QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | |||||
For the quarterly period ended | |||||
OR | |||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
(State or other jurisdiction of | (I.R.S. Employer | ||||||||||
incorporation or organization) | Identification Number) | ||||||||||
(Zip Code) | |||||||||||
(Address of principal executive offices) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||||||||
Smaller reporting company | Emerging growth company | ||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | |||||||||||||||||||||||
Page | |||||
PART II. OTHER INFORMATION | |||||
March 31, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Fees receivable, net of allowances of $ | |||||||||||
Deferred commissions | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, equipment and leasehold improvements, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Total Assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | $ | |||||||||
Deferred revenues | |||||||||||
Current portion of long-term debt | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net of deferred financing fees | |||||||||||
Operating lease liabilities | |||||||||||
Other liabilities | |||||||||||
Total Liabilities | |||||||||||
Stockholders’ Equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss, net | ( | ( | |||||||||
Accumulated earnings | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
Total Stockholders’ Equity | |||||||||||
Total Liabilities and Stockholders’ Equity | $ | $ |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenues: | |||||||||||
Research | $ | $ | |||||||||
Conferences | |||||||||||
Consulting | |||||||||||
Total revenues | |||||||||||
Costs and expenses: | |||||||||||
Cost of services and product development | |||||||||||
Selling, general and administrative | |||||||||||
Depreciation | |||||||||||
Amortization of intangibles | |||||||||||
Acquisition and integration charges | |||||||||||
Total costs and expenses | |||||||||||
Operating income | |||||||||||
Interest expense, net | ( | ( | |||||||||
Other income, net | |||||||||||
Income before income taxes | |||||||||||
Provision for income taxes | |||||||||||
Net income | $ | $ | |||||||||
Net income per share: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted average shares outstanding: | |||||||||||
Basic | |||||||||||
Diluted |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2022 | 2021 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Foreign currency translation adjustments | ( | ||||||||||
Interest rate swaps – net change in deferred gain or loss | |||||||||||
Pension plans – net change in deferred actuarial loss | |||||||||||
Other comprehensive (loss) income, net of tax | ( | ||||||||||
Comprehensive income | $ | $ |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss, Net | Accumulated Earnings | Treasury Stock | Total | ||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Issuances under stock plans | — | — | — | ||||||||||||||||||||||||||||||||
Common share repurchases | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||
Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss, Net | Accumulated Earnings | Treasury Stock | Total | ||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | |||||||||||||||||||||||||||||||
Issuances under stock plans | — | ( | — | — | |||||||||||||||||||||||||||||||
Common share repurchases | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2022 | 2021 | ||||||||||
Operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation expense | |||||||||||
Deferred taxes | ( | ||||||||||
Loss on impairment of lease related assets, net | |||||||||||
Reduction in the carrying amount of operating lease right-of-use assets | |||||||||||
Amortization and write-off of deferred financing fees | |||||||||||
Gain on de-designated swaps | ( | ( | |||||||||
Changes in assets and liabilities: | |||||||||||
Fees receivable, net | |||||||||||
Deferred commissions | ( | ||||||||||
Prepaid expenses and other current assets | ( | ( | |||||||||
Other assets | ( | ( | |||||||||
Deferred revenues | |||||||||||
Accounts payable and accrued and other liabilities | ( | ( | |||||||||
Cash provided by operating activities | |||||||||||
Investing activities: | |||||||||||
Additions to property, equipment and leasehold improvements | ( | ( | |||||||||
Cash used in investing activities | ( | ( | |||||||||
Financing activities: | |||||||||||
Proceeds from employee stock purchase plan | |||||||||||
Payments on revolving credit facility | ( | ||||||||||
Payments on borrowings | ( | ( | |||||||||
Purchases of treasury stock | ( | ( | |||||||||
Cash used in financing activities | ( | ( | |||||||||
Net decrease in cash and cash equivalents and restricted cash | ( | ( | |||||||||
Effects of exchange rates on cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents and restricted cash, beginning of period | |||||||||||
Cash and cash equivalents and restricted cash, end of period | $ | $ |
March 31, | December 31, | |||||||||||||
2022 | 2021 | |||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash classified in (1): | ||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||
Cash and cash equivalents and restricted cash | $ | $ | ||||||||||||
Research | Conferences | Consulting | Total | ||||||||||||||||||||
Balance at December 31, 2021 (1) | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency translation impact | ( | ( | ( | ( | |||||||||||||||||||
Balance at March 31, 2022 (1) | $ | $ | $ | $ |
March 31, 2022 | Customer Relationships | Technology-related | Other | Total | ||||||||||||||||||||||
Gross cost at December 31, 2021 | $ | $ | $ | $ | ||||||||||||||||||||||
Foreign currency translation impact | ( | ( | ( | |||||||||||||||||||||||
Gross cost | ||||||||||||||||||||||||||
Accumulated amortization (1) | ( | ( | ( | ( | ||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | $ | $ |
December 31, 2021 | Customer Relationships | Technology-related | Other | Total | ||||||||||||||||||||||
Gross cost | $ | $ | $ | $ | ||||||||||||||||||||||
Accumulated amortization (1) | ( | ( | ( | ( | ||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ |
2022 (remaining nine months) | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
$ |
Primary Geographic Market | Research | Conferences | Consulting | Total | ||||||||||
United States and Canada | $ | $ | $ | $ | ||||||||||
Europe, Middle East and Africa | ||||||||||||||
Other International | ||||||||||||||
Total revenues | $ | $ | $ | $ |
Primary Geographic Market | Research | Conferences | Consulting | Total | ||||||||||
United States and Canada | $ | $ | $ | $ | ||||||||||
Europe, Middle East and Africa | ||||||||||||||
Other International | ||||||||||||||
Total revenues | $ | $ | $ | $ |
Timing of Revenue Recognition | Research | Conferences | Consulting | Total | ||||||||||
Transferred over time (1) | $ | $ | $ | $ | ||||||||||
Transferred at a point in time (2) | ||||||||||||||
Total revenues | $ | $ | $ | $ |
Timing of Revenue Recognition | Research | Conferences | Consulting | Total | ||||||||||
Transferred over time (1) | $ | $ | $ | $ | ||||||||||
Transferred at a point in time (2) | ||||||||||||||
Total revenues | $ | $ | $ | $ |
March 31, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Assets: | |||||||||||
Fees receivable, gross (1) | $ | $ | |||||||||
Contract assets recorded in Prepaid expenses and other current assets (2) | $ | $ | |||||||||
Contract liabilities: | |||||||||||
Deferred revenues (current liability) (3) | $ | $ | |||||||||
Non-current deferred revenues recorded in Other liabilities (3) | |||||||||||
Total contract liabilities | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Numerator: | ||||||||||||||
Net income used for calculating basic and diluted income per share | $ | $ | ||||||||||||
Denominator: | ||||||||||||||
Weighted average common shares used in the calculation of basic income per share | ||||||||||||||
Dilutive effect of outstanding awards associated with stock-based compensation plans (1) | ||||||||||||||
Shares used in the calculation of diluted income per share | ||||||||||||||
Basic income per share | $ | $ | ||||||||||||
Diluted income per share | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
Award type | 2022 | 2021 | ||||||||||||
Stock appreciation rights | $ | $ | ||||||||||||
Restricted stock units (2) | ||||||||||||||
Common stock equivalents | ||||||||||||||
Total (1) | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
Expense category line item | 2022 | 2021 | ||||||||||||
Cost of services and product development | $ | $ | ||||||||||||
Selling, general and administrative | ||||||||||||||
Total (1) (2) | $ | $ |
Three Months Ended March 31, 2022 | Research | Conferences | Consulting | Consolidated | ||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Gross contribution | ( | |||||||||||||||||||||||||
Corporate and other expenses | ( | |||||||||||||||||||||||||
Operating income | $ |
Three Months Ended March 31, 2021 | Research | Conferences | Consulting | Consolidated | ||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Gross contribution | ||||||||||||||||||||||||||
Corporate and other expenses | ( | |||||||||||||||||||||||||
Operating income | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Total segment gross contribution | $ | $ | ||||||||||||
Costs and expenses: | ||||||||||||||
Cost of services and product development - unallocated (1) | ||||||||||||||
Selling, general and administrative | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Acquisition and integration charges | ||||||||||||||
Operating income | ||||||||||||||
Interest expense and other, net | ( | ( | ||||||||||||
Less: Provision for income taxes | ||||||||||||||
Net income | $ | $ |
March 31, | December 31, | |||||||||||||
Description | 2022 | 2021 | ||||||||||||
2020 Credit Agreement - Term loan facility (1) | $ | $ | ||||||||||||
2020 Credit Agreement - Revolving credit facility (1), (2) | ||||||||||||||
Senior Notes due 2028 (“2028 Notes”) (3) | ||||||||||||||
Senior Notes due 2029 (“2029 Notes”) (4) | ||||||||||||||
Senior Notes due 2030 (“2030 Notes”) (5) | ||||||||||||||
Other (6) | ||||||||||||||
Principal amount outstanding (7) | ||||||||||||||
Less: deferred financing fees (8) | ( | ( | ||||||||||||
Net balance sheet carrying amount | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Number of shares repurchased (1) | ||||||||||||||
Cash paid for repurchased shares (in thousands) (2) | $ | $ |
Interest Rate Swaps | Defined Benefit Pension Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||||||
Balance – December 31, 2021 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive income (loss) activity during the period: | ||||||||||||||||||||||||||
Change in AOCL before reclassifications to income | ( | ( | ||||||||||||||||||||||||
Reclassifications from AOCL to income (2), (3) | ||||||||||||||||||||||||||
Other comprehensive income (loss), net | ( | ( | ||||||||||||||||||||||||
Balance – March 31, 2022 | $ | ( | $ | ( | $ | ( | $ | ( |
Interest Rate Swaps | Defined Benefit Pension Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||||||
Balance – December 31, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive income (loss) activity during the period: | ||||||||||||||||||||||||||
Change in AOCL before reclassifications to income | ||||||||||||||||||||||||||
Reclassifications from AOCL to income (2), (3) | ||||||||||||||||||||||||||
Other comprehensive income (loss), net | ||||||||||||||||||||||||||
Balance – March 31, 2021 | $ | ( | $ | ( | $ | ( | $ | ( |
March 31, 2022 | ||||||||||||||||||||||||||||||||
Derivative Contract Type | Number of Contracts | Notional Amounts | Fair Value Asset (Liability), Net (3) | Balance Sheet Line Item | Unrealized Loss Recorded in AOCL, net of tax | |||||||||||||||||||||||||||
Interest rate swaps (1) | $ | $ | ( | Other liabilities | $ | ( | ||||||||||||||||||||||||||
( | Accrued liabilities | |||||||||||||||||||||||||||||||
Foreign currency forwards (2) | ( | Accrued liabilities | ||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | ( |
December 31, 2021 | ||||||||||||||||||||||||||||||||
Derivative Contract Type | Number of Contracts | Notional Amounts | Fair Value Asset (Liability), Net (3) | Balance Sheet Line Item | Unrealized Loss Recorded in AOCL, net of tax | |||||||||||||||||||||||||||
Interest rate swaps (1) | $ | $ | ( | Other liabilities | $ | ( | ||||||||||||||||||||||||||
( | Accrued liabilities | |||||||||||||||||||||||||||||||
Foreign currency forwards (2) | ( | Accrued liabilities | ||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | ( |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
Amount recorded in: | 2022 | 2021 | ||||||||||||
Interest expense, net (1) | $ | $ | ||||||||||||
Other income, net (2) | ( | ( | ||||||||||||
Total expense, net | $ | ( | $ | ( |
Description | March 31, 2022 | December 31, 2021 | ||||||||||||
Assets: | ||||||||||||||
Values based on Level 1 inputs: | ||||||||||||||
Deferred compensation plan assets (1) | $ | $ | ||||||||||||
Total Level 1 inputs | ||||||||||||||
Values based on Level 2 inputs: | ||||||||||||||
Deferred compensation plan assets (1) | ||||||||||||||
Foreign currency forward contracts (2) | ||||||||||||||
Total Level 2 inputs | ||||||||||||||
Total Assets | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||
Values based on Level 2 inputs: | ||||||||||||||
Deferred compensation plan liabilities (1) | $ | $ | ||||||||||||
Foreign currency forward contracts (2) | ||||||||||||||
Interest rate swap contracts (3) | ||||||||||||||
Total Level 2 inputs | ||||||||||||||
Total Liabilities | $ | $ |
Carrying Amount | Fair Value | |||||||||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||||||
Description | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
2028 Notes | $ | $ | $ | $ | ||||||||||||||||||||||
2029 Notes | ||||||||||||||||||||||||||
2030 Notes | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
Description: | 2022 | 2021 | ||||||||||||
Operating lease cost (1) | $ | $ | ||||||||||||
Variable lease cost (2) | ||||||||||||||
Sublease income | ( | ( | ||||||||||||
Total lease cost, net (3) (4) | $ | $ | ||||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ | ||||||||||||
Cash receipts from sublease arrangements | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||||||||
March 31, | December 31, | |||||||||||||
Description: | 2022 | 2021 | ||||||||||||
$ | $ | |||||||||||||
Operating lease liabilities | ||||||||||||||
Total operating lease liabilities included in the Condensed Consolidated Balance Sheets | $ | $ |
BUSINESS SEGMENT | BUSINESS MEASUREMENT | |||||||
Research | Contract value represents the dollar value attributable to all of our subscription-related contracts. It is calculated as the annualized value of all contracts in effect at a specific point in time, without regard to the duration of the contract. Contract value primarily includes Research deliverables for which revenue is recognized on a ratable basis, as well as other deliverables (primarily Conferences tickets) for which revenue is recognized when the deliverable is utilized. Comparing contract value year-over-year not only measures the short-term growth of our business, but also signals the long-term health of our Research subscription business since it measures revenue that is highly likely to recur over a multi-year period. Our contract value consists of Global Technology Sales contract value, which includes sales to users and providers of technology, and Global Business Sales contract value, which includes sales to all other functional leaders. | |||||||
Client retention rate represents a measure of client satisfaction and renewed business relationships at a specific point in time. Client retention is calculated on a percentage basis by dividing our current clients, who were also clients a year ago, by all clients from a year ago. Client retention is calculated at an enterprise level, which represents a single company or customer. | ||||||||
Wallet retention rate represents a measure of the amount of contract value we have retained with clients over a twelve-month period. Wallet retention is calculated on a percentage basis by dividing the contract value of our current clients, who were also clients a year ago, by the contract value from a year ago, excluding the impact of foreign currency exchange. When wallet retention exceeds client retention, it is an indication of retention of higher-spending clients, or increased spending by retained clients, or both. Wallet retention is calculated at an enterprise level, which represents a single company or customer. | ||||||||
Conferences | Number of destination conferences represents the total number of hosted virtual or in-person conferences completed during the period. Single day, local meetings are excluded. | |||||||
Number of destination conferences attendees represents the total number of people who attend virtual or in-person conferences. Single day, local meetings are excluded. | ||||||||
Consulting | Consulting backlog represents future revenue to be derived from in-process consulting and measurement engagements. | |||||||
Utilization rate represents a measure of productivity of our consultants. Utilization rates are calculated for billable headcount on a percentage basis by dividing total hours billed by total hours available to bill. | ||||||||
Billing rate represents earned billable revenue divided by total billable hours. | ||||||||
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Increase (Decrease) | Increase (Decrease) % | ||||||||||||||||||||
Total revenues | $ | 1,262,740 | $ | 1,104,038 | $ | 158,702 | 14 | % | |||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Cost of services and product development | 377,033 | 334,467 | 42,566 | 13 | |||||||||||||||||||
Selling, general and administrative | 617,904 | 487,255 | 130,649 | 27 | |||||||||||||||||||
Depreciation | 23,201 | 25,750 | (2,549) | (10) | |||||||||||||||||||
Amortization of intangibles | 25,148 | 30,514 | (5,366) | (18) | |||||||||||||||||||
Acquisition and integration charges | 2,207 | 640 | 1,567 | 245 | |||||||||||||||||||
Operating income | 217,247 | 225,412 | (8,165) | (4) | |||||||||||||||||||
Interest expense, net | (31,394) | (26,149) | 5,245 | 20 | |||||||||||||||||||
Other income, net | 29,206 | 15,490 | 13,716 | 89 | |||||||||||||||||||
Less: Provision for income taxes | 42,544 | 50,653 | (8,109) | (16) | |||||||||||||||||||
Net income | $ | 172,515 | $ | 164,100 | $ | 8,415 | 5 | % | |||||||||||||||
As Of And For The Three Months Ended March 31, 2022 | As Of And For The Three Months Ended March 31, 2021 | Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||||
Financial Measurements: | |||||||||||||||||||||||
Revenues (1) | $ | 1,136,380 | $ | 979,732 | $ | 156,648 | 16 | % | |||||||||||||||
Gross contribution (1) | $ | 849,379 | $ | 724,372 | $ | 125,007 | 17 | % | |||||||||||||||
Gross contribution margin | 75 | % | 74 | % | 1 point | — | |||||||||||||||||
Business Measurements: | |||||||||||||||||||||||
Global Technology Sales (2): | |||||||||||||||||||||||
Contract value (1), (3) | $ | 3,346,000 | $ | 2,927,000 | $ | 419,000 | 14 | % | |||||||||||||||
Client retention | 86 | % | 83 | % | 3 points | — | |||||||||||||||||
Wallet retention | 107 | % | 98 | % | 9 points | — | |||||||||||||||||
Global Business Sales (2): | |||||||||||||||||||||||
Contract value (1), (3) | $ | 899,000 | $ | 723,000 | $ | 176,000 | 24 | % | |||||||||||||||
Client retention | 87 | % | 84 | % | 3 points | — | |||||||||||||||||
Wallet retention | 115 | % | 105 | % | 10 points | — |
As Of And For The Three Months Ended March 31, 2022 | As Of And For The Three Months Ended March 31, 2021 | Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||||
Financial Measurements: | |||||||||||||||||||||||
Revenues (1) | $ | 10,354 | $ | 24,802 | $ | (14,448) | (58) | % | |||||||||||||||
Gross contribution (1) | $ | (2,876) | $ | 13,896 | $ | (16,772) | (121) | % | |||||||||||||||
Gross contribution margin | (28) | % | 56 | % | (84) points | — | |||||||||||||||||
Business Measurements: | |||||||||||||||||||||||
Number of destination conferences (2) | 5 | 5 | — | — | % | ||||||||||||||||||
Number of destination conferences attendees (2) | 3,904 | 5,382 | (1,478) | (27) | % |
As Of And For The Three Months Ended March 31, 2022 | As Of And For The Three Months Ended March 31, 2021 | Increase (Decrease) | Percentage Increase (Decrease) | ||||||||||||||||||||
Financial Measurements: | |||||||||||||||||||||||
Revenues (1) | $ | 116,006 | $ | 99,504 | $ | 16,502 | 17 | % | |||||||||||||||
Gross contribution (1) | $ | 51,012 | $ | 39,098 | $ | 11,914 | 30 | % | |||||||||||||||
Gross contribution margin | 44 | % | 39 | % | 5 points | — | |||||||||||||||||
Business Measurements: | |||||||||||||||||||||||
Backlog (1), (2) | $ | 146,800 | $ | 112,700 | $ | 34,100 | 30 | % | |||||||||||||||
Billable headcount | 780 | 744 | 36 | 5 | % | ||||||||||||||||||
Consultant utilization | 72 | % | 68 | % | 4 points | — |
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Increase (Decrease) | |||||||||||||||
Cash provided by operating activities | $ | 167,785 | $ | 157,298 | $ | 10,487 | |||||||||||
Cash used in investing activities | (17,293) | (12,521) | (4,772) | ||||||||||||||
Cash used in financing activities | (445,452) | (403,220) | (42,232) | ||||||||||||||
Net decrease in cash and cash equivalents and restricted cash | (294,960) | (258,443) | (36,517) | ||||||||||||||
Effects of exchange rates | (5,358) | (8,145) | 2,787 | ||||||||||||||
Beginning cash and cash equivalents and restricted cash | 760,602 | 712,583 | 48,019 | ||||||||||||||
Ending cash and cash equivalents and restricted cash | $ | 460,284 | $ | 445,995 | $ | 14,289 | |||||||||||
Period | Total Number of Shares Purchased (#) | Average Price Paid Per Share ($) | Total Number of Shares Purchased Under Announced Programs (#) | Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | ||||||||||||||||||||||
January 1, 2022 to January 31, 2022 | 231,039 | $ | 278.41 | 230,883 | $ | 526,697 | ||||||||||||||||||||
February 1, 2022 to February 28, 2022 | 565,572 | 289.32 | 397,688 | 912,691 | ||||||||||||||||||||||
March 1, 2022 to March 31, 2022 | 831,098 | 282.96 | 830,280 | $ | 677,752 | |||||||||||||||||||||
Total for the quarter (1) | 1,627,709 | $ | 284.53 | 1,458,851 |
EXHIBIT NUMBER | DESCRIPTION OF DOCUMENT | |||||||
31.1* | ||||||||
31.2* | ||||||||
32* | ||||||||
101.INS* | Inline XBRL Instance Document | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104* | Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101). |
Gartner, Inc. | ||||||||
Date: | May 3, 2022 | /s/ Craig W. Safian | ||||||
Craig W. Safian | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
/s/ Eugene A. Hall | ||
Eugene A. Hall | ||
Chief Executive Officer | ||
Date: May 3, 2022 |
/s/ Craig W. Safian | ||
Craig W. Safian | ||
Chief Financial Officer | ||
Date: May 3, 2022 |
/s/ Eugene A. Hall | |||||
Name: Eugene A. Hall | |||||
Title: Chief Executive Officer | |||||
Date: May 3, 2022 | |||||
/s/ Craig W. Safian | |||||
Name: Craig W. Safian | |||||
Title: Chief Financial Officer | |||||
Date: May 3, 2022 |
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
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Statement of Financial Position [Abstract] | ||
Fees receivable, allowance | $ 8,000 | $ 6,500 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0005 | $ 0.0005 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 163,602,067 | 163,602,067 |
Treasury stock shares (in shares) | 82,358,309 | 81,205,504 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2022 |
Mar. 31, 2021 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 172,515 | $ 164,100 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustments | (6,798) | 677 |
Interest rate swaps – net change in deferred gain or loss | 5,370 | 5,270 |
Pension plans – net change in deferred actuarial loss | 48 | 103 |
Other comprehensive (loss) income, net of tax | (1,380) | 6,050 |
Comprehensive income | $ 171,135 | $ 170,150 |
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-In Capital |
Accumulated Other Comprehensive Loss, Net |
Accumulated Earnings |
Treasury Stock |
---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2020 | $ 1,090,428 | $ 82 | $ 1,968,930 | $ (99,228) | $ 2,255,467 | $ (3,034,823) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 164,100 | 164,100 | ||||
Other comprehensive income (loss) | 6,050 | 6,050 | ||||
Issuances under stock plans | 5,380 | (1,543) | 6,923 | |||
Common share repurchases | (410,450) | (410,450) | ||||
Stock-based compensation expense | 36,086 | 36,086 | ||||
Ending balance at Mar. 31, 2021 | 891,594 | 82 | 2,003,473 | (93,178) | 2,419,567 | (3,438,350) |
Beginning balance at Dec. 31, 2021 | 371,058 | 82 | 2,074,896 | (81,431) | 3,049,027 | (4,671,516) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 172,515 | 172,515 | ||||
Other comprehensive income (loss) | (1,380) | (1,380) | ||||
Issuances under stock plans | 6,964 | 579 | 6,385 | |||
Common share repurchases | (463,125) | (463,125) | ||||
Stock-based compensation expense | 32,121 | 32,121 | ||||
Ending balance at Mar. 31, 2022 | $ 118,153 | $ 82 | $ 2,107,596 | $ (82,811) | $ 3,221,542 | $ (5,128,256) |
Business and Basis of Presentation |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business and Basis of Presentation | Business and Basis of Presentation Business. Gartner, Inc. (NYSE: IT) delivers actionable, objective insight to executives and their teams. Our expert guidance and tools enable faster, smarter decisions and stronger performance on an organization’s mission critical priorities. Segments. Gartner delivers its products and services globally through three business segments: Research, Conferences and Consulting. Revenues and other financial information for our segments are discussed in Note 7 — Segment Information. Basis of presentation. The accompanying interim Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270 for interim financial information and with the applicable instructions of U.S. Securities and Exchange Commission (“SEC”) Rule 10-01 of Regulation S-X on Form 10-Q, and should be read in conjunction with the consolidated financial statements and related notes of the Company in its Annual Report on Form 10-K for the year ended December 31, 2021. The fiscal year of Gartner is the twelve-month period from January 1 through December 31. In the opinion of management, all normal recurring accruals and adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented herein have been included. The results of operations for the three months ended March 31, 2022 may not be indicative of the results of operations for the remainder of 2022 or beyond. When used in these notes, the terms “Gartner,” the “Company,” “we,” “us,” or “our” refer to Gartner, Inc. and its consolidated subsidiaries. Principles of consolidation. The accompanying interim Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Use of estimates. The preparation of the accompanying interim Condensed Consolidated Financial Statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of fees receivable, goodwill, intangible assets and other long-lived assets, as well as tax accruals and other liabilities. In addition, estimates are used in revenue recognition, income tax expense or benefit, performance-based compensation charges, depreciation and amortization. Management believes its use of estimates in these interim Condensed Consolidated Financial Statements to be reasonable. Management continually evaluates and revises its estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. Management adjusts these estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time. As a result, differences between estimates and actual results could be material and would be reflected in the Company’s consolidated financial statements in future periods. Cash and cash equivalents and restricted cash. Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company’s Condensed Consolidated Balance Sheets and the total cash amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands).
(1)Restricted cash consists of escrow accounts established in connection with certain of the Company’s business acquisitions. Generally, such cash is restricted to use due to provisions contained in the underlying stock or asset purchase agreement. The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims, etc.). Revenue recognition. Revenue is recognized in accordance with the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). Revenue is only recognized when all of the required criteria for revenue recognition have been met. The accompanying Condensed Consolidated Statements of Operations present revenue net of any sales or value-added taxes that we collect from customers and remit to government authorities. ASC Topic 270 requires certain disclosures in interim financial statements around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Note 4 — Revenue and Related Matters provides additional information regarding the Company’s revenues. Adoption of new accounting standards. The Company adopted the accounting standard described below during the three months ended March 31, 2022. Business Combinations — In October 2021, the FASB issued ASU No. 2021-08, Business Combinations, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU No. 2021-08”). ASU No. 2021-08 provides guidance for a business combination on how to recognize and measure contract assets and contract liabilities from revenue contracts with customers and other contracts that apply the provisions of ASC Topic 606, Revenue from Contracts with Customers. Specifically, the proposed amendments would require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606. Generally, this would result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements (if the acquiree prepared financial statements in accordance with U.S. GAAP). The rule will be effective for public entities on January 1, 2023, with early adoption permitted. Gartner has elected to adopt ASU No. 2021-08 effective January 1, 2022. ASU No. 2021-08 will not impact acquired contract assets or liabilities from business combinations occurring prior to January 1, 2022, and the impact in future periods will depend on the contract assets and contract liabilities acquired in future business combinations. Accounting standards issued but not yet adopted. The FASB has issued accounting standards that have not yet become effective and may impact the Company’s consolidated financial statements or related disclosures in future periods. Those standards and their potential impact are discussed below. Accounting standard effective immediately upon voluntary election by Gartner Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). ASU No. 2020-04 provides that an entity can elect not to apply certain required modification accounting in U.S. GAAP to contracts where all changes to the critical terms relate to reference rate reform (e.g., the expected discontinuance of LIBOR and the transition to an alternative reference interest rate, etc.). In addition, the rule provides optional expedients and exceptions that enable entities to continue to apply hedge accounting for hedging relationships where one or more of the critical terms change due to reference rate reform. The rule became effective for all entities as of March 12, 2020 and will generally no longer be available to apply after December 31, 2022. The Company is currently evaluating the potential impact of ASU No. 2020-04 on its consolidated financial statements, including the rule’s potential impact on any debt modifications or other contractual changes in the future that may result from reference rate reform. Accounting standard effective later in 2022 Government Assistance — In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance (“ASU No. 2021-10”). ASU No, 2021-10 requires business entities to annually disclose information about certain government assistance they receive. The rule will be effective for public entities for annual periods beginning after December 15, 2021. The adoption of ASU No. 2021-10 is currently not expected to have a material impact on the Company’s financial statement disclosures.
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Acquisition |
3 Months Ended |
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Mar. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition | Acquisition On June 17, 2021, the Company acquired 100% of the outstanding capital stock of Pulse Q&A Inc. (“Pulse”), a privately-held company based in San Francisco, California, for an aggregate purchase price of $29.1 million. Pulse is a technology-enabled community platform. During 2021, the Company paid $22.9 million in cash for Pulse after considering the cash acquired with the business, amounts held in escrow and certain other purchase price adjustments at closing. In addition to the purchase price, the Company may also be required to pay up to $4.5 million in cash in the future based on the continuing employment of certain key employees. Such amount will be recognized as compensation expense over three years and reported in Acquisition and integration charges in the Condensed Consolidated Statements of Operations. The Company recorded $31.0 million of goodwill and finite-lived intangible assets for Pulse and $1.9 million of liabilities on a net basis. The allocation of the purchase price is preliminary with respect to certain tax matters.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired. Evaluations of the recoverability of goodwill are performed in accordance with FASB ASC Topic 350, which requires an annual assessment of potential goodwill impairment at the reporting unit level and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. When performing the annual assessment of the recoverability of goodwill, the Company initially performs a qualitative analysis evaluating whether any events or circumstances occurred or exist that provide evidence that it is more likely than not that the fair value of any of the Company’s reporting units is less than the related carrying amount. If the Company does not believe that it is more likely than not that the fair value of any of the Company’s reporting units is less than the related carrying amount, then no quantitative impairment test is performed. However, if the results of the qualitative assessment indicate that it is more likely than not that the fair value of a reporting unit is less than its respective carrying amount, then a quantitative impairment test is performed. Evaluating the recoverability of goodwill requires judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the estimates are subject to uncertainty. The Company’s most recent annual impairment test of goodwill was a qualitative analysis conducted during the quarter ended September 30, 2021 that indicated no impairment. Subsequent to completing the 2021 annual impairment test, there were no events or changes in circumstances noted that required an interim impairment test. The table below presents changes to the carrying amount of goodwill by segment during the three months ended March 31, 2022 (in thousands).
(1)The Company does not have any accumulated goodwill impairment losses. Finite-Lived Intangible Assets The tables below present reconciliations of the carrying amounts of the Company’s finite-lived intangible assets as of the dates indicated (in thousands).
(1) Finite-lived intangible assets are amortized using the straight-line method over the following periods: Customer relationships—6 to 13 years; Technology-related—3 to 7 years; and Other—4 to 11 years. Amortization expense related to finite-lived intangible assets was $25.1 million and $30.5 million during the three months ended March 31, 2022 and 2021, respectively. The estimated future amortization expense by year for finite-lived intangible assets is presented in the table below (in thousands).
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Revenue and Related Matters |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and Related Matters | Revenue and Related Matters Disaggregated Revenue — The Company’s disaggregated revenue by reportable segment is presented in the tables below for the periods indicated (in thousands). By Primary Geographic Market (1) Three Months Ended March 31, 2022
Three Months Ended March 31, 2021
(1)Revenue is reported based on where the sale is fulfilled. The Company’s revenue is generated primarily through direct sales to clients by domestic and international sales forces and a network of independent international sales agents. Most of the Company’s products and services are provided on an integrated worldwide basis and, because of this integrated delivery approach, it is not practical to precisely separate the Company’s revenue by geographic location. Accordingly, revenue information presented in the above tables is based on internal allocations, which involve certain management estimates and judgments. By Timing of Revenue Recognition Three Months Ended March 31, 2022
Three Months Ended March 31, 2021
(1)Research revenues are recognized in connection with performance obligations that are satisfied over time using a time-elapsed output method to measure progress. Consulting revenues are recognized over time using labor hours as an input measurement basis. (2)The revenues in this category are recognized in connection with performance obligations that are satisfied at the point in time that the contractual deliverables are provided to the customer. Performance Obligations — For customer contracts that are greater than one year in duration, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied) as of March 31, 2022 was approximately $4.3 billion. The Company expects to recognize $2.0 billion, $1.7 billion and $580.9 million of this revenue (most of which pertains to Research) during the remainder of 2022, the year ending December 31, 2023 and thereafter, respectively. The Company applies a practical expedient that is permitted under ASC Topic 606 and, accordingly, it does not disclose such performance obligation information for customer contracts that have original durations of one year or less. The Company’s performance obligations for contracts meeting this ASC Topic 606 disclosure exclusion primarily include: (i) stand-ready services under Research subscription contracts; (ii) holding conferences and meetings where attendees and exhibitors can participate; and (iii) providing customized Consulting solutions for clients under fixed fee and time and materials engagements. The remaining duration of these performance obligations is generally less than one year, which aligns with the period that the parties have enforceable rights and obligations under the affected contracts. Customer Contract Assets and Liabilities — The timing of the recognition of revenue and the amount and timing of the Company’s billings and cash collections, including upfront customer payments, result in the recognition of both assets and liabilities on the Company’s Condensed Consolidated Balance Sheets. The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers (in thousands).
(1)Fees receivable represent an unconditional right to payment from the Company’s customers and include both billed and unbilled amounts. (2)Contract assets represent recognized revenue for which the Company does not have an unconditional right to payment as of the balance sheet date because the project may be subject to a progress billing milestone or some other billing restriction. (3)Deferred revenues represent amounts (i) for which the Company has received an upfront customer payment or (ii) that pertain to recognized fees receivable. Both situations occur before the completion of the Company’s performance obligation(s). The Company recognized revenue of $833.9 million and $726.7 million during the three months ended March 31, 2022 and 2021, respectively, that was attributable to deferred revenues that were recorded at the beginning of each such period. Those amounts primarily consisted of Research revenues that were recognized ratably as control of the goods or services passed to the customer during the reporting periods. During each of the three months ended March 31, 2022 and 2021, the Company did not record any material impairments related to its contract assets.
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Computation of Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Earnings Per Share | Computation of Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS reflects the potential dilution of securities that could share in earnings. Potential shares of common stock are excluded from the computation of diluted earnings per share when their effect would be anti-dilutive. The table below sets forth the calculation of basic and diluted income per share for the periods indicated (in thousands, except per share data).
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Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The Company grants stock-based compensation awards as an incentive for employees and directors to contribute to the Company’s long-term success. The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents. As of March 31, 2022, the Company had 3.9 million shares of its common stock, par value $0.0005 per share, (the “Common Stock”) available for stock-based compensation awards under its current Long-Term Incentive Plan as amended and restated in January 2019 (the “Plan”). The tables below summarize the Company’s stock-based compensation expense by award type and expense category line item during the periods indicated (in millions).
(1)Includes charges of $19.2 million and $21.5 million during the three months ended March 31, 2022 and 2021, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis. (2)On February 5, 2020, prior to the COVID-19 related shutdown in the U.S., the Compensation Committee (“Committee”) of the Board of Directors of the Company established performance measures for the performance-based restricted stock units (the “PSUs”) awarded to the Company’s executive officers in 2020 under the Plan. Based on preliminary corporate performance results for the 2020 performance measures, the 2020 PSUs would have been earned at 50% of target. However, on February 3, 2021, the Committee determined to use its discretion under the Plan to approve a payout at 95% of target. In deciding to exercise this discretion to adjust the PSU payout, the Committee considered the Company’s strong overall performance in 2020 despite the significant negative impact of the COVID-19 pandemic. As a result of the modification, the Company recognized $6.5 million of incremental compensation cost during the three months ended March 31, 2021.
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Segment Information |
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Segment Information | Segment Information The Company’s products and services are delivered through three segments – Research, Conferences and Consulting, as described below. •Research equips executives and their teams from every function and across all industries with actionable, objective insight, guidance and tools. Our experienced experts deliver all this value informed by an unmatched combination of practitioner-sourced and data-driven research to help our clients address their mission critical priorities. •Conferences provides executives and teams across an organization the opportunity to learn, share and network. From our Gartner Symposium/Xpo series, to industry-leading conferences focused on specific business roles and topics, to peer-driven sessions, our offerings enable attendees to experience the best of Gartner insight and guidance. •Consulting serves senior executives leading technology-driven strategic initiatives leveraging the power of Gartner’s actionable, objective insight. Through custom analysis and on-the-ground support we enable optimized technology investments and stronger performance on our clients’ mission critical priorities. The Company evaluates segment performance and allocates resources based on gross contribution margin. Gross contribution, as presented in the tables below, is defined as operating income or loss 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 regarding the allocation of resources. The tables below present information about the Company’s reportable segments for the periods indicated (in thousands).
The table below provides a reconciliation of total segment gross contribution to net income for the periods indicated (in thousands).
(1)The unallocated amounts consist of certain bonus and fringe costs recorded in consolidated Cost of services and product development that are not allocated to segment expense. The Company’s policy is to allocate bonuses to segments at 100% of a segment employee’s target bonus. Amounts above or below 100% are absorbed by corporate.
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Debt |
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Debt | Debt The Company’s total outstanding borrowings are summarized in the table below (in thousands).
(1)The contractual annualized interest rate as of March 31, 2022 on the 2020 Credit Agreement Term loan facility and the Revolving credit facility was 1.50%, which consisted of a floating Eurodollar base rate of 0.250% plus a margin of 1.250%. However, the Company has interest rate swap contracts that effectively convert the floating Eurodollar base rates on outstanding amounts to a fixed base rate. (2)The Company had approximately $1.0 billion of available borrowing capacity on the 2020 Credit Agreement revolver (not including the expansion feature) as of March 31, 2022. (3)Consists of $800.0 million principal amount of 2028 Notes outstanding. The 2028 Notes bear interest at a fixed rate of 4.50% and mature on July 1, 2028. (4)Consists of $600.0 million principal amount of 2029 Notes outstanding. The 2029 Notes bear interest at a fixed rate of 3.625% and mature on June 15, 2029. (5)Consists of $800.0 million principal amount of 2030 Notes outstanding. The 2030 Notes bear interest at a fixed rate of 3.75% and mature on October 1, 2030. (6)Consists of two State of Connecticut economic development loans. One of the loans originated in 2012, has a 10-year maturity and the outstanding balance of $0.4 million as of March 31, 2022 bears interest at a fixed rate of 3.00%. The second loan, originated in 2019, has a 10-year maturity and bears interest at a fixed rate of 1.75%. Both of these loans may be repaid at any time by the Company without penalty. (7)The weighted average annual effective rate on the Company’s outstanding debt for the three months ended March 31, 2022, including the effects of its interest rate swaps discussed below, was 4.82%. (8)Deferred financing fees are being amortized to Interest expense, net over the term of the related debt obligation. 2029 Notes On June 18, 2021, the Company issued $600.0 million aggregate principal amount of 3.625% Senior Notes due 2029. The 2029 Notes were issued pursuant to an indenture, dated as of June 18, 2021 (the “2029 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee. The 2029 Notes were issued at an issue price of 100.0% and bear interest at a rate of 3.625% per annum. Interest on the 2029 Notes is payable on June 15 and December 15 of each year, beginning on December 15, 2021. The 2029 Notes will mature on June 15, 2029. The Company may redeem some or all of the 2029 Notes at any time on or after June 15, 2024 for cash at the redemption prices set forth in the 2029 Notes Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to June 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the 2029 Notes in connection with certain equity offerings, or some or all of the 2029 Notes with a “make-whole” premium, in each case subject to the terms set forth in the 2029 Note Indenture. 2030 Notes On September 28, 2020, the Company issued $800.0 million aggregate principal amount of 3.75% Senior Notes due 2030. The 2030 Notes were issued pursuant to an indenture, dated as of September 28, 2020 (the “2030 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee. The 2030 Notes were issued at an issue price of 100.0% and bear interest at a rate of 3.75% per annum. Interest on the 2030 Notes is payable on April 1 and October 1 of each year, beginning on April 1, 2021. The 2030 Notes will mature on October 1, 2030. The Company may redeem some or all of the 2030 Notes at any time on or after October 1, 2025 for cash at the redemption prices set forth in the 2030 Note Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to October 1, 2025, the Company may redeem up to 40% of the aggregate principal amount of the 2030 Notes in connection with certain equity offerings, or some or all of the 2030 Notes with a “make-whole” premium, in each case subject to the terms set forth in the 2030 Note Indenture. 2028 Notes On June 22, 2020, the Company issued $800.0 million aggregate principal amount of 4.50% Senior Notes due 2028. The 2028 Notes were issued pursuant to an indenture, dated as of June 22, 2020 (the “2028 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee. The 2028 Notes were issued at an issue price of 100.0% and bear interest at a rate of 4.50% per annum. Interest on the 2028 Notes is payable on January 1 and July 1 of each year, beginning on January 1, 2021. The 2028 Notes will mature on July 1, 2028. The Company may redeem some or all of the 2028 Notes at any time on or after July 1, 2023 for cash at the redemption prices set forth in the 2028 Note Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to July 1, 2023, the Company may redeem up to 40% of the aggregate principal amount of the 2028 Notes in connection with certain equity offerings, or some or all of the 2028 Notes with a “make-whole” premium, in each case subject to the terms set forth in the 2028 Note Indenture. 2020 Credit Agreement The Company has a credit facility that currently provides for a $400.0 million Term Loan facility and a $1.0 billion Revolving credit facility (the “2020 Credit Agreement”). The 2020 Credit Agreement contains certain customary restrictive loan covenants, including, among others, financial covenants that apply a maximum consolidated leverage ratio and a minimum consolidated interest expense coverage ratio. The Company was in compliance with all financial covenants as of March 31, 2022. The Term loan is being repaid in consecutive quarterly installments that commenced on December 31, 2020, plus a final payment to be made on September 28, 2025. The Revolving credit facility may be borrowed, repaid and re-borrowed through September 28, 2025, at which all then-outstanding amounts must be repaid. Interest Rate Swaps As of March 31, 2022, the Company had two fixed-for-floating interest rate swap contracts with a total notional value of $700.0 million that mature in 2025. The Company pays base fixed rates of 3.04% and in return receives a floating Eurodollar base rate on 30-day notional borrowings. The Company had two other fixed-for-floating interest rate swap contracts with a total notional value of $700.0 million that matured during the three months ended March 31, 2022. As a result of the payment under the then outstanding 2016 Credit Agreement term loan and revolving credit facility, the Company de-designated all of its interest rate swaps effective June 30, 2020. Accordingly, hedge accounting is not applicable, and subsequent changes to the fair value of the interest rate swaps are recorded in Other income, net. The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments. As of March 31, 2022, $67.8 million is remaining in Accumulated other comprehensive loss, net. The interest rate swaps had negative unrealized fair values (liabilities) of $15.3 million and $53.7 million as of March 31, 2022 and December 31, 2021, respectively, of which $51.0 million and $56.3 million were recorded in Accumulated other comprehensive loss, net of tax effect, as of March 31, 2022 and December 31, 2021, respectively. See Note 12 — Fair Value Disclosures for the determination of the fair values of Company’s interest rate swaps.
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Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Equity Share Repurchase Authorization In 2015, the Company’s Board of Directors (the “Board”) authorized a share repurchase program to repurchase up to $1.2 billion of the Company’s common stock. The Board authorized incremental share repurchases of up to an additional $1.6 billion and $0.5 billion of the Company’s common stock during 2021 and February 2022, respectively. $677.8 million remained available under the share repurchase program as of March 31, 2022. The Company may repurchase its common stock from time-to-time in amounts, at prices and in the manner that the Company deems appropriate, subject to the availability of stock, prevailing market conditions, the trading price of the stock, the Company’s financial performance and other conditions. Repurchases may be made through open market purchases (which may include repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended), accelerated share repurchases, private transactions or other transactions and will be funded by cash on hand and borrowings. Repurchases may also be made from time-to-time in connection with the settlement of the Company’s stock-based compensation awards. See Note 15 — Subsequent Event for a discussion regarding an increase in the Company’s share repurchase authorization. The Company’s share repurchase activity is presented in the table below for the periods indicated.
(1)The average purchase price for repurchased shares was $284.53 and $180.44 for the three months ended March 31, 2022 and 2021, respectively. The repurchased shares during the three months ended March 31, 2022 and 2021 included purchases for both open market purchases and stock-based compensation award settlements. (2)The cash paid for repurchased shares during the three months ended March 31, 2021 included $8.0 million of open market purchases with trade dates in December 2020 that settled in January 2021 and excluded $20.0 million of open market purchases with trade dates in March 2021 that settled in April 2021. The cash paid for repurchased shares during the three months ended March 31, 2022 excluded $12.1 million of open market purchases with trade dates in March 2022 that settled in April 2022. Accumulated Other Comprehensive Loss, net (“AOCL”) The tables below provide information about the changes in AOCL by component and the related amounts reclassified out of AOCL to income during the periods indicated (net of tax, in thousands) (1). Three Months Ended March 31, 2022
Three Months Ended March 31, 2021
(1)Amounts in parentheses represent debits (deferred losses). (2)$7.2 million and $7.0 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the three months ended March 31, 2022 and 2021, respectively. See Note 8 — Debt and Note 11 — Derivatives and Hedging for information regarding the cash flow hedges. (3)The reclassifications related to defined benefit pension plans were recorded in Other income, net. The estimated net amount of the existing losses on the Company’s interest rate swaps that are reported in Accumulated other comprehensive loss, net at March 31, 2022 that is expected to be reclassified into earnings within the next 12 months is $20.6 million.
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Income Taxes |
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Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the three months ended March 31, 2022 and 2021 was $42.5 million and $50.7 million, respectively. The effective income tax rate was 19.8% and 23.6% for the three months ended March 31, 2022 and 2021, respectively. The year-over-year decrease in the effective income tax rate was primarily due to the relative impact of tax benefits from stock-based compensation. The Company had gross unrecognized tax benefits of $153.4 million on March 31, 2022 and $150.0 million on December 31, 2021. It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $29.5 million within the next twelve months due to the anticipated closure of audits and the expiration of certain statutes of limitation.
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Derivatives and Hedging |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging | Derivatives and Hedging The Company enters into a limited number of derivative contracts to mitigate the cash flow risk associated with changes in interest rates on variable-rate debt and changes in foreign exchange rates on forecasted foreign currency transactions. The Company accounts for its outstanding derivative contracts in accordance with FASB ASC Topic 815, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value. The tables below provide information regarding the Company’s outstanding derivative contracts as of the dates indicated (in thousands, except for number of contracts).
(1)As a result of the payment under the then outstanding 2016 Credit Agreement term loan and revolving credit facility, the Company de-designated all of its interest rate swaps effective June 30, 2020. Accordingly, hedge accounting is not applicable, and subsequent changes to fair value of the interest rate swaps are recorded in Other income, net. The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments. See Note 8 — Debt provides additional information regarding the Company’s interest rate swap contracts. (2)The Company has foreign exchange transaction risk because it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income, net because the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding foreign currency forward exchange contracts at March 31, 2022 matured before April 30, 2022. (3)See Note 12 — Fair Value Disclosures for the determination of the fair values of these instruments. At March 31, 2022, all of the Company’s derivative counterparties were investment grade financial institutions. The Company did not have any collateral arrangements with its derivative counterparties and none of the derivative contracts contained credit-risk related contingent features. The table below provides information regarding amounts recognized in the accompanying Condensed Consolidated Statements of Operations for derivative contracts for the periods indicated (in thousands).
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Fair Value Disclosures |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | Fair Value Disclosures The Company’s financial instruments include cash equivalents, fees receivable from customers, accounts payable and accrued liabilities, all of which are normally short-term in nature. The Company believes that the carrying amounts of these financial instruments reasonably approximate their fair values due to their short-term nature. The Company’s financial instruments also include its outstanding variable-rate borrowings under the 2020 Credit Agreement. The Company believes that the carrying amounts of its variable-rate borrowings reasonably approximate their fair values because the rates of interest on those borrowings reflect current market rates of interest for similar instruments with comparable maturities. The Company enters into a limited number of derivatives transactions but does not enter into repurchase agreements, securities lending transactions or master netting arrangements. Receivables or payables that result from derivatives transactions are recorded gross in the Company’s Condensed Consolidated Balance Sheets. FASB ASC Topic 820 provides a framework for the measurement of fair value and a valuation hierarchy based on the transparency of inputs used in the valuation of assets and liabilities. Classification within the valuation hierarchy is based on the lowest level of input that is significant to the resulting fair value measurement. The valuation hierarchy contains three levels. Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs such as internally-created valuation models. Generally, the Company does not utilize Level 3 valuation inputs to remeasure any of its assets or liabilities. However, Level 3 inputs may be used by the Company when certain long-lived assets, including identifiable intangible assets, goodwill, and right-of-use assets are measured at fair value on a nonrecurring basis when there are indicators of impairment. Additionally, Level 3 inputs may be used by the Company in its required annual impairment review of goodwill. Information regarding the periodic assessment of the Company’s goodwill is included in Note 3 — Goodwill and Intangible Assets. The Company does not typically transfer assets or liabilities between different levels of the valuation hierarchy. The table below presents the fair values of certain financial assets and liabilities (in thousands).
(1)The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees. The assets consist of investments in money market funds, mutual funds and company-owned life insurance contracts, which are valued based on Level 1 or Level 2 inputs. The related deferred compensation plan liabilities are recorded at fair value, or the estimated amount needed to settle the liability, which the Company considers to be a Level 2 input. (2)The Company enters into foreign currency forward exchange contracts to hedge the effects of adverse fluctuations in foreign currency exchange rates (see Note 11 — Derivatives and Hedging). Valuation of these contracts is based on observable foreign currency exchange rates in active markets, which the Company considers to be a Level 2 input. (3)The Company has interest rate swap contracts that hedge the risk of variability from interest payments on its borrowings (see Note 8 — Debt). The fair values of interest rate swaps are based on mark-to-market valuations prepared by a third-party broker. Those valuations are based on observable interest rates from recently executed market transactions and other observable market data, which the Company considers to be Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker by using an electronic quotation service. The table below presents the carrying amounts (net of deferred financing costs) and fair values of financial instruments that are not recorded at fair value in the Company’s Condensed Consolidated Balance Sheets (in thousands). The estimated fair value of the financial instruments was derived from quoted market prices provided by an independent dealer, which the Company considers to be a Level 2 input.
Assets and liabilities measured at fair value on a non-recurring basis The Company’s certain long-lived assets, including identifiable intangible assets, goodwill, and right-of-use assets are measured at fair value on a nonrecurring basis when there are indicators of impairment. During the three months ended March 31, 2022, the Company recorded impairment charges of $23.9 million on right-of-use assets and other long-lived assets primarily related to certain office leases that the Company determined will no longer be used. The impairment was derived by comparing the fair value of the impacted assets to the carrying value of those assets as of the impairment measurement date, as required under ASC Topic 360 using Level 3 inputs. See Note 14 — Leases for additional discussion related to these impairment charges.
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Contingencies |
3 Months Ended |
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Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Legal Matters. The Company is involved in legal proceedings and litigation arising in the ordinary course of business. A provision is recorded for pending litigation in the Company’s consolidated financial statements when it is determined that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. The Company believes that the potential liability, if any, in excess of amounts already accrued from all proceedings, claims and litigation will not have a material effect on its financial position, cash flows or results of operations when resolved in a future period. Indemnifications. The Company has various agreements that may obligate it to indemnify the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arising in the normal course of business under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations related to matters such as title to assets sold and licensed or certain intellectual property rights. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of the Company’s obligations and the unique facts of each particular agreement. Historically, payments made by the Company under these agreements have not been material. As of March 31, 2022, the Company did not have any material payment obligations under any such indemnification agreements.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company’s leasing activities are primarily for facilities under cancelable and non-cancelable lease agreements expiring during 2022 and through 2038. These facilities support our executive and administrative activities, sales, systems support, operations, and other functions. The Company also has leases for office equipment and other assets, which are not significant. Certain of these lease agreements include (i) renewal options to extend the lease term for up to ten years and/or (ii) options to terminate the agreement within one year. Additionally, certain of the Company’s lease agreements provide standard recurring escalations of lease payments for, among other things, increases in a lessor’s maintenance costs and taxes. Under some lease agreements, the Company may be entitled to allowances, free rent, lessor-financed tenant improvements and other incentives. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company subleases certain office space that it does not intend to occupy. Such sublease arrangements expire during 2022 and through 2032 and primarily relate to facilities in Arlington, Virginia. Certain of the Company’s sublease agreements: (i) include renewal and termination options; (ii) provide for customary escalations of lease payments in the normal course of business; and (iii) grant the subtenant certain allowances, free rent, Gartner-financed tenant improvements and other incentives. All of the Company’s leasing and subleasing activity is recognized in Selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations. The table below presents the Company’s net lease cost and certain other information related to the Company’s leasing activities as of and for the periods indicated (dollars in thousands).
(1)Included in operating lease cost was $10.5 million and $10.4 million for the three months ended March 31, 2022 and 2021, respectively, for costs related to subleasing activities. (2)These amounts are primarily variable lease and nonlease costs that are not fixed at the lease commencement date or are dependent on something other than an index or a rate. (3)The Company did not capitalize any operating lease costs during any of the periods presented. (4)Amount excludes an impairment charge of lease related assets totaling $23.9 million, as discussed below. The table below indicates where the discounted operating lease payments from the above table are classified in the accompanying Condensed Consolidated Balance Sheets (in thousands).
During the three months ended March 31, 2022, as a result and in consideration of the changing nature of the Company’s use of office space for its workforce and the impacts of the COVID-19 pandemic, the Company continued to evaluate its existing real estate lease portfolio. This evaluation included the decision to abandon a portion of one leased office space and the cease-use of certain other leased office spaces that the Company intends to sublease. In connection with this evaluation, the Company reviewed certain of its right-of-use assets and related other long-lived assets for impairment under ASC 360. As a result of the evaluation, the Company recognized an impairment loss during the three months ended March 31, 2022 of $23.9 million, which is included as a component of Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. The impairment loss recorded includes $17.7 million related to right-of-use assets and $6.2 million related to other long-lived assets, primarily leasehold improvements. The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs. The significant assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates that reflect the level of risk associated with receiving future cash flows.
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Leases | Leases The Company’s leasing activities are primarily for facilities under cancelable and non-cancelable lease agreements expiring during 2022 and through 2038. These facilities support our executive and administrative activities, sales, systems support, operations, and other functions. The Company also has leases for office equipment and other assets, which are not significant. Certain of these lease agreements include (i) renewal options to extend the lease term for up to ten years and/or (ii) options to terminate the agreement within one year. Additionally, certain of the Company’s lease agreements provide standard recurring escalations of lease payments for, among other things, increases in a lessor’s maintenance costs and taxes. Under some lease agreements, the Company may be entitled to allowances, free rent, lessor-financed tenant improvements and other incentives. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company subleases certain office space that it does not intend to occupy. Such sublease arrangements expire during 2022 and through 2032 and primarily relate to facilities in Arlington, Virginia. Certain of the Company’s sublease agreements: (i) include renewal and termination options; (ii) provide for customary escalations of lease payments in the normal course of business; and (iii) grant the subtenant certain allowances, free rent, Gartner-financed tenant improvements and other incentives. All of the Company’s leasing and subleasing activity is recognized in Selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations. The table below presents the Company’s net lease cost and certain other information related to the Company’s leasing activities as of and for the periods indicated (dollars in thousands).
(1)Included in operating lease cost was $10.5 million and $10.4 million for the three months ended March 31, 2022 and 2021, respectively, for costs related to subleasing activities. (2)These amounts are primarily variable lease and nonlease costs that are not fixed at the lease commencement date or are dependent on something other than an index or a rate. (3)The Company did not capitalize any operating lease costs during any of the periods presented. (4)Amount excludes an impairment charge of lease related assets totaling $23.9 million, as discussed below. The table below indicates where the discounted operating lease payments from the above table are classified in the accompanying Condensed Consolidated Balance Sheets (in thousands).
During the three months ended March 31, 2022, as a result and in consideration of the changing nature of the Company’s use of office space for its workforce and the impacts of the COVID-19 pandemic, the Company continued to evaluate its existing real estate lease portfolio. This evaluation included the decision to abandon a portion of one leased office space and the cease-use of certain other leased office spaces that the Company intends to sublease. In connection with this evaluation, the Company reviewed certain of its right-of-use assets and related other long-lived assets for impairment under ASC 360. As a result of the evaluation, the Company recognized an impairment loss during the three months ended March 31, 2022 of $23.9 million, which is included as a component of Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. The impairment loss recorded includes $17.7 million related to right-of-use assets and $6.2 million related to other long-lived assets, primarily leasehold improvements. The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs. The significant assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates that reflect the level of risk associated with receiving future cash flows.
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Subsequent Event |
3 Months Ended |
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Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent EventOn April 28, 2022, the Company’s Board of Directors authorized incremental share repurchases of up to an additional $500.0 million of Gartner’s common stock. This authorization is in addition to the previously authorized repurchases of up to $3.3 billion, which as of the end of April 2022 had approximately $504.4 million remaining. |
Business and Basis of Presentation (Policies) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | Segments. Gartner delivers its products and services globally through three business segments: Research, Conferences and Consulting. Revenues and other financial information for our segments are discussed in Note 7 — Segment Information. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation | Basis of presentation. The accompanying interim Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270 for interim financial information and with the applicable instructions of U.S. Securities and Exchange Commission (“SEC”) Rule 10-01 of Regulation S-X on Form 10-Q, and should be read in conjunction with the consolidated financial statements and related notes of the Company in its Annual Report on Form 10-K for the year ended December 31, 2021.The fiscal year of Gartner is the twelve-month period from January 1 through December 31. In the opinion of management, all normal recurring accruals and adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented herein have been included. The results of operations for the three months ended March 31, 2022 may not be indicative of the results of operations for the remainder of 2022 or beyond. When used in these notes, the terms “Gartner,” the “Company,” “we,” “us,” or “our” refer to Gartner, Inc. and its consolidated subsidiaries. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of consolidation | Principles of consolidation. The accompanying interim Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of estimates | Use of estimates. The preparation of the accompanying interim Condensed Consolidated Financial Statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of fees receivable, goodwill, intangible assets and other long-lived assets, as well as tax accruals and other liabilities. In addition, estimates are used in revenue recognition, income tax expense or benefit, performance-based compensation charges, depreciation and amortization. Management believes its use of estimates in these interim Condensed Consolidated Financial Statements to be reasonable. Management continually evaluates and revises its estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. Management adjusts these estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time. As a result, differences between estimates and actual results could be material and would be reflected in the Company’s consolidated financial statements in future periods.
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Cash and cash equivalents and restricted cash | Cash and cash equivalents and restricted cash. Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company’s Condensed Consolidated Balance Sheets and the total cash amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands).
(1)Restricted cash consists of escrow accounts established in connection with certain of the Company’s business acquisitions. Generally, such cash is restricted to use due to provisions contained in the underlying stock or asset purchase agreement. The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims, etc.).
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Revenue recognition | Revenue recognition. Revenue is recognized in accordance with the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). Revenue is only recognized when all of the required criteria for revenue recognition have been met. The accompanying Condensed Consolidated Statements of Operations present revenue net of any sales or value-added taxes that we collect from customers and remit to government authorities. ASC Topic 270 requires certain disclosures in interim financial statements around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adoption of new accounting standards | Adoption of new accounting standards. The Company adopted the accounting standard described below during the three months ended March 31, 2022. Business Combinations — In October 2021, the FASB issued ASU No. 2021-08, Business Combinations, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU No. 2021-08”). ASU No. 2021-08 provides guidance for a business combination on how to recognize and measure contract assets and contract liabilities from revenue contracts with customers and other contracts that apply the provisions of ASC Topic 606, Revenue from Contracts with Customers. Specifically, the proposed amendments would require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606. Generally, this would result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements (if the acquiree prepared financial statements in accordance with U.S. GAAP). The rule will be effective for public entities on January 1, 2023, with early adoption permitted. Gartner has elected to adopt ASU No. 2021-08 effective January 1, 2022. ASU No. 2021-08 will not impact acquired contract assets or liabilities from business combinations occurring prior to January 1, 2022, and the impact in future periods will depend on the contract assets and contract liabilities acquired in future business combinations. Accounting standards issued but not yet adopted. The FASB has issued accounting standards that have not yet become effective and may impact the Company’s consolidated financial statements or related disclosures in future periods. Those standards and their potential impact are discussed below. Accounting standard effective immediately upon voluntary election by Gartner Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). ASU No. 2020-04 provides that an entity can elect not to apply certain required modification accounting in U.S. GAAP to contracts where all changes to the critical terms relate to reference rate reform (e.g., the expected discontinuance of LIBOR and the transition to an alternative reference interest rate, etc.). In addition, the rule provides optional expedients and exceptions that enable entities to continue to apply hedge accounting for hedging relationships where one or more of the critical terms change due to reference rate reform. The rule became effective for all entities as of March 12, 2020 and will generally no longer be available to apply after December 31, 2022. The Company is currently evaluating the potential impact of ASU No. 2020-04 on its consolidated financial statements, including the rule’s potential impact on any debt modifications or other contractual changes in the future that may result from reference rate reform. Accounting standard effective later in 2022 Government Assistance — In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance (“ASU No. 2021-10”). ASU No, 2021-10 requires business entities to annually disclose information about certain government assistance they receive. The rule will be effective for public entities for annual periods beginning after December 15, 2021. The adoption of ASU No. 2021-10 is currently not expected to have a material impact on the Company’s financial statement disclosures.
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Business and Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash and Cash Equivalents | Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company’s Condensed Consolidated Balance Sheets and the total cash amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands).
(1)Restricted cash consists of escrow accounts established in connection with certain of the Company’s business acquisitions. Generally, such cash is restricted to use due to provisions contained in the underlying stock or asset purchase agreement. The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims, etc.).
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Restrictions on Cash and Cash Equivalents | Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company’s Condensed Consolidated Balance Sheets and the total cash amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands).
(1)Restricted cash consists of escrow accounts established in connection with certain of the Company’s business acquisitions. Generally, such cash is restricted to use due to provisions contained in the underlying stock or asset purchase agreement. The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims, etc.).
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes to the carrying amount of goodwill by reporting unit | The table below presents changes to the carrying amount of goodwill by segment during the three months ended March 31, 2022 (in thousands).
(1)The Company does not have any accumulated goodwill impairment losses.
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Schedule of amortizable intangible assets | The tables below present reconciliations of the carrying amounts of the Company’s finite-lived intangible assets as of the dates indicated (in thousands).
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Schedule of estimated future amortization expense by year | The estimated future amortization expense by year for finite-lived intangible assets is presented in the table below (in thousands).
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Revenue and Related Matters (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue by Reportable Segment | Disaggregated Revenue — The Company’s disaggregated revenue by reportable segment is presented in the tables below for the periods indicated (in thousands). By Primary Geographic Market (1) Three Months Ended March 31, 2022
Three Months Ended March 31, 2021
(1)Revenue is reported based on where the sale is fulfilled.
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Schedule of Disaggregation of Revenue | By Timing of Revenue Recognition Three Months Ended March 31, 2022
Three Months Ended March 31, 2021
(1)Research revenues are recognized in connection with performance obligations that are satisfied over time using a time-elapsed output method to measure progress. Consulting revenues are recognized over time using labor hours as an input measurement basis. (2)The revenues in this category are recognized in connection with performance obligations that are satisfied at the point in time that the contractual deliverables are provided to the customer.
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Schedule for Contract with Customer, Asset and Liability | The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers (in thousands).
(1)Fees receivable represent an unconditional right to payment from the Company’s customers and include both billed and unbilled amounts. (2)Contract assets represent recognized revenue for which the Company does not have an unconditional right to payment as of the balance sheet date because the project may be subject to a progress billing milestone or some other billing restriction. (3)Deferred revenues represent amounts (i) for which the Company has received an upfront customer payment or (ii) that pertain to recognized fees receivable. Both situations occur before the completion of the Company’s performance obligation(s).
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Computation of Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of basic and diluted (loss) earnings per share calculations | The table below sets forth the calculation of basic and diluted income per share for the periods indicated (in thousands, except per share data).
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Stock-Based Compensation (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock-based compensation expense by award type | The tables below summarize the Company’s stock-based compensation expense by award type and expense category line item during the periods indicated (in millions).
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Schedule of stock-based compensation expense by expense category |
(1)Includes charges of $19.2 million and $21.5 million during the three months ended March 31, 2022 and 2021, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis. (2)On February 5, 2020, prior to the COVID-19 related shutdown in the U.S., the Compensation Committee (“Committee”) of the Board of Directors of the Company established performance measures for the performance-based restricted stock units (the “PSUs”) awarded to the Company’s executive officers in 2020 under the Plan. Based on preliminary corporate performance results for the 2020 performance measures, the 2020 PSUs would have been earned at 50% of target. However, on February 3, 2021, the Committee determined to use its discretion under the Plan to approve a payout at 95% of target. In deciding to exercise this discretion to adjust the PSU payout, the Committee considered the Company’s strong overall performance in 2020 despite the significant negative impact of the COVID-19 pandemic. As a result of the modification, the Company recognized $6.5 million of incremental compensation cost during the three months ended March 31, 2021.
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Segment Information (Tables) |
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information, by segment | The tables below present information about the Company’s reportable segments for the periods indicated (in thousands).
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Schedule of reconciliation of segment gross contribution to net income (loss) | The table below provides a reconciliation of total segment gross contribution to net income for the periods indicated (in thousands).
(1)The unallocated amounts consist of certain bonus and fringe costs recorded in consolidated Cost of services and product development that are not allocated to segment expense. The Company’s policy is to allocate bonuses to segments at 100% of a segment employee’s target bonus. Amounts above or below 100% are absorbed by corporate.
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The Company’s total outstanding borrowings are summarized in the table below (in thousands).
(1)The contractual annualized interest rate as of March 31, 2022 on the 2020 Credit Agreement Term loan facility and the Revolving credit facility was 1.50%, which consisted of a floating Eurodollar base rate of 0.250% plus a margin of 1.250%. However, the Company has interest rate swap contracts that effectively convert the floating Eurodollar base rates on outstanding amounts to a fixed base rate. (2)The Company had approximately $1.0 billion of available borrowing capacity on the 2020 Credit Agreement revolver (not including the expansion feature) as of March 31, 2022. (3)Consists of $800.0 million principal amount of 2028 Notes outstanding. The 2028 Notes bear interest at a fixed rate of 4.50% and mature on July 1, 2028. (4)Consists of $600.0 million principal amount of 2029 Notes outstanding. The 2029 Notes bear interest at a fixed rate of 3.625% and mature on June 15, 2029. (5)Consists of $800.0 million principal amount of 2030 Notes outstanding. The 2030 Notes bear interest at a fixed rate of 3.75% and mature on October 1, 2030. (6)Consists of two State of Connecticut economic development loans. One of the loans originated in 2012, has a 10-year maturity and the outstanding balance of $0.4 million as of March 31, 2022 bears interest at a fixed rate of 3.00%. The second loan, originated in 2019, has a 10-year maturity and bears interest at a fixed rate of 1.75%. Both of these loans may be repaid at any time by the Company without penalty. (7)The weighted average annual effective rate on the Company’s outstanding debt for the three months ended March 31, 2022, including the effects of its interest rate swaps discussed below, was 4.82%. (8)Deferred financing fees are being amortized to Interest expense, net over the term of the related debt obligation.
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Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share repurchase activity | The Company’s share repurchase activity is presented in the table below for the periods indicated.
(1)The average purchase price for repurchased shares was $284.53 and $180.44 for the three months ended March 31, 2022 and 2021, respectively. The repurchased shares during the three months ended March 31, 2022 and 2021 included purchases for both open market purchases and stock-based compensation award settlements. (2)The cash paid for repurchased shares during the three months ended March 31, 2021 included $8.0 million of open market purchases with trade dates in December 2020 that settled in January 2021 and excluded $20.0 million of open market purchases with trade dates in March 2021 that settled in April 2021. The cash paid for repurchased shares during the three months ended March 31, 2022 excluded $12.1 million of open market purchases with trade dates in March 2022 that settled in April 2022.
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Schedule of the changes in Accumulated Other Comprehensive (Loss) Income by component (net of tax) | The tables below provide information about the changes in AOCL by component and the related amounts reclassified out of AOCL to income during the periods indicated (net of tax, in thousands) (1). Three Months Ended March 31, 2022
Three Months Ended March 31, 2021
(1)Amounts in parentheses represent debits (deferred losses). (2)$7.2 million and $7.0 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the three months ended March 31, 2022 and 2021, respectively. See Note 8 — Debt and Note 11 — Derivatives and Hedging for information regarding the cash flow hedges. (3)The reclassifications related to defined benefit pension plans were recorded in Other income, net.
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Derivatives and Hedging (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of information regarding outstanding derivative contracts | The tables below provide information regarding the Company’s outstanding derivative contracts as of the dates indicated (in thousands, except for number of contracts).
(1)As a result of the payment under the then outstanding 2016 Credit Agreement term loan and revolving credit facility, the Company de-designated all of its interest rate swaps effective June 30, 2020. Accordingly, hedge accounting is not applicable, and subsequent changes to fair value of the interest rate swaps are recorded in Other income, net. The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments. See Note 8 — Debt provides additional information regarding the Company’s interest rate swap contracts. (2)The Company has foreign exchange transaction risk because it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income, net because the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding foreign currency forward exchange contracts at March 31, 2022 matured before April 30, 2022. (3)See Note 12 — Fair Value Disclosures for the determination of the fair values of these instruments.
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Schedule of amounts recognized in statement of operations | The table below provides information regarding amounts recognized in the accompanying Condensed Consolidated Statements of Operations for derivative contracts for the periods indicated (in thousands).
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Fair Value Disclosures (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities that are remeasured to fair value | The table below presents the fair values of certain financial assets and liabilities (in thousands).
(1)The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees. The assets consist of investments in money market funds, mutual funds and company-owned life insurance contracts, which are valued based on Level 1 or Level 2 inputs. The related deferred compensation plan liabilities are recorded at fair value, or the estimated amount needed to settle the liability, which the Company considers to be a Level 2 input. (2)The Company enters into foreign currency forward exchange contracts to hedge the effects of adverse fluctuations in foreign currency exchange rates (see Note 11 — Derivatives and Hedging). Valuation of these contracts is based on observable foreign currency exchange rates in active markets, which the Company considers to be a Level 2 input. (3)The Company has interest rate swap contracts that hedge the risk of variability from interest payments on its borrowings (see Note 8 — Debt). The fair values of interest rate swaps are based on mark-to-market valuations prepared by a third-party broker. Those valuations are based on observable interest rates from recently executed market transactions and other observable market data, which the Company considers to be Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker by using an electronic quotation service.
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Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The table below presents the carrying amounts (net of deferred financing costs) and fair values of financial instruments that are not recorded at fair value in the Company’s Condensed Consolidated Balance Sheets (in thousands). The estimated fair value of the financial instruments was derived from quoted market prices provided by an independent dealer, which the Company considers to be a Level 2 input.
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Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease costs | The table below presents the Company’s net lease cost and certain other information related to the Company’s leasing activities as of and for the periods indicated (dollars in thousands).
(1)Included in operating lease cost was $10.5 million and $10.4 million for the three months ended March 31, 2022 and 2021, respectively, for costs related to subleasing activities. (2)These amounts are primarily variable lease and nonlease costs that are not fixed at the lease commencement date or are dependent on something other than an index or a rate. (3)The Company did not capitalize any operating lease costs during any of the periods presented. (4)Amount excludes an impairment charge of lease related assets totaling $23.9 million, as discussed below.
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Supplemental balance sheet information | The table below indicates where the discounted operating lease payments from the above table are classified in the accompanying Condensed Consolidated Balance Sheets (in thousands).
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Business and Basis of Presentation - Narrative (Details) $ in Thousands |
3 Months Ended | |||
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Mar. 31, 2022
USD ($)
segment
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Dec. 31, 2021
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Mar. 31, 2021
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Dec. 31, 2020
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Number of reportable segments | segment | 3 | |||
Cash and cash equivalents and restricted cash | $ 460,284 | $ 760,602 | $ 445,995 | $ 712,583 |
Cash and cash equivalents | $ 456,175 | $ 756,493 |
Business and Basis of Presentation - Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Mar. 31, 2021 |
Dec. 31, 2020 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 456,175 | $ 756,493 | ||
Prepaid expenses and other current assets | 4,109 | 4,109 | ||
Cash and cash equivalents and restricted cash | $ 460,284 | $ 760,602 | $ 445,995 | $ 712,583 |
Acquisition - Narrative (Details) - Pulse Q&A Inc. $ in Millions |
Jun. 17, 2021
USD ($)
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Business Acquisition [Line Items] | |
Percent of outstanding membership interests acquired | 100.00% |
Purchase price | $ 29.1 |
Cash paid for acquisition net of cash acquired | 22.9 |
Future compensation expense | $ 4.5 |
Future compensation expense, recognition period | 3 years |
Acquired finite lived intangible assets and goodwill | $ 31.0 |
Acquired other liabilities | $ 1.9 |
Goodwill and Intangible Assets - Changes to Carrying Amount of Goodwill by Reporting Unit (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Sep. 30, 2021 |
|
Goodwill [Line Items] | ||
Goodwill impairment | $ 0 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 2,951,317,000 | |
Foreign currency translation impact | (1,996,000) | |
Ending balance | 2,949,321,000 | |
Goodwill, accumulated impairment losses | 0 | |
Research | ||
Goodwill [Roll Forward] | ||
Beginning balance | 2,670,934,000 | |
Foreign currency translation impact | (1,652,000) | |
Ending balance | 2,669,282,000 | |
Conferences | ||
Goodwill [Roll Forward] | ||
Beginning balance | 184,021,000 | |
Foreign currency translation impact | (27,000) | |
Ending balance | 183,994,000 | |
Consulting | ||
Goodwill [Roll Forward] | ||
Beginning balance | 96,362,000 | |
Foreign currency translation impact | (317,000) | |
Ending balance | $ 96,045,000 |
Goodwill and Intangible Assets - Estimated Future Amortization Expense By Year From Amortizable Intangibles (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2022 (remaining nine months) | $ 75,065 | |
2023 | 100,071 | |
2024 | 92,890 | |
2025 | 82,361 | |
2026 | 79,686 | |
Thereafter | 254,456 | |
Finite-lived intangible assets, net | $ 684,529 | $ 714,418 |
Revenue and Related Matters - Schedule of Contract with Customer, Asset and Liability (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Assets: | |||
Fees receivable, gross | $ 1,334,398 | $ 1,371,680 | |
Contract assets recorded in Prepaid expenses and other current assets | 21,820 | 20,054 | |
Contract liabilities: | |||
Deferred revenues (current liability) | 2,421,726 | 2,238,035 | |
Non-current deferred revenues recorded in Other liabilities | 46,257 | 48,176 | |
Total contract liabilities | 2,467,983 | $ 2,286,211 | |
Revenue recognized previously attributable to deferred revenues | $ 833,900 | $ 726,700 |
Computation of Earnings Per Share - Calculations Of Basic And Diluted (Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Numerator: | ||
Net income used for calculating basic and diluted income per share | $ 172,515 | $ 164,100 |
Denominator: | ||
Weighted average number of common shares used in the calculation of basic income per share (in shares) | 82,020 | 88,352 |
Dilutive effect of outstanding awards associated with stock-based compensation plans (in shares) | 953 | 787 |
Shares used in the calculation of diluted income per share (in shares) | 82,973 | 89,139 |
Basic income per share (in dollars per share) | $ 2.10 | $ 1.86 |
Diluted income per share (in dollars per share) | $ 2.08 | $ 1.84 |
Computation of Earnings Per Share - Additional information (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of (loss) income per share (in shares) | 0.2 | 0.4 |
Stock-Based Compensation - Additional Information (Details) - $ / shares shares in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Share-based Payment Arrangement [Abstract] | ||
Number of shares available for grant (in shares) | 3.9 | |
Common stock par value (in dollars per share) | $ 0.0005 | $ 0.0005 |
Segment Information - Reconciliation of Segment Gross Contribution to Net Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Costs and expenses: | ||
Cost of services and product development | $ 377,033 | $ 334,467 |
Selling, general and administrative | 617,904 | 487,255 |
Acquisition and integration charges | 2,207 | 640 |
Operating income | 217,247 | 225,412 |
Interest expense and other, net | (2,188) | (10,659) |
Less: Provision for income taxes | 42,544 | 50,653 |
Net income | 172,515 | 164,100 |
Reportable segments | ||
Costs and expenses: | ||
Operating income | $ 897,515 | 777,366 |
Reportable segments | Maximum | ||
Costs and expenses: | ||
Percent of target bonus allocated to segments | 100.00% | |
Corporate and other expenses | ||
Costs and expenses: | ||
Cost of services and product development | $ 11,808 | 7,795 |
Selling, general and administrative | 617,904 | 487,255 |
Depreciation and amortization | 48,349 | 56,264 |
Acquisition and integration charges | 2,207 | 640 |
Operating income | $ (680,268) | $ (551,954) |
Debt - Borrowings (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Instrument [Line Items] | ||
Principal amount outstanding | $ 2,491,800 | $ 2,493,131 |
Less: deferred financing fees | (29,234) | (30,367) |
Net balance sheet carrying amount | 2,462,566 | 2,462,764 |
Term Loan Facility | 2020 Credit Agreement | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | 286,400 | 287,600 |
Line of Credit | Revolving credit facility | 2020 Credit Agreement | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | 0 | 0 |
Senior Notes | 2028 Notes | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | 800,000 | 800,000 |
Senior Notes | 2029 Notes | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | 600,000 | 600,000 |
Senior Notes | 2030 Notes | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | 800,000 | 800,000 |
Other | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | $ 5,400 | $ 5,531 |
Debt - Interest Rate Swaps (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022
USD ($)
contract
|
Dec. 31, 2021
USD ($)
contract
|
|
Derivative [Line Items] | ||
Number of contracts | contract | 43 | 142 |
Interest rate swap contracts total notional value | $ 1,018,622 | $ 1,933,506 |
Interest rate swaps | ||
Derivative [Line Items] | ||
Number of contracts | contract | 2 | |
Interest rate swap contracts total notional value | $ 700,000 | |
Term of contract | 30 days | |
Loss on release of interest rate swap recognized in AOCI | $ 67,800 | |
Net negative fair value (liability) | (15,300) | (53,700) |
Interest rate swaps | Accumulated Other Comprehensive Loss, Net | ||
Derivative [Line Items] | ||
Net negative fair value (liability) | $ (51,000) | $ (56,300) |
Interest rate swaps | Minimum | ||
Derivative [Line Items] | ||
Fixed interest rate | 3.04% |
Equity - Share Repurchase Program and Share Repurchase Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 30, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Feb. 28, 2022 |
Feb. 28, 2021 |
Dec. 31, 2015 |
|
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock repurchase program, authorized amount | $ 3,300,000 | $ 1,200,000 | ||||
Stock repurchase program, additional authorized amount | $ 500,000 | $ 1,600,000 | ||||
Stock repurchase program, remaining authorized repurchase amount | $ 677,800 | |||||
Number of shares repurchased (in shares) | 1,627,709 | 2,274,710 | ||||
Cash paid for repurchased shares | $ 451,070 | $ 398,450 | ||||
Treasury stock, average price paid per share (in dollars per share) | $ 284.53 | $ 180.44 | ||||
Open Market Purchases | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Cash paid for repurchased shares | $ 20,000 | $ 12,100 | $ 8,000 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Income Tax Disclosure [Abstract] | |||
Provision for income taxes | $ 42,544 | $ 50,653 | |
Effective income tax rate | 19.80% | 23.60% | |
Unrecognized tax benefits | $ 153,400 | $ 150,000 | |
Decrease in unrecognized tax benefits is reasonably possible | $ 29,500 |
Derivatives and Hedging - Amounts Recognized in the Condensed Consolidated Statements of Operations for Derivative Contracts (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total expense, net | $ (19,734) | $ (8,791) |
Interest (income) expense, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total expense, net | 7,166 | 7,032 |
Interest (income) expense, net | Interest rate swaps | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total expense, net | (7,200) | (7,000) |
Other (income) expense, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total expense, net | $ (26,900) | $ (15,823) |
Leases - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Lessee, Lease, Description [Line Items] | |
Renewal term | 10 years |
Option to terminate, term | 1 year |
Loss on impairment of lease related assets, net | $ 17.7 |
Impairment of leasehold improvement | 6.2 |
Selling, general and administrative | |
Lessee, Lease, Description [Line Items] | |
Loss on impairment of lease related assets, net | $ 23.9 |
Leases - Net Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Leases [Abstract] | ||
Operating lease cost | $ 30,364 | $ 32,865 |
Variable lease cost | 4,268 | 4,302 |
Sublease income | (10,925) | (10,339) |
Total lease cost, net | 23,707 | 26,828 |
Cash paid for amounts included in the measurement of operating lease liabilities | 34,817 | 34,927 |
Cash receipts from sublease arrangements | 11,164 | 10,095 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 6,930 | 7,046 |
Cost for subleasing activities | $ 10,500 | $ 10,400 |
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Leases [Abstract] | ||
Accounts payable and accrued liabilities | $ 90,836 | $ 89,754 |
Operating lease liabilities | 677,616 | 697,766 |
Total operating lease liabilities included in the Condensed Consolidated Balance Sheets | $ 768,452 | $ 787,520 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accounts payable and accrued liabilities | Accounts payable and accrued liabilities |
Subsequent Events - (Details) - USD ($) $ in Millions |
Apr. 30, 2022 |
Apr. 28, 2022 |
Mar. 31, 2022 |
Feb. 28, 2022 |
Feb. 28, 2021 |
Dec. 31, 2015 |
---|---|---|---|---|---|---|
Subsequent Event [Line Items] | ||||||
Stock repurchase program, additional authorized amount | $ 500.0 | $ 1,600.0 | ||||
Stock repurchase program, authorized amount | $ 3,300.0 | $ 1,200.0 | ||||
Stock repurchase program, remaining authorized repurchase amount | $ 677.8 | |||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Stock repurchase program, additional authorized amount | $ 500.0 | |||||
Stock repurchase program, remaining authorized repurchase amount | $ 504.4 |
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