# GARTNER INC (IT) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from GARTNER INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/749251/000074925125000008/it-20241231.htm
Accession: 0000749251-25-000008
Filing date: 2025-02-13
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/IT/
All MD&A years: /company/IT/mda/
Previous year: /company/IT/mda/fy2023/ (FY 2023)
Next year: /company/IT/mda/fy2025/ (FY 2025)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The purpose of this Management’s Discussion and Analysis (“MD&A”) is to facilitate an understanding of significant factors influencing the operating results, financial condition and cash flows of Gartner, Inc. Additionally, the MD&A conveys our expectations of the potential impact of known trends, events or uncertainties that may impact future results. You should read this discussion in conjunction with our consolidated financial statements and related notes included in this Annual Report on Form 10-K. Historical results and percentage relationships are not necessarily indicative of operating results for future periods. References to “Gartner,” the “Company,” “we,” “our” and “us” in this MD&A are to Gartner, Inc. and its consolidated subsidiaries.

This MD&A provides an analysis of our consolidated financial results, segment results and cash flows for 2024 and 2023 under the headings “Results of Operations,” “Segment Results” and “Liquidity and Capital Resources.” For a similar detailed

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discussion comparing 2023 and 2022, refer to those headings under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2023.

In addition to GAAP results, we provide foreign currency neutral dollar amounts and percentages for our revenues, certain expenses, contract values and other metrics. These foreign currency neutral dollar amounts and percentages eliminate the effects of exchange rate fluctuations and thus provide a more accurate and meaningful trend in the underlying data being measured. We calculate foreign currency neutral dollar amounts by converting the underlying amounts in local currency for different periods into U.S. dollars by applying the same foreign exchange rates to all periods presented.

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions, projections or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expect,” “should,” “could,” “believe,” “plan,” “anticipate,” “estimate,” “predict,” “potential,” “continue” or other words of similar meaning.

We operate in a very competitive and rapidly changing environment that involves numerous known and unknown risks and uncertainties, some of which are beyond our control. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future quarterly and annual revenues, operating income, results of operations and cash flows, as well as any forward-looking statement, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, among others, the following: the impact of general economic conditions, including inflation (and related monetary policy by governments in response to inflation), on economic activity and our operations; changes in macroeconomic and market conditions and market volatility, including interest rates and the effect on the credit markets and access to capital; the impact of global economic and geopolitical conditions, including inflation, and recession; our ability to carry out our strategic initiatives and manage associated costs; the timing of conferences and meetings, in particular our Gartner Symposium/Xpo series that normally occurs during the fourth quarter; our ability to achieve and effectively manage growth, including our ability to integrate our acquisitions and consummate and integrate future acquisitions; our ability to pay our debt obligations; our ability to maintain and expand our products and services; our ability to expand or retain our customer base; our ability to grow or sustain revenue from individual customers; our ability to attract and retain a professional staff of research analysts and consultants as well as experienced sales personnel upon whom we are dependent, especially in light of labor competition; our ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; our ability to successfully compete with existing competitors and potential new competitors; our ability to enforce and protect our intellectual property rights; our ability to keep pace with technological developments in artificial intelligence (“AI”) and comply with evolving AI regulations; additional risks associated with international operations, including foreign currency fluctuations; the impact on our business resulting from changes in international conditions, including those resulting from the conflict in the Middle East, the war in Ukraine and current and future sanctions imposed by governments or other authorities; the impact of restructuring and other charges on our businesses and operations; cybersecurity incidents or other disruptions to our information systems; risks associated with the creditworthiness, budget cuts, and shutdown of governments and agencies; our ability to meet sustainability commitments and comply with applicable regulatory requirements; the impact of changes in tax policy (including global minimum tax legislation) and heightened scrutiny from various taxing authorities globally; changes to laws and regulations; and other risks and uncertainties. The potential fluctuations in our operating income could cause period-to-period comparisons of operating results not to be meaningful and could provide an unreliable indication of future operating results. A description of the risk factors associated with our business is included under “Risk Factors” in Item 1A of this Annual Report on Form 10-K, which is incorporated herein by reference.

Forward-looking statements are subject to risks, estimates and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those listed above or described under “Risk Factors” in Item 1A of this Annual Report on Form 10-K. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Readers should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Forward-looking statements in this Annual Report on Form 10-K speak only as of the date hereof, and forward-looking statements in documents attached that are incorporated by reference speak only

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as of the date of those documents. Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

BUSINESS OVERVIEW

Gartner, Inc. (NYSE: IT) delivers actionable, objective insight that drives smarter decisions and stronger performance on an organization’s mission-critical priorities.

We are a trusted advisor and an objective resource for close to 14,000 enterprises in approximately 90 countries and territories — across all major functions, in every industry and enterprise size.

Gartner delivers its products and services globally through three business 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 a 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.

Recent Event

On July 25, 2024 the Company entered into a settlement agreement to resolve litigation concerning the Company's event cancellation insurance for 2020 and 2021. The settlement resolved all remaining 2020 and 2021 event cancellation insurance claims for $300.0 million.

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BUSINESS MEASUREMENTS

We believe that the following business measurements are important performance indicators for our business segments:

[[GREPCENT_TABLE]]
[["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 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 in-person conferences. Single day, local meetings are excluded."],["Consulting","","Consulting backlog represents future revenue to be derived from in-process consulting and benchmark analytics 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."]]
[[/GREPCENT_TABLE]]

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EXECUTIVE SUMMARY OF OPERATIONS AND FINANCIAL POSITION

The fundamentals of our strategy include a focus on creating actionable insights for executive leaders and their teams, delivering innovative and highly differentiated product offerings, building a strong sales capability, providing world class client service with a focus on client engagement and retention, and continuously improving our operational effectiveness.

We had total revenues of $6.3 billion in 2024, an increase of 6% compared to 2023 on both a reported basis and excluding the foreign currency impact. Net income increased to $1.3 billion in 2024 from $882.5 million in 2023 and diluted earnings per share was $16.00 in 2024 compared to $11.08 in 2023.

Research revenues increased to $5.1 billion in 2024, an increase of 5% compared to 2023 on both a reported basis and excluding the foreign currency impact. The Research gross contribution margin was 74% in both 2024 and 2023. Contract value was $5.3 billion at December 31, 2024, an increase of 8% compared to December 31, 2023 on a foreign currency neutral basis.

Conferences revenues increased to $583.2 million in 2024, an increase of 15% compared to 2023 on both a reported basis and excluding the foreign currency impact. The Conferences gross contribution margin was 48% and 50% in 2024 and 2023, respectively. We held 51 and 47 in-person conferences in 2024 in 2023, respectively.

Consulting revenues increased to $558.5 million in 2024, an increase of 9% compared to 2023 on both a reported basis and excluding the foreign currency impact. The Consulting gross contribution margin was 36% and 35% in 2024 and 2023, respectively. Backlog was $191.5 million at December 31, 2024.

Cash provided by operating activities was $1.5 billion and $1.2 billion during 2024 and 2023, respectively. As of December 31, 2024, we had $1.9 billion of cash and cash equivalents and approximately $0.7 billion of available borrowing capacity on our revolving credit facility. During 2024, we repurchased 1.6 million shares of the Company’s common stock for an aggregate purchase price of approximately $0.7 billion.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements requires the application of appropriate accounting policies and the use of estimates. Our significant accounting policies are described in Note 1 — Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements. Management considers the policies discussed below to be critical to an understanding of our consolidated financial statements because their application requires complex and subjective management judgments and estimates. Specific risks for these critical accounting policies are also described below.

The preparation of our consolidated financial statements requires us to make estimates and assumptions about future events. We develop our estimates using both current and historical experience, as well as other factors, including the general economic environment and actions we may take in the future. We adjust such estimates when facts and circumstances dictate. However, our estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on our best judgment at a point in time and, as such, they may ultimately differ materially from actual results. Ongoing changes in our estimates could be material and would be reflected in the Company’s consolidated financial statements in future periods.

Our critical accounting policies and estimates are described below.

Revenue recognition — Our revenue by significant source is accounted for as follows:

•Research revenues are mainly derived from subscription contracts for research products. The related revenues are deferred and recognized ratably over the applicable contract term. Fees derived from assisting organizations in selecting the right business software for their needs are recognized when the leads are provided to vendors.

•Conferences revenues are deferred and recognized upon the completion of the related conference or meeting.

•Consulting revenues are principally generated from fixed fee or time and materials engagements. Revenues from fixed fee contracts are recognized as we work to satisfy our performance obligations. Revenues from time and materials engagements are recognized as work is delivered and/or services are provided. Revenues related to contract optimization engagements are contingent in nature and are only recognized upon satisfaction of all conditions related to their payment.

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The majority of our Research contracts are billable upon signing, absent special terms granted on a limited basis from time to time. Research contracts are generally non-cancelable and non-refundable, except for government contracts that may have cancellation or fiscal funding clauses. Generally, it is our policy to record the amount of a subscription contract that is billable as a fee receivable at the time the contract is signed with a corresponding amount as deferred revenue because the contract represents a legally enforceable claim.

Note 1 — Business and Significant Accounting Policies and Note 9 — Revenue and Related Matters in the Notes to Consolidated Financial Statements provide additional information regarding our revenues.

Accounting for income taxes — We use the asset and liability method of accounting for income taxes. We estimate our income taxes in each of the jurisdictions where we operate. This process involves estimating our current tax expense or benefit together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. When assessing the realizability of deferred tax assets, we consider if it is more likely than not that some or all of the deferred tax assets will not be realized. In making this assessment, we consider the availability of loss carryforwards, projected reversals of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning strategies. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained based on the technical merits of the position. Recognized tax positions are measured at the largest amount of benefit with greater than a 50% likelihood of being realized. We use estimates in determining the amount of unrecognized tax benefits associated with uncertain tax positions. Significant judgment is required in evaluating tax law and measuring the benefits likely to be realized. Uncertain tax positions are periodically re-evaluated and adjusted as more information about their ultimate realization becomes available. In December 2024, we completed an intercompany transfer of certain intellectual property (IP). As a result, we recorded a deferred tax asset of approximately $163.2 million, based on the fair value of the IP rights transferred. The deferred tax asset represents the value of future tax deductions for amortization of the assets in the acquiring jurisdiction. The fair value of the intellectual property was determined using an income approach based on unobservable inputs and involves significant judgments such as, but not limited to, future cash flows and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Accounting for stock-based compensation — We account for stock-based compensation awards in accordance with FASB ASC Topics 505 and 718 and SEC Staff Accounting Bulletins No. 107 and No. 110. We recognize stock-based compensation expense, which is based on the fair value of the award on the date of grant, over the related service period. Note 10 — Stock-Based Compensation in the Notes to Consolidated Financial Statements provides additional information regarding stock-based compensation. Determining the appropriate fair value model and calculating the fair value of stock-based compensation awards requires the use of certain subjective assumptions, including the expected life of a stock-based compensation award and our common stock price volatility. In addition, determining the appropriate periodic stock-based compensation expense requires management to estimate the likelihood of the achievement of certain performance targets. The assumptions used in calculating the fair values of stock-based compensation awards and the related periodic expense represent management’s best estimates, which involve inherent uncertainties and the application of judgment. As a result, if circumstances change and we deem it necessary in the future to modify the assumptions we made or to use different assumptions, or if the quantity and nature of our stock-based compensation awards changes, then the amount of expense may need to be adjusted and future stock-based compensation expense could be materially different from what has been recorded in the current period.

A change in any of the terms or conditions of stock-based compensation awards is accounted for as a modification of the award. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the fair value of the awards at the modification date. For vested awards, we recognize incremental compensation cost in the period the modification occurs. For unvested awards, we recognize any incremental compensation expense at the modification date or ratably over the requisite remaining service period, as appropriate. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost we recognize is the cost of the original award.

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RESULTS OF OPERATIONS

Consolidated Results

The table below presents an analysis of selected line items and year-over-year changes in our Consolidated Statements of Operations for the years indicated (in thousands).

[[GREPCENT_TABLE]]
[["","","Year Ended December 31, 2024","","Year Ended December 31, 2023","","Increase (Decrease)","","Percentage Increase (Decrease)"],["Total revenues","","$","6,267,411","","","$","5,906,956","","","$","360,455","","","6","%"],["Costs and expenses:"],["Cost of services and product development","","2,023,022","","","1,903,240","","","119,782","","","6"],["Selling, general and administrative","","2,884,814","","","2,701,542","","","183,272","","","7"],["Depreciation","","112,083","","","98,645","","","13,438","","","14"],["Amortization of intangibles","","90,232","","","92,458","","","(2,226)","","","(2)"],["Acquisition and integration charges","","973","","","9,587","","","(8,614)","","","(90)"],["Gain from sale of divested operation","","\u2014","","","(135,410)","","","135,410","","","nm"],["Operating income","","1,156,287","","","1,236,894","","","(80,607)","","","(7)"],["Interest expense, net","","(69,488)","","","(94,246)","","","(24,758)","","","(26)"],["Gain on event cancellation insurance claims","","300,000","","","3,077","","","296,923","","","nm"],["Other income, net","","575","","","1,404","","","(829)","","","(59)"],["Less: Provision for income taxes","","133,659","","","264,663","","","(131,004)","","","(49)"],["Net income","","$","1,253,715","","","$","882,466","","","$","371,249","","","42","%"]]
[[/GREPCENT_TABLE]]

nm = not meaningful

Total revenues for 2024 were $6.3 billion, an increase of $360.5 million compared to 2023, or 6% on both a reported basis and excluding the foreign currency impact. The tables below present (i) revenues by geographic region (based on where the sale is fulfilled) and (ii) revenues by segment for the years indicated (in thousands).

[[GREPCENT_TABLE]]
[["Primary Geographic Market","","Year Ended December 31, 2024","","Year Ended December 31, 2023","","Increase","","Percentage Increase"],["United States and Canada","","$","4,017,730","","","$","3,911,042","","","$","106,688","","","3","%"],["Europe, Middle East and Africa","","1,517,815","","","1,332,070","","","185,745","","","14"],["Other International","","731,866","","","663,844","","","68,022","","","10"],["Total revenues","","$","6,267,411","","","$","5,906,956","","","$","360,455","","","6","%"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Segment","","Year Ended December 31, 2024","","Year Ended December 31, 2023","","Increase","","Percentage Increase"],["Research","","$","5,125,650","","","$","4,887,046","","","$","238,604","","","5","%"],["Conferences","","583,224","","","505,164","","","78,060","","","15"],["Consulting","","558,537","","","514,746","","","43,791","","","9"],["Total revenues","","$","6,267,411","","","$","5,906,956","","","$","360,455","","","6","%"]]
[[/GREPCENT_TABLE]]

Refer to the section of this MD&A below entitled “Segment Results” for a discussion of revenues and results by segment.

Cost of services and product development was $2.0 billion in 2024, an increase of $119.8 million compared to 2023, or 6% on both a reported basis and excluding the foreign currency impact. The increase in Cost of services and product development was primarily due to a $82.8 million increase in personnel expenses associated with headcount and merit increases as well a $37.0 million increase in conference expenses due to an increase in the number of conferences. Cost of services and product development as a percent of revenues was 32% for both 2024 and 2023.

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Selling, general and administrative (“SG&A”) expense was $2.9 billion in 2024, an increase of $183.3 million compared to 2023, or 7% on both a reported basis and excluding the foreign currency impact. The increase in SG&A during the year ended December 31, 2024, as compared to the prior fiscal year, was primarily a result of a $165.4 million increase in personnel expenses due to increased headcount and merit increases.

The number of quota-bearing sales associates in Global Technology Sales increased by 4% to 3,804 and in Global Business Sales increased by 9% to 1,298, compared to December 31, 2023. On a combined basis, the total number of quota-bearing sales associates increased by 6% when compared to December 31, 2023. SG&A expense as a percent of revenues was 46% during both 2024 and 2023.

Depreciation increased by 14% during 2024 compared to 2023. The increase for the year ended December 31, 2024 was primarily due to increased software additions during the last twelve months.

Amortization of intangibles decreased by 2% during 2024 compared to 2023.

Acquisition and integration charges decreased by $8.6 million during the year ended December 31, 2024, compared to the same period in 2023.

Gain from sale of divested operation during the prior year was attributable to the sale of our TalentNeuron business in February 2023. We recognized a pre-tax gain of $135.4 million during the year ended December 31, 2023.

Operating income was $1.16 billion and $1.24 billion during 2024 and 2023, respectively. The 7% decrease in operating income was primarily due to the gain from sale of divested operation recognized during the prior year period, and increases in cost of services and product development and selling, general and administrative expenses, partially offset by increased revenue.

Interest expense, net decreased by $24.8 million during 2024 compared to 2023. The decrease in interest expense, net was due to increased interest income, primarily as a result of higher cash balances than the prior year.

Gain on event cancellation insurance claims of $300.0 million during the year ended December 31, 2024 reflected proceeds from a settlement agreement to resolve litigation concerning the Company's event cancellation insurance for 2020 and 2021. The settlement resolved all remaining 2020 and 2021 event cancellation insurance claims. Gain on event cancellation insurance claims of $3.1 million during the year ended December 31, 2023 reflected proceeds related to 2020 conference cancellation insurance claims.

Other income, net for the years presented herein included the net impact of foreign currency gains and losses from our hedging activities, as well as sales of certain state tax credits and the recognition of other tax incentives. During both 2024 and 2023, Other income, net included a $3.9 million gain on de-designated interest rate swaps.

Provision for income taxes was $133.7 million and $264.7 million during 2024 and 2023, respectively, with an effective income tax rate of 9.6% and 23.1% for 2024 and 2023, respectively. The decrease in the effective income tax rate in 2024 was primarily the result of net tax benefits of approximately $161.9 million recognized as a result of an intercompany transfer of certain intellectual property in December 2024. Note 12 — Income Taxes in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s income taxes.

Net income was $1.3 billion and $882.5 million during 2024 and 2023, respectively. Additionally, our diluted net income per share increased by $4.92 in 2024 compared to 2023. The increase in net income during 2024 was primarily due to the gain on event cancellation insurance claims, as well as an increase in revenue and lower provision for income taxes and interest expense, net, partially offset by the gain from sale of divested operation recognized during the year ended December 31, 2023 and increased operating expenses.

SEGMENT RESULTS

We evaluate reportable segment performance and allocate resources based on gross contribution margin. Gross contribution is defined as operating income or loss excluding certain Cost of services and product development expenses, SG&A expenses, Depreciation, Amortization of intangibles, and Acquisition and integration charges. Gross contribution margin is defined as gross contribution as a percent of revenues.

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Reportable Segments

The sections below present the results of the Company’s three business segments – Research, Conferences and Consulting, as described below.

Research

[[GREPCENT_TABLE]]
[["","Year Ended December 31, 2024","","Year Ended December 31, 2023","","Increase (Decrease)","","Percentage Increase (Decrease)"],["Financial Measurements:"],["Revenues (1)","$","5,125,650","","","$","4,887,046","","","$","238,604","","5","%"],["Gross contribution (1)","$","3,792,843","","","$","3,600,143","","","$","192,700","","5","%"],["Gross contribution margin","74","%","","74","%","","\u2014","point","","\u2014"],["Business Measurements:"],["Contract Value (1), (3)","$","5,262,000","","","$","4,880,000","","","$","382,000","","8","%"],["Global Technology Sales (2):"],["Contract value (1), (3)","$","4,029,000","","","$","3,779,000","","","$","250,000","","7","%"],["Client retention","84","%","","83","%","","1","point","","\u2014"],["Wallet retention","102","%","","101","%","","1","point","","\u2014"],["Global Business Sales (2):"],["Contract value (1), (3)","$","1,233,000","","","$","1,101,000","","","$","132,000","","12","%"],["Client retention","87","%","","87","%","","\u2014","point","","\u2014"],["Wallet retention","106","%","","107","%","","(1)","point","","\u2014"]]
[[/GREPCENT_TABLE]]

(1)Dollars in thousands.

(2)Global Technology Sales includes sales to users and providers of technology. Global Business Sales includes sales to all other functional leaders.

(3)Contract values are on a foreign exchange neutral basis. Contract values as of December 31, 2023 have been calculated using the same foreign currency rates as 2024.

Research revenues increased by $238.6 million during 2024 compared to 2023, or 5% on both a reported basis excluding the foreign currency impact. The increase in revenues during 2024 was primarily due to Research contract value growth in 2023. The gross contribution margin was 74% in both 2024 and 2023, as the increase in revenue and decreased research program expenses were offset by an increase in personnel expenses to support future growth.

Contract value increased to $5.3 billion at December 31, 2024, or 8% compared to December 31, 2023 on a foreign currency neutral basis. All industry sectors grew at mid single-digit rates or faster, other than media. The fastest growth was in the manufacturing, healthcare and public sectors. Global Technology Sales (“GTS”) contract value increased by 7% at December 31, 2024 when compared to December 31, 2023. The increase in GTS contract value was primarily due to new business from existing clients. GTS contract value increased by at least mid single-digits for nearly all enterprise sizes and sectors. Global Business Sales (“GBS”) contract value increased by 12% year-over-year, also primarily driven by new business from existing clients. The majority of our GBS practices achieved double-digit growth rates, with all enterprise sizes and the majority of sectors also growing double-digits year-over-year.

GTS client retention was 84% and 83% as of December 31, 2024 and 2023, respectively, while wallet retention was 102% and 101%, as of December 31, 2024 and 2023, respectively. GBS client retention was 87% as of both December 31, 2024 and 2023, while wallet retention was 106% and 107% as of December 31, 2024 and 2023, respectively.

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Conferences

[[GREPCENT_TABLE]]
[["","Year Ended December 31, 2024","","Year Ended December 31, 2023","","Increase (Decrease)","","Percentage Increase (Decrease)"],["Financial Measurements:"],["Revenues (1)","$","583,224","","","$","505,164","","","$","78,060","","15","%"],["Gross contribution (1)","$","281,409","","","$","253,739","","","$","27,670","","11","%"],["Gross contribution margin","48","%","","50","%","","(2)","points","","\u2014"],["Business Measurements:"],["Number of destination conferences (2)","51","","47","","4","","9","%"],["Number of destination conferences attendees (2)","86,625","","75,569","","11,056","","15","%"]]
[[/GREPCENT_TABLE]]

(1)Dollars in thousands.

(2)Single day, local meetings are excluded.

Conferences revenues increased by $78.1 million during 2024 compared to 2023, or 15% on both a reported basis and excluding the foreign currency impact. We held 51 in-person destination conferences during the year ended December 31, 2024. We held 47 in-person conferences during the year ended December 31, 2023. The increase in revenues for the year ended December 31, 2024 was due to an increase of 15% in both exhibitor revenue and attendee revenue compared to the same period in 2023. The segment gross contribution margin was 48% and 50% in 2024 and 2023, respectively. The lower gross contribution margin during 2024 was primarily the result of an increase in conference-related expenses and increased headcount partially offset by the increase in revenue.

Consulting

[[GREPCENT_TABLE]]
[["","As Of And For The Year Ended December 31, 2024","","As Of And For The Year Ended December 31, 2023","","Increase (Decrease)","","Percentage Increase (Decrease)"],["Financial Measurements:"],["Revenues (1)","$","558,537","","","$","514,746","","","$","43,791","","9","%"],["Gross contribution (1)","$","203,292","","","$","181,501","","","$","21,791","","12","%"],["Gross contribution margin","36","%","","35","%","","1","point","","\u2014"],["Business Measurements:"],["Backlog (1), (2)","$","191,500","","","$","163,000","","","$","28,500","","17","%"],["Average billable headcount","956","","934","","22","","2","%"],["Consultant utilization","65","%","","65","%","","\u2014","point","","\u2014"]]
[[/GREPCENT_TABLE]]

(1)Dollars in thousands.

(2)Backlog is on a foreign currency neutral basis. Backlog as of December 31, 2023 has been calculated using the same foreign currency rates as 2024.

Consulting revenues increased 9% during 2024 compared to 2023 on both a reported basis and excluding the foreign currency impact. The increase in revenues on a reported basis was due to a 5% increase in labor-based consulting, and a 21% increase in contract optimization. Contract optimization revenue may vary significantly and, as such, 2024 revenues may not be indicative of future results. The segment gross contribution margin was 36% and 35% in 2024 and 2023, respectively. The increase in gross contribution margin during 2024 was primarily due to the increase in revenue.

Backlog increased by $28.5 million, or 17%, from December 31, 2023 to December 31, 2024.

LIQUIDITY AND CAPITAL RESOURCES

We finance our operations through cash generated from our operating activities and borrowings. Note 6 — Debt in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt obligations. At December 31, 2024, we had $1.9 billion of cash and cash equivalents and approximately $0.7 billion of available borrowing

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capacity on the revolving credit facility under our 2024 Credit Agreement. We believe that the Company has adequate liquidity and access to capital markets to meet its currently anticipated needs for both the next twelve months and the foreseeable future.

We have historically generated significant cash flows from our operating activities, benefiting from the favorable working capital dynamics of our subscription-based business model in our Research segment, which is our largest business segment and historically has constituted a significant portion of our total revenues. The majority of our Research customer contracts are paid in advance and, combined with a strong customer retention rate and high incremental margins, our subscription-based business model has resulted in continuously strong operating cash flow. Cash flow generation has also benefited from our ongoing efforts to improve the operating efficiencies of our businesses as well as a focus on the optimal management of our working capital as we increase sales.

During the fourth quarter of 2024, we entered into an amended lease agreement to significantly reduce the square footage and reduce future lease payments at one of our leased locations. We made an installment payment of $24.0 million during the fourth quarter of 2024, and will make an equal installment payment during the second quarter of 2025 in consideration for the lease amendment.

Our cash and cash equivalents are held in numerous locations throughout the world with 43% held overseas at December 31, 2024. We intend to distribute a portion of the accumulated undistributed earnings of non-U.S. subsidiaries as of December 31, 2024 in conjunction with global restructuring activity. We continue to assert our intention to reinvest substantially all remaining accumulated undistributed foreign earnings, except in instances where repatriation would result in minimal additional tax.

The table below summarizes the changes in the Company’s cash balances for the years indicated (in thousands).

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","Increase (Decrease)"],["","2024","","2023"],["Cash provided by operating activities","$","1,484,922","","","$","1,155,737","","","$","329,185"],["Cash (used in) provided by investing activities","(103,737)","","","54,157","","","(157,894)"],["Cash used in financing activities","(710,143)","","","(588,881)","","","(121,262)"],["Net increase in cash and cash equivalents and restricted cash","671,042","","","621,013","","","50,029"],["Effects of exchange rates","(57,494)","","","(13)","","","(57,481)"],["Beginning cash and cash equivalents and restricted cash","1,319,599","","","698,599","","","621,000"],["Ending cash and cash equivalents and restricted cash","$","1,933,147","","","$","1,319,599","","","$","613,548"]]
[[/GREPCENT_TABLE]]

Operating

Cash provided by operating activities was $1.5 billion and $1.2 billion in 2024 and 2023, respectively. The year-over-year increase was primarily due to the $300.0 million of insurance proceeds received during 2024 as well as reduced net cash interest expense and increased operating income, excluding the 2023 gain from sale of divested operation.

Investing

Cash (used in) provided by investing activities was $(103.7) million and $54.2 million in 2024 and 2023, respectively. The decrease from 2023 to 2024 was primarily the result of the $161.1 million in proceeds received from the sale of our TalentNeuron business in February 2023.

Financing

Cash used in financing activities was $0.7 billion and $0.6 billion in 2024 and 2023, respectively. During the 2024 period, we used $0.7 billion of cash for share repurchases. In March 2024, we borrowed $274.4 million under the 2024 Credit Agreement. The initial borrowing was used to repay the outstanding amounts under the 2020 Credit Agreement. During the 2023 period, we used $0.6 billion for share repurchases and paid a net $7.8 million in debt principal repayments.

OBLIGATIONS AND COMMITMENTS

Debt

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As of December 31, 2024, the Company had $2.5 billion of principal amount of debt outstanding. Note 6 — Debt in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt obligations. From time to time, the Company may seek to retire or repurchase its outstanding debt through various methods including open market repurchases, negotiated block transactions, or otherwise, all or some of which may be effected through Rule 10b5-1 plans. Such transactions, if any, depend on prevailing market conditions, our liquidity and capital requirements, contractual restrictions, and other factors, and may involve material amounts.

Off-Balance Sheet Arrangements

Through December 31, 2024, the Company has not entered into any material off-balance sheet arrangements or transactions with unconsolidated entities or other persons.

Contractual Cash Commitments

The table below summarizes the Company’s future contractual cash commitments as of December 31, 2024 (in thousands).

[[GREPCENT_TABLE]]
[["Commitment Description","","Due In Less Than 1 Year","","Due In 2-3 Years","","Due In 4-5 Years","","Due In More Than 5 Years","","Total"],["Debt \u2013 principal, interest, and commitment fees (1)","","$","105,055","","","$","213,326","","","$","1,827,149","","","$","830,001","","","$","2,975,531"],["Operating leases (2)","","122,111","","","197,949","","","85,313","","","130,261","","","535,634"],["Deferred compensation arrangements (3)","","12,876","","","20,595","","","14,490","","","100,603","","","148,564"],["Other (4)","","52,748","","","117,091","","","215,058","","","61,296","","","446,193"],["Totals","","$","292,790","","","$","548,961","","","$","2,142,010","","","$","1,122,161","","","$","4,105,922"]]
[[/GREPCENT_TABLE]]

(1)Principal repayments of the Company’s debt obligations were classified in the above table based on the contractual repayment dates. Interest payments were based on the effective interest rates as of December 31, 2024. Commitment fees were based on unused balances and commitment rates as of December 31, 2024. Note 6 — Debt in the Notes to Consolidated Financial Statements provides information regarding the Company’s debt obligations and interest rate swap contracts.

(2)The Company leases various facilities, automobiles, computer equipment and other assets under non-cancelable operating lease agreements expiring between 2025 and 2038. The total commitment excludes approximately $145.5 million of estimated future cash receipts from the Company’s subleasing arrangements. Note 1 — Business and Significant Accounting Policies and Note 7 — Leases in the Notes to Consolidated Financial Statements provide additional information regarding the Company’s leases.

(3)The Company has supplemental deferred compensation arrangements with certain of its employees. Amounts payable with known payment dates have been classified in the above table based on those scheduled payment dates. Amounts payable whose payment dates are unknown have been included in the Due In More Than 5 Years category because the Company cannot determine when the amounts will be paid. Note 15 — Employee Benefits in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s supplemental deferred compensation arrangements.

(4)Other includes: (i) contractual commitments (a) for software, telecom and other services and (b) to secure sites for our Conferences business; and (ii) projected cash contributions to the Company’s defined benefit pension plans. Note 15 — Employee Benefits in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s defined benefit pension plans.

In addition to the contractual cash commitments included in the above table, the Company has other payables and liabilities that may be legally enforceable but are not considered contractual commitments. Information regarding the Company’s payables and liabilities is included in Note 5 — Accounts Payable and Accrued and Other Liabilities and Note 12 — Income Taxes in the Notes to Consolidated Financial Statements.

RECENTLY ISSUED ACCOUNTING STANDARDS

The FASB has issued accounting standards that had not yet become effective as of December 31, 2024 and may impact the Company’s consolidated financial statements or its disclosures in future periods. Note 1 — Business and Significant

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Accounting Policies in the Notes to Consolidated Financial Statements provides information regarding those accounting standards.