Gartner, Inc. NYSE:IT

FQ4 2023 Earnings Call Transcripts
Tuesday, February 06, 2024 1:00 PM GMT
S&P Global Market Intelligence Estimates-FQ4 2023CONSENSUSACTUALEPS
Normalized

2.83

3.04

Revenue(mm)1586.971586.10-FQ1 2024SURPRISE-FY 2023--FY 2024-

CONSENSUSCONSENSUSACTUALSURPRISECONSENSUS

7.42

2.66

11.12

11.33

1.89

11.96

(0.05 %)

1488.225908.34

5900.00(0.14 %)

6359.16

Currency: USD
Consensus as of Jan-22-2024 10:06 AM GMT- EPS NORMALIZED CONSENSUSACTUALSURPRISEFQ1 2023

2.06

2.88

39.81 %

FQ2 2023

2.50

2.85

14.00 %

FQ3 2023

1.96

2.56

30.61 %

FQ4 2023

2.83

3.04

7.42 %COPYRIGHT © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All rights reserved

spglobal.com/marketintelligence1

Contents

Table of Contents
Call Participants..................................................................................

3

Presentation..................................................................................

4

Question and Answer..................................................................................

10

COPYRIGHT © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All rights reserved

spglobal.com/marketintelligence

2

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

Call Participants
EXECUTIVES
Craig W. Safian
Executive VP & CFO
David CohenGroup Vice President of Investor
Relations
Eugene A. Hall
CEO & Director
ANALYSTS
Andrew Owen Nicholas
William Blair & Company L.L.C.,
Research Division
Brendan J. Popson
Barclays Bank PLC, Research
Division

Surinder Singh Thind
Jefferies LLC, Research Division

Heather Nicole Balsky
Toni Michele Kaplan
BofA Securities, Research Division Morgan Stanley, Research Division
Jeffrey Marc Silber
BMO Capital Markets Equity
Research
Jeffrey P. Meuler
Robert W. Baird & Co.
Incorporated, Research Division
Joshua K. Chan
UBS Investment Bank, Research
Division
Keen Fai Tong
Goldman Sachs Group, Inc.,
Research Division
Seth Robert Weber
Wells Fargo Securities, LLC,
Research Division

Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

3

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

Presentation
David CohenGroup Vice President of Investor Relations
Good morning, everyone. Welcome to Gartner's Fourth Quarter 2023 Earnings Call. I'm David Cohen, SVP
of Investor Relations. [Operator Instructions] After comments by Gene Hall, Gartner's Chief Executive
Officer; and Craig Safian, Gartner's Chief Financial Officer, there will be a question-and-answer session.
Please be advised that today's conference is being recorded.
This call will include a discussion of fourth quarter 2023 financial results and Gartner's outlook for2024 as disclosed in today's earnings release and earnings supplement, both posted to our website,
investor.gartner.com. On the call, unless stated otherwise, all references to EBITDA are for adjusted
EBITDA, with the adjustments as described in our earnings release and supplement. All contract
values and associated growth rates we discuss are based on 2023 foreign exchange rates and exclude
contributions related to the first quarter divestiture and the 2022 Russia exit. All growth rates 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 constituteforward-looking statements. Forward-looking statements can vary materially from actual results andare subject to a number of risks and uncertainties, including those contained in the company's 2022
annual report on Form 10-K and quarterly reports on Form 10-Q as well as in other filings with the SEC. I
encourage all of you to review the risk factors listed in these documents.
Now I will turn the call over to Gartner's Chief Executive Officer, Gene Hall.
Eugene A. Hall
CEO & Director
Good morning, and thanks for joining us today. Gartner drove another strong performance in the fourth
quarter. We delivered high single-digit growth in contract value. Revenue, EBITDA, adjusted EPS and free
cash flow came in above expectations.
Gartner delivers incredible client value in any macroeconomic environment. In 2023, the world
experienced multiple disruptions. They impacted enterprises in dramatically different ways. For example,
high interest rates affected capital-intensive industries and financial institutions such as regional banks.
High inflation rates had an outsized effect on industries such as health care. Geopolitical polarizationand conflict drove increases in military and defense spending while affecting supply chains. More shifts
in how and where people work affected real estate, live events and entertainment and other industries.
Cybersecurity attacks became even more frequent, were getting stronger and more disruptive. And wesaw a significant leap in the capabilities of artificial intelligence, or AI, which fueled even more complexity.
We serve leaders in every enterprise, across every industry and every geography. They know theyneed help, and they know Gartner is the best source for the help they need. Gartner delivers actionableobjective insight that drive smarter decisions and stronger performance on an organization's missioncritical priorities. We guide the leaders who shape the world. Our insights often make the difference
between success and failure, the leaders we work with and the enterprises they serve.
As we move into 2024, our ability to execute operational best practices consistently is the strongest it's
ever been. We have the lowest proportion of open positions ever. Our recruiting capability and capacity
are world-class. We have a strong associate value proposition. And our teams have higher tenure than in
2023, which will allow us to drive strong performance well into the future.
Research continues to be our largest and most profitable segment. Our market opportunity is vast acrossall sectors, sizes and geographies. Our business remains resilient in a complex external environment.
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

4

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

Through relentless execution of proven practices, we're able to deliver unparalleled value to our clients. In
the fourth quarter, we helped clients with a wide range of topics, including cybersecurity, data analytics,
artificial intelligence, remote work, cost optimization and more.
Research revenue grew 5% in Q4. Subscription revenue represented more than 75% of our consolidated
global revenue in 2023. We delivered subscription revenue growth of 8% on an organic basis in the fourth
quarter. Total contract value growth was 8%. Across GTS and GBS, contract value from enterprise function
leaders grew at double-digit rates. New business with enterprise function leaders also grew at double-digit
rates.
Gartner serves executives and their teams through distinct sales channels. Global Technology Sales, or
GTS, serves leaders and their teams within IT. GTS also serves leaders at technology vendors, including
CEOs, Chief Marketing Officers and senior product leaders. GTS contract value grew 6%, led by growthwith IT and enterprise function leaders.
GTS sales to leaders and technology vendors continued to be affected by technology sector dynamics.
Exiting the year, we began to see some improvement. New business with tech vendors were at high single
digits. We expect new business to lead retention and contract value growth.
Global Business Sales, or GBS, serves leaders and their teams beyond IT. This includes HR, supply chain,finance, marketing, legal, sales and more. GBS contract value grew 13%. GBS new business was up
double digits.
Gartner Conferences deliver extraordinarily valuable insights to an engaged and qualified audience. 2023
was the first full year of in-person conferences since 2019. We had a great year, and we drove a strong
finish in the fourth quarter. In Q4, we held some of our largest destination conferences, including IT
Symposium in Orlando and Barcelona, and ReimagineHR in Orlando. These conferences were spectacular.
Across all our destination conferences, attendance was up year-over-year, with many at or near capacity.
Looking ahead to 2024, advanced bookings continue to be very strong and feedback continues to be
excellent.
Gartner Consulting is an extension of Gartner Research. Consulting helps clients execute their moststrategic initiatives through deeper, extended project-based work. Consulting is an important complement
to our IT research business. Consulting revenue grew 8% for the full year. We saw growth in labor-based
consulting and record results in contract optimization for the full year.
We are introducing 2024 guidance which we view as achievable across a wide range of economic andgeopolitical scenarios with opportunity for upside.
In closing, Gartner achieved another strong quarter of growth. We deliver incredible client value whether
our clients are struggling, thriving or anywhere in between. We're exceptionally agile and continuously
adapt to the changing world, and we know the right things to do to be successful in any environment.
Looking ahead, we're well positioned to continue our sustained record of success far into the future.
Our client value proposition and addressable market opportunity will allow us to drive long-term sustained
double-digit revenue growth. We expect margins will expand modestly over time, and we generatesignificant free cash flow well in excess of net income. As we invest for future growth, we'll return
significant levels of excess capital to our shareholders. This reduces shares outstanding and increases
returns over time.
With that, I'll hand the call over to our Chief Financial Officer, Craig Safian.
Craig W. Safian
Executive VP & CFO
Thank you, Gene, and good morning. Fourth quarter revenue, EBITDA, adjusted EPS and free cash flow
were better than expected as we continue to execute very well in a complex environment.
Our financial performance for the full year 2023 included global contract value and consolidated revenue
growth of 8%, EBITDA of $1.5 billion, diluted adjusted EPS of $11.33 and free cash flow of $1.1 billion.
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

5

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

We are introducing 2024 guidance which we view as achievable across a wide range of economic andgeopolitical scenarios, with opportunity for upside.
Fourth quarter revenue was $1.6 billion, up 5% year-over-year as reported and 4% FX-neutral. In
addition, total contribution margin was 67%. EBITDA was $386 million, ahead of our guidance primarily asa result of disciplined cost management. Adjusted EPS was $3.04 and free cash flow was $196 million.
We finished the quarter with 20,237 associates, up 5% excluding the 2023 divestiture and about the sameas Q3. We have a great team across Gartner, driven by a very compelling associate value proposition.
Moving into 2024, we are in an excellent position from a talent and tenure perspective.
Research revenue in the fourth quarter grew 6% year-over-year as reported and 5% FX-neutral.
Subscription revenue grew 8% on an organic FX-neutral basis. Non-subscription revenue performance inthe quarter reflects a shift to higher-quality traffic. While this action has a short-term effect on revenue,
we expect it will drive higher prices and increase revenue over time.
Fourth quarter Research contribution margin was 74%, consistent with the prior year period as we havecaught up on hiring and returned to the new expected levels of travel. For the full year 2023, Researchrevenues increased by 6%, both as-reported and FX-neutral. The gross contribution margin for the year
was 74%.
Contract value, or CV, was $4.8 billion at the end of the fourth quarter, up 8% versus the prior year. CV
growth is FX-neutral and excludes the first quarter 2023 divestiture. We expect new business to be aleading indicator for retention and, in turn, contract value growth. We had the highest 1 month of new
business dollars ever in December 2023.
For the fourth quarter, CV from enterprise function leaders across GTS and GBS grew at double-digit rates.
New business with enterprise function leaders increased double digits as well. CV from tech vendors about
flat versus the prior year and up sequentially. Tech vendor CV continued the quarterly improvement we
saw in Q3. Tech vendor new business was up high single digits in Q4, marking the first year-over-yearincrease in 2023. Quarterly net contract value increase, or NCVI, was $180 million. As we've discussed in
the past, there is notable seasonality in this metric.
CV growth was broad-based across practices, industry sectors, company sizes and geographic regions.
Across our combined practices, the majority of the industry sectors grew at double-digit or high singledigit rates, led by the energy, manufacturing and public sectors. We had high single-digit growth acrossalmost all of our enterprise-size categories. The small category, which has the largest tech vendor mix,
grew modestly. We also drove double-digit or high single-digit growth in the majority of our top 10
countries.
Global Technology Sales contract value was $3.7 billion at the end of the fourth quarter, up 6% versus theprior year. GTS CV increased $134 million from the third quarter. Wallet retention for GTS was 101% thequarter, reflecting net growth even before the addition of new clients. In the fourth quarter, IT enterprisefunction leaders' wallet retention was consistent with historical GTS levels. GTS new business increased
12% versus last year. New business with IT enterprise function leaders increased mid-teens compared to2022. New business with tech vendors increased high single digits in the quarter.
GTS quota-bearing headcount was about flat year-over-year. With the dynamic territory planning we
introduced a few years ago, the catch-up hiring we did last year and our teams moving up the tenure
curve, we're well positioned for growth moving into 2024. Operationally, we are continuously allocating
resources to the best near-term opportunities even as we ensure we are well positioned to capture thelarge addressable market opportunity over time. Our regular full set of GTS metrics can be found in theearnings supplement.
Global Business Sales contract value was $1.1 billion at the end of the fourth quarter, up 13% year-overyear. The majority of our GBS practices grew at double-digit rates. Growth was led by supply chain, legaland HR. GBS CV increased $46 million from the third quarter. Wallet retention for GBS was 107% for thequarter, reflecting strong net growth with our existing clients. GBS new business was up 13% compared
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

6

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

to last year. GBS quota-bearing headcount was up 8% versus the fourth quarter of 2022. This excludes
headcount associated with the Q1 divestiture.
As with GTS, a regular full set of GBS metrics can be found in the earnings supplement. As we do eachyear at this time, we've provided 2 years of quarterly historical contract value data updated to 2024 FX
rates in the appendix of the earnings supplement.
Conferences revenue for the fourth quarter was $214 million, up 14% year-over-year. Contribution margin
in the quarter was 50%, consistent with typical seasonality. We held 11 destination conferences in thequarter, all in-person. For the full year 2023, we delivered an all-time high revenue of $505 million, which
was an increase of 30% on a reported basis and 29% FX-neutral. Gross contribution margin was 50%.
Fourth quarter Consulting revenues were $128 million compared with $138 million in 2022, when we saw
a record performance in the contract optimization business. Consulting contribution margin was 27% in
the fourth quarter, affected by revenue mix and growth hiring. Labor-based revenues were $99 million, up
3% versus Q4 of last year as-reported and on an FX-neutral basis.
Backlog at December 31 was $162 million, increasing 21% year-over-year on an FX-neutral basis with
continued booking strength. We delivered $29 million of contract optimization revenue in the quarter. Thispart of our business is highly variable. For the second half of 2023, revenues were $62 million, up fromthe second half of 2022, when we delivered our largest-ever quarter in Q4. Full year Consulting revenue
was up 7% on a reported basis and 8% FX-neutral. Gross contribution margin was 35% compared to 39%
in 2022.
Consolidated cost of services increased 11% year-over-year in the fourth quarter as reported and 10%
on an FX-neutral basis. The biggest driver of the increase was higher headcount to support our future
growth. SG&A increased 9% year-over-year in the fourth quarter as reported and 8% FX-neutral basis.
SG&A increased in the quarter as a result of headcount growth.
EBITDA for the fourth quarter was $386 million compared to $421 million last year. Fourth quarter EBITDA
upside to our guidance primarily reflected disciplined expense management. EBITDA for the full year was
almost $1.5 billion, a 1% increase over 2022 on a reported basis and up 2% FX-neutral. Depreciation in
the quarter of $26 million was up modestly compared to 2022.
Net interest expense, excluding deferred financing costs in the quarter, was $19 million. This was down $9
million versus the fourth quarter of 2022 due to higher interest income on our cash balances. The modest
floating rate debt we have is fully hedged through maturity.
The Q4 adjusted tax rate, which we use for the calculation of adjusted net income, was 24% for thequarter. The tax rate for the items used to adjust that income was 15% for the quarter. The full year tax
rate for the calculation of adjusted net income was 22%.
Adjusted EPS in Q4 was $3.04 compared with $3.70 last year. We had 79 million shares outstanding in
the fourth quarter. This is a reduction of about 1 million shares or about 1% year-over-year. We exited thefourth quarter with about 79 million shares on an unweighted basis. For the full year, adjusted EPS was$11.33, up modestly from 2022.
Operating cash flow for the quarter was $224 million, up 10% compared to last year. CapEx for thequarter was $28 million, down $4 million, as a result of catch-up spend on technology investments in 2022
which normalize this year.
Free cash flow for the quarter was $196 million, up 19% compared to last year. Free cash flow for thefull year was almost $1.1 billion, a 6% increase versus $2.2 million. Free cash flow on a rolling 4-quarter
basis was 18% of revenue and 71% of EBITDA. Adjusting for the Q1 divestiture, the full year free cash
flow conversion from GAAP net income would have been 138%. Our free cash flow conversion is generally
higher when CV growth is accelerating.
We have a new slide in the earnings supplement which shows the conversion from both EBITDA and GAAP
net income to free cash flow on a rolling 4-quarter basis. The past 2 years have had some unusual items
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

7

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

affecting the conversion, including insurance proceeds related to pandemic conference cancellations andthe 2023 divestiture. We expect about a 4- to 6-point difference between EBITDA margin and free cash
flow margins in a typical year. The normal free cash flow conversion from GAAP net income is 140% to160%.
At the end of the fourth quarter, we had about $1.3 billion of cash. Our December 31 debt balance wasabout $2.5 billion. Our reported gross debt to trailing 12-month EBITDA was under 2x. Our expected
free cash flow generation, available revolver and excess cash remaining on the balance sheet provide
ample liquidity to deliver on our capital allocation strategy of share repurchases and strategic tuck-in M&A.
Our balance sheet is very strong with $2.3 billion of liquidity, low levels of leverage and effectively fixedinterest rates.
We repurchased $158 million of stock during the fourth quarter and more than $600 million for the full
year. At the end of December, we had about $1 billion of authorization for repurchases remaining, andwe expect the Board will continue to refresh the repurchase authorization going forward. As we continue
to repurchase shares, our capital base will shrink. Over time, this is accretive to earnings per share and,combined with growing profits, also delivers increasing returns on invested capital.
Before providing the 2024 guidance details, I want to discuss our base level assumptions and planningphilosophy for 2024.
For Research, we continue to innovate and provide a very compelling value proposition for clients andprospects. Executives and their teams face uncertainty and challenges, and they recognize how Gartner
can help regardless of the economic environment. The outlook for 2024 Research revenue growth is afunction of 3 primary factors: First, 2023 ending contract value; second, the timing of growth bottoming
and the slope of the reacceleration; and third, the performance of non-subscription revenue.
Starting with the Research subscription revenue, which was 76% of 2023 consolidated revenue. Our
guidance reflects CV bottoming and reaccelerating during 2024. First quarter and first half NCVI are
important inputs to calendar 2024 revenue growth. We have taken a prudent view of NCVI phasing
because Q1 is a seasonally important quarter for tech vendor renewals.
With the majority of our contracts being multiyear, some haven't come up for renewal during the techsector's recalibration, and Research subscription revenue will likely bottom about 1 quarter after thecontract value growth bottoms. If new business continues to perform well and retention is better than
we've incorporated into the plan, there would be upside to our guidance.
The non-subscription revenue was about 6% of consolidated revenue in 2023. In this part of the business,
we help small business buyers find the best software for their needs and help sellers find customers. This
adds a lot of tangible value for both groups. The outlook built into the 2024 guidance reflects a shift tohigher-quality traffic sources. As I mentioned, this affects revenue in the short term, but we expect it todrive higher prices and increased revenue over time.
For Conferences, which is about 9% of 2023 revenue, we are basing our guidance on the 51 in-person
destination conferences we have planned for 2024. We expect similar seasonality to what we saw in
2023, with Q4 the largest quarter, followed by Q2. We have very good visibility into 2024 revenue, withthe majority of what we've guided already under contract. This is consistent with last year and ahead of
historical levels.
For Consulting, which was also about 9% of 2023 revenue, we have more visibility into the first halfbased on the composition of our backlog and pipeline, as usual. Contract optimization has had several
very strong years. It's also seasonally slower in the first quarter and remains highly variable. We've
incorporated a prudent outlook for this part of the segment. We remain focused on aligning expense
growth with CV growth. This is the best way for us to balance short-term margins while investing for longterm sustained double-digit growth.
Our base level assumptions for consolidated expenses reflect a more typical cadence than we've seen in awhile. We are investing for future growth even as we have taken a prudent view of the timing of revenue
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

8

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

flowing into the P&L. We recommend thinking about expenses sequentially, with notable seasonality driven
by the Conferences calendar and merit increases.
Our plan for mid- to high single-digit sales headcount growth for 2024 reflects our commitment to invest
for future growth while delivering on our margin targets. We have the recruiting capacity to go faster,depending on how the year plays out; and we have other levers, like increased tenure, to support CV
growth in 2024. At current rates, FX will be approximately neutral to growth for the full year.
Our guidance for 2024 is as follows. We expect Research revenue of at least $5.15 billion, which is FXneutral growth of about 5%. The Research revenue guidance reflects a prudent plan for NCVI performanceand the recalibration of non-subscription part of the business. The guidance reflects subscription revenue
growth in the high single digits. We expect Conferences revenue of at least $560 million, which is FXneutral growth of about 10%. We expect Consulting revenue of at least $530 million, which is growth ofabout 3% FX-neutral. The result is an outlook for consolidated revenue of at least $6.24 billion, which is
FX-neutral growth of 5%.
We expect full year EBITDA of at least $1.435 billion, which results in an EBITDA margin of at least 23%.
We expect 2024 adjusted EPS of at least $10.55 per share. For 2024, we expect free cash flow of at least$1.065 billion. This reflects a conversion from GAAP net income of above 140%. Our guidance is based on
79 million shares, which only assumes repurchases to offset dilution. Finally, for the first quarter of 2024,
we expect to deliver EBITDA of at least $335 million.
We performed well this year despite continuing global macro uncertainty and a dynamic tech vendor
market. Global CV grew high single digits in the quarter, with enterprise function leaders CV growing
double digits. Revenue, EBITDA and EPS performance exceeded our expectations, and we introduced
achievable guidance with opportunity for upside.
We repurchased more than $600 million in stock during 2023 and more than $3 billion in the past 3 years.
We remain eager to return excess capital to our shareholders. We will continue to be price-sensitive,
opportunistic and disciplined.
Looking out over the medium term, our financial model and expectations are unchanged. With 12% to
16% Research CV growth, we will deliver double-digit revenue growth. With gross margin expansion, sales
costs growing about in line with CV growth and G&A leverage, we will expand EBITDA margins modestly
over time. We can grow cash flow at least as fast as EBITDA because of our modest CapEx needs and thebenefits of our clients paying us upfront. And we'll continue to deploy our capital on share repurchases,
which lower the share count over time, and on strategic value-enhancing tuck-in M&A.
With that, I'll turn the call back over to the operator, and we'll be happy to take your questions. Operator?

Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

9GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

Question and Answer
Operator[Operator Instructions] Our first question comes from the line of Jeff Meuler with Baird.
Jeffrey P. Meuler
Robert W. Baird & Co. Incorporated, Research Division
Just want to dig in first. I know it's not a huge business, but on the Research non-subscription headwinds
and need for recalibration. I know it's been weak all year, but I was interpreting that previously more as
like cyclical headwinds. And now it seems like you're responding more operationally to drive higher-quality
traffic. So just I guess, I don't know if there was like a business review or, I guess, the why now in termsof cyclicality of the business versus where there's an opportunity for operational improvement.
Craig W. Safian
Executive VP & CFO
Jeff, thanks for the question. I'll give it a start, and then Gene will chime in as well. I think -- just startingwith the facts, the non-subscription part of the business was about 6% of 2023 revenue. Obviously, we
have had tech market pressure for the full year. And the way that mostly manifested itself through our
results was real pressure on pricing throughout the full year. And we saw that. We adjusted coming out of
Q2 earnings.
And the good news is pricing has been roughly stable since we made that adjustment. In Q4 though, oneof the things we're always focused on is making sure that we are providing the highest value to both sidesof the equation. And with these offerings, we are essentially -- small business buyers are coming to oursites to learn more about what software to buy, and we actually help them with reviews and ratings andwritten research and things of that nature, and then we're matching them to the sellers. And again, so
tangible value, as we mentioned, on both sides of the equation.
We're always focused on driving even more value for our clients. And so one of the things we've done isreally shift our focus and prioritization to higher-quality forms of traffic. And again, short-term impact onrevenues. But over the long term, we think this is good for clients on both sides of the equation, will drive
higher pricing over time, which will drive higher revenue, which is good for everybody.
But one thing I would say just about the guidance is we've modeled in the real focus on higher-quality
traffic. We have not modeled in any real uptick in the pricing. Again, over the long term, we expect that tohappen. We did not want to model that in as we actually see that manifesting itself in reality.
Jeffrey P. Meuler
Robert W. Baird & Co. Incorporated, Research Division
Okay. And then I hear you loud and clear on the better tech vendor new business sold trends. Maybe talkthrough more on the retention for tech vendor. Just like how you're thinking about the tail that has not yet
renewed in a more difficult environment. Or just what's the typical lag time from when you've seen priorinflections in new business? Like how long it kind of takes for the retention trend to similarly improve?
Eugene A. Hall
CEO & Director
Jeff, it's Gene. So one -- the biggest issue we have is in the small tech vendors, and a lot of small tech
vendors are in markets that have changed and they have difficulty getting funding now. And for thosevendors, if they signed a 2- or 3-year multiyear a year or 2 ago, when that comes up for renewal, they
don't have any funding. In fact, in many cases, out of business. And so what's happening there is that,
that's our biggest drag in the tech sector in terms of retention.
The larger companies, as you've seen, are still laying off tens of thousands of people, and so they haven't
finished restructuring. As we mentioned, overall new business is up in the tech sector mid-single digits.
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

10

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

And so we're thinking that's a leading indicator that retention will follow once we work our way throughthese -- particularly these companies that have gone out of business since they signed the agreement and-- today.
And by the way, it's a very -- still a very robust business. It's just a different side of companies now thatare getting funding. Think AI.
Operator
Our next question comes from the line of Toni Kaplan with Morgan Stanley.
Toni Michele Kaplan
Morgan Stanley, Research Division
Actually, maybe following on a similar line to the last question. The commentary around new business inthe prepared remarks. And this is beyond tech vendors, so just in general, the enterprise new businesssounded very good. Even the tech vendor improvement in new business sounded good.
Just wanted to understand if there was anything that could -- that is a risk to that sort of starting to flow
through contract value in the next few quarters. And how quickly you could expect to see sort of that shift
in contract value. I know you mentioned in the prepared remarks that you're expecting an inflection thisyear.
Craig W. Safian
Executive VP & CFO
Toni, thanks for the question. Just to lay out the facts. So to your point, GTS, the [ AC ] vendor part ofthe business, new business grew at high single-digit rates. The end user or enterprise function leader
part of GTS grew, new business, mid-teens year-over-year. And GBS was up 13% over prior year on new
business. So we actually saw a pretty strong new business results across all of the markets we sell into in
the fourth quarter.
And as we mentioned, we view new business as a real leading indicator for what's happening in themarket in the moment, so to speak. And so again, we saw a modest improvement in new business from
Q2 to Q3. That continued from Q3 to Q4 with tech vendor actually growing for the first time in 2023 in the
fourth quarter.
As you know, NCVI and CV growth are a function of the combination of new business and retention. And
as we talked about in our prepared remarks and also in response to Jeff's question, there's still a lot ofpressure, and Gene alluded to this as well, still a lot of pressure on retention in the small tech vendor partof the market. And we still have a lot of renewals that haven't been touched -- or coming renewals thathaven't been touched since the tech sector really started to recalibrate, call it, third, fourth quarter of2022.
So still a little bit of retention pressure. However, new business, we definitely view as a leading indicator.
And again, that's part of what gives us confidence to say that we expect CV to bottom during 2024 andstart to reaccelerate during 2024 as well.
Toni Michele Kaplan
Morgan Stanley, Research Division
Makes a lot of sense. And then just for a follow-up, I wanted to ask about headcount. The -- I guess, what
are your expectations for headcount growth in '24? And just wanted to understand a little bit more about-- it seems like headcount growth has been slowing the last 2 quarters to like below normal levels. I know
there was a catch-up in sort of the prior year and earlier in '23.
So I guess is the slower headcount sort of helping manage margin? Or is it, I guess, an indicator that
there's -- I don't think you're saying there's less opportunity. But just wanted to understand the sort of
below-normal headcount growth levels that we're seeing now.
Eugene A. Hall
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

11

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

CEO & Director
So Toni, really look at it as there's a very enormous market opportunity. We intend to capture that market
opportunity over the next many years. Part of our core strategy projected at that opportunity is growing
our headcount to capture it. That headcount growth, it can be faster or slower depending on the actual
kind of selling capacity of the team we have. And right now, we believe we have a lot of selling capacity
embedded actually in the capacity we have today. Over time though, that's going to grow as we grow ourbusiness.
Craig W. Safian
Executive VP & CFO
And as we mentioned during our prepared remarks, we've actually got dialed into our plan, combination
GTS/GBS quota-bearing headcount growth of mid- to high single digits. And as always, we're prepared
to go faster. As both Gene and I mentioned, we have recruitment capacity go faster if we want to. And so
we've got dialed in mid- to high single-digit growth in GTS and GBS quota-bearing headcount, and we cango faster if we see that rebound coming faster as well.
Operator
Our next question comes from the line of Heather Balsky with Bank of America.
Heather Nicole Balsky
BofA Securities, Research Division
I was muted. Sorry about that. I wanted to go back to the renewals on the tech vendor side and just ask
you, are there any -- I mean, obviously, if companies are going under, there's nothing you can control
there, but what you can do on that front. And can you help us in perspective how material the wave ofrenewals are? I know that's something investors have been curious about.
Eugene A. Hall
CEO & Director
Again, if you look at the larger companies in the market, renewals are going kind of normally. It's a little
slower than usual because, again, they're laying off tens of thousands of people. We expect that willchange. There's plenty of demand. Again, we expect global IT spend in this year to grow by 7% to almost$5 trillion. So plenty of demand there. We expect over time, that will normalize.
And so the real issue on retention is these very small tech vendors, which are over time a great market
for us. But there's a shift going on now from what used get funding, through now, what does funding is,
as I mentioned, there's a real focus on AI. And so those companies that are in less-popular segments forfunding these days can't get funding. And if they haven't been as successful commercially, the either get
acquired or go out of business. In which case, our retention -- it affects our retention.
Craig W. Safian
Executive VP & CFO
And the other thing I'd add, Heather, just on the larger tech clients, typically, what we see is acombination of maybe modestly less growth than we would normally buy or normally see through renewal
cycles or modest cuts or reduction to spend. But they maintain a pretty significant Gartner presence
always.
And what we then do is make sure that we are there to win back that business, and it actually does help
drive the growth coming out of tougher macro environment. And that's sort of what we've always seen
in tough macro environments, tech vendor or otherwise, where we'll take some nicks from a retention
perspective, but stay embedded, still delivering huge value to our clients, and then win back and grow thatbusiness over the long term.
Heather Nicole Balsky
BofA Securities, Research Division
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

12

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

And then just kind of asking another version of probably something you've already said in the samequestion, but you were talking about CV on the tech vendor side normalizing. Last quarter, you talked
about normalizing over 12 to 18 months. Is that still your outlook? Based on what you saw in the fourth
quarter, how are you thinking about that?
Craig W. Safian
Executive VP & CFO
So our long-term view on this segment of the business is unchanged. We believe it can grow in line with
our medium-term objectives. We still believe that we are going to see reacceleration of this businessover time. Whether it's 9 to 15 months or 12 to 18 or 24, it will be in that range that we actually see that
reacceleration.
But we -- the market here is still really strong. Our offerings still drive really huge value for our clientsin this segment. And over the medium term, there's no reason why this can't get back to 12% to 16%
growth, consistent with our medium-term objective for this part of the business.
Operator
Our next question comes from the line of Seth Weber with Wells Fargo.
Seth Robert Weber
Wells Fargo Securities, LLC, Research Division
I think maybe first, just a clarification. When you talk about your research revenue guide, I think backing
into it, it kind of implies a non-subscription revenue growth of down -- like down low double digits. Is thatthe right way to think about what's baked into your model?
Craig W. Safian
Executive VP & CFO
Yes, that is the correct math, Seth. You got it.
Seth Robert Weber
Wells Fargo Securities, LLC, Research Division
Okay. And then just on the strong new business wins, can you just frame that a little bit? I mean, is that afunction of comps are easier, productivity is better? Or are you actually seeing or hearing better sentimentfrom your customers? Is -- are the sales cycles getting shorter? It just seems like the new business wins
are just really strong, and I'm just trying to tie all these things together with your guidance.
Eugene A. Hall
CEO & Director
Yes. So first I'd say is we have a strong value proposition. And so when clients see the value they get fromour offerings, they want to buy. So that's what -- that's fundamentally what's driving demand. And on
top of that, we're always focused on things that impact sales productivity. And there's things that -- andthere's things like the tools that we have done, the process we have. And then as Craig mentioned in his
remarks, tenure can affect as well. We're having modest improvement in tenure as well. And so -- but thefundamental thing that's driving it is really intrinsic demand from clients because they have to need forour services to get on the value of them.
Seth Robert Weber
Wells Fargo Securities, LLC, Research Division
Right. But has sentiment -- has customer sentiment changed at all over the last quarter? Has it gotten
better? Or have the sales cycles changed? Or anything you'd call out for the acceleration of new businesswins here?
Eugene A. Hall
CEO & Director
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

13

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

I'd say the sort of selling environment modestly improved throughout 2023.
Operator
Our next question comes from the line of Andrew Nicholas with William Blair.
Andrew Owen Nicholas
William Blair & Company L.L.C., Research Division
I wanted to touch on artificial intelligence as a driver of new business. I realize it was one of the topics,
Gene, that you outlined at the front. Just kind of curious, is there any way to kind of quantify or maybe
even subjectively talk about AI as the driver of new business, cross-sell, new conversations with clients? I
understand it's part of an ever-evolving tech landscape, but I'm just wondering if there's been any boost
or notable boost from that topic specifically as it relates to new client wins and new business.
Eugene A. Hall
CEO & Director
Andrew, our -- we serve clients with a wide variety of areas, as you know, and they get value with all
those areas. AI has had a lot of publicity over the last year. And so there is -- throughout the media, etcetera. And so the -- there is an unusually high level of interest understanding what AI is and how it could
affect our clients' businesses.
I'd say it's just like the other things that we help our clients with. It's not something that's causing likean extra 20% of demand or something. It's an area that is one of the things we cover that clients haveinterest in. Just clients that have cost problems, they're interested on cost optimization as opposed to AI.
So it kind of depends on the situation of the individual client, but it's certainly an area of robust demand.
Andrew Owen Nicholas
William Blair & Company L.L.C., Research Division
Great. And then for my follow-up, I just wanted to hone in on the CV growth bottoming part of yourguidance. I recognize that first quarter and first half NCVI are important inputs, and you've beenconservative. Gene, I think in the press release, you said that you had an opportunity for upside and that
guidance was achievable across a wide range of economic scenarios.
So just trying to putting all these pieces together. Is it fair for us to assume that CV growth is bottoming inthe second half in your guidance? And then upside would be from that happening earlier? Or is there someother way for us to think about the underlying assumptions there?
Craig W. Safian
Executive VP & CFO
I think the way to think about the CV and the revenue, and obviously, our revenue guide for the Research
segment and the subscription revenue piece, the revenue is always going to lag the contract value
recovery. And on top of that, as you know, first half changes to NCVI are going to have a bigger impact on
the 2024 revenue run-out than big step-ups in Q3 or Q4, which are great and drive great cash flow andwill drive future revenue, but have minimal impact on 2024 revenue.
So we're not guiding to a revenue or CV number for the year, nor are we pointing to specifically where thebottom is, but we have baked into our outlook a bottoming of that CV and a reacceleration of that CV overthe course of 2024.
Operator
Our next question comes from the line of Manav Patnaik with Barclays.
Brendan J. Popson
Barclays Bank PLC, Research Division

Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

14

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

This is Brendan on for Manav. I just want to ask how you guys think about getting back to double-digit CV
growth. Obviously, if your QBH is mid- to high single digit, your new business is still pretty strong. So it
seems like really it's just like a wallet retention, higher cancellation issue for now. Is it just that, that kindof goes away over time? Or do you actually expect even more kind of new business productivity, if you
will, from QBH? Or I guess, how do you guys think about that?
Craig W. Safian
Executive VP & CFO
Brendan, I mean, the biggest thing impacting contract value and contract value growth right now is
the tech vendor part of the business. And so as we mentioned, the enterprise function leader part ofour business grew at double-digit growth rates in the fourth quarter and actually has been a consistent
double-digit grower through the course of 2023. And so if you look at that 7.7% overall contract value
growth, the reality is the enterprise function leader portion of the business, which is more than 75% of
total CV, is growing at double-digit growth rates.
And the tech vendor portion of the business, as we mentioned in our prepared remarks, was essentiallyflat for the year. And so as we start to see a reacceleration of the tech vendor business, which again, is alittle less than 25% of total CV, that obviously has an impact on the overall CV growth.
The other piece that I think is obviously super important is we caught up on our hiring quite a bit overthe course of 2022. And so what that meant is, over the course of 2023, we had a lot of people very earlyin their Gartner sales careers. And as you know, as people come up with tenure curve, their productivity
increases.
And so we feel confident that we've got enough capacity from a selling perspective heading into 2024
given the combination of tech sector rebound, and probably more importantly, our salespeople coming up
the tenure curve. That should provide the right amount of fuel, if you will, to drive contract value growthin 2024. And we're growing our GTS, GBS headcount, mid- to high single digits during 2024, and that's
really about accelerating and sustaining that growth as we roll into 2025 and 2026.
Brendan J. Popson
Barclays Bank PLC, Research Division
Okay. And then just any call-outs or growth rates you can give us within GBS? Obviously, it's still
performing pretty well. So just anything -- any other color you can give us.
Craig W. Safian
Executive VP & CFO
Yes. I mean, it's still 12.9% or 13% year-over-year growth on a bigger base, and so getting bigger andbigger and sustaining growth within our medium-term objective for the segment. As I mentioned in
my prepared remarks, supply chain, legal and HR are the 3 fastest-growing pieces of the segment. But
obviously, all pieces have to be growing nicely for us to register a 13% year-over-year CV growth.
Operator
Our next question comes from the line of Josh Chan with UBS.
Joshua K. Chan
UBS Investment Bank, Research Division
I know that you don't guide to CV trajectory or NCVI. But I guess it sounds like you are emphasizing more
the tech vendor renewal dynamic here. So I guess, are we to interpret that as there being more of an
impact of that on Q1 than normal? Could you just kind of explain the rationale behind calling that specificdynamic out the way you did?
Craig W. Safian
Executive VP & CFO
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

15

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

Yes, great question. So we're always looking at the skew of contract end dates and contract value
associated with that. And as we've talked about in the past, generally speaking, we're pretty evenly
skewed across the year. This year, we actually have a little bit of a bubble, not a huge one, but just a little
bit more than average in -- with our tech vendor clients in the first quarter.
And so you may have heard us use the word prudent several times during our prepared remarks. We justwant to make sure that our guidance reflects our most recent performance and what we know about thenext couple of quarters coming up. And so we've taken a prudent view on our first half NCVI to take that
into account.
That said, again, I'll reiterate, we do expect CV growth overall to bottom during 2024 and begin toreaccelerate with -- even with that first quarter focus on tech vendor renewals.
Joshua K. Chan
UBS Investment Bank, Research Division
Okay. I appreciate the color there. That's really helpful. And if I can shift over to margins. Could you talkabout the different drivers of margin year-over-year? I mean, you have positive revenue growth, you havereaccelerating CV, the cost structure seems to be in a good spot. So are there more margin pluses thanminuses? And how does that reconcile with the guidance?
Craig W. Safian
Executive VP & CFO
Sure, Josh. The simplest way to think about it is that, with our targeted headcount growth in GTS and
GBS of mid- to high single digits and think about that, not the only place that we're actually growing but
growing a little bit elsewhere, combined with normal merit and wage inflation combined with a growing
Conferences business, if you look at the implied operating expense in the guidance, it's up about 8% or
9% year-over-year, which aligns with the headcount growth and the conference growth that we've got
dialed into the guidance.
And so as we mentioned, a much more "normal" cadence of operating expense in 2024 as compared toprior years, where we fell behind and then we're catching up, et cetera, et cetera. So a much more normal
quarter-to-quarter build of our operating expense.
We are -- the biggest thing that drives our revenue for 2024 is the ending contract value for 2023. And
obviously, as we talked about on Andrew's question, the revenue will lag the recovery in contract value.
And so the reality is -- and again, we've been not guiding, but pointing this way for the last several
quarters, that this was going to be the reality for 2024, which is we're going to get back on our normal
cadence of investing for the future and growing our sales force and growing other areas.
We are dealing with the CV deceleration through 2023. And obviously, that has an impact on 2024 forrevenues. Obviously, the non-subscription revenue performance also mutes the overall revenue as well; as
does the Consulting growth rate, which while still within our medium-term guidance, given we had such astrong year in contract optimization, we're being thoughtful about the growth rates there.
And so it's a little bit of all of those factors impacting the top line with what I would consider "normal"
operating expense growth baked into the 2024 guide.
Operator
Our next question comes from the line of Surinder Thind with Jefferies LLC.
Surinder Singh Thind
Jefferies LLC, Research Division
Just taking a step back, if we look at the big picture and what I would call the relative strength of theeconomy, why do you think the clients on the tech side aren't spending more at this point? And I guess inyour conversations, what would get them to commit? Like what are they looking for at this point?
Craig W. Safian
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

16

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

Executive VP & CFO
So Surinder, on the tech side, I think it's really the -- so it's a combination of the recalibration of thatmarket and also -- when I say recalibration, down to the things Gene was talking about, where we actually
have a really healthy business on the small end of tech and there is funding flowing, but it's not flowing to
the same places that it may have been a year or 2 or 3 ago. And so we're just dealing with that.
And again, we're going after the opportunities where the money is or we're fishing where the fish are. But
as you've seen, there are still large tech sector layoffs happening a year or almost even 15 months since
they began. And selling into that environment when they're in the process of cutting tens of thousands ofjobs is a little more challenging than it would be if they completely recalibrated.
So I think we're still in. We're still driving huge value for those clients. They're still very important clientsfor us. We're going to be there to help them as they rebound and come through the recalibration. It's
just going to take a little bit of time. But we're confident in the value we provide. We're confident, as I
mentioned earlier, in the long-term or medium-term growth prospects for this part of the business. But thefact is they are still significantly recalibrating and we are along for that ride, so to speak.
Eugene A. Hall
CEO & Director
Just to add a little bit. When you're selling into a company that is actively making layoffs, the attention ofpeople's focus is on who they're going to lay off or whether, in fact, they're going to get laid off. And so ittakes a little while -- that's a much tougher -- that's kind of the toughest selling environment. They'll get
through that and will return to normal. That's the larger end. And on the small end, Craig described very
well.
Surinder Singh Thind
Jefferies LLC, Research Division
Got it. And then I guess if we think about that or advance that line of thinking, so as you kind of more
broadly think about the business and all of these clients that you serve, so is there arguably more,
I guess, cyclicality or potential volatility today in your business than maybe in prior cycles? Would
maybe the reason being there's more PE/VC-backed firms now, that they're just got a larger part of theecosystem, so they're just more willing to make quicker strategic pivots or spending decision changes orother things? Is there something structural perhaps that we should be aware of or at least we should bethinking about?
Eugene A. Hall
CEO & Director
So our perspective is there's nothing structural about it. What happened was, during the pandemic, there
was a pull-forward of tech spending. The tech -- many of the tech companies, probably most of them,assumed that was going to last forever, it turned out it was just a pull forward. Now they're just adjustingto getting back to normal. And it's as simple as that. So unless pandemics become cyclical, I think we're inpretty good shape.
Craig W. Safian
Executive VP & CFO
Yes. I also think, Surinder, just to sort of underscore that point. When we talk about the overall businessor market opportunity, I'll focus on the market opportunity. So roughly $200 billion market opportunity,$190 billion of that is outside of the tech vendor opportunity. So we remain very focused on that big prizeof $190-plus billion market opportunity serving enterprise function leaders across GTS and GBS. Andagain, we're confident that the tech vendor market is a really strong market, but the reality is $190 billion
out of that $200 billion market opportunity is the enterprise function leader opportunity.
Operator
Our next question comes from the line of Jeff Silber with BMO Capital Markets.
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

17

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

Jeffrey Marc Silber
BMO Capital Markets Equity Research
I know it's late. I'll just ask one, though it's multi-part. Can we talk about the pricing environment,
can you just remind us what price increases you put in for this year? Are you getting any pushback?
And others in the space have been providing some breaks for extending the length of the term, is thatsomething you're doing as well?
Craig W. Safian
Executive VP & CFO
Jeff, thanks for a quick question. On the pricing side, we're a little over 4%. We did our price increase in
November of this year, which is when we typically do it. A little bit lower than what we did in '21 and '22,
largely because we've seen inflation come down a little bit, most importantly wage inflation come down alittle bit. And so we're in that around 4%, a little bit more than 4%.
I think clients, by and large, are not pushing back on it. Again, remember, the average spend per client is,order of magnitude, $250,000. So the difference between a 3% or a 4% increase is pretty de minimis.
And again -- and we're very focused on making sure that our products and services have incremental
value each and every year. And we're continuing to sell with our upfront invoicing and a real focus on that.
We're continuing to sell more and more multiyear contracts with our focus on that.
And so I'd say, yes, the environment has been a little tougher, but we've been managing to stick to ourguns on the things that we know drive huge economic value for the business, which is sticking to our
pricing guns, not discounting, selling multiyear contracts and making sure we get the invoicing done
upfront. And I think our teams have done a phenomenal job of sticking to our core knitting there.
Operator
Our next question comes from the line of George Tong with Goldman Sachs.
Keen Fai Tong
Goldman Sachs Group, Inc., Research Division
You mentioned 1Q tech vendor renewals are especially important because of a little bubble there. Can you
help quantify that? How much concentration is there compared to other quarters in the year?
Craig W. Safian
Executive VP & CFO
Yes. I think -- I mean, again, remember, our tech vendor CV is a little less than 25% of total CV. Normally,Q1 represents a little bit more than 25% of total renewals on the overall franchise. This year, with tech
vendors, it's in the low to mid-30% of overall CV. So it's not a huge bubble, it's just a little bit of an
overweighting, more than normal, in the first quarter.
Keen Fai Tong
Goldman Sachs Group, Inc., Research Division
Got it. That's helpful. And then you're guiding to EBITDA margins of 23% for the year. What do you see as
the major driver of potential upside to that target?
Craig W. Safian
Executive VP & CFO
I think at this point, George, it's revenue upside will drive the biggest potential for margin upside fromthat 23%. As we've talked about -- I can't remember whose question it was, I think it was Josh's question.
The OpEx is -- again, forgive me for using this term, more normal than it has been for the last few years.
We're back on our territory growth planning. We're back on our more normal merit increases kicking in on
April 1. And so I feel really -- we feel really good about the OpEx plan we've got. And so I think revenue
Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

18

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

upside across the various business lines would be the place that could potentially unlock a little bit of
margin upside.
That said, if we are doing better from a revenue perspective, and again, Gene and I both alluded to this,
we've got recruitment capacity to go faster. And so we want to make sure that not only are we doing wellin 2024, that we are setting ourselves up to continue to perform really strongly in '25 and '26. And so if
we have the opportunity to go a little bit faster on GTS and GBS headcount growth, we're going to takethat opportunity for sure.
OperatorThank you. And I'm showing no further questions at this time. I'd like to hand the call back over to Gene
Hall for closing remarks.
Eugene A. Hall
CEO & Director
So here are the takeaways for today's call. Gartner drove another strong performance in Q4. We deliver
incredible value whether our clients are struggling, thriving or anywhere in between. We're exceptionallyagile and continuously adapt to the changing world, and we know the right things to do to be successful inany environment.
Looking ahead, we're well positioned to continue our sustained record of success for into the future. Ourclient value proposition and addressable market opportunity will allow us to drive long-term sustained
double-digit revenue growth. We expect margins will expand modestly over time. And we generatesignificant free cash flow well in excess of net income. As we invest for future growth, we'll return
significant levels of excess capital to our shareholders. This reduces shares outstanding and increases
returns over time.
Thanks for joining us today, and we look forward to updating you again next quarter.
Operator
This concludes today's conference call. Thank you for your participation. You may now disconnect.

Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence

19

GARTNER, INC. FQ4 2023 EARNINGS CALL | FEB 06, 2024

Copyright © 2024 by S&P Global Market Intelligence, a division of S&P Global Inc. All rights reserved.
These materials have been prepared solely for information purposes based upon information generally available to the public
and from sources believed to be reliable. No content (including index data, ratings, credit-related analyses and data, research,model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered,
reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permissionof S&P Global Market Intelligence or its affiliates (collectively, S&P Global). The Content shall not be used for any unlawful or
unauthorized purposes. S&P Global and any third-party providers, (collectively S&P Global Parties) do not guarantee the accuracy,completeness, timeliness or availability of the Content. S&P Global Parties are not responsible for any errors or omissions, regardlessof the cause, for the results obtained from the use of the Content. THE CONTENT IS PROVIDED ON "AS IS" BASIS. S&P GLOBALPARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS,
THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWAREOR HARDWARE CONFIGURATION. In no event shall S&P Global Parties be liable to any party for any direct, indirect, incidental,
exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without
limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content
even if advised of the possibility of such damages. S&P Global Market Intelligence's opinions, quotes and credit-related and otheranalyses are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase,
hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P Global Market
Intelligence may provide index data. Direct investment in an index is not possible. Exposure to an asset class represented by anindex is available through investable instruments based on that index. S&P Global Market Intelligence assumes no obligation to
update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for theskill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and otherbusiness decisions. S&P Global Market Intelligence does not act as a fiduciary or an investment advisor except where registeredas such. S&P Global keeps certain activities of its divisions separate from each other in order to preserve the independence andobjectivity of their respective activities. As a result, certain divisions of S&P Global may have information that is not available toother S&P Global divisions. S&P Global has established policies and procedures to maintain the confidentiality of certain nonpublic
information received in connection with each analytical process.
S&P Global may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or fromobligors. S&P Global reserves the right to disseminate its opinions and analyses. S&P Global's public ratings and analyses are madeavailable on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com(subscription), and may be distributed through other means, including via S&P Global publications and third-party redistributors.
Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.
© 2024 S&P Global Market Intelligence.

Copyright © 2024 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.

spglobal.com/marketintelligence20