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GARTNER, INC.

(IT)
  Report
Delayed Nyse  -  04:04 2022-10-06 pm EDT
300.76 USD   +0.33%
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GARTNER INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

11/02/2021 | 05:12am EDT
The purpose of this Management's Discussion and Analysis ("MD&A") is to
facilitate an understanding of significant factors influencing the quarterly
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 Condensed Consolidated Financial
Statements and related notes included in this Quarterly Report on Form 10-Q and
our Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020
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.


FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q
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: uncertainty of the magnitude, duration, geographic
reach and impact on the global economy of the COVID-19 pandemic; the current,
and uncertain future, impact of the COVID-19 pandemic and governments' responses
to it on our business, growth, reputation, projections, prospects, financial
condition, operations, cash flows, and liquidity; the adequacy or effectiveness
of steps we take to respond to the crisis; our ability to recover potential
claims under our event cancellation insurance; the timing of conferences and
meetings, in particular our Gartner Symposium/Xpo series that normally occurs
during the fourth quarter, as well as the timing of our return to in-person
conferences and meetings and willingness of participants to attend; 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; 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 carry out our strategic
initiatives and manage associated costs; our ability to successfully compete
with existing competitors and potential new competitors; our ability to enforce
and protect our intellectual property rights; additional risks associated with
international operations, including foreign currency fluctuations; the U.K.'s
exit from the European Union and its impact on our results; the impact of
restructuring and other charges on our businesses and operations; cybersecurity
incidents; general economic conditions; changes in macroeconomic and market
conditions and market volatility (including developments and volatility arising
from the COVID-19 pandemic), including interest rates and the effect on the
credit markets and access to capital; risks associated with the
creditworthiness, budget cuts, and shutdown of governments and agencies; the
impact of changes in tax policy and heightened scrutiny from various taxing
authorities globally; uncertainty from the expected discontinuance of LIBOR and
transition to any other interest rate benchmark; changes to laws and
regulations; and other risks and uncertainties detailed in this Form 10-Q, our
most recent Form 10-K and other filings we make with the SEC. 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 the
2020 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, and are currently, or in the future
could be, amplified by the COVID-19 pandemic. 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 the 2020 Form 10-K. 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
                                       27
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statements in this Quarterly Report on Form 10-Q speak only as of the date hereof, and forward-looking statements in documents attached that are incorporated by reference speak only 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 to executives
and their teams. Our expert guidance and tools enable faster, smarter decisions
and stronger performance on an organization's most critical priorities.

We deliver our products and services globally through three segments - Research, Conferences and Consulting, as described below.


•Research equips executives and their teams from every function and across all
industries with actionable, objective insight, guidance and tools. Our
experienced experts deliver all this value informed by an unmatched combination
of practitioner-sourced and data-driven research to help our clients address
their most 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' most critical priorities.

COVID-19 Impact


As a result of the COVID-19 pandemic, we temporarily closed Gartner offices
around the world and implemented significant travel restrictions. We began a
limited reopening of our offices in the United States in June 2021. Reopening of
our remaining offices is subject to many factors outside of our control. As a
result, we cannot predict for certain when or how we will begin to lift the
actions put in place as part of our business continuity plans, including work
from home protocols and travel restrictions. We expect to move to a more
flexible mix of work from home and in the office going forward. As a result, we
are in the process of evaluating our real estate footprint globally, and may
determine that certain of our leased locations are no longer necessary for our
operations. If we determine there is any excess property, there is no assurance
that we will be able to sublease any such excess properties or that we will not
incur costs in connection with such exit activities, which may be material. As
of the date of this filing, we do not believe our work from home protocol has
affected our internal controls over financial reporting.

Of the three business segments in which we operate, Research and Consulting have
returned to growth levels that were in line with our growth prior to the
pandemic. However, Conferences remains impacted. We cancelled in-person
conferences beginning in late February/early March 2020 with the remainder being
cancelled after the World Health Organization's declaration of the COVID-19
pandemic later in March 2020. We began holding virtual conferences during the
second half of 2020. We held 26 virtual conferences during the nine months ended
September 30, 2021 and will continue to deliver conferences virtually through
the remainder of 2021. These virtual conferences have resulted in significantly
less revenue and gross contribution than in-person conferences, but we believe
they aid in client retention and engagement. The safety of our associates and
clients remains our top priority so future in-person conferences will be held
only when we determine the relevant impacts of COVID-19 have sufficiently
receded in the jurisdictions where our conferences are to be held.
Operationally, we plan to resume in-person conferences in 2022.

For cancelled conferences, our event cancellation insurance enables us to
receive an amount up to the lost contribution margin per conference plus
incurred expenses. Our event cancellation insurance provides up to $170 million
in coverage for 2020 with the right to reinstate that amount one time if those
limits are utilized. The insurer has contested our right to reinstate limits. We
are in litigation with the insurer on these issues. Gartner also has event
cancellation insurance for 2021, covering events that were planned for 2021 but
cancelled, of up to $150 million with the right to reinstate up to that amount
one time if the initial limits are inadequate. The insurer has contested all
coverage for events cancelled in 2021 due to COVID-19. In May 2021, we received
$150 million of proceeds related to 2020 insurance claims, and recorded a gain
of $135.5 million. The timing of receiving the remaining proceeds from 2020
insurance claims is uncertain so we will not record any insurance claims in
excess of expenses incurred related to the remaining claims until the receipt of
the insurance proceeds is deemed to be realizable.

In response to the pandemic's impacts to our business, we implemented cost avoidance initiatives in the first half of 2020 including significant limitations on hiring and third-party spending, reductions to discretionary spending and elimination of

                                       28
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non-essential travel and re-prioritization of capital expenditures. We began to
restore certain investments in the business during the second half of 2020 and
the first nine months of 2021. We expect these investments to increase in future
periods, which may have a negative impact on operating margins.


                                       29
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BUSINESS MEASUREMENTS

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


BUSINESS SEGMENT                      BUSINESS MEASUREMENT
Research                              Total contract value represents the 

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. 

Total 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 

total 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

                                      total contract value from a year ago, 

excluding the impact of foreign

                                      currency exchange. When wallet 

retention exceeds client retention, it is

                                      an indication of retention of 

higher-spending clients, or increased

                                      spending by retained clients, or 

both. Wallet retention is calculated at

                                      an enterprise level, which represents 

a single company or customer.


Conferences                           Number of destination conferences 

represents the total number of hosted

                                      virtual or in-person conferences 

completed during the period. Single

                                      day, local meetings are excluded.

                                      Number of destination conferences 

attendees represents the total number

                                      of people who attend virtual or 

in-person conferences. Single day, local

                                      meetings are excluded.

Consulting                            Consulting backlog represents future revenue to be derived from
                                      in-process consulting and measurement engagements.

                                      Utilization rate represents a measure of productivity of our
                                      consultants. Utilization rates are

calculated for billable headcount on

                                      a percentage basis by dividing total hours billed by total hours
                                      available to bill.

                                      Billing rate represents earned

billable revenue divided by total

                                      billable hours.

                                      Average annualized revenue per 

billable headcount represents a measure

                                      of the revenue generating ability of 

an average billable consultant and

                                      is calculated periodically by 

multiplying the average billing rate per

                                      hour times the utilization percentage 

times the billable hours available

                                      for one year.



                                       30
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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 $1.2 billion during the third quarter of 2021, an
increase of 16% compared to the third quarter of 2020. During the third quarter
of 2021 revenues for Research increased by 16% year-over-year, Conferences
revenue increased by $11.7 million, and Consulting revenues increased by 6%. For
a more complete discussion of our results by segment, see Segment Results below.

For the third quarter of 2021 and 2020, we had net income of $148.9 million and
$17.0 million, respectively, and diluted income per share of $1.76 and $0.19,
respectively. Cash provided by operating activities was $1,077.7 million and
$642.8 million during the nine months ended September 30, 2021 and 2020,
respectively. As of September 30, 2021, we had $765.5 million of cash and cash
equivalents and approximately $1.0 billion of available borrowing capacity on
our revolving credit facility. For a more complete discussion of our cash flows
and financial position, see the Liquidity and Capital Resources section below.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


For information regarding our critical accounting policies and estimates, please
refer to Part II, Item 7, "Critical Accounting Policies and Estimates" contained
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
There have been no material changes to the critical accounting policies
previously disclosed in that report.

RECENTLY ISSUED ACCOUNTING STANDARDS


The FASB has issued accounting standards that have not yet become effective and
that may impact the Company's consolidated financial statements or its
disclosures in future periods. Note 1 - Business and Basis of Presentation in
the Notes to Condensed Consolidated Financial Statements provides information
regarding those accounting standards.

RESULTS OF OPERATIONS
Consolidated Results
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.
The table below presents an analysis of selected line items and
period-over-period changes in our interim Condensed Consolidated Statements of
Operations for the periods indicated (in thousands).
                                       31
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                                              Three Months            Three Months                                    Increase
                                             Ended September        Ended September           Increase               (Decrease)
                                                30, 2021                30, 2020             (Decrease)                  %
Total revenues                              $    1,156,282          $     994,618          $   161,664                         16  %
Costs and expenses:
Cost of services and product development           359,237                329,767               29,470                          9
Selling, general and administrative                512,573                521,508               (8,935)                        (2)
Depreciation                                        25,371                 22,743                2,628                         12
Amortization of intangibles                         27,109                 31,228               (4,119)                       (13)
Acquisition and integration charges                  1,771                  1,722                   49                          3
Operating income                                   230,221                 87,650              142,571                        163
Interest expense, net                              (31,599)               (30,538)               1,061                          3

Loss on extinguishment of debt                           -                (44,814)             (44,814)                           nm
Other income, net                                      211                  1,869               (1,658)                       (89)
Less: Provision (benefit) for income taxes          49,968                 (2,797)              52,765                            nm
Net income                                  $      148,865          $      16,964          $   131,901                        778  %
nm = not meaningful


                                            Nine Months Ended       Nine Months Ended                                  Increase
                                              September 30,           September 30,            Increase               (Decrease)
                                                  2021                    2020                (Decrease)                  %
Total revenues                              $    3,427,639          $    2,986,644          $   440,995                         15  %
Costs and expenses:
Cost of services and product development         1,044,506                 993,596               50,910                          5
Selling, general and administrative              1,488,324               1,512,987              (24,663)                        (2)
Depreciation                                        76,972                  67,988                8,984                         13
Amortization of intangibles                         83,777                  94,615              (10,838)                       (11)
Acquisition and integration charges                  3,713                   5,438               (1,725)                       (32)
Operating income                                   730,347                 312,020              418,327                        134
Interest expense, net                              (85,138)                (87,182)              (2,044)                        (2)
Gain on event cancellation insurance claims        135,545                       -              135,545                            nm

Loss on extinguishment of debt                           -                 (44,814)             (44,814)                           nm
Other income (expense), net                         12,019                 (10,046)             (22,065)                           nm
Less: Provision for income taxes                   208,572                  22,840              185,732                            nm
Net income                                  $      584,201          $      147,138          $   437,063                        297  %
nm = not meaningful


Total revenues for the three months ended September 30, 2021 were $1.2 billion,
an increase of $161.7 million, or 16% compared to the same period in 2020 on a
reported basis and 15% excluding the foreign currency impact. Total revenues for
the nine months ended September 30, 2021 were $3.4 billion, an increase of
$441.0 million, or 15% compared to the same period in 2020 on a reported basis
and 12% excluding the foreign currency impact. 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 $359.2 million during the three
months ended September 30, 2021, an increase of $29.5 million compared to the
same period in 2020, or 9% on a reported basis and 8% excluding the foreign
currency impact. The increase in Cost of services and product development was
primarily due to increased compensation costs, research program expenses and
conference related expenses. Cost of services and product development as a
percent of revenues was 31% and 33% during the three months ended September 30,
2021 and 2020, respectively. Cost of services and product development was
$1,044.5 million during the nine months ended September 30, 2021, an increase of
$50.9 million compared to the same period in 2020, or 5% on a reported basis and
3% excluding the foreign currency impact. The increase was primarily due to
increased compensation costs and program expenses, partially offset by reduced
travel and entertainment costs. Cost of services and
                                       32
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product development as a percent of revenues was 30% and 33% during the nine months ended September 30, 2021 and 2020, respectively.


Selling, general and administrative ("SG&A") expense was $512.6 million during
the three months ended September 30, 2021, a decrease of $8.9 million compared
to the same period in 2020, or 2% on a reported basis and 3% excluding the
foreign currency impact. The decrease in SG&A expense was primarily due to the
timing of certain compensation and benefits costs last year, partially offset by
higher personnel costs in the current year. The number of quota-bearing sales
associates in Global Technology Sales decreased by 3% to 2,988 and in Global
Business Sales increased by 8% to 909 compared to September 30, 2020. On a
combined basis, the total number of quota-bearing sales associates decreased by
1% when compared to September 30, 2020. Global Technology Sales turnover remains
modestly elevated. SG&A expense as a percent of revenues was 44% and 52% during
the three months ended September 30, 2021 and 2020, respectively. SG&A expense
was $1,488.3 million during the nine months ended September 30, 2021, a decrease
of $24.7 million compared to the same period in 2020, or 2% on a reported basis
and 4% excluding the foreign currency impact. The decrease was primarily due to
the same factors that caused the year-over-year quarterly decrease as well as
reduced travel and entertainment costs. SG&A expense as a percent of revenues
was 43% and 51% during the nine months ended September 30, 2021 and 2020,
respectively.

Depreciation increased by 12% and 13% during the three and nine months ended
September 30, 2021, respectively, compared to the same periods in 2020. The
increases for the three and nine months ended September 30, 2021 were due to
additional investments, including new leasehold improvements as additional
office space went into service, and capitalized software.

Amortization of intangibles decreased by 13% and 11% during the three and nine months ended September 30, 2021 compared to the same periods in 2020 due to certain intangible assets that became fully amortized in 2020.


Acquisition and integration charges increased by less than $0.1 million during
the three months ended September 30, 2021 compared to the three months ended
September 30, 2020, and decreased by $1.7 million during the nine months ended
September 30, 2021, compared to the nine months ended September 30, 2020.

Gain on event cancellation insurance claims of $135.5 million during the nine
months ended September 30, 2021 reflected proceeds, net of expense recoveries,
related to the 2020 conference cancellation insurance claims.

Operating income was $230.2 million and $87.7 million during the three months
ended September 30, 2021 and 2020, respectively. The increase in operating
income was due to increased revenue. Operating income was $730.3 million and
$312.0 million during the nine months ended September 30, 2021 and 2020,
respectively. The increase in operating income was also primarily due to
increased revenue.

Interest expense, net increased by $1.1 million during the three months ended
September 30, 2021, compared to the same period in 2020. The increase was
primarily due to an increase in outstanding debt, as a result of the issuance of
the 2029 Notes in June 2021, partially offset by a decrease in the amortization
of debt issuance costs. Interest expense, net decreased by $2.0 million during
the nine months ended September 30, 2021, compared to the same period in 2020.
The decrease during the nine months ended September 30, 2021 was primarily due
to a reduction in the amortization of debt issuance costs.

Loss on extinguishment of debt during the three and nine months ended September
30, 2020 was related to the early redemption premium and write-off of deferred
financing fees on our redemption of the 2025 Notes on September 28, 2020.

Other income (expense), net for the periods presented herein included the net
impact of foreign currency gains and losses from our hedging activities. Other
income (expense), net for the three and nine months ended September 30, 2021
also included a $0.4 million gain and $12.1 million gain, respectively, on
de-designated interest rate swaps. Other income (expense), net for the nine
months ended September 30, 2020 included the release of $10.3 million on
interest rate swaps from Accumulated other comprehensive loss, net related to
forecasted interest payments no longer being probable as a result of the payment
under the then outstanding 2016 Credit Agreement term loan and revolving credit
facility on June 30, 2020.

The provision for income taxes for the three months ended September 30, 2021 and
2020 was an expense of $50.0 million and a benefit of $2.8 million,
respectively. The provision for income taxes for the nine months ended
September 30, 2021 and 2020 was an expense of $208.6 million and $22.8 million,
respectively.

The effective income tax rate was an expense of 25.1% and a benefit of 19.7% for
the three months ended September 30, 2021 and 2020, respectively. The three
month results for both years included movements in unrecognized tax benefits as
well as changes in estimated geographical mix of earnings. The change in the
effective tax rate was largely attributable to differences in the relative
impacts of these items period over period.
                                       33
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The effective income tax rate was 26.3% and 13.4% for the nine months ended
September 30, 2021 and 2020, respectively. In addition to the items noted above,
the nine month results for 2020 included benefits from intercompany sales of
certain intellectual property. Approximately $28.3 million of tax benefits were
recognized, representing the value of future tax deductions for amortization of
the assets in the acquiring jurisdiction. No such benefits were included in the
nine months ended September 30, 2021. This drove an additional increase in the
2021 year to date effective income tax rate.

Net income for the three months ended September 30, 2021 and 2020 was $148.9
million and $17.0 million, respectively, while net income for the nine months
ended September 30, 2021 and 2020 was $584.2 million and $147.1 million,
respectively. Our diluted net income per share during the three months ended
September 30, 2021 increased by $1.57 compared to the same period in 2020. The
increase in net income during the three months ended September 30, 2021 was
primarily the result of increased revenues and the prior year loss on
extinguishment of debt, partially offset by an increase in income tax expense.
The increase in net income during the nine months ended September 30, 2021 was
primarily the result of increased revenues, the gain on event cancellation
insurance claims, the prior year loss on extinguishment of debt, the gain from
de-designated interest rate swaps and the prior year loss on de-designation of
interest rate swaps, partially offset by the increase in income tax expense.

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.

Reportable Segments

The sections below present the results of the Company's three reportable business segments: Research, Conferences and Consulting.

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Research
                                                                                                                                                                        As Of And For
                                    As Of And For The            As Of And For The                                  Percentage            As Of And For The Nine       The Nine Months                                Percentage
                                    Three Months Ended           Three Months Ended           Increase               Increase             Months Ended September       Ended September          Increase               Increase
                                    September 30, 2021           September 30, 2020          (Decrease)             (Decrease)                   30, 2021                  30, 2020            (Decrease)             (Decrease)
Financial Measurements:
Revenues (1)                      $            1,037,124       $              892,719       $  144,405                        16  %       $     3,020,094              $      2,677,339       $  342,755                        13  %
Gross contribution (1)            $              769,091       $              642,328       $  126,763                        20  %       $     2,235,594              $      1,928,422       $  307,172                        16  %
Gross contribution margin                      74      %                    72      %            2 points                      -                       74      %                  72  %            2 points                      -
Business Measurements:
Global Technology Sales (2):
Contract value (1), (3)           $     3,168,000              $     2,833,000              $  335,000                        12  %
Client retention                               85      %                    80      %            5 points                      -
Wallet retention                              104      %                    99      %            5 points                      -
Global Business Sales (2):
Contract value (1), (3)           $              814,000       $              665,000       $  149,000                        22  %
Client retention                               86      %                    82      %            4 points                      -
Wallet retention                              113      %                    99      %           14 points                      -




(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 September 30, 2020 have been calculated using the same foreign currency rates
as 2021.

Research revenues increased by $144.4 million during the three months ended
September 30, 2021 compared to the same period in 2020, or 16% on a reported
basis and 15% excluding the foreign currency impact. The segment gross
contribution margin was 74% and 72% during the three months ended September 30,
2021 and 2020, respectively. For the nine months ended September 30, 2021,
research revenues increased by $342.8 million compared to the same period in
2020, or 13% on a reported basis and 10% excluding the foreign currency impact.
The increase in revenues during 2021 was primarily due to the same factors
driving the trend in our Research contract value, which are discussed below. The
improvement in margin of 2 points for the three months ended September 30, 2021
compared to the same prior year period was primarily due to the growth in
revenue. The nine months ended September 30, 2021 also benefited from a decline
in travel and entertainment expenses due to COVID-19 travel restrictions.

Total contract value increased to $4.0 billion at September 30, 2021, or 14%
compared to September 30, 2020 on a foreign currency neutral basis. Global
Technology Sales ("GTS") contract value increased by 12% at September 30, 2021
when compared to September 30, 2020. The increase in GTS contract value was
primarily due to new business from new and existing clients, as well as improved
client retention. Global Business Sales ("GBS") contract value increased by 22%
year-over-year, also primarily driven by new business from new and existing
clients, and improved client retention.

GTS client retention was 85% and 80% as of September 30, 2021 and 2020,
respectively, while wallet retention was 104% and 99%, respectively. GBS client
retention was 86% and 82% as of September 30, 2021 and 2020, respectively, while
wallet retention was 113% and 99%, respectively. The increase in GTS and GBS
wallet retention was largely due to increased spending by existing clients. The
number of GTS client enterprises increased by 11% when compared to prior year,
while GBS client enterprises increased by 3% at September 30, 2021 when compared
to September 30, 2020.


                                       35
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Conferences
                                 As Of And         As Of And
                                  For The           For The
                                   Three             Three
                                  Months            Months
                                   Ended             Ended                                   Percentage           As Of And For The Nine       As Of And For The Nine                                Percentage
                                 September         September           Increase               Increase            Months Ended September       Months Ended September          Increase               Increase
                                 30, 2021          30, 2020           (Decrease)             (Decrease)                  30, 2021                     30, 2020                (Decrease)             (Decrease)
Financial Measurements:
Revenues (1)                    $ 24,415          $ 12,738          $    11,677                       92  %       $      107,396               $       26,925               $    80,471                      299  %
Gross contribution (1)          $ 11,456          $  2,044          $     9,412                      460  %       $       67,954               $      (15,246)              $    83,200                          nm
Gross contribution margin             47  %             16  %            31 points                     -                      63       %                  (57)      %           120 points                     -
Business Measurements:
Number of destination
conferences (2)                        8                 2                    6                      300  %                   26                            7                        19                      271  %
Number of destination
conferences attendees (2)          6,472             2,584                3,888                      150  %               27,123                        5,948                    21,175                      356  %




nm = not meaningful
(1)Dollars in thousands.
(2)Includes both virtual and in-person conferences. Single day, local meetings
are excluded.

In response to the COVID-19 pandemic, we cancelled all in-person conferences
from March 2020 through at least December 2021, and pivoted to producing virtual
conferences with a focus on maximizing the value we deliver to our clients. We
held 8 and 26 virtual conferences during the three and nine months ended
September 30, 2021, respectively, and plan on holding additional virtual
conferences through the remainder of 2021. Operationally, we are planning to
resume in-person conferences in 2022. Conferences revenues increased by $11.7
million during the three months ended September 30, 2021 compared to the same
period in 2020. Conferences revenues increased by $80.5 million during the nine
months ended September 30, 2021, compared to the same period in 2020. The
increase in revenues for the three months ended September 30, 2021 was the
result of the increase in the number of virtual conferences held during the
period, compared to the prior year. The increase in revenues for the nine months
ended September 30, 2021 was due to the virtual conferences held during the
period, as well as the use of ticket entitlements which we extended from 2020
due to the pandemic. Gross contribution increased to $11.5 million during the
three months ended September 30, 2021 compared to $2.0 million in the same
period last year. Gross contribution increased to $68.0 million during the nine
months ended September 30, 2021 compared to a loss of $15.2 million in the same
period last year.

                                       36
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Consulting
                                                                As Of And
                                                                 For The
                                                                  Three
                                                                 Months
                                    As Of And For The             Ended                                   Percentage           As Of And For The Nine       As Of And For The Nine                                Percentage
                                    Three Months Ended          September           Increase               Increase            Months Ended September       Months Ended September          Increase               Increase
                                    September 30, 2021          30, 2020           (Decrease)             (Decrease)                  30, 2021                     30, 2020                (Decrease)             (Decrease)
Financial Measurements:
Revenues (1)                      $       94,743               $ 89,161          $     5,582                        6  %       $      300,149               $      282,380               $    17,769                        6  %
Gross contribution (1)            $       30,972               $ 28,161          $     2,811                       10  %       $      112,840               $       91,086               $    21,754                       24  %
Gross contribution margin                     33       %             32  %              1 point                     -                      38       %                   32       %             6 points                     -
Business Measurements:
Backlog (1), (2)                  $      125,500               $ 99,200          $    26,300                       27  %
Billable headcount                           749                    737                   12                        2  %
Consultant utilization                        62       %             60  %             2 points                     -                      67       %                   61       %             6 points                     -
Average annualized revenue per
billable headcount (1), (3)       $          387               $    364          $        23                        6  %       $          419               $          361               $        58                       16  %




(1)Dollars in thousands.
(2)Backlog is on a foreign exchange neutral basis. Backlog as of September 30,
2020 has been calculated using the same foreign currency rates as 2021.
(3)Previously reported average annualized revenue per billable headcount has
been corrected from $387 to $421 for the three months ended March 31, 2021, and
from $379 and $383 to $448 and $435 for the three and six months ended June 30,
2021, respectively.

Consulting revenues increased 6% during the three months ended September 30,
2021 compared to the same period in 2020 on both a reported basis and excluding
the foreign currency impact, with a revenue increase in labor-based consulting
of 5% and an increase in contract optimization of 13%, each on a reported basis.
Contract optimization revenue may vary significantly and, as such, revenues for
the third quarter of 2021 may not be indicative of results for the remainder of
2021 or beyond. The segment gross contribution margin was 33% and 32% for the
three months ended September 30, 2021 and 2020, respectively. The increase in
gross contribution margin during the third quarter of 2021 was primarily due to
the increase in revenue.

For the nine months ended September 30, 2021, Consulting revenues increased 6%
compared to the same period in 2020 on a reported basis and 3% excluding the
foreign currency impact, while the segment gross contribution margin increased
by 6 points. The increase in revenues was due to an increase in labor-based
consulting of 11%, partially offset by a decrease in contract optimization of
10%.

Backlog increased by $26.3 million, or 27%, from September 30, 2020 to September 30, 2021 on a foreign currency neutral basis.

                                       37
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LIQUIDITY AND CAPITAL RESOURCES


We finance our operations through cash generated from our operating activities
and borrowings. Note 8 - Debt in the Notes to Condensed Consolidated Financial
Statements provides additional information regarding the Company's outstanding
debt obligations. At September 30, 2021, we had $765.5 million of cash and cash
equivalents and approximately $1.0 billion of available borrowing capacity on
the revolving credit facility under our 2020 Credit Agreement. We believe that
the Company has adequate liquidity to meet its currently anticipated needs for
at least the next twelve months.

We have historically generated significant cash flows from our operating
activities. Our operating cash flow has been continuously maintained by the
leverage characteristics 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, 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.

Our cash and cash equivalents are held in numerous locations throughout the
world with 77% held overseas at September 30, 2021. We intend to reinvest
substantially all of our accumulated undistributed foreign earnings, except in
instances where repatriation would result in minimal additional tax. As a result
of the U.S. Tax Cuts and Jobs Act of 2017, we believe that the income tax impact
if such earnings were repatriated would be minimal.

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

                                                         Nine Months Ended         Nine Months
                                                           September 30,         Ended September         Increase
                                                               2021                 30, 2020            (Decrease)
Cash provided by operating activities                    $    1,077,684          $    642,830          $  434,854
Cash used in investing activities                               (61,700)              (60,845)               (855)
Cash used in financing activities                              (944,186)             (318,025)           (626,161)

Net increase in cash and cash equivalents and restricted cash

                                                             71,798               263,960            (192,162)
Effects of exchange rates                                       (14,651)                8,919             (23,570)
Beginning cash and cash equivalents                             712,583               280,836             431,747

Ending cash and cash equivalents and restricted cash $ 769,730

     $    553,715          $  216,015



Operating

Cash provided by operating activities was $1,077.7 million and $642.8 million
during the nine months ended September 30, 2021 and 2020, respectively. The
year-over-year increase was primarily due to higher pre-tax income in the 2021
period, in part due to a $135.5 million gain on event cancellation insurance
claims, and an increase in deferred revenues resulting from increased bookings
in Research, partially offset by higher income tax payments.

Investing


Cash used in investing activities was $61.7 million and $60.8 million during the
nine months ended September 30, 2021 and 2020, respectively. The cash used in
2021 was for capital expenditures and the acquisition of Pulse Q&A Inc. The
slight increase from 2020 to 2021 was the result of the 2021 acquisition of
Pulse Q&A Inc., partially offset by reduced capital spending in response to the
COVID-19 pandemic.

Financing

Cash used in financing activities was $944.2 million and $318.0 million during
the nine months ended September 30, 2021 and 2020, respectively. During the 2021
period, we issued $600.0 million of 3.625% Senior Notes due 2029, and repaid
$100.0 million on our term loan facility under the 2020 Credit Agreement with a
portion of the proceeds from the issuance of the 2029 Notes. We also repaid a
net $5.0 million on our revolving credit facility under the 2020 Credit
Agreement, paid a net $106.6 million in debt principal repayments and used
$1,438.8 million of cash for share repurchases. During the 2020 period, we
repaid a net $148.0 million on our revolving credit facility under the 2016
Credit Agreement, paid a net $53.3 million in debt
                                       38
--------------------------------------------------------------------------------

principal repayments and used $76.1 million of cash for share repurchases.
Additionally, we paid $23.6 million in deferred financing fees related to our
2020 financing activities and $30.8 million in early redemption premium payments
related to the redemption of our 2025 Notes.

Debt


As of September 30, 2021, the Company had $2.5 billion of principal amount of
debt outstanding, of which $1.3 million is to be repaid in the remainder of
fiscal year 2021. Note 8 - Debt in the Notes to Condensed 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.

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 the 2029
Note Indenture, dated as of June 18, 2021, 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 100.00% 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 Notes will mature
on June 15, 2029.

The Company used a portion of the net proceeds of the 2029 Notes (i) to repay
$100.0 million of the outstanding borrowings under the Company's existing term
loan facility and (ii) to pay related fees and expenses. The Company intends to
use the remaining net proceeds from the issuance of the 2029 Notes for general
corporate purposes.


OFF BALANCE SHEET ARRANGEMENTS

From January 1, 2021 through September 30, 2021, the Company has not entered into any material off-balance sheet arrangements or transactions with unconsolidated entities or other persons.

                                       39

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