Good morning, everyone. Welcome to Gartner's First Quarter 2025 Earnings Call. I'm David Cohen, SVP of Investor Relations. At this time, all participants are in a listen-only mode. After comments by Gene Hall, Gartner's Chairman and Chief Executive Officer; and Craig Safian, Gartner's Chief Financial Officer, there will be a question-and-answer session. Please be advised that today's conference is being recorded. This call will include a discussion of first quarter 2025 financial results and Gartner's outlook for 2025 as disclosed in today's earnings release and earnings supplement, both posted to our website, investor.gartner.com. On the call, unless stated otherwise, all references to EBITDA are for adjusted EBITDA with the adjustments as described in our earnings release and supplement. All contract values and associated growth rates we discuss are based on 2025 foreign exchange rates. All growth rates in Gene's comments are FX neutral, unless stated otherwise. All references to share counts are for fully diluted weighted average share counts, unless stated otherwise. Reconciliations for all non-GAAP numbers we use are available in the Investor Relations section of the gartner.com website. As set forth in more detail in today's earnings release, certain statements made on this call may constitute forward-looking statements. Forward-looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the company's 2024 annual report on Form 10-K and quarterly report on Form 10-Q, as well as in other filings with the SEC. I encourage all of you to review the risk factors listed in these documents. Now, I will turn the call over to Gartner's Chairman and Chief Executive Officer, Gene Hall.

Good morning, and thanks for joining us today. Gartner remains resilient in a complex environment. In Q1, contract value grew 7%. First quarter revenue, EBITDA, EPS, and free cash flow were ahead of our expectations. We increased headcount across our sales organizations by 4%. As we navigate another year of volatility, uncertainty, complexity, and ambiguity, we'll continue to be agile, and we'll target our investments to support long-term sustained double-digit growth. Research continues to be our largest and most profitable segment. Research contract value grew 7%. Excluding the U.S. federal business, contract value grew 8%. Within research, we serve executives and their teams through distinct sales channels. Global technology sales or GTS serves leaders in their teams within IT. GTS contract value grew 6%. Excluding the U.S. federal business, contract value grew 7%. Contract value with tech vendor clients improved for the fourth consecutive quarter. Global business sales or GBS serves leaders and their teams beyond IT. This includes HR, supply chain, finance, marketing, legal, sales, and more. GBS contract value increased 11%. Gartner conferences deliver extraordinarily valuable insights to engaged and qualified audiences. On the same conference basis, revenue grew 12%. Gartner Consulting is an extension of Gartner Research. Consulting helps clients execute their most strategic initiatives through deeper project-based work. Consulting is an important complement to our IT research business. Consulting revenue grew 5% against a strong compare from Q1 2024. Revenue from contract optimization grew robust 38%, and consulting backlog grew 16%. Overall, our Q1 financial results were ahead of expectations. Gartner has a unique client value proposition. We deliver actionable, objective insight, guidance, and tools that help our clients succeed with their mission-critical priorities. We practice disciplined cost management while remaining agile and prudently investing for future growth. We generate free cash flow well in excess of net income, and we return capital to our shareholders through our repurchase program. Over the past five years, we've seen persistent elevated levels of volatility in the macroeconomic environment. The COVID-19 pandemic, the bursting of a tech spending bubble, the highest inflation in 40 years, a sharp rise in interest rates, the first ground war in Europe in 80 years. Now, government policy and tariff changes are affecting enterprises across the U.S. and around the world in different and complex ways. There's a high level of macroeconomic uncertainty. Executives know they need help. Gartner is the best, most cost-effective source for the insight, guidance, and tools they need to succeed. We help our clients make smarter decisions that address mission-critical priorities, such as cost optimization, managing through public policy changes, leveraging AI innovation, cybersecurity, and more. And we do this while helping them manage risk, save time, save money, and build confidence. Gartner helps senior executives make smarter decisions to achieve their mission-critical priorities. Today, one urgent priority for the majority of our clients is harnessing the potential of artificial intelligence. Of course, Gartner is one of the world's leading experts in AI. We help thousands of end-user enterprises determine the best uses and business cases for AI. With our in-depth understanding of end-user business cases, we also advise thousands of technology vendors on how to compete in the AI marketplace. And finally, we use AI internally to support our business. We develop proprietary insight, guidance, and tools to help senior executives make smarter decisions on their mission-critical priorities. Our 2,500 experts develop these proprietary insights, guidance, and tools by analyzing our more than 500,000 one-on-one conversations that we hold with clients every year. In addition, we conduct proprietary primary research, which is only available through Gartner to supplement these conversations. All of this creates a valuable dataset that is massive, proprietary, and constantly updated. Finally, we incorporate publicly available data where we’re helpful, often using AI. The combination of our 2,500 experts, hundreds of thousands of conversations with end users and technology vendors, and proprietary data methodologies and processes makes our insights, guidance, and tools highly valuable, highly unique, and highly differentiated from any other source. A core element of our strategy is continuous improvement and innovation, which we will apply to further increase our value and differentiation over time. Our powerful client value proposition gives us a vast untapped market opportunity, and we know the right things to do to capture that opportunity. Gartner has proven best practices that address how we serve our clients, recruit, hire, train, and deploy our salespeople, create our insights, guidance, and tools, host attendees at our conferences, and support our largest technology clients through consulting. We also have best practices that address how we approach expense management to optimize flexibility while increasing selling capacity. For the remainder of 2025, we plan to grow sales headcount in the mid-single digits, excluding directly impacted areas. This reflects our commitment to invest for future growth while delivering strong margins and free cash flow. Our plan is to exit the current environment better, faster, and stronger than before. With continued sales headcount growth and a return to historically strong productivity, we're well-positioned to accelerate growth as the external environment evolves. We expect to reaccelerate CV growth to our target of 12% to 16% when the macroeconomic environment returns to normal. And we expect EBITDA margins to expand through the natural operating leverage in the business. Gartner has a highly diversified client base. The U.S. federal government represents approximately 4% of our total contract value. Our U.S. federal business has been impacted by the recent policy changes. Nearly all of our U.S. federal contracts are up for renewal in 2025. Roughly 40 of these were transacted in Q1, the largest quarter of the year, and we renewed roughly half that business. We remain laser-focused on creating and delivering value for our U.S. federal clients. As the U.S. federal government modifies and refines their priorities, we believe that we will be a core part of helping them achieve critical priorities, such as cybersecurity, cost optimization, digital transformation, and more. Stock buybacks are an important way we return value to shareholders. We remain eager to repurchase shares aggressively. Our approach is designed to optimize returns by being price-sensitive, opportunistic, and disciplined. In closing, Gartner delivered financial results ahead of expectations. Tech vendor CV growth continued to accelerate. We have a powerful client value proposition and a vast addressable market opportunity. We will continue to create value for our shareholders by providing actionable, objective insight, guidance, and tools to our clients, prudently investing for future growth, remaining agile and disciplined in our approach to expenses, and returning capital to our shareholders through our share repurchase program. We expect to deliver modest margin expansion over time alongside double-digit top-line growth, and we'll continue to generate significant free cash flow well in excess of net income. All of this and more positions us to drive long-term double-digit growth and sustain our track record of success far into the future. With that, I'll hand the call over to our Chief Financial Officer, Craig Safian.

Thank you, Gene, and good morning. First quarter contract value or CV grew 7% year-over-year. Revenue, EBITDA, adjusted EPS, and free cash flow were better than expected as we continue to execute well in an increasingly complex environment. We were resilient in a quarter affected by macro factors. Since we reported Q4 2024 results in early February, there were notable changes in the U.S. Federal government end market. The broader selling environment also shifted during the quarter as many company decision makers started to adjust to the evolving global macro economy. We are updating our guidance to reflect Q1 performance, the new macro landscape, the benefit from the move in FX rates, and our own expense agility. We repurchased $163 million of stock in the quarter, maintaining flexibility as the market digests the changes in the macro landscape. We remain eager to repurchase shares, which we will do opportunistically. First quarter revenue was $1.5 billion, up 4% year-over-year as reported and 6% FX neutral. In addition, total contribution margin was 69%, up 20 basis points from last year. EBITDA was $385 million, up 1% as reported and 3% FX neutral versus the first quarter of 2024. Adjusted EPS was $2.98, up 2% from Q1 of last year. And free cash flow was $288 million, a very strong performance for our first quarter. Research revenue in the quarter grew 4% year-over-year as reported and 6% FX neutral. Subscription revenue grew 8% FX neutral. Non-subscription research revenue was in line with our expectations. First quarter research contribution margin was 74%, consistent with last year. Contract value was $5.1 billion at the end of the first quarter, up 7% versus the prior year. Contract value and CV growth are FX neutral. Excluding the U.S. Federal government, CV grew 8%. Contract value growth with tech vendors continued to improve. Global CV was $63 million lower than Q4 2024, with around 80% of the change attributable to the U.S. Federal government end market. CV growth was broad-based across practices, industry sectors, company sizes, and geographic regions. Across our combined practices, all of the industry sectors except two grew at high single-digit rates, led by the energy, healthcare, and manufacturing sectors. CV grew at high single-digit rates across all enterprise sizes except small, which grew low single digits. We also drove double-digit or high single-digit growth in the majority of our top 10 countries. Canada, which represents about 3% of total CV, had a more challenging selling environment in the quarter. Nearly all of our U.S. federal contracts will come up for renewal during 2025, with about 40% having transacted in Q1, the largest quarter of this calendar year. In the first quarter, the dollar retention was almost 50%. At March 31, we had $225 million of U.S. federal CV. Global technology sales contract value was $3.9 billion at the end of the first quarter, up 6% versus the prior year. Excluding the U.S. federal government from both periods, GTS CV grew 7% in the quarter, as the tech vendor market continued to improve. $44 million of the $58 million change in GTS CV from Q4 was due to the U.S. federal government, while retention for GTS was 101% for the quarter. GTS new business was down 4% compared to last year. GTS quota-bearing headcount was up 3% year-over-year. Our regular full set of GTS metrics can be found in our earnings supplement. Global business sales contract value was $1.2 billion at the end of the first quarter, up 11% year-over-year. All of our major GBS practices grew at double-digit or high single-digit rates. Growth was led by the sales, finance, and legal practices. GBS CV was $5 million below the fourth quarter. Excluding the U.S. federal government, GBS CV was largely unchanged from Q4. Wallet retention for GBS was 105% for the quarter. GBS new business was down 3% compared to last year. GBS quota-bearing headcount was up 9% year-over-year. As with GTS, our regular full set of GBS metrics can be found in our earnings supplement. Conference revenue for the first quarter was $73 million, increasing 4% as reported and 5% FX neutral compared to Q1 of 2024. Adjusting for the two conferences we moved to Q2 this year, revenue increased around 12% FX neutral. Contribution margin was 38%, consistent with typical Q1 seasonality. We held 10 destination conferences in the first quarter as planned. Q1 consulting revenue was $140 million compared with $135 million in the year-ago period, or about 4% as reported and 5% FX neutral. Consulting contribution margin was 38% in the first quarter. Labor-based revenue was $104 million. This part of the segment was down 4% versus Q1 of last year's reported and 2% FX neutral against the tough compare. Backlog at March 31 was $214 million, increasing 16% year-over-year FX-neutral. This was driven by strength in multiyear contracts. In Contract Optimization, we delivered $36 million of revenue in the quarter, up 36% versus Q1 of last year and 38% FX neutral. The quarter was ahead of our expectations. Our contract optimization revenue is highly variable. Consolidated costs of services increased 3% year-over-year in the first quarter as reported and 4% FX neutral. The biggest driver of the increase was higher compensation costs. SG&A increased 6% year-over-year in the first quarter as reported and about 7% on an FX-neutral basis. SG&A increased in the quarter as a result of headcount growth. EBITDA for the first quarter was $385 million, up 1% from last year's reported and up 3% FX neutral. We outperformed in the first quarter through modest revenue upside, effective expense management, and a prudent approach to guidance. Depreciation in the quarter of $29 million was up 10% compared to 2024. Net interest expense, excluding deferred financing costs in the quarter, was $12 million. This is favorable by $5 million versus the first quarter of 2024 due to higher interest income on our cash balances. The modest floating rate debt we have is fully hedged through the third quarter of 2025. The Q1 adjusted tax rate, which we used for the calculation of adjusted net income, was 21% for the quarter. This compares to last year's rate of 19%. The tax rate for the items used to adjust net income was 26% for the quarter. Adjusted EPS in Q1 was $2.98, up 2% compared to Q1 last year. We had 78 million shares outstanding in the first quarter. This is an improvement of over 1 million shares or about 1% year-over-year. We exited the first quarter with just under 78 million shares on an unweighted basis. Operating cash flow for the quarter was $314 million, up 66% compared with last year. CapEx was $26 million, up about $3 million year-over-year. This was primarily due to real estate-related costs, and in line with our expectations. First quarter free cash flow was $288 million, up 73% compared with Q1 in 2024. Free cash flow on a rolling four-quarter basis was 120% of GAAP net income and 97% of EBITDA. As we noted last quarter, there were several items in 2024 that affect rolling fourth quarter net income and free cash flow, including after-tax insurance proceeds or real estate lease termination payment and tax planning benefits. Adjusting for these items, free cash flow on a rolling four-quarter basis was 20% of revenue, 82% of EBITDA, and 155% of GAAP net income. At the end of the first quarter, we had about $2.1 billion of cash. Our March 31 debt balance was about $2.5 billion. Our reported gross debt to trailing 12-month EBITDA was well under 2 times. Our expected free cash flow generation, available revolver, and excess cash remaining on the balance sheet provide ample liquidity to deliver on our capital allocation strategy of disciplined share repurchases and strategic tuck-in M&A. Our balance sheet is very strong with $2.8 billion of liquidity, low levels of leverage, and effectively fixed interest rates. We repurchased $163 million of stock during the first quarter. At the end of Q1, our share repurchase authorization was approximately $870 million. As we continue to repurchase shares, our capital base will shrink. Over time, this is accretive to earnings per share and, combined with growing profits, also delivers increasing returns on invested capital. We are updating our full-year guidance to reflect recent performance and trends. Since we reported Q4 results in early February, the world has become significantly more dynamic. We are applying all the lessons we've learned from prior challenging environments. We are shifting our focus to the things our clients need the most in an extraordinarily uncertain operating environment. We're also remaining agile in managing our cost structure while also investing for future growth. In particular, we are preserving and growing our selling capacity outside of directly impacted areas, which is a key input into our algorithm for future sustained double-digit growth. The U.S. dollar weakened significantly during Q1. We now expect FX to benefit revenue growth by about 50 basis points and EBITDA growth by about 130 basis points in 2025. We've provided both the FX-driven and operational changes to guidance in our earnings supplement. As a reminder, about one-third of our revenue and operating expenses are denominated in currencies other than the U.S. dollar. For research subscription revenue in 2025, our guidance reflects an expectation that Q1 trends for new business and retention continue for the balance of the year. We've also incorporated the information we have about U.S. federal spending decisions to date. In addition, we've taken a prudent view of the outlook as the current environment remains very dynamic. For the non-subscription part of the research segment, we've built a continuation of recent traffic and pricing trends into the guidance. For conferences, we are basing our guidance on the 53 in-person destination conferences we have planned for 2025. We have good visibility into current year revenue, with the majority of what we've guided already under contract. For consulting, we have more visibility into the next quarter or two based on the composition of our backlog and pipeline, as usual. Given the shifts in the macro environment, we have been thoughtful about the outlook for the labor-based part of the business. Contract optimization has had several very strong years, and the business remains highly variable. We've incorporated a prudent outlook for this part of the segment. Our base level assumptions for consolidated expenses have changed to reflect the revenue outlook. We have demonstrated our ability to manage costs prudently in any market environment, and we will remain agile. We will do this while also investing for future growth. Our plan is to exit the current environment better, faster, and stronger than before. We can both deliver on our EBITDA margin commitments for this year while investing for future growth. Our plan for both GTS and GBS is for mid-single-digit sales headcount growth outside of directly impacted areas. This reflects our commitment to invest for future growth while delivering strong margins and free cash flow. We're maintaining recruiting capacity and are prepared to go faster on the hiring based on the macro-driven demand. And as the selling environment gets back to normal, we expect significant benefits from QBH productivity. Our updated 2025 guidance is as follows: we expect research revenue of at least $5.34 billion, which is FX-neutral growth of about 4%. This reflects subscription research revenue growth of about 5%. We expect conferences revenue of at least $625 million, which is FX-neutral growth of about 6%. We expect consulting revenue of at least $575 million, which is growth of about 2%, FX-neutral. The result is an outlook for consolidated revenue of at least $6.535 billion, which is FX-neutral growth of 4%. We now expect full year EBITDA of at least $1.535 billion, up $25 million from our prior guidance. We expect 2025 adjusted EPS of at least $11.70, up about $0.25 from last quarter. For 2025, we expect free cash flow of at least $1.145 billion. This reflects a conversion from GAAP net income of 137%. Our guidance is based on 78 million fully diluted weighted average shares outstanding, which reflects the repurchases made through the end of the first quarter. For Q2, we expect adjusted EBITDA of at least $400 million. Our financial results through March were ahead of expectations, underscoring the resilience of our business model. While we updated the revenue guidance to reflect the macro landscape, we will also benefit from the latest FX rates. Our EBITDA margin outlook is now higher than it was in February. We have successfully navigated challenging macro environments before and know the right things to do. We are running our operational best practices, including delivering exceptional value for our clients, running our sales and services best practices playbooks, investing in sales capacity, which is a key ingredient for future sustained double-digit top line growth, managing our expenses aggressively and thoughtfully to protect profitability and cash flow, and using our strong balance sheet and cash flow to buy our stock and for tuck-in M&A. Looking out over the medium term in a normal macro environment, our financial model and expectations are unchanged. With 12% to 16% research CV growth, we will deliver double-digit revenue growth. There is operating leverage in the business, which allows us to expand margins. With gross margin expansion, sales costs growing about in line with CV growth and G&A leverage, we will deliver modest EBITDA margin expansion. We can grow free cash flow at least as fast as EBITDA because of our modest CapEx needs and the benefits of our clients paying us upfront. And we'll continue to deploy our capital on share repurchases, which will lower the share count over time and on strategic value-enhancing tuck-in M&A. With that, I'll turn the call back over to the operator, and we'll be happy to take your questions.

Our first question comes from Jeff Meuler with Baird. Your line is open.

Thank you, good morning. So what percentage of the contract value base are you following the directly impacted areas? And how are you managing sales headcount, I guess, for U.S. federal government agency prospects or the more meaningfully other directly impacted areas in terms of are you reassigning it to other opportunities? Or are you kind of preserving some of that capacity, including to position for like win-back opportunities?

Good morning, Jeff, and thank you for your question. I will begin, and then Gene will provide additional insights. We are primarily focusing on the U.S. federal sector, which is the area most directly affected. While we are not aiming to increase our QBH in that sector, I want to emphasize that outside of those directly impacted areas, we plan to grow our headcount and expand into more territories for both GTS and GBS in the mid-single digits.

Yes. Basically, Jeff, as Craig said, the largest impacted area is by far the U.S. federal government. And there, what we're planning to do is we're not backfilling, and we're basically making sure we're controlling our headcount there very carefully. The rest of the business, but not impacted carries, as I said, continues to grow in mid-single digits this year.

Got it. What is the revenue recognition treatment for early cancels for convenience among U.S. federal government agency contracts? How is the contract value treated? Can you provide any insight on whether this represents a significant percentage of attrition compared to non-renewal as contracts naturally expire?

Yes, Jeff, it's a great question. So actually, we've got details on that in the Q, but let me just summarize for the benefit of everyone on the call. So, as it stands right now, we've got about $30 million worth of termination notices related to contracts that are set to expire later in the year. One way to think about it is it's sort of just normal course. We've just been notified ahead that those things will not be renewing or they will or would have the termination notice in hand. That $30 million remains in contract value because we are continuing to recognize the revenue on it. But in the grand scheme of not only the U.S. federal business, but actually on total CV, it's a relatively small amount, but that's how we're handling it. And there's a little bit more detail in the Q, I think, on Page 25, if you want to search it out.

Our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is open.

Thanks so much. I was hoping to get just maybe a little bit more color on the guidance. I know you talked about on the slide and in the remarks that the guidance reflects 1Q new business and retention trends. I know you mentioned that there was a little bit of a change during the quarter, maybe a slower like back half of the quarter. So, I wanted to sort of understand, does the guidance reflect like the complete 1Q, which was maybe a little bit better or more weighted towards like the more recent, like slower experience that you've seen?

Yes. Toni, it's a great question. So, when we were together in early February, talking about Q4 commentary at that point through the month of January, we hadn't really seen a change in the selling environment, and that was the case. Clearly, things started to change mid-February into early March. I would say, from a metric perspective, though, since we are so dominated by the third month of every quarter, what we saw in the back half of February and March, in particular, in March, is reflective of the quarter. And again, we've taken that experience and rolled it forward across Q2, Q3, and Q4 to drive that update on the revenue guidance. So, while January was normal, it's really small, and the bulk of the volume in Q1 actually happened during the month of March.

Got it. And then wanted to ask, I know U.S. federal government was sort of the big impact for what has changed on the government side. wanted to, though broaden it out to are you seeing anything at the state and local level or international government level that is similar to U.S. Federal and also maybe just opportunity for win back would be, as Jeff sort of alluded to as well, is there an opportunity there this year, too?

So, Toni, regarding the win-back aspect, we believe we offer significant value to our clients, including U.S. federal government clients, by assisting with strong cybersecurity capabilities, cost optimization, and the use of AI, which are priorities for every enterprise, including those in the public sector. We are confident that we will continue to provide substantial value to federal governments over time. For state and local governments in the United States, there was not much variation in Q1 compared to previous quarters. The same applies to governments worldwide, both at the federal level and at the provincial or state and local government levels.

Our next question comes from the line of George Tong with Goldman Sachs. Your line is open.

Your business outlook for 2025 research revenue was downwardly revised by $135 million. Can you elaborate on how much of this reflects updated views on federal contract renewals versus updated views on other customer segments like tech vendors and enterprise functional leaders?

Yes. George, I would say that the guidance is reflective of everything we've seen and everything we know. And so, obviously, the biggest thing or the largest impact that we saw that was sort of off trend in Q1 was related to the U.S. federal government, which we just talked about with Jeff and Toni. But in terms of what we're seeing more broadly, macroeconomically, that has been factored into the updated guidance. So, I think what I'd say is from an update on the guidance perspective, and this applies to all the revenue lines, but research, in particular, is we took our Q1 experience and we flowed that through across our contract expirations for the balance of the year. We took what we knew specifically about U.S. federal government. We modeled in the new FX rates. And as always, we try and take a prudent approach to how we approach our guidance for the full year. So, I'd say those are the four things that factored into the update of all the guidance lines and the research line in particular.

Got it. And can you talk a little bit more about what you're seeing with tech vendors and enterprise functional leaders? Would you say that those trends are holding up better than what you're seeing with federal contract renewals?

So, what I say with tech vendors, the market continues to improve. Our business there is accelerating, particularly larger vendors. The smaller vendors are accelerating just at a slower pace than the larger vendors. So that business is, I think, quite healthy. With enterprise functional leaders, again, sort of you can separate into the federal government, which we talked about and then all the other enterprise functional or business case, which I think is more in trend with global matters.

Our next question comes from the line of Joshua Chan with UBS. Your line is open.

Good morning. Thanks for taking my question. I was wondering if you could talk about the selling environment outside of federal. It seems like you're saying that the environment became more volatile. But I guess if I add back the impact that you gave for the federal government. It seems like the CV ex-federal was fairly similar to what you had in Q4. So, just trying to triangulate the comment about volatility and then the relatively good ex-federal CV growth?

Josh, so the selling environment because of the federal government we talked about, and that was the main thing that impacted our results in Q1. Outside of the federal government, it's not completely uniform in terms of the impact. So, there are some companies that are more impacted, for example, by tariffs than others. By the way, both U.S. as well as non-U.S. companies. And so, the companies that don't have a lot of tariff impact or other kinds of impact from policy changes, it's kind of business as usual in terms of decision-making. The ones that are more directly impacted decision-making has slowed. They're still buying. They're still renewing, but decision cycles have extended compared to what they were, say, Q4 of last year. So, we still see the value. Our pipeline is actually very robust, but decisions are taking longer to get than they would get in Q4 or last year basically.

Okay. How are you approaching your cost structure moving forward? You clearly raised the guidance even though you've lowered the revenues. Could you explain how the decrease in revenue, combined with more prudent cost management, is influencing your increased margin guidance for the year?

Yes, Josh. So, I mean, the way to think about that is we've proven over the last several years, given all the things Gene outlined in his prepared remarks about the craziness in the macro and geopolitical environment and just how challenging it has been, that we've been very agile in managing our expenses. And what I'd say now is given the U.S. Fed results and the impact that's having on the contract value growth and then some of the things Gene just outlined as well in terms of longer selling cycles and things like that, we're taking the opportunity to make sure that we are managing our operating expense base super prudently and super carefully. But also making sure that we're investing in areas that we know support and drive future growth. We're in a period right now where our CV is growing, call it, mid- to high single digits. Obviously, we firmly believe that we can be at 12% to 16% growth on the research business at a double-digit grow on the overall top line, and we want to make sure that we don't do anything that damages or impedes our ability to get back there when the economic situation is more normal. And so, what we're doing is, I'd call it like a slight belt tightening across the board as we're seeing a little bit of pressure in some areas, but also making sure that we're growing our selling capacity because we know that's a key ingredient going forward. So, we're not chopping anything. We're not slamming on the brakes on anything. We're just being thoughtful and prudent and careful and also making sure that we're investing in areas that we know drive and support future growth.

That makes a lot of sense. Thank you both for the time and the color.

Our next question comes from the line of Faiza Alwy with Deutsche Bank. Your line is open.

Thank you. I wanted to discuss the clients you mentioned who are expected to be affected by tariffs, particularly regarding the slower decision-making we've observed. How has this situation historically unfolded? As noted in your remarks, these clients can certainly gain from Gartner’s insights at this time. Is there an initial period where these clients are assessing the situation? Are you actively engaging with them to enhance your value proposition? How should we view the future of these clients?

Faiza, that’s a great question. Historically, we've observed that during periods of uncertainty, clients tend to delay their decision-making. After a few months, they realize they need to navigate the situation, which often leads to a resurgence in activity. We keep nurturing our relationships and building our pipeline because clients recognize the value we provide. Initially, when faced with uncertainty, some companies may choose to slow down or halt their decisions. However, as time passes, they understand they require assistance in areas like cybersecurity, AI, cost optimization, and software selection—all of which are our areas of expertise. This pattern of increasing demand over time is something we've seen consistently.

Understood. And then just on capital allocation and share buyback, I know you mentioned sort of your eagerness to buy back shares a couple of times. Is there any other perspective around that, just given what's happened with the stock and the market overall? How are you viewing the opportunity to buy back stock? And could we expect a more elevated level of share repurchases this year just given the amount of cash that you have on the balance sheet?

Our long-term capital allocation strategy focuses on utilizing our balance sheet and excess cash to return value to shareholders through buyback programs while also seeking out strategic mergers and acquisitions. We believe we can effectively manage both initiatives with our available capital. Regarding buybacks, our approach has historically been to remain price-sensitive, opportunistic, and disciplined. We aim to optimize returns from buybacks over the long term rather than just in the short term. We consider various factors, including stock price, overall market multiples, and our stock's intrinsic value, to inform our decisions. As you noted, we currently have $2.1 billion in cash on our balance sheet and anticipate generating an additional $800 million in free cash flow this year, with expectations of over $1 billion in free cash flow annually moving forward. This positions us well to deploy capital for buybacks or strategic acquisitions. We will continue to monitor the situation closely, but we remain committed to our approach of being price-sensitive, opportunistic, and disciplined, maintaining a focus on long-term returns.

Our next question comes from the line of Jason Haas with Wells Fargo. Your line is open.

Good morning. Thank you for taking my questions. I believe previously, you were guiding the GBS quarter earned headcount to grow double digits this year. And I believe you said that you're now expecting it to grow mid-single digits. Can you just talk about what's the reason for the reduction in that segment specifically?

Yes, I think it's part of our sort of normal agile planning around the business. Obviously, we do have U.S. federal footprint with our GBS business as well, and that has been impacted in the first quarter, as we described in our prepared remarks. We're also dealing with a more challenging macro environment, Gene referenced, longer sales cycles, things of that nature. And so, we're always tweaking what we want and expect from a quota-bearing headcount growth perspective over the course of the year. What I would say is we've got dialed into our outlook right now is mid-single-digit growth in both GTS and GBS. But if the end market improves or the demand environment improves or sales cycles reduce, we have plenty of recruiting capacity to be able to go faster if we want to. But essentially, right now, just a reflection of what we're seeing in the market and modest tapping of the brakes there just to make sure that we keep our cost structure in line with our CV growth expectations and our revenue and CV growth expectations rolling forward in '26 and '27.

Got it. That's helpful. And then as a follow-up, I appreciate the commentary on how you're leveraging AI. I'm curious if you put any thought to rolling out any sort of chat functionality driven by AI, if that's something that your customers are asking for? Or if there's any potential to use that to maybe make it a little bit easier for your customers to access and utilize all the primary insights from your research?

Jason, as I mentioned in my remarks, we're really experts on AI. We know it really well. We use AI internally. So, we have an application much like you described, where internally, our associates can use AI to help navigate through our very large content base. We're planning to release that to clients. But because of the problems like hallucinations and things like that, we want to make sure that we get the fundamentals right. So, our clients come not to have any hallucinations and things like that, that can happen with AI. So, we've developed it. We're using it internally. You can see about it as piloting, but it's very broad among thousands of our associates. And it's working very well, but we want to make sure that it is bulletproof before we roll it out to clients. Our clients understand that. They know we understand that they want it, and it will improve.

Our next question comes from the line of Andrew Nicholas with William Blair. Your line is open.

Hi, good morning. Thanks for taking my questions. First on the government side, just curious if you could provide any additional color on the timing of renewals throughout the remainder of this year. I believe I caught 40% in the first quarter, but just curious if there's anything unique about kind of cadence throughout the rest of the year. And relatedly, I think you said half or roughly half of those contracts were renewed. Is there any reason for us to think that renewal rates will get better or worse from that level as the year goes on, maybe as you get more comfortable selling back into that group or anything like that that I'm not thinking of?

Yes, Andrew, thanks. So, over the next three quarters, Q1 was the largest, as we mentioned and you referenced. Q2 is less than half of what we saw in Q1. In Q3, which aligns with the U.S. Federal fiscal is our next largest quarter, but it's probably about three-quarters size of what we saw in Q1. And then Q4 is really small in terms of the expirations there. So, the bulk is actually in Q3, which again aligns with the U.S. Federal fiscal. In terms of what we've modeled in is what you highlighted essentially, what we experienced during the first quarter, which is nearly half dollar retention around 50%. We've modeled that forward. I do think, and Gene made this point earlier as well, we're intent on making sure and really helping our U.S. federal clients achieve their most important mission-critical priorities. And so, we're not just abandoning our clients if the contract doesn't renew, we are there, and we want to make sure that we are there when they are ready to buy again, which we have a high degree of confidence that if they are still there, they will want to buy our services because we provide so much value. That's not baked in because again, we haven't seen it yet. And so, our philosophy generally is not to build forecasts, plans, and outlooks based on what we hope is going to happen, but rather on what we've seen. But that is certainly a possibility. And again, we're organizing our teams to make sure we take advantage of that, probably more of a '26 and '27 dynamic than a '25 dynamic. But if we are able to get people back and turned on during 2025, great, and that would be that upside to what we're looking at.

Understood. And then kind of changing gears for my follow-up. I just wanted to ask about the conservatism of the OpEx guide. I understand and you gave some great reminders on the flexibility of the cost base and how you're kind of thinking about the cost structure. But you've also, over the past several years, given a pretty prudent outlook in terms of spend. So just wondering if some of the cost actions that you've started to take and tightening of the belt over the past month plus may lower some of the conservatism on that front? Or if we should think about it being relatively consistent with previous approaches.

Yes, it's a great question. I mean the environment is dynamic, as we discussed. And so, we are rolling with that dynamism and attempting to have as much agility around our operating expense base as possible. The reality is, we're obviously managing the 2025 P&L to make sure that we're investing for the future and protecting profitability and free cash flow. But in reality, as you know, we run this business for the long term, and we're making sure that our OpEx base is rightsized for 2026, that we're investing in the right areas during 2025, so that we can reaccelerate CV into the future. And so, I wouldn't characterize the guidance as any more prudent or conservative than normal. I would say it's sort of our normal approach to how we build our outlook and how we build our guidance. And as we mentioned earlier, we're prepared to invest more if we see positive changes in the environment, and we're prepared to tighten the belt maybe one more notch if we have to as well. And so, we're very focused on making sure we're doing the right things for the business over the long term. But we're also going to make the right decisions in the short term as well to make sure that we are, again, making the right investments, but also protecting profitability and free cash flow.

Thank you very much. I wanted to ask about the details regarding the cancellation of contracts. I understand that most of your federal government contracts are one year, but it seems you also have several multiyear contracts. Can a client with a two-year contract cancel it early? How much notice is required? Does it need to be around the anniversary date? Any specific details you can share would be appreciated.

Yes. Generally, a multiyear contract represents a long-term commitment with no options for cancellation or termination for convenience. Our multiyear contracts can range from two to five years, though most of them are typically two-year agreements. In contrast, U.S. federal contracts are primarily one-year contracts. Our multiyear contracts are designed to be long-term without any genuine cancellation clauses. We have been actively working to increase the share of multiyear contracts in our overall contract value, particularly during challenging economic conditions. This strategy enhances the resilience of our business, allowing us to mitigate the impact of short-term macroeconomic challenges through a focus on operational best practices like securing multiyear contracts.

Okay. That's helpful. And then you were kind enough to give us kind of the seasonality on renewals for the federal government. Can we get some similarity for the non-federal government contracts? I know they vary, but any helpful information would be great.

So, I'd say, again, you can kind of see this in the external metrics as well. So, client retention is holding up really well and looks pretty good. And will look even better or modestly better if we excluded U.S. federal from it. So, retention rates broadly continue to look pretty good. I think the challenge and Gene alluded to this earlier, is our sales cycles from both a new logo perspective and also from an upsell perspective, have lengthened, and that impacts the wallet retention numbers. And so, you're seeing a little bit of that new business velocity impacting the retention numbers, but overall, the retention numbers are holding up pretty well. And again, you can see that in both the GTS and GBS client and wallet retention numbers. Our two biggest quarters are Q1 and Q4 from an expiration perspective; Q2 and Q3 tend to be later quarters. But one of our practices is to, when we have the opportunity, to early renew things. And so that can move things around. But if you just look at the pure contract term dates or end dates, over weighted to Q1 and Q4, I think like 26% or 27%, and then a little underweighted in Q2 and Q3, think in the 22% to 23% of total range.

Well, here's what we'd like you to take away from today's call. Gartner delivered financial results ahead of expectations. Our tech vendor CV growth continues to accelerate. We have a vast addressable market opportunity. We have a strong and compelling client value proposition. Looking ahead, we're well-positioned to drive sustained double-digit revenue growth over the long term. We'll continue to create value for our shareholders by providing actionable, objective insight, guidance, and tools to our clients, by prudently investing for future growth, by generating free cash flow well in excess of net income, and by returning capital to our shareholders through our repurchase program. Thanks for joining us today. We look forward to updating you again next quarter.

This concludes today's conference call. Thank you for your participation. You may now disconnect.