. Tong: <unk> represents a little bit more than 25% of total renewals on the overall franchise.

George K. Tong: This year with tech vendors in the low to mid 30% of overall Cvs. So it's not a huge bubble, it's just a little bit of an over waiting.

Craig W. Safian: It's just going to take a little bit of time, but we're confident in the value we provide. We're confident, as I mentioned earlier, in the long-term or medium-term growth prospects for this part of the business. But, you know, the fact is they are still significantly recalibrating, and we are, you know, along for that ride.

George K. Tong: More than normal in the first quarter.

Speaker Change: Got it that's helpful and then youre guiding to EBITDA margins of 23% for the year, what do you see as the major driver of potential upside to that target.

Speaker Change: Yes, I think at this point George its revenue upside we will drive the biggest.

Surinder Singh Thind: When you're selling into a company that is actively making layoffs, the attention of people is focused on who they're going to lay off or whether, in fact, they're going to get laid off. And so, it takes a little while, you know; that's much tougher, that's kind of the toughest selling environment. They'll get through that, and it'll return to normal. That's the larger end. And then the small end, which Craig described very well, got it.

Speaker Change: Potential for margin upside from that 23% as we've talked about.

Speaker Change: I can't remember whose question. It was I think it was <unk> question.

Speaker Change: Opex.

Speaker Change: As.

Speaker Change: And again forgive me for using this term more normal than has been for the last few years, we're back on our territory growth planning we're back on our more normal merit increases kicking in on April one and so I feel really we feel really good about the Opex plan we thought.

Eugene A. Hall: And then I guess, if we think about that, you know, or advance that line of thinking. [inaudible] So is there arguably more cyclicality or potential volatility today in your business than maybe in prior cycles, with maybe the reason being that there's more PE VC-backed firms now that they're just a larger part of the ecosystem? So they're just more willing to, you know, make quicker strategic pivots or spending decision changes or other things. Is there something structural, perhaps, that we should be aware of or at least we should be thinking about? So our perspective is that there's nothing structural about it.

Speaker Change: So I think revenue upside.

Speaker Change: Across the various business lines would be the place that could potentially unlock a little bit of margin upside that said, if we are doing better from a revenue perspective, and again gene and I. Both alluded to this we've got recruitment capacity to go faster and so we.

Speaker Change: We want to make sure that not only are we doing well in 2024 that we are setting ourselves up to continue to perform really strongly in 2005 and 2000 <unk>. So if we have the opportunity to go a little bit faster on GTS and GBS headcount growth, we're going to take that opportunity for sure.

Speaker Change: Got it thank you.

Thank you and I'm showing no further questions at this time I would like to hand, the call back over to gene Hall for closing remarks.

Eugene A. Hall: What happened was during the pandemic, there was a pull-forward of tech spending. Many tech companies, probably most of them, assumed that it was going to last forever. It turned out it was just a pull-forward.

Eugene A. Hall: So here are the takeaways from today's call Gartner drove another strong performance in Q4, we deliver incredible value with our clients are struggling driving or anywhere in between we're exceptionally agile and continuously adapt to the changing world and we know the right things to do to be successful in any environment.

Craig W. Safian: Now they're just adjusting to getting back to normal, and it's as simple as that. So unless pandemics become cyclical, I think we're in pretty good shape. Yeah, I also think, Surinder, just to sort of underscore that point, when we talk about the overall business or market opportunity, I'll focus on the market opportunity. So roughly $200 billion market opportunity, 190 billion of that is outside of the tech vendor opportunity. So we remain very focused on that big prize of 190 plus billion dollar market opportunity, serving enterprise function leaders across GTS and GBS. And again, we're confident that the tech vendor market's a really strong market, but the reality is 190 out of that $200 billion market opportunity is the enterprise function leader opportunity. Got it.

Looking ahead, we're well positioned to continue our sustained record of success.

Eugene A. Hall: Our client value proposition and addressable market opportunity will allow us to drive long term sustained double digit revenue growth we.

Eugene A. Hall: We expect margins will expand modestly over time.

Eugene A. Hall: Significant free cash flow well in excess of net income as.

Eugene A. Hall: As we invest for future growth will return significant levels of excess capital to our shareholders. This reduced shares outstanding increases returns over time.

Speaker Change: Thanks for joining today and we look forward to updating you again next quarter.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

Surinder Singh Thind: Thank you. Thank you. Our next question comes from the line of Jeff Silber with BMO Capital Markets. Your line is now open. Thanks.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Sure.

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Jeffrey Marc Silber: It's multi-part. Can we talk about pricing and the environment? Can you just remind us what price increases you put in for this year? Are you getting any pushback? And others in this space have been providing some breaks for extending the length of the term. Is that something you're doing as well?

Speaker Change: Okay.

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Craig W. Safian: Hey, good morning, Jeff. Thanks for the quick question. On the pricing side, we're a little over 4%. We did our price increase in November of this year, which is when we typically do it, a little bit lower than what we did in 2021 and 2022, largely because we've seen inflation come down a little bit, and most importantly, wage inflation come down a little bit. And so we're in that around 4%, a little bit more than 4%. I think clients, by and large, are not pushing back on it.

Speaker Change: Yes.

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Speaker Change: Sure.

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Jeffrey Marc Silber: Again, remember, the average spend per client is orders of magnitude, $250,000. So the difference between a 3% or a 4% increase is pretty de minimis. And again, we're very focused on making sure that our products and services have incremental value each and every year. And we're continuing to sell with our upfront invoicing and a real focus on that. And so I'd say, yeah, the environment has been a little tougher, but we've been managing to stick to our guns on the things that we know drive huge economic value for the business, which is sticking to our pricing guns, not discounting, selling multi-year contracts, and making sure we get the invoicing done up front. And I think our teams have done a phenomenal job of sticking to our coordinating plan. Thanks so much.

Speaker Change: Yes.

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Keen Fai Tong: Thank you. Our next question comes from the line of George Tong with Goldman Sachs. Your line is now open.

Keen Fai Tong: Hi, thanks. Good morning. You mentioned 1Q tech vendor renewals are especially important because of a little bubble there. Can you help quantify that? How much concentration is there compared to other quarters in the U.S.?

Craig W. Safian: Yeah, I think I mean, you know, again, remember, our tech vendor CV is a little less than 25% of total CV. Normally, Q1 represents a little bit more than 25% of total renewals on the overall franchise. This year, with tech vendors, it's in the low to mid 30% of overall CV, so it's not a huge bubble. It's just a little bit of an overweighting more than normal in the first.

Keen Fai Tong: Got it. That's helpful. And then you're guiding to EBITDA margins of 23% for the year. What do you see as the major driver of potential upside to that target? You know, I think at this point, George, revenue upside will drive the biggest potential for margin upside from that 23 percent. As we talk about this, I can't remember whose question it was. I think it was Josh's question.

Craig W. Safian: You know, the OPEX is, again, forgive me for using this term, more normal than it has been for the last few years. We're back on our territory growth planning. We're back on our, you know, more normal merit increases kicking in on April 1. And so, you know, we feel really good about the OPEX plan. We thought.

Speaker Change: Yes.

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Keen Fai Tong: And so I think revenue upside, you know, across the various business lines would be the place that could potentially unlock a little bit of margin upside. That said, you know, if we are doing better from a revenue perspective, and again, Gene and I both alluded to this, we've got recruitment capacity to go faster. And so, you know, we want to make sure that not only are we doing well in 2024, but we are setting ourselves up to continue to perform really strongly in twenty five and 26. And so if we have the opportunity to go a little bit faster on GTS and GBS account growth, we're going to take that up. Got it. Thank you.

Speaker Change: Okay.

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Eugene A. Hall: Thank you, and I'm showing no further questions at this time. I'd like to hand the call back over to Gene Hall for closing remarks. So here are the takeaways from today's call. Gartner delivered another strong performance in Q... We deliver incredible value whether our clients are struggling, thriving, or anywhere in between. We're exceptionally agile and continuously adapt to the changing world, and we know the right things to do to be successful in any environment.

Speaker Change: Okay.

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David Cohen: Looking ahead, we're well-positioned to continue our sustained record of success barring the, for the Client Value Proposition and Addressable Market Operations, will allow us to drive long-term, sustained double-digit revenue. We expect margins to expand modestly over time, and we generate significant free cash flow, well in excess of... As we invest for future growth, we'll return significant levels of excess capital to our shareholders. Thanks for joining us today, and we look forward to updating you again next week. This concludes today's conference call. Thank you for your participation. You may now disconnect. Good morning, everyone.

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Eugene A. Hall: Welcome to Gartner's fourth quarter 2023 earnings call. I'm David Cohen, SVP of Investor Relations. At this time, all participants are in a listen-only mode.

Eugene A. Hall: After comments by Gene Hall, Gartner's 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 fourth quarter 2023 financial results and Gartner's Outlook for 2024, both 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 are for adjusted EBITDA with the adjustments as described in our earnings release and supplement. All contract values and associated growth rates we discuss are based on 2023 foreign exchange rates and exclude contributions related to the first quarter divestiture and the 2022 Russia exit. All growth rates and genes comments are FX neutral unless stated otherwise. All references to share counts are for fully diluted weighted average share counts unless stated otherwise.

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Eugene A. Hall: 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 in this column 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 in other filings with the SEC. I encourage all of you to review the risk factors listed in these documents. Now, I'll turn the call over to Gartner's Chief Executive Officer, Gene Hall. Good morning, and thanks for joining us today.

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Eugene A. Hall: Gartner drove another strong performance in the fourth quarter. We delivered high single-digit growth in contract value. Revenue, EBITDA, adjusted EPS, and pre-cash flow came in above expectation. Gartner delivers incredible client value in any macroeconomic environment. In 2023, the world experienced multiple disruptions.

Speaker Change: Yes.

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Speaker Change: Thank you.

Speaker Change: Good morning, everyone welcome to Gardner <unk> fourth quarter, 2023 earnings call and David Cohen SVP of Investor Relations.

David Cohen: At this time all participants are in a listen only mode. After comments by Gene Hall, Garners, Chief Executive Officer, and Craig Safian Gardeners, Chief Financial Officer, there'll be a question and answer session.

Eugene A. Hall: They impacted enterprises in dramatically different ways. For example, high interest rates affected capital intensive industries and financial institutions such as regional banks. High inflation rates had an outsized effect on industries such as health care. Geopolitical polarization and conflict drove increases in military and defense spending while affecting supply chains. More shifts in how and where people work have affected real estate, live events, and entertainment, and other industries. Cybersecurity attacks have become even more frequent, while getting stronger and more disruptive.

David Cohen: Please be advised that today's conference is being recorded.

David Cohen: This call will include a discussion of fourth quarter 2023 financial results and garners outlook for 2024 as disclosed in today's earnings release and earnings supplement both posted to our website investor that Gartner Dot com.

David Cohen: On the call unless stated otherwise all references to EBITDA for adjusted EBITDA with the adjustments as described in our earnings release and supplement all contract values and associated growth rates. We discuss are based on 2023 foreign exchange rates and exclude contributions related to the first quarter divestiture and the 2022, Russia exit.

David Cohen: While growth rates in Gene's comments are FX neutral unless stated otherwise all references to share counts are fully diluted weighted average share counts unless stated otherwise.

Eugene A. Hall: And we saw a significant leap in the capabilities of artificial intelligence, or AI, which fueled even more complexity. We serve leaders in every enterprise, across every industry, and every geography. They know they need help, and they know Gartner is the best source for the help they need. Gartner delivers actionable, objective insight that drives smarter decisions and stronger performance on an organization's mission critical priorities. We guide the leaders who shape the world.

David Cohen: Reconciliations for all non-GAAP numbers, we use are available in the Investor Relations section of the Gartner Dot Com website.

David Cohen: 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 2022 annual report on Form 10-K, and quarterly reports on Form 10-Q, as well as in other filings with the SEC.

Eugene A. Hall: Our insights are the difference between success and failure, the leaders we work with, and the enterprises they serve. As we move into 2020-24, our ability to execute operational best practices consistently is the strongest it's ever been. We have the lowest proportion of open positions ever, and our recruiting capability and capacity are world-class.

David Cohen: I encourage all of you to review the risk factors listed in these documents.

David Cohen: Now I will turn the call over to gardeners, Chief Executive Officer Gene Hall.

Eugene A. Hall: Good morning, and thanks for joining us today.

Eugene A. Hall: Gartner drove another strong performance in the fourth quarter.

Eugene A. Hall: We delivered high single digit growth in contract value.

Eugene A. Hall: Revenue EBITDA, adjusted EPS and free cash flow came in above expectations.

Eugene A. Hall: We have a strong associate value proposition, and our teams have higher tenure than in 2023, which will allow us to drive strong performance well into the future. Research continues to be our largest and most profitable segment. [inaudible] Our business remains resilient in a complex external environment.

Eugene A. Hall: Gartner delivers incredible client value in any macroeconomic environment.

Eugene A. Hall: In 2023, the world experienced multiple disruptions.

Eugene A. Hall: Impacted enterprise has been dramatically different ways.

Eugene A. Hall: For example high interest rates.

Eugene A. Hall: Capital intensive industries and financial institutions, such as regional banks.

Eugene A. Hall: Through relentless execution of proven practices, we're able to deliver unparalleled value to our clients. In the fourth quarter, we helped clients with a wide range of topics, including cybersecurity, data analytics, artificial intelligence, remote work, cost optimization, and more. Research revenue grew 5% in Q4. Subscription revenue will represent more than 75% of our consolidated global revenue in 2023. We delivered subscription revenue growth of 8% on an organic basis in the fourth quarter. Additionally, total contract value growth was 8%. Across GTS and GBS, contract value from enterprise function leaders grew at a double-digit rate, and new business with enterprise function leaders also grew at double-digit rates. Gartner serves executives and their teams through a distinct sales challenge. Global Technology Sales, or GTS, serves leaders and their teams within IT. TTS also serves leaders at technology vendors, including CEOs, Chief Marketing Officers, and Senior Product Leaders.

Eugene A. Hall: High inflation rates and an outsized effect on industries, such as healthcare.

Eugene A. Hall: Geopolitical polarization in conflict drove increases in military and defense spending while effective supply chains.

Eugene A. Hall: More shifts and how and where people work affected real estate life events and entertainment and other industries.

Eugene A. Hall: Cyber security attacks became even more frequently we're getting stronger and more disruptive.

Eugene A. Hall: And we saw a significantly and the capabilities of artificial intelligence or AI, which fueled even more complexity.

Eugene A. Hall: We serve leaders in every enterprise across every industry and every geography.

Speaker Change: They know they need help.

Speaker Change: And I know Gartner is the best source for the help they need.

Speaker Change: Gartner delivers actionable objective insights to drive smarter decisions and stronger performance on an organization's mission critical priorities.

Speaker Change: We got the leaders who shaped the world.

Speaker Change: Our insights often make the difference between success and failure the leaders, we work with and the enterprises they serve.

Speaker Change: As we move into 2000 2024, our ability to execute operational best practices consistently is the strongest it's ever been.

Eugene A. Hall: GTS contract value grew 6%, led by growth with IT's enterprise function leaders. GTS sales to leaders at technology vendors continue to be affected by technology sector dynamics. By the end of the year, we began to see some improvement. New business with tech vendors grew at high single digits. We expect new business to lead retention and contract value growth. Global Business Sales, or GBS, serves leaders and their teams beyond IT. This includes HR, supply chain, finance, marketing, legal, sales, and more.

Speaker Change: We have the lowest proportion of open positions ever.

Speaker Change: Our recruiting capability and capacity are world class.

Speaker Change: We have a strong associate value proposition.

Speaker Change: And our teams have higher tenure than in 2023, which.

Speaker Change: Which will allow us to drive strong performance well into the future.

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

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

Speaker Change: Our business remains resilient in a complex external environment.

Speaker Change: Through relentless execution, a proven practices, we're able to deliver unparalleled value to our clients.

Eugene A. Hall: GVS contract value grew 13%, and GPS New Business was double-digit. Gartner Conferences deliver extraordinarily valuable insights to an engaged and qualified audience. 2023 was the first full year of in-person conferences since 2019. We had a great year, and we drew a strong finish in the fourth quarter.

Speaker Change: In the fourth quarter, we help clients with a wide range of topics, including cyber security data analytics artificial intelligence.

Speaker Change: Work cost optimization and more.

Speaker Change: Research revenue grew 5% in Q4.

Subscription revenue represented more than 75% of our consolidated global revenue in 2023.

Eugene A. Hall: In Q4, we held some of our largest destination conferences, including IT Symposium in Orlando and Barcelona and Reimagining HR in Orlando. These conferences were spectacular. Across all our destination conferences, attendance was up year over year, with many at or near capacity. Looking ahead to 2024, advanced bookings continue to be very strong, and feedback continues to be excellent. Gartner Consulting is an extension of Gartner Research. Consulting helps clients execute their most strategic initiatives through deeper, extended, project-based work.

We delivered subscription revenue growth of 8% on an organic basis in the fourth quarter.

Speaker Change: Total contract value growth was 8%.

Speaker Change: Across GTS and GBS contract value from enterprise function leaders grew at double digit rates.

Speaker Change: New business with enterprise sponsored leaders also grew at double digit rates.

Speaker Change: Garner serves executives and their teams through distinct sales channels.

Global technology sales or GTS serves leaders and their teams within it.

Speaker Change: Cts also source leaders that technology vendors, including Ceos, Chief marketing officers and senior product leaders.

Eugene A. Hall: Consulting is an important complement to our IT research business. Consulting revenue grew 8% for the full year. We saw growth in labor-based consulting and record results in contract optimization for the full year. We are introducing 2024 guidance, which we view as achievable across a wide range of economic and geopolitical scenarios with opportunity for upside. In closing, Gartner achieved another strong quarter of growth. We deliver incredible client value, whether our clients are struggling, thriving, or anywhere in between. We're exceptionally agile and continuously adapt to the changing world, and we know the right things to do to be successful in any environment.

Speaker Change: GTS contract value grew 6% led by growth with Itg's enterprise function leaders.

Speaker Change: GTS sales leaders that technology vendors continue to be affected by technology sector dynamics.

Speaker Change: Exiting the year, we began to see some improvement.

Speaker Change: New business with Tech vendors grew at high single digits.

Speaker Change: We expect new business to lead retention and contract value growth.

Speaker Change: Global business sales or GBS serves leaders and their teams beyond it.

Speaker Change: This includes HR supply chain finance marketing legal sales and more.

Speaker Change: GBS contract value grew 13%.

Eugene A. Hall: Looking ahead, we're 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 to expand modestly over time, and we generate significant free cash flow, well in excess of net income. As we invest for future growth, we'll return significant levels of excess capital to our shareholders. This reduces shares outstanding and increases returns over time. With that said, I'll hand the call over to our Chief Financial Officer, Greg Sapien. Thank you, Gene, and good morning.

Speaker Change: GBS, new business was up double digits.

Speaker Change: Gartner conferences deliver extraordinarily valuable insights to an engaged and qualified audience.

Speaker Change: 2023 was the first full year of in person conferences since 2019.

Speaker Change: We had a great year.

Speaker Change: And we drove a strong finish in the fourth quarter.

Speaker Change: In Q4, we held some of our largest destination conferences, including at symposium.

Speaker Change: In Orlando, and Barcelona, and re imagine HR in Orlando.

Speaker Change: These conferences were spectacular.

Speaker Change: Across all of our destination conferences attendance was up year over year with many at or near capacity.

Speaker Change: Looking ahead to 2020 for advanced bookings continue to be very strong and feedback continues to be excellent.

Speaker Change: Gartner consulting is an extension of Gartner research.

Greg Sapien: Fourth-quarter revenue EBITDA, adjusted EPS, and free cash flow were better than expected, as we continue to execute very well in a complex environment. Our financial performance for the full year 2023 includes global contract value and consolidated revenue growth of 8%. EBITDA of $1.5 billion, diluted adjusted EPS of $11.33, and free cash flow of $1.1 billion. We are introducing 2024 guidance, which we view as achievable across a wide range of economic and geopolitical scenarios with opportunity for upside.

Speaker Change: Consulting helps clients to execute their most strategic initiatives through deeper extended project based work.

Speaker Change: Consulting is an important complement to our research business.

Speaker Change: Consulting revenue grew 8% for the full year.

We saw growth in labor based consulting and record results in contract optimization for the full year.

We are introducing 2020 forward guidance, which we view as achievable across a wide range of economic and geopolitical scenarios with opportunity for upside.

Speaker Change: In closing Gartner achieved another strong quarter of growth.

Craig W. Safian: Fourth quarter revenue was $1.6 billion, up 5% year-over-year as reported and 4% FX neutral. In addition, total contribution margin was 67%. EBITDA was $386 million, ahead of our guidance primarily as a result of disciplined cost management. Adjusted EPS was $3.04.

Speaker Change: We deliver incredible client value, whether our clients are struggling driving or anywhere in between.

Speaker Change: We're exceptionally agile and continuously adapt to the changing world.

Speaker Change: And we know the right things to do to be successful in any environment.

Speaker Change: Looking ahead, we're well positioned to continue our sustained record of success or into the future.

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

Craig W. Safian: And free cash flow was $196 million. We finished the quarter with 20,237 associates, up 5% excluding the 2023 divestiture and about the same as Q3. We have a great team across Gartner, driven by a very compelling associate value proposition. Moving into 2024, we are in an excellent position from a talent and tenure perspective.

We expect margins will expand modestly over time.

Speaker Change: And we generate significant free cash flow well in excess of net income.

Speaker Change: As we invest for future growth will return significant levels of excess capital to our shareholders.

Speaker Change: This reduces shares outstanding and increases returns overtime.

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

Craig W. Safian: Thank you gene and good morning fourth quarter revenue EBITDA, adjusted EPS and free cash flow were better than expected as we continued to execute very well in a complex environment.

Craig W. Safian: Research revenue in the fourth quarter grew 6% year-over-year, as reported, and 5% FX-neutral. Subscription revenue grew 8% on an organic, FX-neutral basis. Non-subscription revenue performance in the quarter reflects a shift to higher quality traffic. While this action has a short-term effect on revenue, we expect it will drive higher prices and increase revenue over time.

Craig W. Safian: Our financial performance for the full year of 2023 included global contract value and consolidated revenue growth of 8%.

Craig W. Safian: EBITDA of $1 5 billion.

Craig W. Safian: Diluted adjusted EPS of $11 33.

And free cash flow of $1 1 billion.

Craig W. Safian: We are introducing 2024 guidance, which we view as achievable across a wide range of economic and geopolitical scenarios with opportunity for upside.

Craig W. Safian: Fourth quarter revenue was $1 6 billion up 5% year over year as reported and 4% FX neutral.

Craig W. Safian: Fourth quarter research contribution margin was 74%, consistent with the prior year period as we have caught up on hiring and returned to the new expected levels of travel. For the full year 2023, research revenues increased by 6 percent, both as reported and FX neutral. The gross contribution margin for the year was 74 percent.

Craig W. Safian: In addition, total contribution margin was 67%.

Craig W. Safian: EBITDA was $386 million ahead of our guidance, primarily as a result of disciplined cost management.

Craig W. Safian: Adjusted EPS was $3 <unk>.

Craig W. Safian: And free cash flow was $196 million.

Craig W. Safian: We finished the quarter with 20237 associates up 5%, excluding the 2023 divestiture and about the same as Q3.

Craig W. Safian: Contract value, or CV, was $4.8 billion at the end of the fourth quarter, up 8% versus the prior year. CV growth is FX neutral and excludes the first quarter 2023 divestiture. We expect new business to be a leading indicator for retention and, in turn, contract value growth.

Craig W. Safian: We have a great team across Gardner driven by a very compelling associate value proposition.

Craig W. Safian: Moving into 2024, we are in excellent position from a talent and 10 year perspective.

Craig W. Safian: Research revenue in the fourth quarter grew 6% year over year as reported and 5% FX neutral.

Craig W. Safian: We had the highest one month of new business dollars ever in December 2023. For the fourth quarter, CV from enterprise function leaders across GTS and GBS grew at double-digit rates, new business with enterprise function leaders increased double digits as well, while TV from tech vendors was about flat versus the prior year and up sequentially.

Craig W. Safian: Subscription revenue grew 8% on an organic FX neutral basis.

Craig W. Safian: Non subscription revenue performance in the quarter reflects a shift to higher quality traffic.

Craig W. Safian: While this action has a short term effect on revenue, we expect it will drive higher prices and increase revenue over time.

Craig W. Safian: Fourth quarter research contribution margin was 74% consistent with the prior year period, as we have caught up on hiring and return to the new expected levels of travel.

Craig W. Safian: Tech Vendor CV continued the quarterly improvement we saw in G3. Tech vendor new business was up high single digits in Q4, marking the first year-over-year increase in 2023. Quarterly Net Contract Value Increase, or NCVI, was $180 million. As we've discussed in the past, there is notable seasonality in this metric.

Craig W. Safian: For the full year 2023 research revenues increased by 6%, both as reported and FX neutral.

Craig W. Safian: The gross contribution margin for the year was 74%.

Craig W. Safian: Contract value or CV was $4 $8 billion at the end of the fourth quarter up 8% versus the prior year.

Craig W. Safian: CV Growth was broad-based across practices, industry sectors, company sizes, and geographic regions. Across our combined practices, the majority of the industry sectors grew at double-digit or high single-digit rates, led by the energy, manufacturing, and public sectors. We had high single-digit growth across almost all of our enterprise size categories. The small category, which had the largest tech vendor mix, grew modestly.

Craig W. Safian: CV growth is FX neutral and excludes the first quarter 2023 divestiture.

Craig W. Safian: We expect new business to be a leading indicator for retention and in turn contract value growth.

Craig W. Safian: We had the highest one month of new business dollars ever in December 2023.

Craig W. Safian: For the fourth quarter CV from enterprise function leaders across GTS and GBS grew at double digit rates.

New business with enterprise function leaders increased double digits as well.

Craig W. Safian: CV from Tech vendors was about flat versus the prior year and up sequentially.

Craig W. Safian: Vendors CV continued quarterly improvement we saw in Q3.

Craig W. Safian: We also drove double-digit or high single-digit growth in the majority of our top 10 countries. Global technology sales contract value was $3.7 billion at the end of the fourth quarter, up 6% versus the prior year. GTSCV increased $134 million from the third quarter. Wallet retention for GTS was 101% for the quarter, reflecting net growth even before the addition of new clients. In the fourth quarter, IT enterprise function leaders, while retention was consistent with historical GTS levels, GTS new business increased 12% versus last year. New business with IT enterprise function leaders increased in the mid-teens compared to 2022.

Craig W. Safian: Tech vendor new business was up high single digits in Q4, marking the first year over year increase in 2023.

Craig W. Safian: Quarterly net contract value increase or and CVI was $180 million.

Craig W. Safian: As we've discussed in the past there is notable seasonality in this metric.

Craig W. Safian: CV growth was broad based across practices industry sectors company sizes and geographic regions.

Craig W. Safian: Across our combined practices the majority of the industry sectors grew at double digit or high single digit rates led by the energy manufacturing and public sectors.

Craig W. Safian: We had high single digit growth across almost all of our enterprise size categories.

Craig W. Safian: Small category, which has the largest tech vendor mix grew modestly.

Craig W. Safian: We also drove double digit or high single digit growth in the majority of our top 10 countries.

Craig W. Safian: New business with tech vendors increased by high single digits in the quarter, but GTS quarterly revenue headcount was about flat year over year. With the dynamic territory planning we introduced a few years ago, the catch-up hiring we did last year, and our team's moving up the tenure curve, we're well-positioned for growth moving into 2024. Operationally, we are continuously allocating resources to the best near-term opportunities, even as we ensure we are well-positioned to capture the large addressable market opportunity over time.

Craig W. Safian: Global technology sales contract value was $3 7 billion at the end of the fourth quarter up 6% versus the prior year.

Craig W. Safian: GTS CV increased $134 million from the third quarter.

Craig W. Safian: Wallet retention for GTS was 101% for the quarter, reflecting net growth even before the addition of new clients.

Craig W. Safian: In the fourth quarter enterprise function leaders wallet retention was consistent with historical GTS levels.

Craig W. Safian: GTS, new business increased 12% versus last year.

Craig W. Safian: A full set of GTS metrics can be found in the earnings supplement. Global business sales contract value was $1.1 billion at the end of the fourth quarter, up 13% year over year. The majority of our GBS practices grew at double-digit rates, and growth was led by Supply Chain, Legal, and HR.

Craig W. Safian: New business with enterprise function leaders increased mid teens compared to 2022.

Craig W. Safian: New business with tech vendors increased high single digits in the quarter.

Craig W. Safian: GTS quota bearing head count was about flat year over year.

Craig W. Safian: With the dynamic territory planning, we introduced a few years ago. The catch up hiring we did last year and our teams moving up 10 year curve, we're well positioned for growth moving into 2024.

Craig W. Safian: GBSCV increased $46 million from the third quarter. Wallet retention for GBS was 107% for the quarter, reflecting strong net growth with our existing clients. GBS new business was up 13% compared to last year, and GBS quarter-bearing headcount was up 8% versus the fourth quarter of 2022. This excludes headcount associated with the Q1 divestiture. As with GTS, a full set of GBS metrics can be found in the Orange Supplement.

Craig W. Safian: Operationally, we are continuously allocating resources to the best near term opportunities even as we ensure we are well positioned to capture the large addressable market opportunity over time.

Craig W. Safian: Our regular full set of GTS metrics can be found in the earnings supplement.

Craig W. Safian: Global business sales contract value was $1 $1 billion at the end of the fourth quarter up 13% year over year.

Craig W. Safian: The majority of our GBS practices grew at double digit rates.

Craig W. Safian: Growth was led by supply chain legal and HR.

Craig W. Safian: GBS CV increased $46 million from the third quarter.

Craig W. Safian: As we do each year at this time, we've provided two years of quarterly historical contract value data updated to 2024 FX rates in the appendix of the earnings supplement. Conference revenue for the fourth quarter was $214 million, up 14% year over year. Contribution margin in the quarter was 50%, consistent with typical seasonality. We held 11 destination conferences in the quarter, all in person.

Craig W. Safian: Wallet retention for GBS was 107% for the quarter, reflecting strong net growth with our existing clients.

Craig W. Safian: GBS, new business was up 13% compared to last year.

Craig W. Safian: GBS quota bearing head count was up 8% versus the fourth quarter of 2022.

Craig W. Safian: This excludes head count associated with the Q1 divestiture.

Craig W. Safian: As with GTS, a regular full set of GBS metrics can be found in the earnings supplement.

Craig W. Safian: As we do each year at this time, we have provided two years of quarterly historical contract value data updated to 2020 for FX rates in the appendix of the earnings supplement.

Craig W. Safian: For the full year 2023, we delivered an all-time high revenue of $505 million, which was an increase of 30% on a reported basis and 29% FX neutral. Gross contribution margin was 50%. Fourth quarter consulting revenues were $128 million, compared with $138 million in 2022, when we saw record performance in the contract optimization business. Consulting contribution margin was 27% in the fourth quarter, affected by revenue mix and growth hiring. Labor-based revenues were $99 million, up 3% versus Q4 of last year as reported and on an FX-neutral basis. Backlog at December 31st was $162 million, increasing 21% year-over-year on an FX-neutral basis with continued booking strength. We delivered $29 million of contract optimization revenue in a quarter. This part of our business is highly variable.

Craig W. Safian: Conferences revenue for the fourth quarter was $214 million up 14% year over year.

Craig W. Safian: Contribution margin in the quarter was 50% consistent with typical seasonality, we held 11 destination conferences in the quarter all in person.

Craig W. Safian: For the full year 2023, we delivered an all time high revenue of $505 million, which was an increase of 30% on a reported basis and 29% FX neutral.

Craig W. Safian: Gross contribution margin was 50%.

Craig W. Safian: Fourth quarter consulting revenues were $128 million compared with $138 million in 2022, when we saw a record performance in the contract optimization business.

Craig W. Safian: Consulting contribution margin was 27% in the fourth quarter affected by revenue mix and growth hiring.

Craig W. Safian: Labor based revenues were $99 million up 3% versus Q4 of last year as reported and on an FX neutral basis.

Craig W. Safian: Backlog at December 31 was $162 million, increasing 21% year over year on an FX neutral basis with continued booking strength.

Craig W. Safian: We delivered $29 million of contract optimization revenue in the quarter.

Craig W. Safian: This is part of our business is highly variable.

Craig W. Safian: For the second half of 2023, revenues were $62 million, up from the second half of 2022 when we delivered our largest ever quarter in Q4. Full-year consulting revenue was up 7% on a reported basis and 8% FX neutral. Gross contribution margin was 35% compared to 39% in 2022. Consolidated cost of services increased 11% year-over-year in the fourth quarter, as reported, and 10% on an FX-neutral basis. The biggest driver of the increase was higher headcount to support future growth.

Craig W. Safian: For the second half of 2023 revenues were $62 million up from the second half of 2022, when we delivered our largest ever quarter in Q4.

Craig W. Safian: Full year consulting revenue was up 7% on a reported basis and 8% FX neutral gross.

Gross contribution margin was 35% compared to 39% in 2022.

Craig W. Safian: Consolidated cost of services increased 11% year over year in the fourth quarter as reported and 10% on an FX neutral basis.

Craig W. Safian: Biggest driver of the increase was higher head count to support our future growth.

Craig W. Safian: SG&A increased 9% year-over-year in the fourth quarter, as reported, and 8% on an FX-neutral basis. SG&A increased in the quarter as a result of head cow growth. EBITDA for the fourth quarter was $386 million, compared to $421 million last year. The fourth quarter upside to our guidance primarily reflected disciplined expense management. EBITDA for the full year was almost $1.5 billion, a 1% increase over 2022 on a reported basis and up 2% FX neutral. Depreciation in the quarter of $26 million was up modestly compared to 2022. Net interest expense excluding deferred financing costs in the quarter was $19 million. This was down $9 million versus the fourth quarter of 2022 due to higher interest income on our cash balances. The modest floating rate debt we have is fully hedged through maturity.

Craig W. Safian: SG&A increased 9% year over year in the fourth quarter as reported an 8% on an FX neutral basis.

Craig W. Safian: G&A increased in the quarter as a result of head count growth.

Craig W. Safian: EBITDA for the fourth quarter was $386 million compared to $421 million last year.

Craig W. Safian: Fourth quarter EBITDA upside to our guidance, primarily reflected disciplined expense management.

Craig W. Safian: EBITDA for the full year was almost $1 5, billion% to 1% increase over 2022 on a reported basis and up 2% FX neutral.

Craig W. Safian: Depreciation in the quarter of $26 million was up modestly compared to 2022.

Craig W. Safian: Net interest expense, excluding deferred financing costs in the quarter was $19 million.

Craig W. Safian: This was down $9 million versus the fourth quarter of 2022 due to higher interest income on our cash balances.

Craig W. Safian: Modest floating rate debt, we have is fully hedged through maturity.

Craig W. Safian: The Q4 adjusted tax rate, which we used for the calculation of adjusted net income, was 24% for the quarter. The tax rate for the items used to adjust that income was 15% for the quarter. The full-year tax rate for the calculation of adjusted net income was 22%.

Craig W. Safian: The Q4 adjusted tax rate, which we use for the calculation of adjusted net income was 24% for the quarter.

Craig W. Safian: The tax rate for the items used to adjust that income was 15% for the quarter.

Craig W. Safian: The full year tax rate for the calculation of adjusted net income was 22%.

Craig W. Safian: Adjusted EPS in Q4 was $3.04 compared with $3.70 last year. We had 79 million shares outstanding in the fourth quarter, a reduction of about 1 million shares or about 1% year over year. We exited the fourth quarter with about 79 million shares on an unweighted basis. For the full year, Adjusted EPS was $11.33, up modestly from 2022.

Craig W. Safian: Adjusted EPS in Q4 was $3.04 compared with $3 70 last year.

Craig W. Safian: We had 79 million shares outstanding in the fourth quarter.

Craig W. Safian: This is a reduction of about 1 million shares or about 1% year over year.

Craig W. Safian: We exited the fourth quarter with about 79 million shares on an unweighted basis.

Craig W. Safian: For the full year adjusted EPS was $11 33 up.

Craig W. Safian: Up modestly from 2022.

Craig W. Safian: Operating cash flow for the quarter was $224 million, up 10% compared to last year. CapEx for the quarter was $28 million, down $4 million as a result of catch-up spend on technology investments in 2022, which normalized this year. Free cash flow for the quarter was $196 million, up 19% compared to last year. Free cash flow for the full year was almost $1.1 billion, a 6% increase compared to 2022. Pre-cash flow on a rolling four-quarter basis was 18% of revenue and 71% of EBITDA. Adjusting for the Q1 divestiture, the full-year free cash flow conversion from Gap Net Income would have been 138%. Our free cash flow conversion is generally higher when CV growth is accelerating. We have a new slide in the earnings supplement, which shows the conversion from both EBITDA and gap debt income to free cash flow on a rolling four quarter basis. The past two years have had some unusual items affecting the conversion, including insurance proceeds related to pandemic conference cancellations and the 2023 divestiture. We expect about a four to six point difference between EBITDA margin and free cash flow margins in a typical year. The normal free cash flow conversion from Gap Net Income is 140 to 160 percent.

Craig W. Safian: Operating cash flow for the quarter was $224 million up 10% compared to last year.

Craig W. Safian: Capex for the quarter was $28 million down $4 million as a result of catch up spend on technology investments in 2022, which normalized this year.

Craig W. Safian: Free cash flow for the quarter was $196 million up 19% compared to last year.

Craig W. Safian: Free cash flow for the full year was almost $1 1 billion.

A 6% increase versus 2022.

Craig W. Safian: Free cash flow on a rolling four quarter basis was 18% of revenue and 71% of EBITDA.

Craig W. Safian: Adjusting for the Q1 divestiture, our full year free cash flow conversion from GAAP net income would have been 138%.

Craig W. Safian: Our free cash flow conversion is generally higher when CV growth is accelerating.

Craig W. Safian: We have a new slide in the earnings supplement which shows the conversion from both EBITDA and GAAP net income to free cash flow on a rolling four quarter basis.

Craig W. Safian: Past few years have had some unusual items affecting the conversion, including insurance proceeds related to pandemic conference cancellations and the 2023 divestiture.

Craig W. Safian: We expect about 4% to six point difference between EBITDA margin and free cash flow margins in a typical year.

Craig W. Safian: Normal free cash flow conversion from GAAP net income is 140% to 160%.

At the end of the fourth quarter, we had about $1.3 billion in cash. Our December 31st debt balance was about $2.5 billion. Our reported gross stat 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 tuck-in M&A. Our balance sheet is very strong, with $2.3 billion of liquidity, low levels of leverage, and effectively fixed interest rates. We repurchased $158 million of stock during the fourth quarter and more than $600 million for the full year. At the end of December, we had about $1 billion of authorization for repurchases remaining, and we expect the board will continue to refresh the repurchase authorization going forward. As we continue to repurchase shares, our capital base will shrink. Over time, this is a creative way

Craig W. Safian: At the end of the fourth quarter, we had about $1 3 billion of cash are.

Craig W. Safian: Our December 31 debt balance was about $2 $5 billion.

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

Craig W. Safian: Our expected free cash flow generation available revolver and excess cash remaining on the balance sheet provides ample liquidity to deliver on our capital allocation strategy of share repurchases and strategic tuck in M&A.

Craig W. Safian: Our balance sheet is very strong with $2 $3 billion of liquidity low levels of leverage and effectively fixed interest rates.

Craig W. Safian: We repurchased $158 million of stock during the fourth quarter and more than $600 million for the full year.

Craig W. Safian: At the end of December we had about $1 billion of authorization for repurchases remaining and we expect the board will continue to refresh the repurchase authorization going forward.

Craig W. Safian: As we continue to repurchase shares our capital base will shrink.

Craig W. Safian: Time this is accretive.