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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the quarterly period ended March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission File Number 1-14443
Gartner, Inc.
(Exact name of Registrant as specified in its charter)
Delaware04-3099750
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification Number)
  
P.O. Box 1021206902-7700
56 Top Gallant Road(Zip Code)
Stamford, 
Connecticut
(Address of principal executive offices) 
Registrant’s telephone number, including area code: (203) 964-0096
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $.0005 par value per shareITNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerNon-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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 28, 2023, 79,042,049 shares of the registrant’s common shares were outstanding.
1


Table of Contents

 Page
 
 
PART II. OTHER INFORMATION
 

2


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited; in thousands, except share data)
 March 31,December 31,
20232022
Assets  
Current assets:  
Cash and cash equivalents$893,512 $697,999 
Fees receivable, net of allowances of $8,000 and $9,000, respectively
1,523,441 1,556,786 
Deferred commissions343,716 363,079 
Prepaid expenses and other current assets142,650 119,207 
Assets held-for-sale 49,036 
Total current assets2,903,319 2,786,107 
Property, equipment and leasehold improvements, net256,863 264,581 
Operating lease right-of-use assets415,074 436,592 
Goodwill2,929,941 2,930,211 
Intangible assets, net564,138 584,714 
Other assets309,597 297,531 
Total Assets$7,378,932 $7,299,736 
Liabilities and Stockholders’ Equity   
Current liabilities:  
Accounts payable and accrued liabilities$838,784 $1,115,198 
Deferred revenues2,607,072 2,443,762 
Current portion of long-term debt8,400 7,800 
Liabilities held-for-sale 30,840 
Total current liabilities3,454,256 3,597,600 
Long-term debt, net of deferred financing fees 2,452,369 2,453,607 
Operating lease liabilities575,963 597,267 
Other liabilities423,486 423,464 
Total Liabilities6,906,074 7,071,938 
Stockholders’ Equity   
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none issued or outstanding
  
Common stock, $0.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods
82 82 
Additional paid-in capital2,222,511 2,179,604 
Accumulated other comprehensive loss, net(95,910)(101,610)
Accumulated earnings4,152,609 3,856,826 
Treasury stock, at cost, 84,109,645 and 84,428,513 common shares, respectively
(5,806,434)(5,707,104)
Total Stockholders’ Equity 472,858 227,798 
Total Liabilities and Stockholders’ Equity $7,378,932 $7,299,736 
 

See the accompanying notes to Condensed Consolidated Financial Statements.
3


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share data)
Three Months Ended
 March 31,
 20232022
Revenues:
Research$1,217,191 $1,136,380 
Conferences64,642 10,354 
Consulting127,036 116,006 
Total revenues1,408,869 1,262,740 
Costs and expenses:
Cost of services and product development435,139 377,033 
Selling, general and administrative657,090 617,904 
Depreciation23,896 23,201 
Amortization of intangibles22,735 25,148 
Acquisition and integration charges1,368 2,207 
    Gain from sale of divested operation(139,316) 
Total costs and expenses1,000,912 1,045,493 
Operating income 407,957 217,247 
Interest expense, net(27,391)(31,394)
Gain on event cancellation insurance claims3,077  
Other (expense) income, net(2,366)29,206 
Income before income taxes381,277 215,059 
Provision for income taxes85,494 42,544 
Net income $295,783 $172,515 
Net income per share:
Basic$3.72 $2.10 
Diluted$3.68 $2.08 
Weighted average shares outstanding:
Basic79,452 82,020 
Diluted80,282 82,973 

See the accompanying notes to Condensed Consolidated Financial Statements.
4


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited; in thousands)
Three Months Ended
 March 31,
 20232022
Net income $295,783 $172,515 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments1,832 (6,798)
Interest rate swaps – net change in deferred gain or loss3,834 5,370 
Pension plans – net change in deferred actuarial loss34 48 
Other comprehensive income (loss), net of tax5,700 (1,380)
Comprehensive income$301,483 $171,135 

See the accompanying notes to Condensed Consolidated Financial Statements.
5


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited; in thousands)


Three Months Ended March 31, 2023
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss, NetAccumulated EarningsTreasury StockTotal
Balance at December 31, 2022$82 $2,179,604 $(101,610)$3,856,826 $(5,707,104)$227,798 
Net income— — — 295,783 — 295,783 
Other comprehensive income (loss), net— — 5,700 — — 5,700 
Issuances under stock plans— (2,141)— — 9,520 7,379 
Common share repurchases— — — — (108,850)(108,850)
Stock-based compensation expense — 45,048 — — — 45,048 
Balance at March 31, 2023$82 $2,222,511 $(95,910)$4,152,609 $(5,806,434)$472,858 

Three Months Ended March 31, 2022
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss, NetAccumulated EarningsTreasury StockTotal
Balance at December 31, 2021$82 $2,074,896 $(81,431)$3,049,027 $(4,671,516)$371,058 
Net income— — — 172,515 — 172,515 
Other comprehensive income (loss), net— — (1,380)— — (1,380)
Issuances under stock plans— 579 — — 6,385 6,964 
Common share repurchases— — — — (463,125)(463,125)
Stock-based compensation expense — 32,121 — — — 32,121 
Balance at March 31, 2022$82 $2,107,596 $(82,811)$3,221,542 $(5,128,256)$118,153 

See the accompanying notes to Condensed Consolidated Financial Statements.
6


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited; in thousands)
Three Months Ended
 March 31,
 20232022
Operating activities:  
Net income $295,783 $172,515 
Adjustments to reconcile net income to cash provided by operating activities:  
Depreciation and amortization 46,631 48,349 
Stock-based compensation expense45,048 32,121 
Deferred taxes(7,866)(7,502)
Gain from sale of divested operation(139,316) 
Loss on impairment of lease related assets8,720 23,878 
Reduction in the carrying amount of operating lease right-of-use assets17,644 17,951 
Amortization and write-off of deferred financing fees1,161 1,133 
Loss (gain) on de-designated swaps1,393 (29,896)
Changes in assets and liabilities, net of acquisitions and divestitures:  
Fees receivable, net36,177 30,700 
Deferred commissions19,635 18,909 
Prepaid expenses and other current assets(18,370)(13,596)
Other assets(14,799)(1,082)
Deferred revenues155,153 195,306 
Accounts payable and accrued and other liabilities(282,315)(321,001)
Cash provided by operating activities164,679 167,785 
Investing activities:  
Additions to property, equipment and leasehold improvements(21,122)(17,293)
Proceeds from sale of divested operation158,733  
Cash provided by (used in) investing activities137,611 (17,293)
Financing activities:  
Proceeds from employee stock purchase plan7,358 6,949 
Payments on borrowings(1,800)(1,331)
Purchases of treasury stock(106,850)(451,070)
Cash used in financing activities(101,292)(445,452)
Net increase (decrease) in cash and cash equivalents and restricted cash200,998 (294,960)
Effects of exchange rates on cash and cash equivalents(5,485)(5,358)
Cash and cash equivalents and restricted cash, beginning of period 698,599 760,602 
Cash and cash equivalents and restricted cash, end of period $894,112 $460,284 

See the accompanying notes to Condensed Consolidated Financial Statements.
7


GARTNER, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
Note 1 — 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 the Company’s 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, 2022.

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, 2023 may not be indicative of the results of operations for the remainder of 2023 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).
March 31,December 31,
20232022
Cash and cash equivalents$893,512 $697,999 
Restricted cash classified in (1):
Other assets600 600 
Cash and cash equivalents and restricted cash $894,112 $698,599 
(1)Restricted cash consisted of an escrow account established in connection with one 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.
8


The Company will disburse the restricted cash to the sellers of the business 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.

Gain on event cancellation insurance claims. In February 2023, the Company received $3.1 million of proceeds related to 2020 event cancellation insurance claims. The Company does not record any gain on insurance claims in excess of expenses incurred until the receipt of the insurance proceeds is deemed to be realizable.

Adoption of new accounting standard. The Company adopted the accounting standard described below during the three months ended March 31, 2023.

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. ASU No. 2022-06, which was issued in December 2022, extended the deadline to December 31, 2024. During 2023, the Company adopted the practical expedient provided under ASU 2020-04 related to its debt and interest rate swap arrangements and as such, any amendments are treated as a continuation of the existing agreements and no gain or loss on the modification is recorded.



9



Note 2 — Acquisition and Divestiture

Acquisition

In October 2022, the Company acquired 100% of the outstanding capital stock of UpCity, Inc. (“UpCity”), a privately-held company based in Chicago, Illinois, for an aggregate purchase price of $6.4 million. UpCity’s online marketplace helps small businesses by connecting them to ratings and reviews of more than 50,000 B2B service providers.

Divestiture

In February 2023, the Company completed the sale of a non-core business, TalentNeuron, for approximately $164.2 million and realized $158.7 million in cash from the sale, which was net of certain closing expenses. The sale is subject to certain post-closing adjustments. The Company recorded a pre-tax gain of $139.3 million on the sale of TalentNeuron, which is included in Gain from sale of divested operation in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2023. TalentNeuron was included in the Company’s Research segment. The principal components of the assets divested included goodwill, intangible assets, net, property, equipment and leasehold improvements, net, and accounts receivable, with carrying amounts of $16.0 million, $9.5 million, $4.5 million and $11.8 million, respectively, while the liabilities transferred with the sale primarily consisted of deferred revenue with a carrying amount of $24.4 million. Such assets and liabilities were included in Assets held-for-sale and Liabilities held-for-sale, respectively, on the Condensed Consolidated Balance Sheet at December 31, 2022 at their respective carrying values at that date.

Note 3 — 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, 2022 that indicated no impairment. Subsequent to completing the 2022 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, 2023 (in thousands).
 ResearchConferencesConsultingTotal
Balance at December 31, 2022 (1)$2,651,193 $183,951 $95,067 $2,930,211 
Foreign currency translation impact (390)1 119 (270)
Balance at March 31, 2023 (1)$2,650,803 $183,952 $95,186 $2,929,941 
(1)The Company does not have any accumulated goodwill impairment losses.

10


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).
March 31, 2023Customer
Relationships
Technology-relatedOtherTotal
Gross cost at December 31, 2022$1,060,541 $11,200 $10,436 $1,082,177 
Foreign currency translation impact 3,931   3,931 
Gross cost1,064,472 11,200 10,436 1,086,108 
Accumulated amortization (1)(509,583)(6,533)(5,854)(521,970)
Balance at March 31, 2023$554,889 $4,667 $4,582 $564,138 
December 31, 2022Customer
Relationships
Technology-relatedOther Total
Gross cost $1,060,541 11,200 $10,436 $1,082,177 
Accumulated amortization (1)(486,260)(5,600)(5,603)(497,463)
Balance at December 31, 2022$574,281 $5,600 $4,833 $584,714 
(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 years; and Other—4 to 11 years.

Amortization expense related to finite-lived intangible assets was $22.7 million and $25.1 million during the three months ended March 31, 2023 and 2022, respectively. The estimated future amortization expense by year for finite-lived intangible assets is presented in the table below (in thousands).

2023 (remaining nine months)$68,301 
202489,160 
202580,493 
202677,818 
202777,210 
Thereafter171,156 
$564,138 

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Note 4 — 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, 2023
Primary Geographic MarketResearchConferencesConsultingTotal
United States and Canada$809,399 $48,775 $76,975 $935,149 
Europe, Middle East and Africa268,657 9,207 32,938 310,802 
Other International139,135 6,660 17,123 162,918 
Total revenues $1,217,191 $64,642 $127,036 $1,408,869 
Three Months Ended March 31, 2022
Primary Geographic MarketResearchConferencesConsultingTotal
United States and Canada$740,529 $7,652 $68,789 $816,970 
Europe, Middle East and Africa263,129 1,238 32,444 296,811 
Other International132,722 1,464 14,773 148,959 
Total revenues$1,136,380 $10,354 $116,006 $1,262,740 
(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, 2023
Timing of Revenue RecognitionResearchConferencesConsultingTotal
Transferred over time (1)$1,109,796 $ $97,006 $1,206,802 
Transferred at a point in time (2)107,395 64,642 30,030 202,067 
Total revenues $1,217,191 $64,642 $127,036 $1,408,869 
Three Months Ended March 31, 2022
Timing of Revenue RecognitionResearchConferencesConsultingTotal
Transferred over time (1)$1,025,810 $ $96,436 $1,122,246 
Transferred at a point in time (2)110,570 10,354 19,570 140,494 
Total revenues$1,136,380 $10,354 $116,006 $1,262,740 
(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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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, 2023 was approximately $5.3 billion. The Company expects to recognize $2.4 billion, $2.1 billion and $0.8 billion of this revenue (most of which pertains to Research) during the remainder of 2023, the year ending December 31, 2024 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).

March 31,December 31,
20232022
Assets:
Fees receivable, gross (1)$1,531,441 $1,565,786 
Contract assets recorded in Prepaid expenses and other current assets (2)$24,350 $21,183 
Contract liabilities:
Deferred revenues (current liability) (3)$2,607,072 $2,443,762 
Non-current deferred revenues recorded in Other liabilities (3)32,272 39,115 
Total contract liabilities$2,639,344 $2,482,877 
(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 restrictions.
(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 $924.9 million and $833.9 million during the three months ended March 31, 2023 and 2022, 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, 2023 and 2022, the Company did not record any material impairments related to its contract assets.

Note 5 — 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).
13


Three Months Ended
 March 31,
 20232022
Numerator:  
Net income used for calculating basic and diluted income per share$295,783 $172,515 
Denominator:  
Weighted average common shares used in the calculation of basic income per share 79,452 82,020 
Dilutive effect of outstanding awards associated with stock-based compensation plans (1)830 953 
Shares used in the calculation of diluted income per share 80,282 82,973 
Basic income per share$3.72 $2.10 
Diluted income per share $3.68 $2.08 
(1)Certain outstanding awards associated with stock-based compensation plans were not included in the computation of diluted income per share because the effect would have been anti-dilutive. These anti-dilutive outstanding awards associated with stock-based compensation plans totaled approximately 0.3 million and 0.2 million for the three months ended March 31, 2023 and 2022, respectively.

Note 6 — 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, 2023, the Company had 1.9 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).
Three Months Ended
 March 31,
Award type20232022
Stock appreciation rights$2.5 $1.9 
Restricted stock units42.2 30.0 
Common stock equivalents0.3 0.2 
Total (1)$45.0 $32.1 

Three Months Ended
 March 31,
Expense category line item20232022
Cost of services and product development$18.3 $11.5 
Selling, general and administrative26.7 20.6 
Total (1)$45.0 $32.1 

(1)Includes costs of $26.8 million and $19.2 million during the three months ended March 31, 2023 and 2022, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis.

Note 7 — 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,
14


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, Acquisition and integration charges and Gain from sale of divested operation. 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).

Three Months Ended March 31, 2023ResearchConferencesConsultingConsolidated
Revenues$1,217,191 $64,642 $127,036 $1,408,869 
Gross contribution899,514 26,788 50,808 977,110 
Corporate and other expenses   (569,153)
Operating income   $407,957 
Three Months Ended March 31, 2022ResearchConferencesConsultingConsolidated
Revenues$1,136,380 $10,354 $116,006 $1,262,740 
Gross contribution849,379 (2,876)51,012 897,515 
Corporate and other expenses(680,268)
Operating income$217,247 



15


The table below provides a reconciliation of total segment gross contribution to net income for the periods indicated (in thousands).
Three Months Ended
March 31,
20232022
Total segment gross contribution$977,110 $897,515 
Costs and expenses:
Cost of services and product development - unallocated (1)3,380 11,808 
Selling, general and administrative 657,090 617,904 
Depreciation and amortization46,631 48,349 
Acquisition and integration charges1,368 2,207 
  Gain from sale of divested operation(139,316) 
Operating income 407,957 217,247 
Interest expense and other, net(29,757)(2,188)
Gain on event cancellation insurance claims3,077  
Less: Provision for income taxes85,494 42,544 
Net income $295,783 $172,515 
(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.

Note 8 — Debt

The Company’s total outstanding borrowings are summarized in the table below (in thousands).
March 31,December 31,
Description20232022
2020 Credit Agreement - Term loan facility (1)$280,400 $282,200 
2020 Credit Agreement - Revolving credit facility (1), (2)  
Senior Notes due 2028 (“2028 Notes”) (3)
800,000 800,000 
Senior Notes due 2029 (“2029 Notes”) (4)
600,000 600,000 
Senior Notes due 2030 (“2030 Notes”) (5)
800,000 800,000 
Other (6)5,000 5,000 
Principal amount outstanding (7)2,485,400 2,487,200 
Less: deferred financing fees (8)(24,631)(25,793)
Net balance sheet carrying amount$2,460,769 $2,461,407 
(1)The contractual annualized interest rate as of March 31, 2023 on the 2020 Credit Agreement Term loan facility and the Revolving credit facility was 6.13%, which consisted of a floating Eurodollar base rate of 4.875% plus a margin of 1.250%. However, the Company has an interest rate swap contract 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, 2023.
(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 a State of Connecticut economic development loan originated in 2019 with a 10-year maturity and bears interest at a fixed rate of 1.75%. This loan may be repaid at any time by the Company without penalty.
16


(7)The weighted average annual effective rate on the Company’s outstanding debt for the three months ended March 31, 2023, including the effects of its interest rate swaps discussed below, was 5.03%.
(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, 2023.
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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, 2023, the Company had one fixed-for-floating interest rate swap contract with a notional value of $350.0 million that matures in 2025. The Company pays a base fixed rate of 3.04% and in return receives a floating Eurodollar base rate on 30-day notional borrowings.

Effective June 30, 2020, the Company de-designated all of its interest rate swaps and discontinued hedge accounting. Accordingly, subsequent changes to the fair value of the interest rate swaps are recorded in Other (expense) 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, 2023, $47.2 million is remaining in Accumulated other comprehensive loss, net. See Note 11 — Derivatives and Hedging for the amounts remaining in Accumulated other comprehensive loss, net of tax effect, at March 31, 2023 and December 31, 2022. See Note 12 — Fair Value Disclosures for a discussion of the fair values of Company’s interest rate swaps.

Note 9 — 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, $1.0 billion and $0.4 billion of the Company’s common stock during 2021, 2022, and February 2023, respectively. As of March 31, 2023, $954.5 million remained available under the share repurchase program. 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.

The Company’s share repurchase activity is presented in the table below for the periods indicated.
Three Months Ended
 March 31,
 20232022
Number of shares repurchased (1) 327,680 1,627,709 
Cash paid for repurchased shares (in thousands) (2)$106,850 $451,070 
(1)The average purchase price for repurchased shares was $332.18 and $284.53 for the three months ended March 31, 2023 and 2022, respectively. The repurchased shares during the three months ended March 31, 2023 and 2022 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, 2023 excluded $2.0 million of open market purchases with trade dates in March 2023 that settled in April 2023. 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).

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Three Months Ended March 31, 2023
 Interest Rate
Swaps
Defined
Benefit
Pension Plans
Foreign
Currency
Translation
Adjustments
Total
Balance - Balance at December 31, 2022$(39,248)$(4,247)$(58,115)$(101,610)
Other comprehensive income (loss) activity during the period:  
  Change in AOCL before reclassifications to income  1,832 1,832 
  Reclassifications from AOCL to income (2), (3)3,834 34  3,868 
Other comprehensive income (loss), net3,834 34 1,832 5,700 
Balance – March 31, 2023$(35,414)$(4,213)$(56,283)$(95,910)

Three Months Ended March 31, 2022
 Interest Rate
Swaps
Defined
Benefit
Pension Plans
Foreign
Currency
Translation
Adjustments
Total
Balance – December 31, 2021$(56,323)$(6,672)$(18,436)$(81,431)
Other comprehensive income (loss) activity during the period:
  Change in AOCL before reclassifications to income  (6,798)(6,798)
  Reclassifications from AOCL to income (2), (3)5,370 48  5,418 
Other comprehensive income (loss), net5,370 48 (6,798)(1,380)
Balance – March 31, 2022$(50,953)$(6,624)$(25,234)$(82,811)
(1)Amounts in parentheses represent debits (deferred losses).
(2)$5.1 million and $7.2 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, 2023 and 2022, 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 (expense) 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, 2023 that is expected to be reclassified into earnings within the next 12 months is $19.8 million.

Note 10 — Income Taxes

The provision for income taxes was $85.5 million and $42.5 million for the three months ended March 31, 2023 and 2022, respectively. The effective income tax rate was 22.4% and 19.8% for the three months ended March 31, 2023 and 2022, respectively. The year-over-year increase in the effective income tax rate was primarily due to the sale of the TalentNeuron business.

The Company had gross unrecognized tax benefits of $141.0 million on March 31, 2023 and $137.2 million on December 31, 2022. It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $12.3 million within the next twelve months due to the anticipated closure of audits and the expiration of certain statutes of limitation.

Note 11 — 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).
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March 31, 2023
Derivative Contract TypeNumber 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)1 $350,000 $1,681 Other assets$(35,414)
5,909 Other current assets
Foreign currency forwards (2)38 232,475 (483)