Segment Information

On April 5, 2017, Gartner completed its previously announced acquisition of CEB.

With the CEB acquisition, Gartner is reporting four business segments reflecting the Company’s enlarged scale and breadth of advisory services aligned to the mission-critical priorities of virtually all functional business leaders across every industry and size of enterprise worldwide. The Company’s reportable segments are as follows:

•

Research - includes our previous Gartner Research segment as well as the results of CEB’s core subscription-based best practice and decision support research activities. In addition, Research now includes our Strategic Advisory Services ("SAS") business, which was previously included in the Consulting segment. Research consists primarily of subscription-based research products, access to research inquiry, peer networking services, and membership programs.


•	Consulting - includes our previous Gartner Consulting segment except, as noted above, the results of our SAS business are now included in the Research segment. Consulting consists primarily of consulting and measurement engagements.


•	Events - includes our previous Gartner Events segment and the results of CEB’s former Evanta business and destination event activities. Events consists of various symposia, conferences, exhibitions, and destination activities.


•	Talent Assessment & Other - this is a new segment for Gartner and it includes CEB's previously disclosed Talent Assessment business as well as certain CEB non-subscription based talent products and services.

The Company evaluates segment performance and allocates resources based on gross contribution margin. Gross contribution, as presented in the table below, is defined as operating income excluding certain Cost of services and product development expenses, Selling, general and administrative expenses, Depreciation, Amortization of intangibles, and Acquisition and integration charges. Certain bonus and fringe benefit costs included in consolidated Cost of services and product development are not allocated to segment expense. The accounting policies used by the reportable segments are the same as those used by the Company. There are no intersegment revenues. The Company does not identify or allocate assets, including capital expenditures, by reportable segment. Accordingly, assets are not reported by segment because the information is not available by segment and is not reviewed in the evaluation of segment performance or in making decisions in the allocation of resources.

The following tables present operating information about the Company’s reportable segments for the periods indicated (in thousands). The segment results for the three and six months ended June 30, 2017 include the results of CEB beginning on the acquisition date:



Three Months Ended June 30, 2017	Research		Consulting		Events		Talent Assessment & Other		Consolidated
Revenues	$	613,732	$	91,693	$	91,205	$	47,101	$	843,731
Gross contribution	400,571		31,433		49,735		17,297		499,036
Corporate and other expenses									(597,424		)
Operating (loss) income									$	(98,388	)



Three Months Ended June 30, 2016	Research		Consulting		Events		Talent Assessment & Other		Consolidated
Revenues (1)	$	456,690	$	86,548	$	66,760	$	—	$	609,998
Gross contribution (1)	318,621		28,341		36,062		—		383,024
Corporate and other expenses									(299,725		)
Operating income									$	83,299



Six Months Ended June 30, 2017	Research		Consulting		Events		Talent Assessment & Other		Consolidated
Revenues	$	1,125,038	$	170,287	$	126,474	$	47,101	$	1,468,900
Gross contribution	751,684		55,370		63,302		17,297		887,653
Corporate and other expenses									(932,527		)
Operating (loss) income									$	(44,874	)



Six Months Ended June 30, 2016	Research		Consulting		Events		Talent Assessment & Other		Consolidated
Revenues (1)	$	904,280	$	164,169	$	98,815	$	—	$	1,167,264
Gross contribution (1)	631,630		52,895		49,045		—		733,570
Corporate and other expenses									(585,842		)
Operating income									$	147,728

(1) Effective June 30, 2017, the Company is reporting the results of its SAS business in Research whereas previously the SAS business was reported with Consulting. As a result, revenues of $7.5 million and $14.8 million pertaining to the three and six months ended June 30, 2016, respectively, were reclassified from Consulting to Research to be comparable with the current year presentation. Gross contribution of $4.9 million and $9.8 million for the three and six months ended June 30, 2016, respectively, was also reclassified from Consulting to Research.

The following table provides a reconciliation of total segment gross contribution to net (loss) income for the periods indicated (in thousands):



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2017			2016		2017			2016
Total segment gross contribution	$	499,036		$	383,024	$	887,653		$	733,570
Costs and expenses:
Cost of services and product development - unallocated (1)	7,309			4,448		8,366			9,769
Selling, general and administrative	408,226			272,009		712,470			529,420
Depreciation and amortization	83,557			15,235		100,087			30,252
Acquisition and integration charges	98,332			8,033		111,604			16,401
Operating (loss) income	(98,388		)	83,299		(44,874		)	147,728
Interest expense and other, net	44,363			6,108		49,380			10,230
(Benefit) provision for income taxes	(50,470		)	25,565		(38,406		)	40,884
Net (loss) income	$	(92,281	)	$	51,626	$	(55,848	)	$	96,614


(1)	The unallocated amounts consist of certain bonus and related fringe costs recorded in Consolidated cost of services and product development expense that are not allocated to segment expense. The Company's policy is to only allocate bonus and related fringe charges to segments for up to 100% of the segment employee's target bonus. Amounts above 100% are absorbed by corporate.