Q2 2025 Gartner Inc Earnings Call

Good morning everyone. Welcome to Gardener's second quarter 2025 earnings call and David Cohen SVP of investor relations.

This time all participants are in a listen-only mode after comments, by Gene Hall, Gardner's chairman and chief executive officer and Craig, safety and Gartner's Chief Financial Officer. There will be a question and answer session. Please be advised that today's conference is being recorded,

this call will include a discussion of second, quarter 2025, Financial results, and Gardens outlook for 2025 as disclosed in today's earnings release and earning supplement both posts to our website investor.gov

On the call unless stated otherwise all references to ebita for adjusted ebita with the adjustments as described in our earnings release and supplements.

David Cohen: All growth rates in Gene's comments are FX neutral, unless stated otherwise. All references to share counts are for fully diluted weighted average share counts, unless stated otherwise. Reconciliations for all non-GAAP numbers we use are available in the Investor Relations section of the Gartner.com website. As set forth in more detail in today's earnings release, certain statements made on this call may constitute forward-looking statements. Forward-looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the company's 2024 annual report on Form 10-K and quarterly reports on Form 10-Q, as well as in other filings with the SEC. I encourage all of you to review the risk factors listed in these documents. Now, I will turn the call over to Gartner's Chairman and Chief Executive Officer, Gene Hall.

our contract values and Associated growth rates, we discuss are based on 2025 foreign exchange rate,

All growth rates and jeans comments are FX neutral unless stated otherwise, all references to share counts are for fully diluted weighted. Average share counts and the last stated. Otherwise,

Reconciliations, for all non-gaap numbers. We use are available in the investor relations section of the gardener.com website.

It is set forth in more detail in today's earnings release that certain statements made on this call may constitute forward-looking statements. Forward-looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the company's 2024 Annual Report on Form 10-K and quarterly reports on Form 10-Q, as well as other filings with the SEC. I encourage all of you to review the risk factors listed in these documents.

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

Now I will turn the call over to Gartner's chairman and chief executive officer Gan Hall.

Good morning, and thank you for joining us today.

There are 2 things. I'd like you to take away from today's discussion.

First AI is an important opportunity for Gartner across several dimensions.

And second we're making adaptations that give us a clear path. Back to double digit growth, AI is 1 of the most pervasive changes happening around the world. It was the single largest demand area across all the topics we cover for virtually every role.

Clients, see large potential in AI.

And they need help in the best way to capture that potential across functions, geographies and industries clients are looking to Gartner to provide that help.

Gene Hall: While AI was the largest single topic, there were others that were mission-critical to clients, including cybersecurity, cost optimization, data governance and management, IT strategy and digital transformation, risk management, finance transformation, HR talent planning, and more. We also experienced some headwinds during Q2. Measures of CEO confidence fell to recessionary levels, among the fastest drops ever recorded. In a Gartner Inc survey, 78% of CEOs indicated they're implementing cost-cutting measures to safeguard performance. We have a high degree of confidence in what caused these headwinds because we track the reason for every loss, growth renewals, and potential new business. The largest headwind in Q2 was with the U.S. federal government. Initiatives from the Department of Government Efficiency, or DOGE, made it more challenging for clients to purchase or renew many of our products. In addition, there were impacts from tariff policies.

And we're the best solution to work clients. AI Journeys.

Topic. There were others that were missing. Critical to clients including cyber security cost, optimization data governance and management it strategy and digital transformation risk management Finance transformation HR Talent planning and more.

We also experience some headwinds during Q2 measures of CEO confidence. Fell to recessionary levels among the fastest drops ever recorded in a Gartner survey 78% of CEOs, indicated, their implementing cost, cutting measures to safeguard performance. We have a high degree of confidence in what caused these headwinds because we tracked the reason for every loss for both renewals and potential new business, the largest said winning Q2 was with the US federal government.

Initiatives from the Department of government efficiency are Doge made it more challenging for her clients to purchase or renew many of our products.

Gene Hall: With the prospect of higher tariffs, many companies implemented strong cost-saving measures. Even companies not directly impacted by tariffs began implementing these measures. Purchase decisions that were previously made by functional leaders are now being escalated to the CFO or even the CEO. These changes occurred at a record pace, impacting our performance during Q2. One of Gartner Inc's core strengths is agility in responding to change. So we're making adaptations to accelerate our performance going forward. With the U.S. federal government, we're ensuring we stay aligned to the changing priorities, especially improving efficiency. Of course, we'll also continue to support critical issues such as cybersecurity, and we're working with our clients to adjust to new procurement processes. We're also adapting to industries impacted by changing tariffs. A portion of our clients are always interested in cost optimization. We have great expertise in helping clients on this topic.

in addition, there were impacts from tariff policies but the prospect of higher tariffs, many companies implemented, strong cost saving measures even companies not directly impacted by tariffs, began implementing these measures

purchase decisions that were previously made by functional leaders are now being escalated to the CFO or even the CEO.

These changes occurred at a record pace, impacting our performance during Q2.

1 of Gartner's core strengths is agility in responding to change.

So we're making adaptations to accelerate our performance going forward.

With the US federal government. We're ensuring, we stay aligned to the changing priorities, especially improving efficiency, of course, we'll also continue to support critical issues such as cyber security, and we're working with our clients to adjust to new procurement processes.

We're also adapting to industries impacted by changing tariffs. A portion of our clients is always interested in cost optimization.

Gene Hall: Clients highly value our guidance because it results in quantifiable cost savings. Now, with tariff changes, the number of clients interested in cost optimization has increased dramatically. We've expanded our capabilities, including certifying our client-facing associates on delivering these services. We're also helping clients determine how to optimally reconfigure supply chains for tariff changes. Even industries not directly impacted by tariffs will get strong value from our enhanced cost optimization capabilities. We're making several other changes to reaccelerate growth. In Research, we redesigned our insight processes to ensure we create content relevant to the broadest possible audience and that delivers the biggest impact. We're also incorporating additional proprietary data to enhance the value clients receive from our insights. We've begun rolling out Ask Gartner, an AI-powered tool for our clients to access trusted insights from Gartner.

We have great expertise in helping clients on this topic.

Clients, highly value our guidance because it results in quantifiable cost savings.

Now, with tariff changes, the number of clients interested in cost optimization has increased dramatically. So we've expanded our capabilities.

including certifying our client-facing Associates on delivering these services.

We're also helping clients determine how to optimally reconfigure Supply chains for chair changes.

Even Industries not directly. Impacted by tariffs will get strong value from our enhanced cost optimization capabilities.

We're making several other changes to re accelerate growth.

In research, we redesigned our Insight processes to ensure. We create content relevant to the broadest possible audience and that delivers the biggest impact. We're also incorporating additional proprietary data to enhance the value clients receive from our insights

Gene Hall: Ask Gartner has been in development for almost two years to ensure clients get the high-quality results they expect from Gartner. It's based on best-in-class large language models. Ask Gartner quickly breaks down a client's question into topic and intent and provides structured answers through natural language processing. Answers cannot contain direct references to our distinctive insights. Unlike other AI tools, which provide answers based on public information from the internet, Ask Gartner's responses are fully grounded and are world-class, proprietary, independent, and objective insights. Ask Gartner also provides users with relevant images and recommends follow-up questions, making our insights more discoverable and fully immersing clients in the Gartner platform. Ask Gartner is unique because it marries the power of Gartner insights with AI, and our teams are focused on making sure it gets better and better. We've been testing it with internal teams and a pilot group of clients.

We've begun rolling out as Gartner, an AI powered tool for our clients to access trusted, insights from Gartner. As Gartner has been in development for almost 2 years to ensure clients, get the high-quality results they expect from Carter.

It's based on best-in-class large language models as Gartner quickly breaks down a client's question into topic and intent and provide structured answers through natural language processing.

Answers cannot contain direct references to our distinctive insights, unlike other AI tools which provide answers based on public information from the internet. Ask Gartner's responses are fully grounded, and our world-class proprietary independent and objective insights.

As Carter also provides users with recommendations, follow-up questions, making our insights more discoverable, and fully immersing clients in the Gartner platform.

As partners unique because it marries, the power of Carter insights with AI, and our teams are focused on making sure it gets better and better.

Gene Hall: One client referred to Ask Gartner as, quote, "a game changer for Gartner." Some mentioned time savings of up to 75% on the platform. We're also leveraging AI internally. We've introduced more than 50 applications that use AI to improve associate productivity and effectiveness. Finally, we appointed a strong tenured Gartner leader to head up our Research organization. We are also making adaptations in sales and services to accelerate growth. We recently launched a new program to better equip client-facing associates with comprehensive knowledge on hot topics, including AI and cost optimization. We are certifying our associates on these critical topics to ensure a high-level capability. Not all of our clients are aware of the full suite of high-value capabilities they are entitled to.

We've been testing it with internal teams and a pilot group of clients.

One client referred to Gartner as a quote, 'a game-changer for Gartner.'

Some mentioned Time Savings of up to 75% on the platform.

We're leveraging AI internally. We've introduced within 50 applications that use AI to improve associate productivity and Effectiveness. Finally! We appoint you to strong tenure Garden leader to head up, our research organisation.

We're also making adaptations in sales and services to accelerate growth.

We recently launched a new program to better equip client-facing Associates with Comprehensive knowledge on Hot Topics including Ai and cost optimization. And we're certifying our Associates on these critical topics to ensure a high level of capability.

Gene Hall: So we are training our teams to ensure clients benefit from the full range of services. We are also expanding and refining our sales development program, which we have discussed before. This is an apprentice-type program that pairs early-career talent with experienced sales professionals. Program graduates then take on their own sales territories and have higher productivity than those hired directly into the role. We expect these and other adaptations will get us back to double-digit growth. Gartner's strategy and the foundation of our business is to guide executives on their journeys to achieve their mission-critical priorities. Addressing these priorities usually requires long, complex journeys. Through our high-value proprietary business and technology insights, we guide our clients at every stage of their journeys. Gartner insights are derived from a vast pool of highly proprietary data.

Not all of our clients are aware of the full suite of high-value capabilities. They're entitled to.

So, we're training our teams to ensure clients benefit from the full range of services.

We're also expanding and refining our sales development program, which we've discussed before.

This is an apprentice type program that PS early career Talent with experienced sales professionals.

Program graduates then take on their own sales territories and have a higher productivity than those hired directly.

Carter strategy and the foundation of our business is to guide Executives on their Journeys, to achieve their mission critical priorities.

Addressing these priorities usually requires long complex Journeys, through our high value, proprietary business and technology insights. We got our clients at every stage of their Journeys.

Gene Hall: Every year, we hold more than 500,000 two-way conversations with more than 80,000 executives across every major function in every industry. We learn what they care about most, what is working and what is not. All this amounts to several hundred terabytes of highly proprietary data. We also conduct more than 27,000 briefings annually with technology provider executives. This gives us unique insights into the technology industry that no one else has. We supplement this data with additional terabytes of information from proprietary surveys, tools, models, benchmarks, and more. Our data is real-time and continuously updated, reflecting the latest information and challenges our clients are experiencing. Our more than 2,500 world-class experts use this vast proprietary data in highly developed processes to create unique and valuable insights. These insights are not available anywhere else.

Carter insights are derived from a vast pool of Highly proprietary data.

Every year, we hold more than 500,000 2-way conversations with more than 80,000 Executives across every major function in every industry.

We learn with they care about most what's working and what isn't all this amounts to several hundred terabytes of Highly proprietary data.

We also conduct more than 27,000 briefings annually with technology, provider executives.

This gives us unique insights into the technology industry that no 1 else has.

We supplement this data with additional terabytes of information from proprietary surveys, tools models benchmarks and more. Our data is real time and continuously updated reflecting the latest information and challenges for clients are experiencing

Our more than 2,500 world-class experts use this vast proprietary data and highly developed processes to create unique and valuable insights.

Gene Hall: We know we need to get better every year, so we continually develop new proprietary data sources and constantly innovate our processes. The segment that develops these insights has historically been called Research. To better describe the value we deliver, we are changing the name of the segment. Going forward, our Research business will now be called Business and Technology Insights, or Insights for short. Summarizing, there are two things I would like you to take away from today's discussion. First, AI is an important opportunity for Gartner Inc across several dimensions. It is the highest demand topic that we are helping our clients with today. We are rolling out Ask Gartner to provide faster, easier access to our insights. We are improving internal efficiency with AI tools. Second, we are making adaptations that will give us a clear path back to double-digit growth.

These insights are available anywhere else.

We know, we need to get better every year. So we continually develop new proprietary data sources and constantly innovate our processes

The segment that develops, these insights has historically been called research.

To better describe the value we deliver, we're changing the name of the segment going forward. Our Research Business will now be called Business and Technology Insights, or Insights for short.

Summarizing there are 2 things. I'd like you to take away from today's discussion.

First AI is an important opportunity for Gartner across several dimensions.

It's the highest demand topic that we're helping our clients with today.

We're rolling out as Gartner to provide faster easier access to your insights.

And we're improving internal efficiency with AI tools.

Gene Hall: With that, I will hand the call over to our Chief Financial Officer, Craig Safian.

And second, we're making adaptations that will give us a clear path back to double-digit growth.

Craig Safian: Thank you, Gene, and good morning. Second quarter contract value, or CV, grew 5% year over year. Revenue, EBITDA, adjusted EPS, and free cash flow were better than expected. We remain highly focused on delivering extraordinary value to our clients. The challenging Q1 selling environment, which was affected by DOGE and tariff-affected industry spending changes, continued through the second quarter. We are updating our guidance to reflect the Q2 results and the outlook for the balance of the year. With our disciplined expense management, we will continue to deliver strong profitability and free cash flow. Since the end of the first quarter, we have increased the pace of share repurchases. We bought $274 million in Q2 and an additional $282 million since the end of the second quarter. This brings the year-to-date repurchase total to approximately $720 million.

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

Thank you Gene and good morning.

Second quarter contract value or CV grew 5% year-over-year.

Revenue ebita adjusted EPs and free cash. Flow are better than expected.

We remain highly focused on delivering extraordinary value to our clients.

We bought 274 million in Q2 and in additional 282 million, since the end of the second quarter.

Craig Safian: We will generate more free cash flow and have fewer shares outstanding over the course of the next several years. This, coupled with return to double-digit growth, will create significant value for shareholders. After reviewing the results for the second quarter and updating the guidance, I will take you through some of the numbers related to our path back to double-digit CV growth that Gene highlighted. Second quarter revenue was $1.7 billion, up 6% year over year as reported and 5% FX neutral. In addition, total contribution margin was 68%, up 70 basis points from last year. EBITDA was $443 million, up 7% as reported and 5% FX neutral versus the second quarter of 2024. Adjusted EPS was $3.53, up 10% from Q2 of last year. Free cash flow was $347 million, another strong performance.

This brings the year to date, repurchase total to approximately 720 million.

We will generate more free cash flow and have fewer shares outstanding over the course of the next several years.

This coupled with return to double-digit growth. Will create significant value for shareholders

After reviewing the results for the second quarter and updating the guidance, I will take you through some of the numbers related to our path, back to double digit. CV growth at Gene, highlighted

Second quarter revenue is $1.7 billion, up 6% year-over-year, and 5% FX neutral.

In addition, total contribution margin was up 68%, an increase of 70 basis points from last year.

Ebita was 443 million up 7% as reported and 5% FX neutral versus a second quarter of 2024.

Adjusted EPS was 353 up 10% from Q2 of last year.

Craig Safian: As Gene just highlighted, we renamed the Research segment to Business and Technology Insights, or Insights, to reflect the nature of the value we provide to clients. Insights revenue in the quarter grew 4% year over year as reported and 3% FX neutral. Subscription revenue grew 5% FX neutral. Non-subscription Insights revenue continues to be affected by shifts in traffic volumes. Second quarter Insights contribution margin was 74%, up 20 basis points versus last year. Contract value was $5 billion at the end of the second quarter, up 5% versus the prior year. Contract value and CV growth are FX neutral. Excluding the U.S. federal government, CV growth was about 150 basis points faster at around 6%. Global and CVI in the quarter, excluding the U.S. federal government, was positive $13 million. CV growth was broad-based across practices, industry sectors, company sizes, and geographic regions.

And free cash flow is 347 million. Another strong performance.

As Gene just highlighted, we renamed the research segment to Business and Technology, insights, or insights, to reflect the nature of the value. We provide to clients

Insights Revenue in the quarter, grew 4%, year-over-year is reported and 3% FX neutral.

Subscription revenue grew 5% FX neutral.

Non-subscription insights Revenue continues to be affected by shifts in traffic volumes.

Second quarter insights contribution. Margin was 74% up 20 basis points versus last year.

Contract value was 5 billion at the end of the second quarter of 5% versus the prior year.

Control.

Excluding the US federal government CV growth was about 150 basis points faster at around 6%.

Global and CVI in the quarter, excluding the US federal government was positive 13 million

Craig Safian: Across our combined practices, all of the industries except public sector grew at high single or mid-single-digit rates. Energy, banking, transportation, and healthcare led the growth. CV grew at mid-single or high single-digit rates across all commercial enterprise sizes. We drove double-digit growth in half of our top 10 countries. CV declined on a year-over-year basis in Canada and Australia, which combined represents around 6% of global contract value. Nearly all of our U.S. federal contracts will come up for renewal during 2025, with over 60% having transacted in the first half of the year. Dollar retention year-to-date was around 47%. At June 30th, we had approximately $200 million of U.S. federal CV. Global Technology Sales contract value was $3.8 billion at the end of the second quarter, up 4% versus the prior year. Excluding the U.S.

CV growth was broad-based across practices industry, sectors company sizes and geographic regions.

Across our combined practices, all the industries except public sector grew at high single or mid single digit rates.

And energy, banking, transportation, and healthcare led the growth.

CV grew at Mid single or high single digit rates, across all commercial Enterprises.

We drove double digit growth in half of our top 10 countries.

CV declined on a year-over-year basis in Canada and Australia, which combined represent around 6% of global contract value.

Nearly all of our U.S. federal contracts will come up for renewal during 2025, with over 60% having transacted in the first half of the year.

Dollar retention year to date was around 47%.

At June 30th, we had approximately 200 million dollars of US Federal CV.

Craig Safian: federal government from both periods, GTS CV grew about 180 bps faster, or 5% in the quarter. The U.S. federal business and CVI was negative $26 million. While retention for GTS was 99% for the quarter, excluding the U.S. federal business, while retention was over 100%. GTS new business was down 8% compared to last year. GTS quarter-bearing headcount was up 3% year over year. Our regular full set of GTS metrics can be found in our earnings supplement. Global Business Sales contract value was $1.2 billion at the end of the second quarter, up 9% year over year. Excluding the U.S. federal government, GBS CV grew about 60 bps faster at around 10%. All of our major GBS practices grew at double-digit or high single-digit rates. Growth was led by the sales, finance, and legal practices. GBS and CVI was positive $14 million in the second quarter.

Global technology sales, contract value is 3.8 billion at the end of the second quarter up 4% versus the prior year.

Excluding the US federal government from both periods. GTS CV, grew about 180 basis points, faster or 5% in the quarter.

The U.S. Federal Business NCVI was -$26 million.

While retention for GTS was 99% for the quarter, excluding the U.S. Federal Business, retention was over 100%.

GTS. New business was down 8% compared to last year.

CTS quarter, bearing headcount was up 3% year-over-year.

Metrics can be found in our earnings supplement.

Global business sales, contract value was 1.2 billion at the end of the second quarter up 9% year-over-year.

In the U.S. federal government, GBS CV grew about 60 basis points faster at around 10%.

All of our major GBS practices, grew at Double Digit, or high single digit rates.

Growth was led by the sales finance and legal practices.

Craig Safian: Excluding the U.S. federal government, GBS and CVI was positive $18 million. Wallet retention for GBS was 104% for the quarter. GBS new business was down 3% compared to last year. GBS quarter-bearing headcount was up 10% year over year. As with GTS, our regular full set of GBS metrics can be found in our earnings supplement. Conferences revenue for the second quarter was $211 million, increasing 14% as reported and 12% FX neutral compared to Q2 of 2024. Adjusting for the three conferences which moved from Q1 or Q3 last year to Q2 this year, revenue growth was around 6% FX neutral. Contribution margin was 57%, consistent with typical Q2 seasonality. We held 19 destination Conferences in the second quarter as planned. Q2 Consulting revenue was $156 million compared with $143 million in the year-ago period, up about 9% as reported and 6% FX neutral.

CVS and CVI was positive 14 million in the second quarter, excluding the US federal government GBS and CVI was positive, 18 million dollars,

While at retention for GBS was 104% for the quarter.

GBS new business was down 3% compared to last year.

CBS quarter bearing headcount was up, 10% year-over-year.

As with GTS, our regular full set of GBS, metrics can be found in our earnings supplement.

conferences revenue for the second quarter was 211 million, increasing 14% as reported and 12%, SX neutral compared to Q2 of 2024

Adjusting for the 3 conference, which moved from q1 or Q3 last year to Q2 this year. Revenue growth was around 6%. FX neutral.

Contribution, margin was 57% consistent with typical Q2 seasonality.

We held 19 destination conferences in the second quarter as planned.

Craig Safian: Consulting contribution margin was 40% in the second quarter. Labor-based revenue was $110 million. This part of the segment was up 3% versus Q2 of last year as reported and about flat FX neutral. Backlog at June 30th was $191 million, down about 2% year over year FX neutral. In contract optimization, we delivered $46 million of revenue in the quarter, up 26% versus Q2 of last year and 24% FX neutral. The quarter was ahead of our expectations. Our contract optimization revenue is highly variable. Consolidated cost of services increased 4% year over year in the second quarter as reported and 2% FX neutral. The biggest driver of the increase was higher compensation costs. SG&A increased 9% year over year in the second quarter as reported and about 8% on an FX neutral basis. SG&A increased in the quarter as a result of headcount growth.

Q2 Consulting Revenue was 156 million compared with 143 million in a year ago, period up about 9% of reported and 6% FX neutral.

Consulting contribution margin was 40% in the second quarter.

Labor-based Revenue was 110 million. This part of the segment was up, 3% versus Q2 of last year's reported and about flat FX neutral.

Backlog of June 30th was 191 million down about 2% year-over-year FX neutral.

In contract optimization, we deliver 46 million of Revenue in the quarter up 26% versus Q2 of last year and 24% FX neutral.

A quarter was ahead of our expectations. Our contract optimization revenue is highly variable.

Consolidated cost of services increased 4% year-over-year in the second quarter as reported and 2 percent FX neutral.

The biggest driver of the increase was higher. Compensation costs.

Craig Safian: EBITDA for the second quarter was $443 million, up 7% from last year as reported and up 5% FX neutral. We outperformed in the second quarter through modest revenue upside, effective expense management, and a prudent approach to guidance. Depreciation in the quarter of $31 million was up 11% compared to 2024. Net interest expense, excluding deferred financing costs in the quarter, was $11 million. This is favorable by $8 million versus the second quarter of 2024 due to higher interest income on our cash balances. The modest floating rate debt we have is fully hedged through the third quarter of 2025. The Q2 adjusted tax rate, which we use for the calculation of adjusted net income, was 24% for the quarter. This compares to last year's rate of 23%. The tax rate for the items used to adjust net income was 25% for the quarter.

Sgna increased 9% year-over-year in the second quarter of reported, and about 8% on an fx neutral basis. Sgna increased in the quarter as a result of headcount growth.

Ebita for the second quarter was 443 million up 7% from last year's reported and up 5% FX neutral.

We outperformed in the second quarter through modest Revenue, upside effective expense management, and a prudent approach to guidance.

depreciation in the quarter of 31 million was up 11% compared to 2024

Second quarter of 2024 due to higher interest income on our cash, balances.

the modest floating rate debt, we have is fully hedged through the third quarter of 2025

The Q2 adjusted tax rate, which we use for the calculation of adjusted net income was 24% for the quarter.

This compares the last year's rate of 23%.

Craig Safian: Adjusted EPS in Q2 was $3.53, up 10% compared to Q2 last year. We had 77 million shares outstanding in the second quarter. This is an improvement of about 1 million shares or approximately 1% year over year. We exited the second quarter with just under 77 million shares on an unweighted basis. Operating cash flow for the quarter was $384 million, up 4% compared with last year. CapEx was $36 million, up about $7 million year over year. This was primarily due to real estate-related costs and in line with our expectations. Second quarter free cash flow was $347 million, up 2% compared with Q2 in 2024. Free cash flow on a rolling four-quarter basis was 119% of GAAP net income and 95% of EBITDA.

The tax rate for the items used to adjust. Net income was 25% for the quarter.

Adjusted EPs and Q2 was 3.53 up 10% compared to Q2 last year.

We had 77 million shares outstanding in the second quarter.

This is an improvement of about 1 million shares or approximately 1% year-over-year.

We exited the second quarter with just under 77 million shares on an unweighted basis.

Operating cash flow for the quarter. Was 384 million up 4% compared with last year.

Capex was 36 million up about 7 million dollars a year over year. This was primarily due to real estate related costs and in line with our expectations

Second quarter free cash flow is $347 million, up 2% compared with Q2 2024.

Craig Safian: As we noted previously, there were several items that affect rolling four-quarter net income and free cash flow, including after-tax insurance proceeds in 2024, two real estate lease termination payments, and tax planning benefits last year. Adjusting for these items, free cash flow on a rolling four-quarter basis was 20% of revenue, 83% of EBITDA and 157% of GAAP net income. At the end of the second quarter, we had about $2.2 billion of cash. Our June 30th debt balance was about $2.5 billion. Our reported gross debt to trailing 12-month EBITDA was well 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 disciplined share repurchases and strategic tuck-in M&A.

Pre cash flow on a rolling 4 quarter basis was 119% of gaap. Net income, and 95% of ebitda.

As we noted previously, there were several items that affect rolling 4 quarter. Net income and free cash flow including after tax. Insurance proceeds in 2024,

2. Real estate lease termination payments and tax planning benefits last year.

Adjusting for these items. Free cash flow on a rolling 4. Quarter basis was 20% of Revenue, 83% of Evita and 157% of gaap, net income.

At the end of the second quarter, we had about $2.2 billion in cash.

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

Our reported gross debt to trailing 12-month. Evita was well under 2 times.

Craig Safian: Our balance sheet is very strong, with $2.9 billion of liquidity, low levels of leverage, and effectively fixed interest rates. We repurchased $274 million of stock during the second quarter. Since the end of June, we have bought back an additional $282 million worth of shares, bringing us to about $720 million year to date. Last week, the board increased the repurchase authorization to about $1 billion. We expect they will refresh the authorization as needed. As we continue to repurchase stock, we create value for shareholders through EPS accretion and increasing returns on invested capital. We are updating our full-year guidance to reflect recent performance and trends. We are remaining agile in managing our cost structure while also ensuring we have enough selling capacity now and in the future. This includes QBH and other sales-related roles, which are key inputs into our algorithm for future sustained double-digit growth.

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

Our balance sheet is very strong, with $2.9 billion of liquidity, low levels of leverage, and effectively fixed interest rates.

We repurchase 274 million of stock during the second quarter.

Since the end of June, we have bought back an additional $282 million worth of shares, bringing us to about $720 million year to date.

Last week, the board increased the repurchase authorization to about $1 billion.

We expect they will refresh the authorization as needed.

As we continue to repurchase stock, we create value for shareholders through EPS, secretion and increasing Returns on invested capital.

We are updating our full-year guidance to reflect recent performance and trends.

We are remaining agile and managing our cost structure while also ensuring. We have enough selling capacity now and in the future.

Craig Safian: Based on July FX rates, we expect revenue growth to benefit by about 95 basis points and EBITDA growth to benefit by about 190 basis points for the full year. As a reminder, about one-third of our revenue and operating expenses are denominated in currencies other than the U.S. dollar. For the insights subscription revenue in 2025, our guidance reflects an expectation that Q2 trends for new business and retention continue through the second half. At this point in the year, we have very high visibility into the insight subscription revenue for calendar 2025. We've also incorporated the information we have about U.S. federal spending decisions to date. In addition, we've taken a prudent view of the outlook. While the selling environment remains challenging and we've seen longer sales cycles, we entered Q3 with double-digit year-over-year growth in both GTS and GBS new business pipelines.

This includes QBH and other sales-related roles, which are key inputs into our algorithm for future sustained double-digit growth.

Based on July FX rates, we expect Revenue growth to benefit by about 95 basis points and iot growth to benefit by about 190 basis points for the full year.

As a reminder about 1/3 of our revenue and operating expenses are denominated in currencies other than the US dollar.

For the Insight subscription Revenue in 2025. Our guidance, reflects an expectation that Q2 trends for new business and retention. Continue through the second half.

At this point, in the year, we have very high visibility into the Insight subscription revenue for calendar 2025.

We've also Incorporated the information. We have about US federal spending decisions to date.

In addition, we've taken a prudent view of the outlook.

Craig Safian: For the non-subscription part of the insight segment, we've built a continuation of recent traffic and pricing trends into the guidance. For Conferences, we are basing our guidance on the 53 in-person destination Conferences we have planned for 2025. We have good visibility into current year revenue with a majority of what we've guided already under contract. For Consulting, we have more visibility into the next quarter or two based on the composition of our backlog and pipeline as usual. Contract optimization has had several very strong years, and the business remains highly variable. Our updated 2025 guidance is as follows. We expect Insights revenue of at least $5.255 billion, which is FX neutral growth of about 2%. This reflects subscription Insights revenue growth of about 4%. We expect around $210 million of non-subscription revenue.

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

For the non-subscription part of the Insight segment. We've built a continuation of recent traffic and pricing Trends into the guidance.

For conferences, we are basing our guidance on the 53 in-person destination conferences we have planned for 2025.

We have good visibility at the current year Revenue with a majority of what we've got it already under contract.

For consulting, we have more visibility into the next quarter or two based on the composition of our backlog and pipeline, as usual.

Contract optimization has had several very strong years in the business remains highly valuable.

Our updated 2025 guidance is as follows.

About 2%.

this reflects subscription insights Revenue growth of about 4%,

Craig Safian: We expect Conferences revenue of at least $625 million, which is FX neutral growth of about 5%. This is unchanged from last quarter. We expect Consulting revenue of at least $575 million, which is growth of about 1% FX neutral. This is also unchanged from last quarter. The result is an outlook for consolidated revenue of at least $6.455 billion, which is FX neutral growth of 2%. We now expect full-year EBITDA of at least $1.515 billion, down $20 million from our prior guidance. This reflects margins of 23.5%, consistent with last quarter's outlook despite the lower revenue guidance. We expect 2025 adjusted EPS of at least $11.75, an increase from last quarter. For 2025, we expect free cash flow of at least $1.145 billion. This is unchanged from our prior guidance and reflects a conversion from GAAP net income of 141%.

We expect around $210 million of non-subscription revenue.

We expect conferences revenue of at least 625 million, which is FX neutral growth of about 5%.

This is unchanged from last quarter.

We expect Consulting Revenue at least 575 million, which is growth of about 1% FX neutral. This is also unchanged from last quarter.

The result is an outlook for Consolidated revenue of at least 6.455 billion which is FX neutral growth of 2%.

We now expect full year. Ebit dive at least 1.515 billion down 20 million from our prior guidance.

This reflects margins of 23.5% consistent with last quarter's Outlook, despite the lower Revenue guidance.

We expect 2025 adjusted, DPS of, at least 11.75. An increase from last quarter.

Craig Safian: Our guidance is based on 77 million fully diluted weighted average shares outstanding, which incorporates the repurchases made through the end of the second quarter. For Q3, we expect adjusted EBITDA of at least $300 million. Our financial results through June were modestly ahead of expectations, underscoring the resilience of our business model. We've updated the revenue guidance to reflect continued challenges in the selling environment. Our EBITDA margin outlook remains higher than it was at the start of the year. We have successfully navigated challenging environments before and know the right things to do. We are adapting by making operational changes and renewing focus on leveraging our proven sales best practices. This will drive the return to historical levels of productivity. Some of the headwinds are related to temporary external factors, including the U.S. federal government and tariff-affected industries.

For 2025, we expect free cash flow of at least 1.145 billion. This is unchanged from our prior guidance and reflects the conversion from gaap. Net income of 141%.

Our guidance is based on 77 million fully diluted weighted average shares outstanding, which incorporates the repurchases made through the end of the second quarter.

For Q3, we expect adjusted EBITDA of at least $300 million.

Our financial results through June were modestly ahead of expectations. Underscoring, the resilience of our business model,

We've updated the revenue guidance to reflect continued challenges in the selling environment.

Our Evita margin Outlook remains higher than it was at the start of the year.

We've successfully navigated challenging environments before and know the right things to do.

We are adapting by making operational changes and renewing focus on leveraging our proven sales. Best practices.

This will drive the return to historical levels of productivity.

Craig Safian: As productivity gets back to historical levels, we will accelerate QBH to capture the very large addressable market opportunity we have. Before we go to questions, I will take you through some of the numbers related to our path back to double-digit CV growth. If recent retention and new business trends continue in the second half, we would exit this year with CV growth in the low to mid-single digits. This reflects DOGE, tariff-affected industry dynamics, and tech vendors only part of the way back to normal spending. There are four primary categories which will drive the return to double-digit growth. First, most of our U.S. federal contracts will have come up for renewal this year. Removing the DOGE-related headwinds with no assumption for net growth next year will add back around 200 basis points of CV growth in 2026.

Some of the headwinds are related to Temporary external factors, including the US federal government and tariff, affected Industries,

As productivity gets back to historical levels, we will accelerate qbh to capture the very large addressable Market opportunity. We have

Before we go to questions, I will take you through some of the numbers related to our path, back to double digit CV growth.

If recent retention and new business trends continue in the second half, we would exit this year with CV growth in the low to mid single digits.

This reflects those tariff-affected industries, dynamics, and tech vendors, only part of the way back to normal spending.

There are four primary categories that will drive the return to double-digit growth.

First, most of our US Federal contracts will have come up for Renewal this year.

Craig Safian: Second, as companies and tariff-affected industries get more clarity around trade policies, we expect them to get back to normal course planning and spending. This should add at least 100 basis points to growth. Third, tech vendor remains on a path back to double digits. We are encouraged, in particular, with the improvement in the small tech vendor part of the business. Within large tech vendors, the overall trend remains positive. The second quarter was affected by the timing of a few larger deals getting delayed and tariffs affecting some parts of the hardware subsegment. Continued reacceleration of tech vendor CV would add back another 100 basis points to growth. Finally, we are focused on improving our operations to drive faster growth, even in challenging selling environments. This includes more focus on cost optimization insights, the continued rollout of Ask Gartner, the initiatives Gene discussed, and more.

Removing the dose related headwinds with no assumption for net growth. Next year, will add back around 200 basis points of CV growth in 2026.

Second, as companies in tariff, affected Industries, get more clarity around trade policies. We expect them to get back to normal course, planning and spending, this should add at least 100 basis points to growth.

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

Within large tech vendors, the overall trend remains positive. The second quarter was affected by the timing of a few larger deals getting delayed and tariffs affecting some parts of the hardware sub-segment.

Continued reacceleration of tech vendor CV would add back another 100 basis points to growth.

Finally we are focused on improving our operations to drive faster growth, even in challenging selling environments.

Craig Safian: We expect to add as much as 100 to 200 basis points to growth from these initiatives and better overall execution. All these factors would get us to at least high single-digit growth in 2026, well on our way back to double-digit growth in 2027 and beyond. Another take on the opportunity is to recognize that as the sales teams return towards historical levels of productivity, we will return to double-digit CV growth. With around 5,000 sellers, we can generate enough NCVI to grow high single to low double digits next year. This is the case without growing QBH and even at productivity levels lower than the historical $110,000 to $120,000 per seller. We are implementing programs to support the sales teams, to drive client and prospect engagement, and to grow our sales and sales support teams outside of direct frontline quarter-bearing headcount.

This includes more focus on cost, optimization insights. The continued rollout of ask Gartner. The initiative Gene discussed and more

we expect to add as much as 100 to 200 basis points to growth from these initiatives and better overall execution.

All these factors would get us to at least high single-digit growth in 2026. Well, on our way back to double-digit growth in 2027 and beyond.

another take on the opportunity is to recognize that as the sales teams returned towards historical levels of productivity, we will return to double digit CV growth,

With around 5,000 sellers, we can generate enough ncvi to grow High single to low double digits next year.

This is the case with outgrowing qbh and even at productivity levels lower than the historical 110 to 120,000 per seller.

Craig Safian: Based on recent trends, as I mentioned, CV growth this year will be in the low to mid-single digits. With the adaptations we are making and with the stabilization of our most acutely impacted end markets, we expect growth to accelerate next year and again in 2027. Based on this outlook, our overall medium-term growth algorithm, including double-digit revenue growth and modest margin expansion, remains unchanged. We'll also continue to deploy our capital on share repurchases, which will lower the share count over time, and on strategic value-enhancing tuck-in M&A. With that, I'll turn the call back over to the operator, and we'll be happy to take your questions. Operator?

We are implementing programs to support the sales teams to drive client and Prospect engagement and to grow our sales and sales support teams outside of direct Frontline quarter bearing headcount.

Based on a recent Trends, as I mentioned CV growth, this year will be in the low to mid single digits.

And with the stabilization of our most acutely impacted markets, we expect growth to accelerate next year and again in 2027.

Based on this outlook, our overall medium-term growth algorithm, including double-digit revenue growth and modest margin expansion, remains unchanged.

Operator: Thank you. Ladies and gentlemen, if you would like to ask a question at this time, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again. The first question is coming from the lineup. Andrew Nicholas with William Blair. Your line is now open.

We'll also continue to deploy our capital on share purchases, which will lower the share count over time, and on strategic value-enhancing tuck-in M&A. With that, I'll turn the call back over to the operator, and we'll be happy to take your questions. Operator?

Ladies and gentlemen, if you'd like to

Ask question at this time.

Press star, 1, 1 1 on your telephone.

And wait for your name to be announced.

To withdraw your question, simply press *111 again.

Andrew Nicholas: Hi, good morning. Thanks for taking my questions. I appreciate the build on the return to high single-digit or even double-digit CV growth. I wanted to ask specifically on the tariff-impacted industry piece. Is there anything you can do to kind of size what you have determined to be the tariff-affected industries, how much that represents in terms of CV? I think you said 100 bps improvement next year from kind of some normalization there. Any more color or quantification on that front would be helpful.

Not first question coming from the lineup. Andrew Nicholas, with William. Blair, you'll understand

Hi, good morning. Thanks for taking my questions. I appreciate the build on the return to...

high single digit or or even double digit CV growth. Um, I wanted to ask specifically on the Tariff impacted industry piece can, is there anything you can do to kind of size?

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

You know what you've determined to be the Tariff affected Industries, how much that represents in terms of CV? I think you said 100 basis points Improvement next year from kind of some normalization there. Uh any more color or or quantification on on that front would be helpful.

Andrew Nicholas: Okay, thank you. On the AI topic, I want to maybe focus on the operational efficiency piece. Again, I am just asking, is there anything you can do to kind of quantify that? I understand that improving the product was one part of the top line growth acceleration. If we think about later this year or into 2026 and 2027, is there anything that you can say about what those internal efficiencies might do for the cost structure or margin profile broadly? Thank you.

Yeah, good morning Andrew uh thank you for the question the the way we've defined uh tariff impact and industries is not perfect. I will tell you um we've looked at industries that rely heavily on importing and exporting. Uh and we've looked at really ones focused uh, here in the US and those where the US is a major trade partner. Uh when we rolled that up around 35 to 40% of our CV, fell into that category of both TTS and GTS.

Toni Kaplan: Hey, Andrew, it's Gene. We've implemented about 50 internal applications where we're using AI. Most of those are custom applications, meaning it's not just using a commercial tool. We make that available as well, but we have a bunch of, you know, the majority of those applications are custom AI applications. While I'd say there are some of those applications that have promising early results, it's surely to say that they're going to have, you know, what impact they're going to have over the long term on our cost structure.

Okay, thank you. And then on the AI topic, I want to maybe focus on the operational efficiency piece again just asking, is there anything you can do to kind of quantify that? I understand that, you know, improving the product, uh, was 1 part of the Topline growth acceleration? But if, if we think about, you know, later this year or into 26 and 27, is there, is there anything that you can say about, what those internal efficiencies might do for the cost structure or margin profile? Broadly, thank you.

Hey Andrew, its gene. So the we've implemented about 50 internal applications where we're using AI, most of those are custom applications, meaning it's not just using a commercial tool. We make that available as well, but we have a bunch of you know, the majority of those applications would be custom AI applications. And you know, while the I'd say uh there are some of those applications.

That have promising early results, it's purely to say that they're going to have them, you know what, what impact they're going to have over the long term on our cost structure.

Andrew Nicholas: Understood. Thank you.

Operator: Thank you. The next question is coming from Toni Kaplan with Morgan Stanley. Your line is now open.

I understood. Thank you.

Thank you.

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

Our next question coming from the lineup. Tony Kaplan with Morgan, Stanley yen is now open.

Thanks so much. Um and thank you for the comments on as Gartner in the prepared remarks. Um and also the clarification on sort of the proprietary data and processes that you have. I I was hoping. I know AI has been a topic that has been most frequent for you. Coming in from customers, just

What are the most common questions or topics that clients come to you for understanding uh just better and and how you help them like that. And and and I think my my main purpose in asking, the question is trying to figure out um you know ha what what is it that can't be addressed by sort of deep research AI tools um that that you're able to help with. Um that clients are seeing the value in. Thank you.

Toni Kaplan: Hey, Toni. If you look at Gartner Inc, let me just start with what's differentiated for us, which sounds like is at the heart of your question. Is that right?

Talking.

Jason Haas: Yes, thank you.

Toni Kaplan: Okay. The first thing is that we help clients with what we call mission-critical priorities, which are things like building a cybersecurity capability, how to fully leverage AI within their organizations, leveraging technology for finance transformation. These kinds of initiatives, what we call mission-critical priorities, are things that take a lot of effort, a lot of investment, typically over a period of years. Those are the things that we are helping our clients with. The first thing to understand is we are not just answering a simple question. We are actually helping clients on a journey to accomplish these high-leverage, high-impact initiatives. We are doing it with the seniormost executives in the company. Think about it again, Chief Information Officer, Chief HR Officer, Chief Financial Officer.

Hey, Tony. So, um, if you look at Gartner, let me just start with the what's differentiated for us, which sounds like is that the hardest question, is that right?

Yes, thank you. Okay, yeah. So the first thing is that we help clients with what we call Mission critical priorities, which are things like building, a cyber security capability, uh how to fully leverage within their organizations,

Uh use it. You'll leverage it technology for finance transformation.

Of the things that relevant our clients with. So the first thing to understand is we're not kind of just answering a simple question. We're actually helping clients on a journey to accomplish these

Toni Kaplan: They are relying on us to help them suggest them through those journeys and make sure they are successful with these relatively large, complex projects. Again, we are not answering a simple question. We are actually helping them with these complex journeys. The way we do that is actually by several terabytes of proprietary data. What we have is, as we have mentioned in the past, something like 500,000 one-on-one conversations between our analysts and clients each year. Those conversations cover things like what are their mission-critical priorities, what are the challenges, what is working, what is not working.

Toni Kaplan: In addition to that, we have, when it comes to software, which is a big part of a lot of solutions, 27,000 briefings from technology vendors, where typically senior leaders of those technology vendors would brief our analysts on what the strategy of the company is, how they are trying to compete, et cetera. We then combine that with proprietary research that we do, things like surveys of our clients, things like peer interactions, things like that, that again is not publicly available, but it is helpful in solving these kinds of problems. We have world-class experts that take all that information and synthesize it, and then come out with how do clients, what is the best way for clients to go on these journeys to solve these very difficult mission-critical priorities.

High, leverage, high impact initiatives. Every join it with the senior health Executives, and the company. So, think about it again, uh, Chief Information officer Chief HR officer Chief Financial Officer and so they're relying on us to help them take, uh, step them through those Journeys and make sure they're successful with these relatively large complex projects. And so again, we're we're not answering a simple question. We're actually helping these complex Journeys and then the, we're, uh, the way we do that is actually by, uh, several terabytes of proprietary data. And what we have is, we have, uh, as we've mentioned in the past, something like 500,000, uh, 1-on-1 conversations between our analysts and clients each year, those conversations, cover things like, what are their mission? Critical records. What are the challenges? What's working? What's not working? And in addition to that, then uh, we have, uh, when it comes to software, which is a big part of a lot of solutions, we have 27,000 briefings from technology vendors, where typically senior leaders those technology

Vendors would brief our analysts on what the strategy of the company is how they're trying to compete Etc. We then combine that, with proprietary research, that we do things like surveys of our clients, things, like peer interactions, things like that, but again isn't public available, but it's helpful in these kinds of problems and there are we have world-class experts that take all that information and synthesize it.

Toni Kaplan: You can think about it, we are, and then on top of that, of course, we are unbiased, independent, objective, et cetera. Those are the key elements about the kind of problems we help our clients with and how it is differentiated for their alternatives.

Then come out with. How does how do clients? What's the best way for clients to go on these Journeys to solve these very difficult Mission critical priorities,

and so, when you think about it, um,

You know, we are. And then on top of that, of course, we're unbiased independent objective, uh, Etc.

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

Uh, and so those are the key elements about the kind of problems we have our clients with and how it's differentiated from other alternatives.

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

It's very helpful. And then, you know, wanted to ask if you're getting any different feedback from clients in terms of either why they are. Um, I like, I assume when when a client is at renewal period. Um, if there's any sort of difference in Trend, like if there's um, clients that are, you know, cutting seats because of either the macro or other things and, and how much Insight you get from them in terms of the reasons why, if they are happening to, to cut a seat or 2 or something like that, do they give you reasons in terms of why why they're doing that? And if you've seen any change. Thanks. Yeah Tony. So we're in contact with our clients every single day and we track we have done this for years we track every single deal at the deal level and so if we win a deal we ask the client we ask the salesperson. Why did we win if we lose a deal?

We do the same thing and and again, this is not just for renewals, it's for new businesses as well.

and 1 of the things that we saw, we've seen this year, particularly in Q2 is, uh,

with clients, I'm sorry with tariff impact Industries.

Toni Kaplan: One of the things that we saw was a dramatic change in Q2 is that got escalated to the CFO and the CEO. That changed, and the reason the clients tell us was because they are worried, especially the tariff-impacted industries, they are worried the tariffs are going to lower their profitability. They will not be able to pass all the costs to their clients. They have massive cost-cutting initiatives across the enterprise, which is why you see decisions, really small, you know, small purchases getting escalated to the CFO or the CEO. This is behavior that we have seen in every recession. We saw that exact same behavior in the pandemic back in 2021. We saw that same behavior back in 2009 during the Great Recession.

Toni Kaplan: Whenever companies are under cost stress, one way they control those costs is they put more friction in the process by making it get escalated to the CFO or CEO. The implication for us is it stretches out selling cycles. Selling cycles, you know, went up substantially in terms of the amount of time it takes to close a deal because of having this additional room with you. In the end of the day, it does not necessarily change our close rate, but it does make it so that we have to do more work and it takes more time to close a deal. The biggest single change we saw in Q2 outside of the public sector was this escalation.

That purchase decisions, we're getting escalated, normally a chief HR officer or a Chief Information officer can make a decision to buy an additional license with Gartner or a couple of extra license with jogger. That's why they're purchase Authority. 1 of the things that we saw was a dramatic change in Q2 is that got escalated to CFO, or even the CEO that tends. And the reason the clients tell us was because they're worried, especially the Tariff infection Industries. They're worried, the tariffs are going to lower the profitability. They won't be able to pass all the costs to their clients. And so, they have massive cost cutting initiatives across Enterprise, which is why you see decisions. Really small, you know, small purchases is getting escalated to the CFO or the CEO. This is behavior that we've seen in every recession. So we saw that exact same behavior in the in the pandemic. Back in 2021, we saw this in Behavior back in 2009, during the Great Recession, whenever companies are under cost stress 1 way they control those costs is they put more friction in the process by making it it escalated to the CFO or CEO the application provider.

Is it stretches out uh, selling Cycles. So, selling Cycles, you know, went up substantially in terms of the amount of time, it takes to close a deal because of having this additional route,

in the end of the day, it doesn't necessarily change our close rate, but it does make it so that we have to be more work and it takes more time to

Toni Kaplan: The other thing we saw in Q2 is, and we did not see this in Q1, is for companies that were not impacted by tariffs, many of their clients are companies that are impacted by tariffs. They started this as well. Our growth rate was higher with.

Sew the biggest single change we saw in in Q2 outside of the public sector was uh, this escalation the other thing that's on Q2 is, we didn't see this in q1 is for companies that work impacted by tariffs.

David Cohen: that were not impacted by tariffs. But we saw the beginnings of the same kind of escalation that we are seeing in tariff-impacted industries. Then lastly, we talked about there is the impact in the U.S. federal government with DOGE, Department of Government Efficiency, where again, the changes they made to improve government efficiency made it much harder for our clients to buy from us. We still have strong demand, but we are having to work our way through with our clients through showing the value that we have. We are confident over the long term, we will be able to do that. There is just more scrutiny than there was a year or two ago.

Many of their clients are companies that are in third, buy cars. And so they started this as well and our growth rate was higher with companies that were not impacted by tariffs but we saw at the beginning of the same kind of escalation that we're seeing in tariff impact in the street.

Gene Hall: Thank you.

Impacted in the US federal government with Doge Department of government efficiency where again the, uh, they the changes they made to improve government, efficiency. Made it much harder for our clients, uh, to buy from us. We still have strong demand, uh, but we're having to work our way through our clients through, showing the value that we have and we're confident over the long term, we'll be able to do that. Uh, there's just more scrutiny than there was a year or 2 ago.

Craig Safian: Thank you. Our next question, coming from the lineup, George Tong with Goldman Sachs. The line is now open.

Thank you.

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

Thank you. Our next question, coming from the lineup Georgetown, with Goldman Sachs Line is now open.

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

Hi thanks, good morning. You provided very helpful renewal metrics on federal government. Uh clients in the quarter, can you talk a little bit more about how new purchases among these government? Clients are performing? Have they uh come to a a full standstill or are you seeing some trickle in

Hey, good morning, George. Yeah, we um, you know, we mentioned the, the dollar retention rate that we've been achieving, um, you know, which is just a shade under 50% on a year to date basis. Pretty consistent, both q1 and Q2, we actually are writing some new business, um, but I would underscore What gene just highlighted about. The Contracting process is not simple or easy, um, but you know, we we are we are writing new business and and again, I think we talked about, you know, on the call last quarter. Our

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

Operator: Got it. That is helpful. With respect to Gartner Inc., you mentioned it represents about 35% to 40% of CV spread across both GTS and GBS. Is there any way you can provide some sort of spread between how much of that impact is in GTS, how much of that impact is in GBS so that it is possible to ascertain how much headwind across both of those segments one should expect from Gartner Inc.?

Our clients really do value everything. They get from Gartner and they want to keep us. Um, in some cases, they are unable to do that because of dictates from above, or just really challenging hurdles, that you have to go through from a Contracting perspective. Um, in the clients where we are retaining, but not driving the business, we are seeing close to them so that when things do stabilize, you know, we will be able to, uh, win back business that we may have lost. Um, and then also, we continue to work with all our clients. A lot of our value proposition is very well aligned with driving efficiency. Um, our cost optimization assets are, uh, our our first rate and 100% aligned with government efficiency. So, while the, um, dollar retention rate has been just below. 50%, we are rating some levels of new business, it's obviously way down on a year-over-year basis, as you'd expect. Um, but we are writing some levels of

Andrew Nicholas: Yeah, it's a really good question. I think in Global Business Sales because supply chain is, if not our largest practice, top two in terms of size, that's going to be much more concentrated with "tariff-affected industries." I do not think it changes the distribution wildly, but Global Business Sales is probably a little bit more reliant on or has a little higher proportion of tariff-affected clients in CV than Global Technology Sales.

Got it, that's helpful. Uh and then with um, with respect to tariff Industries, you mentioned the represents about 35 to 40% of CV spread across both GTS and GBS is there. Uh, any way you can provide some sort of, uh, spread between how much of that impact is in GTS? How much is that impact is in GBS. So that, um, it's possible to ascertain how much headwind across both of those segments. Uh, 1 should expect from tariffs,

Operator: Very helpful. Thank you.

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

Craig Safian: Thank you. Our next question, coming from the lineup, Manav Patnaik with Barclays. The line is now open.

Very helpful. Thank you.

Thank you.

Operator: Hi. This is Brendan on FRMONOV. I just wanted to ask on the tariff commentary. We have had a lot of companies report, and it seemed like the view was that confidence had kind of returned by the end of the quarter, even though there were definitely some concerns earlier in the quarter and not necessarily huge strategy changes outside maybe a couple of industries. Just seeing kind of what is different about your business in this environment right now?

Our next question, coming from the line of Mana with bark. Lan is now open.

David Cohen: What I would say is that what we saw with our clients is what I described earlier. This did not change at the end of the quarter, which is that companies worry about, even with a low on the low end of tariffs, even like a 15% increase in tariffs, that they do not believe they could necessarily pass all of that on to their clients. So, they wanted to cut costs so that they could help maintain both the client pricing as well as their margins. We saw clients very widely basically saying, "Look, we need to cut costs so that we can maintain our revenues and our margin structure." That did not change through the quarter.

Hi, this is, uh, Brendan on from formano. I just want to ask on the, on the Tariff commentary. I mean, we, we had a lot of companies report and it seemed like the view was that confidence, that kind of returned by the end of the quarter. Even though there was definitely some, um, you know, concerns earlier in the quarter. Um, and and not necessarily huge strategy changes outside maybe a couple Industries. So, uh, just seeing what, like kind of what's different about your business in this environment right now.

Operator: OK. On the new business pipelines, I guess what is driving that? Is it new logo, upsell, cross-sell, or seats, or some mix of all?

I just want to say is that uh, we saw with our clients' website earlier, uh, and this didn't change at the end of the quarter, which is that uh, companies worry about, even with a 15, a low on the low end of chairs. Even like a 15%, uh, increase in tariffs that, uh, they did not believe that could necessarily pass all that onto their clients. And so 1 is to cut costs so that they could uh help maintain both the the client pricing as well as their margins. And so we saw clients very widely is be saying look we need to cut costs so that we can maintain our revenues and our uh uh margin structure and again that didn't change through the quarter.

David Cohen: As Craig Safian mentioned in his remarks, our new business was up at very solid double-digit rates for both Global Technology Sales and Global Business Sales.

is it a new logo upsell cross-sell or sheets or or some mix of all

Andrew Nicholas: Pipeline.

David Cohen: Pipeline. Pipeline was up at very good double-digit rates for both GTS and GBS. We basically see that as, again, there is high demand for our services. The biggest single area is in helping clients figure out how to use AI, but also all the traditional things as well, like cybersecurity and things like that. Our pipeline is up because there is strong demand out there for our services.

So is Craig mentioned, his remarks are new business was up at at very solid, double digit rates, for both.

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

Operator: All right. Thank you.

Pipeline. Yeah, pipeline pipeline was up uh you know a very good double digit rate but GTS and GTS. And we basically see that is again there's there's demand for high demand for our services. The biggest single area is in helping clients figure out how to use AI but also all the traditional things as well like cyber security and things like that. And so our pipeline's up because there's strong demand out there for our services and Brandon. It's it's it's balanced across additional licenses with existing clients, new logos Etc.

Craig Safian: Thank you. Our next question, coming from the lineup, Joshua Chan with UBS. The line is now open.

All right. Thank you.

Our next question.

Operator: Hi. Good morning, Gene and Craig. I guess considering the magnitude of the slowdown in the ex-Fed business, what is your level of conviction that this is really tariff-related versus clients just pulling back and blaming tariffs? I cannot imagine the existence of tariffs is that much of a surprise in Q2 versus Q1, right? So I guess what is your confidence about tariffs being the precise driver there?

Coming from the lineup, just join with UPS your line is now open.

David Cohen: Again, we track every single deal. We have a well-developed system. We have done this for a long period of time where we track every single deal, and we ask the clients, we ask our salespeople what was the reason we won or what was the reason we lost. We get quite good detail. That is why we have confidence that what is driving this is, in the tariff-affected industries, a real focus on reducing costs because that is what our clients are telling us. We also track escalations. As I mentioned, whenever people are focused on costs, one of the first things they do is make clients escalate things from the functional leaders, the CHRO, the CFO, the CIO, I am sorry, CIO, to the CEO or the CFO.

Hi, good morning Gene and Craig. Um I guess um considering the the magnitude of the slowdown in the exfat business. Um I guess what's your level of conviction that this is really Terror for late related versus clients, just, you know, pulling back and and blaming terrorists. Because I, I can't imagine the existence of terrorists is, is that much of a surprise in Q2 versus q1, right? So I guess, what's your confidence about tariffs being the the precise driver there?

David Cohen: That is exactly what we are seeing, which is, again, we have seen that, as I mentioned before, in both the pandemic and the recession in 2009. That is what we are seeing right now.

Operator: Oh, sorry. Josh, one other just add-on thing. As we are talking about the dynamics of the business, I would not characterize us saying the slowdown was completely attributable to tariffs and tariff-affected industries. We are just trying to provide incremental color around what we are seeing in the business. Because a large part of the economy and a large part of our client base are impacted by tariffs, we wanted to make sure we provided that incremental color around the business.

Well again we track every single deal and again we have a well-developed system we've done this for a long period of time where we track every single deal and we ask the clients, we ask our sales people kind of what was the reason we won or what was the reason we lost? We get it in quite quite good detail. And so that's why we have confidence that what's driving. This is uh in the chart. Prevention industry is a real focus on reducing costs because that's what our clients are telling us. And we also uh, track escalations and again, as I mentioned, whenever people are focused on costs 1 of the first things they do is make uh, clients escalate things from the functional leaders of chro, the CFO CIO. That's right. CIO to the CEO or the CFO, and that's exactly what we're seeing, which is, you know. Again, we've seen that, as I mentioned before, in both the pandemic and in the recession 2009, that's what we're seeing.

David Cohen: Due to the performance of the tariff-affected industries, it is much worse than the non-tariff-affected industries.

And I'm sorry. And Josh, what, what other just, um, uh, add-on thing. You know, as we're talking about the, you know, the Dynamics of the business, um, I wouldn't characterize. You know us saying the Slowdown was completely attributable to tariffs and tariffs, affected Industries. We're just trying to provide incremental color around. What we're seeing in the business and because a large part of the economy and a large part of our client base, uh, are uh, impacted by tariffs. Uh, we wanted to make sure we provide that incremental color around.

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

And again, due to the performance of the Tariff impact Industries, it's much worse than the non-tariff protections.

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

Craig Safian: Ladies and gentlemen, please stand by. Our speakers are having technical issues. Please stand by.

David Cohen: No, we're good, I think.

Craig Safian: Oh, your audio is back.

Thank you. Please stand by our speakers are having. Um, technical issues, please stand by.

David Cohen: Did you not get that response?

Nope, we're good.

Did you not get that response?

Craig Safian: Our next question, coming from the lineup, Jeffrey Meuler with Baird. The line is now open.

Okay, our next question coming from the line of

Jeffrey Meuler: Hey, Gene. We did not get that response. I think a lot of us have a similar question. If you could try to ring-fence the AI risk, including from my perspective, just what you are hearing on pipeline conversion and if that is coming up as an issue at all for those that may not understand the richness of the Gartner Inc. value proposition as well.

Jeff, Mueller, with their the Line is now open.

David Cohen: Yeah. Hey, Jeff. Sorry, I didn't get that response. First, our pipeline, as I mentioned, is up at robust double-digit rates for both GTS and GBS. I think that's the best indicator of what demand is like. What we're seeing with the pipeline is that we track the number of days from when a deal enters a pipeline to the number of days it closed. The time required to close deals now has gone up. The reason it's gone up is that it takes more time. I mentioned earlier that a lot of deals are being escalated from the functional leader, like a CIO or CHRO, up to the CFO or CEO. It takes more time in the selling process because our functional leader then has to make a business case. It just takes time and organizationally for that to get done.

Well.

David Cohen: What I think we're seeing is there's not unjustified demand, but closing deals takes longer because the purchasing processes have been stretched out. That's pretty pervasive in what we've seen in recessions in the past.

Andrew Nicholas: Jeff, the other thing I would just add, harking back to Gene Hall's prepared remarks where he talked at length about the different types of incremental value that you get from Gartner Inc, all of the proprietary insights that we have behind our firewalls that are completely independent, objective, and proprietary to us. Perhaps most importantly, what we are helping our clients with are complex, multi-quarter, often multi-year journeys on their most important mission-critical priorities. There is sometimes a misconception around what the value is of Gartner Inc for our clients in both Global Technology Sales and Global Business Sales. Fundamentally, it is helping our executive clients solve their complex multi-quarter, multi-year mission-critical priority journeys. We believe, and as Gene Hall just highlighted, our pipeline reflects, we are the best, most value-oriented solution to be able to help our clients accomplish those types of things.

Yeah. Hey Jeff, sorry, didn't get that response. So basically first our pipeline, as I mentioned is up at robust, double digit rates for both GTS and GTS. And I think that's the best indicator of kind of what demand is like. And what we're seeing with the pipeline is that we track the number of days from when a deal enters, a 500, the number of days, it closed the time, you know, the time required to close deals. Now has gone up. And the reason it's gone up is that it takes more time. I mentioned earlier that a lot of deals would be escalated from the, the functional leader like a CIO or chro up to the CFO or CEO. It takes more time in the selling process because the our functional leader, then has to make a business case that there's just, it takes time organizationally if that's to get done. And so what I say we're seeing is, there's not reduced demand, but closing deals takes longer because the purchasing processes have been stretched out and that's, um, you know, pretty pervasive and what we see in recessions in the past,

And I think Jeff, the other thing I would just add and just sort of hearken back to, uh, jeans prepared remarks, where, you know, he talked at length about the um, different types of incremental value that you get from Gartner, um, all of the proprietary insights that we have behind our firewalls, um, that are completely independent objective and proprietary to us. And then, I think, you know, perhaps most importantly, the fact that what we're helping our clients,

Andrew Nicholas: We are going to keep improving what we do and keep growing the number of terabytes of data and eventually petabytes of data that we have behind our firewalls that inform the insights that help our clients with their mission-critical priorities. We are going to keep improving our products. As Gene Hall highlighted, the rollout of our GenAI tool as Gartner Inc is a step in that direction. That is not the only thing we have done from a product innovation perspective, but it is certainly one worth highlighting. We are going to continue to bang away at those things to make sure that we are the best, most cost-effective way to help our executive clients accomplish their mission-critical priorities.

With our complex, you know, multi quarter often multi-year Journeys on their most important Mission critical priorities. And I think, you know, there's a sometimes a, um, uh, misconception around what the value, uh, is a Garner for our clients in both GTS and GBS, but fundamentally it's helping. Uh, our executive clients solve their complex multi-quarter multi-year, uh, Mission critical priority Journeys. And um, you know, we believe and and I think as as Gene just highlighted our pipeline reflects, you know, we are the best, most value oriented solution to be able to help our clients, accomplish those types of things, and we're going to keep improving what we do. And keep, you know, growing the number of uh terabytes of data. And you know, eventually Petty of data that we have behind our, our, our firewall

Walls, that inform the insights, that help our clients with their mission, critical priorities. And, you know, we're going to keep improving, you know, our products as you know, as Gene highlighted, the role out of our, um, Genai tool as partner is a step, uh, in that direction. That's not the only thing. We've done from a product Innovation perspective, um, but it's certainly 1 worth highlighting. And so, we're going to continue to, to, to bang away at those things to make sure that we are the best, uh, most cost-effective way to help our executive.

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

Jeffrey Meuler: Got it. For Ask Gartner, can you help us better understand what service tiers it's going to be available in and just what exactly is the rollout process or timeline?

Their clients accomplish their mission critical priorities. Uh, Jeff. The other thing I'd add is, we are training all of our sales and service delivery. People on how to the client has a question like that on how to answer that question directly in the way, Frank just described so that a prospect or client understands kind of what we're used for and why it's so valuable

David Cohen: Yes, yes. Ask Gartner is a GenAI tool that clients can use to get access to our research. Again, it uses our research only. It is a great reflection of helping clients on their mission-critical priorities, like I talked about. Yes. In any event, as I mentioned in my prepared remarks, we have had it in trial for some period of time. We wanted to make sure it was great. Clients love it. The clients have been using it. We are rolling it out as fast as we can. You could think about it as being rolling out several thousand clients per month until we get all of our clients on, which we expect will be by the end of the year.

Got it and then just for ask Gartner can you help us better understand like what service tiers it's going to be available in and just what exactly is the the rollout process?

Or timeline. Yeah, so ask Gartner is an a gen AI tool that, uh, clients can use to get access to our research again, it uses our research only and so, it just, it's a great reflection of helping clients on their basic Mission critical priorities. Like, I talked about

um,

David Cohen: By the way, if a client says, "Hey, it is important to me to have it," we will move them to the top of the queue and get them in there, even if they were slated to a later point in time.

Jeffrey Meuler: But I guess what I am wondering, is it available for like the read-only Gartner digital subscribers, or is it only available for the higher service tiers where they have access to live engagement with analysts?

Yeah, and so any event? So uh We've as I mentioned on my recovery remarks, we've had it in trial for some period of time. We want to make sure it was uh, great, uh, clients love it. The clients have been using it so we're really down as fast as we can. And you can think about it being really have several thousand clients per month until we get all of our clients on which we expect will be by the end of the, by the end of the Year, by the way, if a client sort of says, hey, it's important to me to have it. We'll move in to the top of the queue and get them in there even though they work slated to a later point in time,

David Cohen: It's available to all of our licensed users, again, that have been in that we've rolled it out to.

Andrew Nicholas: Named licensed users. Again, there are some product carve-outs where it will not be enabled, but that is a small fraction of our contract value. So by the end of the year, our goal is to have all of the licensed users that we want enabled with Ask Gartner.

Jeffrey Meuler: OK. Thank you.

Of our our contract values. So, um, by the end of the year, our goal is to have all of the licensed users that we want um, enabled with Asgard.

Craig Safian: Thank you. Our next question, coming from the lineup, Surinder Thind with Jefferies. The line is now open.

Okay, thank you.

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

Thank you. Our next question. Coming from the lineup surrender team with Jeffrey seal on his Nelson.

David Cohen: So I would say in terms of companies impacted by tariffs, there is no difference between whether they are an automotive company in Europe or Japan or in the U.S. They are basically all affected the same way, which we described earlier. There is a second set of things going on, which Craig mentioned, Canada and Australia. In Canada, what is going on is there has been a first, the Canadians changed their procurement processes some time ago to make it more difficult to buy. We are working our way through with clients there. There is, again, we are working with the clients on that. There has been, in some cases, particularly in the public sector, a reaction against some of the U.S. policies and reactions that maybe we should not buy from American companies. In the case of Australia, there was an election recently in May.

Um, thank you. Um, just following up on this, the idea of the the behavior of clients around tariffs, just any color around any differences, you might have seen between, perhaps, your US versus your International clients. I noticed you specifically called out, uh, Canada and Australia.

So the I'd say, in terms of companies impacted by tariffs, there's no difference between whether they're an automotive company in, you know, Europe or Japan, or in the US. They're basically all of that the same way which we described earlier. There's a second set of things going on, which is um you know, Craig mentioned in Canada and Australia in Canada. What's going on? Is there's been a uh first the names, change the procurement processes uh sometime ago, to make it more difficult to buy. We we're working our way through with clients there and there's there's uh yeah we'll work with our clients on that. There has been in some cases, particularly in the public sector, our reaction against some of the US policies.

And reactions that maybe we shouldn't buy from American companies.

David Cohen: Whenever there is an election in Australia, it is often that there are a lot of changes in the government. So purchases and renewals stop for a few months while they get the new, they call it the machinery of government in Australia, while they get the new machinery of government in place. So it is kind of different issues that are largely unrelated to the tariffs.

In the case of Australia, there's an election recently in May, and whenever there's an election Australia, it is often that there are a lot of changes in the government, and so purchases and renewals stop for a few months while they get that new, they call it the Machinery of government Dentistry while they get the new vision new government.

Operator: That is helpful. When we think about just headcount, headcount expectations, any incremental color there? It sounds like you are at a good headcount perspective, but there was anticipation of maybe growth later in the year. How should we think about that in light of just current trends considering through the end of the year?

In place. So it's kind of different issues that are largely unrelated to the tariffs.

That's helpful and then when we think about just um headcount headcount expectations, any incremental color there it it sounds like you're at a good headcount perspective but there wasn't anticipation that maybe a growth later in the year. How should we think about that?

Andrew Nicholas: Hey, Surinder Thind. It's Craig Safian. From a QBH perspective, which I assume when you are saying headcount, you are focused IEF and QBH owners. We have invested a lot in growing the capacity of our QBH over the last several years and last decades, actually, if you go back. We are at a point now where we have got over 5,000 frontline QBH in both Global Technology Sales and Global Business Sales. We fundamentally believe that there is a lot of productivity upside across both Global Technology Sales and Global Business Sales that will be part of that pathway back to double-digit growth in CV that both Gene Hall and I highlighted. We are, of course, remaining very agile in our planning around where we invest and where we do contract. As you would imagine, we have reduced the number of sales territories in the U.S.

Um, in light of this current trends, uh, continuing through the end of the year.

Hey sorry, Ender. Uh, it's Craig. Um from a, you know, qbh perspective which I assume when when you're saying headcount you're you're focused um

You know, we have invested a lot in growing the capacity of our qbh over the last, you know, several years and and last decades actually um if you go back and you know, we're at a point now where you know, we've got over 5,000 Frontline qbh in both GTS and GBS and you know, we fundamentally believe that there is a lot of productivity upside um across both GTS and GBS.

Andrew Nicholas: Fed just because there is less business there now. We are keeping our best people and keeping them fully engaged. They are still working with their clients and prospects across the U.S. Fed. We have taken the territories down there in line with the declines that we have seen in that business. Across the rest of the portfolio, we have a practice which we call territory optimization, which is every time we see turnover, we take a look to see if there is a better investment for us to make. We are very focused on doing that, with the thinking being that trading out poor-performing territories or less profitable territories for territories with more opportunity in the short, medium, and long term is a no-brainer to do.

That will be, you know, part of that pathway back to double digit growth uh in CV that both Gene and I I highlighted um, we are of course, remaining very agile in our planning around where we invest and where, you know, we do contract. Um, as you'd imagine, we have reduced the number of sales territories in the US fed, um, just because there's there's less business there now. Um, but we're keeping our, our best people and keeping them, you know, fully engaged and and, and they're still working with, you know, their clients and Prospects across us fed. But we've taken, you know, the territories down there. Um, you know, in line with the declines that we've seen in that business, um, across the rest of the portfolio. We have a practice, which we call territory optimization, which is, every time we see turnover, we take a look to see if there's a better investment for us to make. And so,

Andrew Nicholas: While it may appear that headcount or territories are flat, know that under the covers, we are always doing this optimization of shutting down lower-performing and less profitable territories and reinvesting in what we believe to be higher opportunity and higher profitability territories. That all said, our expectation for this year is to end the year roughly flattish from a QBH perspective. As we start to re-accelerate across 2026 and into 2027, we will then turn back on the QBH growth that we know is an important input into driving sustained double-digit growth in 2027, 2028, and beyond.

We are um very focused on doing that with the thinking being that um trading out, poor performing territories, or you know, less profitable territories for territories with more opportunity in the short medium and long term is a no-brainer to do. And so while it may appear that you know, headcount or territories are flat know that under the covers. We are always doing this optimization of shutting down, um, lower performing unless

Audible territories and reinvesting in um what we believe to be higher opportunity and higher profitability territories. Um, that all said our expectation for this year is to end the year. Roughly flattish from a qbh perspective. Um,

Important input into driving sustained, uh, double-digit growth in 2027 2028 and Beyond.

Jeffrey Meuler: Thank you.

Craig Safian: Thank you. Our next question, coming from the lineup, Jason Haas with Wells Fargo. The line is now open.

Thank you.

Toni Kaplan: Hey, good morning, and thanks for taking my questions. There are some comments in the prepared remarks about focusing the sales force to ensure that your customers are getting the full value of the Gartner subscription. Is there any way to dimensionalize what percentage of your customers do you see now is not getting the full value of the Gartner subscription? Thank you.

Thank you. Our next question comes from the lineup: Jason Hus with Wells Fargo. Giannis, Melvin.

David Cohen: Yeah, Jason, when you subscribe to Gartner, you get access to our content. You get also access to our experts. You can call the experts. We also, in many of our products, you get a ticket for a conference. You have the ability to do week tiers, both in person as well as electronically. We have a thing called contract reviews, which basically allow a client who is thinking about buying something to say, "Am I giving the right terms? Do I have the right build materials?" all those kinds of things. Then we have some tools that are very helpful, like maturity models. Those are examples. We have quite a suite of services. Not all of our clients use all those services, even though many of them are of very high value.

Hey, good morning, and thanks for taking my questions. There's some comments in the prepared remarks about, um, focusing. The sales force to ensure that your customers are getting the full value of the Garner subscription is there any way to dimensional like what percentage of uh your customers. Do you see now is not getting the full value of uh of the Gartner subscription? Thank you.

Hey, Jason. When you subscribe to, uh, Gartner you get access to our content, you can also access to our experts, you can call the experts. We also in many of our products, you get, uh, a, uh, ticket for a conference. You have the ability to do, uh, peers both in person, as well as electronically.

uh, we have a thing called, uh, uh,

Contract reviews which basically allow a client to who's, who's thinking about buying something to say, am I getting the right terms? Do I have the right bill of materials? All those kinds of things?

David Cohen: One of the things we are doing now is to make sure that our sales and service delivery people know the full suite, even if they are new to Gartner, if they have been here three months or whatever, that we train them effectively on that, and that they can go out and talk to clients, especially the ones that may not be using all those extra services. A good example, actually, is in peer, where we have tens of thousands of clients that use our peer interactions. They value it incredibly highly. Again, you can do it electronically or in person. While we have tens of thousands that are using it, we have tens of thousands that could use it and are not yet, generally because they just have not been made aware of it.

David Cohen: We are trying to make sure clients are aware of all of these sources of value, of which a lot of them are very high, even though they are not using it today.

Toni Kaplan: Got it. That is very helpful. As a follow-up question, I recognize this came up a few times. You talked about the fact that every time you have a cancellation, you will find out what the reason why was. Are you able to give us any sense what percentage of folks are citing usage of a publicly available large language model and therefore not continuing their Gartner Inc subscriptions? Is that coming up at all? What percentage is that?

Uh, and then we have some tools that are very helpful at maturity models, those are examples and so we have quite a suite of services. And, um, not all of our clients use all those Services, even though many of them are very high value. And so, 1 of the things we're doing now, is to make sure that our sales and service delivery people, uh, know the full Suite, even if they're new to Gardiner, if they've been here 3 months, whatever that we train them, effectively on that, and that they can go out and talk to clients, especially the ones that may not be using all those extra Services. A good example, actually is in, uh, pier where uh, you know, we have tens of thousands of clients that use our peer interactions. They value it incredibly highly. And again you can do it electronically or in person and uh and and what we have, tens of thousands of their use that we have tens of thousands that could use it and aren't yet generally because they just haven't been made aware of it. And so we're trying to make sure clients are aware of all these sources of value uh of which a lot of them are very high even though they're not using it today.

Got it. That's very helpful and then

David Cohen: Yeah, that's one of the options when it's not material. It's basically, it's essentially unmeasurable.

A follow-up question recognizes came up a few times. You talked about the fact that every time you have a cancellation, you'll find out what the, what the reason why was, um, are you able to give us any sense? What percentage of folks are are, citing usage of like a publicly available large language model and therefore you know, not continuing their Gartner subscriptions that coming up at all. What what percentage is that?

Yeah, that's 1 of the options and it's not Material.

Toni Kaplan: Got it. Okay, that's very helpful. Thank you.

It's basically, you know, it's essentially unmeasurable.

Craig Safian: Thank you. Our next question, coming from the lineup, Jeff Silber with BMO Capital Markets. The line is now open.

Okay, that's very helpful. Thank you.

Andrew Nicholas: Thanks so much. I know it's late. I will just ask one. I wanted to focus on the number of client enterprises. It has been going down, at least in Global Technology Sales, for the past couple of years, and now we are seeing it in Global Business Sales. Is it just that clients are maybe centralizing the decision-making process and buying as one entity as opposed to multiple entities? I know there is probably some federal government impact this past quarter, but it has been going down for a while. Any color would be great. Thanks.

Thank you. Our next question, coming from the lineup, Jess silver, with BMO Capital markets. Your line is now open.

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

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

Hi, Jeff. Good morning. It's Craig. Um, you know, the, the biggest driver that we've seen on the Enterprise account has been small Tech vendor and while small Tech vendor, our small Tech vendor business, um, is improving and accelerating, there's still higher than average churn amongst that client base. Um, as you know, with Enterprises

Andrew Nicholas: All right. Appreciate the call. Thanks.

Everyone counts as 1 regardless of spending. And so, um, we just see, um, very high turn amongst our small Tech vendors. That's the, the, the the biggest thing, driving that Enterprise count that you're looking at.

All right, appreciate the caller. Thanks.

Craig Safian: Thank you. I am showing there are no further questions in Q. I will turn the call back over to Gene Hall for any closing remarks.

David Cohen: Summarizing, there are two things I would like you to take away from today's discussion. First, AI is an important opportunity for Gartner Inc across several dimensions. It is the highest spend topic that we are helping our clients with today. We are willing to ask Gartner Inc to provide faster, easier access to our insights, and we are improving internal efficiency with AI tools. Second, we are making adaptations that will give us a clear path back to double-digit growth. Thanks for joining us today, and I look forward to updating you again next quarter.

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

To summarizing there are 2 things. I'd like you to take away from today's discussion.

First AI is an important opportunity for Gardener across several dimensions.

It's the highest man topic that will help our clients with today.

We're going to ask Garner to provide faster easier access to rent sites and we're improving internal efficiency with AI tools.

Second, we're making adaptations that will give us a clear path, back to double digit growth.

Craig Safian: This concludes today's conference. Thank you for your participation. You may now disconnect.

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

It's been good, today's conference. Thank you for your participation and you may now disconnect