Good morning, everyone. Welcome to Gartner's Second Quarter 2025 Earnings Call. I'm David Cohen, Senior Vice President of Investor Relations. 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 note that today's conference is being recorded. This call will include a discussion of the second quarter 2025 financial results, and Gartner's outlook for 2025 can be found in today's earnings release and earnings supplement, which are both available on our website, investor.gartner.com. Unless stated otherwise, all references to EBITDA are for adjusted EBITDA as detailed in our earnings release and supplement. The contract values and associated growth rates we discuss are based on 2025 foreign exchange rates. All growth rates mentioned in Gene's comments are FX neutral, unless specified differently. All references to share counts are for fully diluted weighted average share counts, unless stated otherwise. Reconciliations for all non-GAAP numbers we discuss can be found in the Investor Relations section of gartner.com. As noted in today's earnings release, some statements made on this call may be forward-looking statements. Forward-looking statements may differ significantly from actual results and are subject to various risks and uncertainties, including those in the company's 2024 annual report on Form 10-K and quarterly reports on Form 10-Q, along with other SEC filings. I encourage you all to review the risk factors mentioned in these documents. Now I will turn the call over to Gene Hall.

Good morning, and thanks for joining us today. There are two things I'd like you to take away from today's discussion. First, AI is an important opportunity for Gartner across several dimensions. And second, we're making adaptations that give us a clear path back to double-digit growth. AI is one of the most pervasive changes happening around the world. It was the single largest demand area across all the topics we cover for virtually every role. Clients see large potential in AI, and they need help in determining the best way to capture that potential. Across functions, geographies, and industries, clients are looking to Gartner to provide that help, and we're the best solution to support clients' AI journeys. While AI was the largest single topic, there were others that were mission-critical to clients, including cybersecurity, cost optimization, data governance and management, IT strategy and digital transformation, risk management, finance transformation, HR talent planning, and more. We also experienced some headwinds during Q2. Measures of CEO confidence fell to recessionary levels, among the fastest drops ever recorded. And in a Gartner survey, 78% of CEOs indicated they're implementing cost-cutting measures to safeguard performance. We have a high degree of confidence in what caused these headwinds because we track the reason for every loss for both renewals and potential new business. The largest headwind in Q2 was with the U.S. federal government. Initiatives from the Department of Government Efficiency, or DOGE, made it more challenging for clients to purchase or renew many of our products. In addition, there were impacts from tariff policies. With the prospect of higher tariffs, many companies implemented strong cost-saving measures. Even companies not directly impacted by tariffs began implementing these measures. Purchase decisions that were previously made by functional leaders are now being escalated to the CFO or even the CEO. These changes occurred at a record pace, impacting our performance during Q2. One of Gartner's core strengths is agility in responding to change. So we're making adaptations to accelerate our performance going forward. With the U.S. federal government, we're ensuring we stay aligned to the changing priorities, especially improving efficiency. Of course, we'll also continue to support critical issues such as cybersecurity, and we're working with our clients to adjust to new procurement processes. We're also adapting to industries impacted by changing tariffs. A portion of our clients are always interested in cost optimization. We have great expertise in helping clients on this topic. Clients highly value our guidance because it results in quantifiable cost savings. Now with tariff changes, the number of clients interested in cost optimization has increased dramatically. So we've expanded our capabilities, including certifying our client-facing associates on delivering these services. We're also helping clients determine how to optimally reconfigure supply chains for tariff changes. Even industries not directly impacted by tariffs will get strong value from enhanced cost optimization capabilities. We're making several other changes to reaccelerate growth. In research, we redesigned our insight processes to ensure we create content relevant to the broadest possible audience and that delivers the biggest impact. We're also incorporating additional proprietary data to enhance the value clients receive from our insights. We've begun rolling out AskGartner, an AI-powered tool for our clients to access trusted insights from Gartner. AskGartner has been in development for almost two years to ensure clients get the high-quality results they expect from Gartner. It's based on best-in-class large language models. AskGartner quickly breaks down a client's question into topic and intent and provides structured answers through natural language processing. Answers contain direct references to our distinctive insights. Unlike other AI tools, which provide answers based on public information from the Internet, AskGartner's responses are fully grounded in our world-class proprietary independent and objective insights. AskGartner also provides users with relevant images and recommends follow-up questions, making our insights more discoverable and fully immersing clients in the Gartner platform. AskGartner is unique because it marries the power of Gartner insights with AI, and our teams are focused on making sure it gets better and better. We've been testing it with internal teams and a pilot group of clients. One client referred to AskGartner as, 'a game changer for Gartner.' Some mentioned time savings of up to 75% on the platform. We're also leveraging AI internally. We've introduced more than 50 applications that use AI to improve associate productivity and effectiveness. Finally, we appointed a strong tenured Gartner leader to head up our research organization. We're also making adaptations in sales and services to accelerate growth. We recently launched a new program to better equip client-facing associates with comprehensive knowledge on hot topics, including AI and cost optimization, and we're certifying our associates on these critical topics to ensure a high level of capability. Not all of our clients are aware of the full suite of high-value capabilities they're entitled to. So we're training our teams to ensure clients benefit from the full range of services. We're also expanding and refining our sales development program, which we've discussed before. This is an apprentice-type program that pairs early career talent with experienced sales professionals. Program graduates then take on their own sales territories and have higher productivity than those hired directly into roles. We expect these and other adaptations will get us back to double-digit growth. Gartner's strategy and the foundation of our business is to guide executives on their journeys to achieve their mission-critical priorities. Addressing these priorities usually requires long complex journeys. Through our high-value proprietary business and technology insights, we guide our clients at every stage of their journeys. Gartner Insights are derived from a vast pool of highly proprietary data. Every year, we hold more than 500,000 two-way conversations with more than 80,000 executives across every major function and in every industry. We learn what they care about most, what's working and what isn't. All of this amounts to several hundred terabytes of highly proprietary data. We also conduct more than 27,000 briefings annually with technology provider executives. This gives us unique insights into the technology industry that no one else has. We supplement this data with additional terabytes of information from proprietary surveys, tools, models, benchmarks, and more. Our data is real time and continuously updated, reflecting the latest information and challenges our clients are experiencing. Our more than 2,500 world-class experts use this vast proprietary data in highly developed processes to create unique and valuable insights. These insights aren't available anywhere else. We know we need to get better every year. So we continually develop new proprietary data sources and constantly innovate our processes. The segment that develops these insights has historically been called Research. To better describe the value we deliver, we're changing the name of the segment. Going forward, our Research business will now be called Business and Technology Insights, or Insights for short. Summarizing, there are two things I'd like you to take away from today's discussion. First, AI is an important opportunity for Gartner across several dimensions. It's the highest demand topic that we're helping our clients with today. We're rolling out AskGartner to provide faster, easier access to your insights, and we're improving internal efficiency with AI tools. And second, we're making adaptations that will give us a clear path back to double-digit growth. With that, I'll hand the call over to our Chief Financial Officer, Craig Safian.

Thank you, Gene, and good morning. Second quarter contract value, or CV, grew 5% year-over-year. Revenue, EBITDA, adjusted EPS, and free cash flow were better than expected. We remain highly focused on delivering extraordinary value to our clients. The challenging Q1 selling environment, which was affected by DOGE and tariff-affected industry spending changes, continued through the second quarter. We are updating our guidance to reflect the Q2 results and the outlook for the balance of the year. With our disciplined expense management, we will continue to deliver strong profitability and free cash flow. Since the end of the first quarter, we've increased the pace of share repurchases. We bought $274 million in Q2 and an additional $282 million since the end of the second quarter. This brings the year-to-date repurchase total to approximately $720 million. We will generate more free cash flow and have fewer shares outstanding over the course of the next several years. This, coupled with a return to double-digit growth, will create significant value for shareholders. After reviewing the results for the second quarter and updating the guidance, I will take you through some of the numbers related to our path back to double-digit CV growth that Gene highlighted. Second quarter revenue was $1.7 billion, up 6% year-over-year as reported and 5% FX neutral. In addition, total contribution margin was 68%, up 70 basis points from last year. EBITDA was $443 million, up 7% as reported and 5% FX neutral versus the second quarter of 2024. Adjusted EPS was $3.53, up 10% from Q2 of last year. And free cash flow was $347 million, another strong performance. As Gene just highlighted, we renamed the Research segment to Business and Technology Insights or Insights to reflect the nature of the value we provide to clients. Insights revenue in the quarter grew 4% year-over-year as reported and 3% FX neutral. Subscription revenue grew 5% FX-neutral. Non-subscription Insights revenue continues to be affected by shifts in traffic volumes. Second quarter Insights contribution margin was 74%, up 20 basis points versus last year. Contract value was $5 billion at the end of the second quarter, up 5% versus the prior year. Contract value and CV growth are FX-neutral. Excluding the U.S. federal government, CV growth was about 150 basis points faster at around 6%. Global NCVI in the quarter, excluding the U.S. federal government, was positive $13 million. CV growth was broad-based across practices, industry sectors, company sizes, and geographic regions. Across our combined practices, all the industries, except public sector, grew at high single or mid-single digit rates. Energy, banking, transportation and healthcare led the growth. CV grew at mid-single or high single-digit rates across all commercial enterprise sizes. We drove double-digit growth in half of our top 10 countries. CV declined on a year-over-year basis in Canada and Australia, which combined represents around 6% of global contract value. Nearly all of our U.S. federal contracts will come up for renewal during 2025, with over 60% having transacted in the first half of the year. Dollar retention year-to-date was around 47%. At June 30, we had approximately $200 million of U.S. Federal CV. Global Technology Sales contract value was $3.8 billion at the end of the second quarter, up 4% versus the prior year. Excluding the U.S. federal government for both periods, GTS CV grew about 180 basis points faster or 5% in the quarter. The U.S. Federal business NCVI was negative $26 million. Wallet retention for GTS was 99% for the quarter. Excluding the U.S. federal business, wallet retention was over 100%. GTS new business was down 8% 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 second quarter, up 9% year-over-year. Excluding the U.S. federal government, GBS CV grew about 60 basis points faster at around 10%. 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 NCVI was positive $14 million in the second quarter. Excluding the U.S. federal government, GBS NCVI was positive $18 million. Wallet retention for GBS was 104% for the quarter. GBS new business was down 3% compared to last year. GBS quota-bearing headcount was up 10% year-over-year. As with GTS, our regular full set of GBS metrics can be found in our earnings supplement. Conferences revenue for the second quarter was $211 million, increasing 14% as reported and 12% FX neutral compared to Q2 of 2024. Adjusting for the three conferences, which moved from Q1 or Q3 last year to Q2 this year, revenue growth was around 6% FX neutral. Contribution margin was 57%, consistent with typical Q2 seasonality. We held 19 destination conferences in the second quarter as planned. Q2 Consulting revenue was $156 million compared with $143 million in the year-ago period, up about 9% as reported and 6% FX neutral. Consulting contribution margin was 40% in the second quarter. Labor-based revenue was $110 million. This part of the segment was up 3% versus Q2 of last year's reported and about flat FX neutral. Backlog at June 30 was $191 million, down about 2% year-over-year FX neutral. In contract optimization, we delivered $46 million of revenue in the quarter, up 26% versus Q2 of last year and 24% FX neutral. The quarter was ahead of our expectations. Our contract optimization revenue is highly variable. Consolidated cost of services increased 4% year-over-year in the second quarter as reported and 2% FX neutral. The biggest driver of the increase was higher compensation costs. SG&A increased 9% year-over-year in the second quarter as reported and about 8% on an FX-neutral basis. SG&A increased in the quarter as a result of headcount growth. EBITDA for the second quarter was $443 million, up 7% from last year's reported and up 5% FX neutral. We outperformed in the second quarter through modest revenue upside, effective expense management, and a prudent approach to guidance. Depreciation in the quarter of $31 million was up 11% compared to 2024. Net interest expense, excluding deferred financing costs in the quarter, was $11 million. This is favorable by $8 million versus the second 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 Q2 adjusted tax rate, which we use for the calculation of adjusted net income, was 24% for the quarter. This compares to last year's rate of 23%. The tax rate for the items used to adjust net income was 25% for the quarter. Adjusted EPS in Q2 was $3.53, up 10% compared to Q2 last year. We had 77 million shares outstanding in the second quarter. This is an improvement of about 1 million shares or approximately 1% year-over-year. We exited the second quarter with just under 77 million shares on an unweighted basis. Operating cash flow for the quarter was $384 million, up 4% compared with last year. CapEx was $36 million, up about $7 million year-over-year. This was primarily due to real estate-related costs and in line with our expectations. Second quarter free cash flow was $347 million, up 2% compared with Q2 in 2024. Free cash flow on a rolling 4-quarter basis was 119% of GAAP net income and 95% of EBITDA. As we noted previously, there were several items that affect rolling fourth-quarter net income and free cash flow, including after-tax insurance proceeds in 2024, two real estate lease termination payments and tax planning benefits last year. Adjusting for these items, free cash flow on a rolling 4-quarter basis was 20% of revenue, 83% of EBITDA, and 157% of GAAP net income. At the end of the second quarter, we had about $2.2 billion of cash. Our June 30 debt balance was about $2.5 billion. Our reported gross debt to trailing 12-month EBITDA was well under 2x. 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 mergers and acquisitions. Our balance sheet is very strong with $2.9 billion of liquidity, low levels of leverage and effectively fixed interest rates. We repurchased $274 million of stock during the second quarter. Since the end of June, we have bought back an additional $282 million worth of shares, bringing us to about $720 million year-to-date. Last week, the Board increased the repurchase authorization to about $1 billion. We expect they will refresh the authorization as needed. As we continue to repurchase stock, we create value for our shareholders through EPS accretion and increasing returns on invested capital. We are updating our full-year guidance to reflect recent performance and trends. We are remaining agile in managing our cost structure while also ensuring we have enough selling capacity now and in the future. This includes QBH and other sales-related roles, which are key inputs into our algorithm for future sustained double-digit growth. Based on July FX rates, we expect revenue growth to benefit by about 95 basis points and EBITDA growth to benefit by about 190 basis points for the full year. As a reminder, about one-third of our revenue and operating expenses are denominated in currencies other than the U.S. dollar. For the Insights subscription revenue in 2025, our guidance reflects an expectation that Q2 trends for new business and retention continue through the second half. At this point in the year, we have very high visibility into the Insights subscription revenue for calendar 2025. 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. While the selling environment remains challenging, and we've seen longer sales cycles, we entered Q3 with double-digit year-over-year growth in both GTS and GBS new business pipelines. For the non-subscription part of the Insights 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 at the 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. Contract optimization has had several very strong years and the business remains highly variable. Our updated 2025 guidance is as follows: We expect Insights revenue of at least $5.255 billion, which is FX-neutral growth of about 2%. This reflects subscription Insights revenue growth of about 4%. We expect around $210 million of non-subscription revenue. We expect conferences revenue of at least $625 million, which is FX-neutral growth of about 5%. This is unchanged from last quarter. We expect Consulting revenue of at least $575 million, which is growth of about 1% FX neutral. This is also unchanged from last quarter. The result is an outlook for consolidated revenue of at least $6.455 billion, which is FX-neutral growth of 2%. We now expect full-year EBITDA of at least $1.515 billion, down $20 million from our prior guidance. This reflects margins of 23.5%, consistent with last quarter's outlook despite the lower revenue guidance. We expect 2025 adjusted EPS of at least $11.75, an increase from last quarter. For 2025, we expect free cash flow of at least $1.145 billion. This is unchanged from our prior guidance and reflects a conversion from GAAP net income of 141%. Our guidance is based on 77 million fully diluted weighted average shares outstanding, which incorporates the repurchases made through the end of the second quarter. For Q3, we expect adjusted EBITDA of at least $300 million. Our financial results through June were modestly ahead of expectations, underscoring the resilience of our business model. We've updated the revenue guidance to reflect continued challenges in the selling environment. Our EBITDA margin outlook remains higher than it was at the start of the year. We have successfully navigated challenging environments before and know the right things to do. We are adapting by making operational changes and renewing focus on leveraging our proven sales best practices. This will drive the return to historical levels of productivity. Some of the headwinds are related to temporary external factors, including the U.S. federal government and tariff-affected industries. As productivity gets back to historical levels, we will accelerate QBH to capture the very large addressable market opportunity we have. Before we go to questions, I will take you through some of the numbers related to our path back to double-digit CV growth. If recent retention and new business trends continue in the second half, we would exit this year with CV growth in the low to mid-single digits. This reflects DOGE, tariff-affected industry dynamics and tech vendors only part of the way back to normal spending. There are four primary categories, which will drive the return to double-digit growth. First, most of our U.S. federal contracts will have come up for renewal this year. Removing the DOGE-related headwinds with no assumption for net growth next year will add back around 200 basis points of CV growth in 2026. Second, as companies and tariff-affected industries get more clarity around trade policies, we expect them to get back to normal course planning and spending. This should add at least 100 basis points to growth. Third, tech vendor remains on a path back to double digits. We are encouraged, in particular, with the improvement in the small tech vendor part of the business. Within large tech vendors, the overall trend remains positive. The second quarter was affected by the timing of a few larger deals getting delayed and tariffs affecting some parts of the hardware subsegment. Continued reacceleration of tech vendor CV would add back another 100 basis points to growth. Finally, we are focused on improving our operations to drive faster growth, even in challenging selling environments. This includes more focus on cost optimization insights, the continued rollout of AskGartner, the initiatives Gene discussed, and more. We expect to add as much as 100 to 200 basis points to growth from these initiatives and better overall execution. All these factors would get us to at least high single-digit growth in 2026, well on our way back to double-digit growth in 2027 and beyond. Another take on the opportunity is to recognize that as the sales teams return towards historical levels of productivity, we will return to double-digit CV growth. With around 5,000 sellers, we can generate enough NCVI to grow high single to low double digits next year. This is the case with outgrowing QBH and even at productivity levels lower than the historical $110,000 to $120,000 per seller. We are implementing programs to support the sales teams to drive client and prospect engagement and to grow our sales and sales support teams outside of direct frontline quota-bearing headcount. Based on recent trends, as I mentioned, CV growth this year will be in the low to mid-single digits. With the adaptations we are making and with the stabilization of our most acutely impacted end markets, we expect growth to accelerate next year and again in 2027. Based on this outlook, our overall medium-term growth algorithm, including double-digit revenue growth and modest margin expansion remains unchanged. We'll also continue to deploy our capital on share repurchases, which will lower the share count over time, and on strategic value-enhancing tuck-in mergers and acquisitions. With that, I'll turn the call back over to the operator, and we'll be happy to take your questions.

Our first question is from Andrew Nicholas with William Blair.

Appreciate the build on the return to high single-digit or even double-digit CV growth. I wanted to ask specifically on the tariff-impacted industry piece. Is there anything you can do to kind of size what you've determined to be the tariff-affected industries? How much that represents in terms of CV? I think you said 100 basis points improvement next year from kind of some normalization there. Any more color or quantification on that front would be helpful.

Yes. Andrew, thank you for the question. The way we've defined tariff impact in industries is not perfect, I will tell you. We've looked at industries that rely heavily on importing and exporting, and we've looked at really ones focused here in the U.S. and those where the U.S. is a major trade partner. When we rolled that up around 35% to 40% of our CV fell into that category across both GTS and GBS.

Okay. And then on the AI topic, I want to maybe focus on the operational efficiency piece. Again, just asking, is there anything you can do to kind of quantify that? I understand that improving the product was one part of the top line growth acceleration. But if we think about later this year or into '26 and '27, is there anything that you can say about what those internal efficiencies might do for the cost structure or margin profile broadly?

We've implemented around 50 internal applications using AI. Most of these are custom applications rather than just commercial tools. While some of these applications have shown promising early results, it's still too soon to determine their long-term impact on our cost structure.

Our next question coming from the line of Toni Kaplan with Morgan Stanley.

Thank you for your comments on AskGartner and the clarification regarding the proprietary data and processes you utilize. I'm aware that AI has frequently come up in discussions with your customers. What are the most common inquiries or topics that clients seek your insights on? I'm particularly interested in understanding the areas where deep research AI tools may fall short, and how your services provide value in those situations.

Toni, if you look at Gartner, let me start with what differentiates us, which seems to be the core of your question. Is that correct?

Yes.

We assist clients with what we consider mission-critical priorities, such as developing cybersecurity capabilities, maximizing AI utilization in their organizations, and implementing technology for financial transformation. These initiatives require significant effort and investment over several years. We support our clients through these journeys to achieve impactful outcomes, working closely with top executives like Chief Information Officers, Chief HR Officers, and Chief Financial Officers. They depend on us to guide them through the complexities of large projects rather than just answering straightforward questions. To facilitate this, we leverage extensive proprietary data, including around 500,000 one-on-one discussions between our analysts and clients each year. During these conversations, we explore their critical priorities, challenges, and what strategies are effective or ineffective. Additionally, we have conducted 27,000 briefings with technology vendors, where senior leaders share their company strategies and competitive approaches. We also gather proprietary research, including client surveys and peer interactions, which informs our insights and is not publicly available. Our team of world-class experts synthesizes all this information to provide the best solutions for clients tackling challenging priorities. Importantly, we remain unbiased and independent in our approach. These elements distinctly characterize the complex issues we assist our clients with, setting us apart from other options.

That's very helpful. I wanted to ask if you're receiving any different feedback from clients regarding their reasons for renewal. For instance, are there any trends in clients reducing their number of seats due to macroeconomic factors or other reasons? How much insight do you gain from them about the reasons behind these reductions? Have you noticed any changes in their feedback?

Yes, Toni. We engage with our clients daily and have been tracking every deal at the individual level for years. When we win a deal, we inquire from both the client and the salesperson about the reasons for the win. We do the same if we lose a deal. This applies not only to renewals but also to new business. This year, particularly in Q2, we observed that in industries affected by tariffs, purchase decisions have been escalated. Typically, a Chief HR Officer or a Chief Information Officer has the authority to decide on purchasing additional licenses from Gartner. However, in Q2, we noticed that these decisions were being elevated to the CFO or even the CEO. Clients indicated that this was due to concerns about tariffs impacting their profitability, preventing them from passing on all costs to their clients. As a result, they are implementing significant cost-cutting measures, which is why small purchases are being escalated to higher levels. This pattern is consistent with behavior observed during previous recessions. We saw similar behavior during the pandemic in 2021 and the Great Recession in 2009. Companies under financial stress often add friction to the purchasing process, leading decisions to be approved at higher management levels. This situation extends the selling cycles, resulting in longer times to close deals. While our close rate remains stable, the process demands more effort and time. The primary change we noted in Q2, aside from the public sector, was this escalation. Additionally, we observed that companies not affected by tariffs have clients that are, leading to similar trends. Our growth rate has been stronger among those unaffected by tariffs, but we are beginning to see the same escalation pattern. Lastly, the effects of the Department of Government Efficiency in the U.S. federal government have made it increasingly difficult for our clients to make purchases from us, despite still having strong demand. We are navigating these challenges by demonstrating our value, and we are confident that we can continue to do so in the long run, although there is more scrutiny compared to a year or two ago.

Our next and coming from the line of George Tong with Goldman Sachs.

You provided very helpful renewal metrics on federal government clients in the quarter. Can you talk a little bit more about how new purchases among these government clients are performing? Have they come to a full standstill? Or are you seeing some trickle in?

George, yes, we mentioned the dollar retention rate that we've been achieving, which is just a shade under 50% on a year-to-date basis, pretty consistent both Q1 and Q2. We actually are writing some new business, but I would underscore what Gene just highlighted about the contracting process is not simple or easy, but we are writing new business. And again, I think we talked about on the call last quarter, our clients really do value everything they get from Gartner and they want to keep us. In some cases, they are unable to do that because of dictates from above or just really challenging hurdles that you have to go through from a contracting perspective. In the clients where we are retaining but not driving new business, we are staying close to them. So that when things do stabilize, we will be able to win back business that we may have lost. And then also, we continue to work with all our clients. A lot of our value proposition is very well aligned with driving efficiency. Our cost optimization assets are our first-rate and 100% aligned with government efficiencies. So while the dollar retention rate has been just below 50%, we are writing some levels of new business. It's obviously weighed down on a year-over-year basis, as you'd expect, but we are writing some levels of new business.

Got it. That's helpful. And then with respect to tariff industries, you mentioned it represents about 35% to 40% of CV spread across both GTS and GBS. Is there any way you can provide some sort of spread between how much of that impact is in GTS? How much of that impact is in GBS? So that it's possible to ascertain how much headwind across both of those segments one should expect from tariffs?

Yes. It's a really good question. I think in GBS because supply chain is, if not our largest practice, top 2 in terms of size, that's going to be much more concentrated with 'tariff affected industries.' I don't think it changes the distribution wildly, but GBS is probably a little bit more reliant on or has a little higher proportion of tariff affected clients in CV than GTS.

Our next question coming from the line of Manav Patnaik with Barclays.

This is Brendan, on for Manav. I just want to ask on the tariff commentary. I mean, we've had a lot of companies report, and it seemed like the view was that confidence that kind of returned by the end of the quarter, even though there was definitely some concerns earlier in the quarter and not necessarily huge strategy changes outside maybe a couple of industries. So just seeing like kind of what's different about your business in this environment right now?

What I can say is that our observations with clients remained consistent until the end of the quarter. Companies are concerned, even with a modest increase in tariffs, as they don't believe they can fully pass those costs onto their clients. Therefore, they are looking to reduce expenses to maintain their pricing for clients as well as their profit margins. Consequently, we saw a broad consensus among clients expressing the need to cut costs to sustain their revenues and margin structures, and this sentiment remained unchanged throughout the quarter.

Okay. And then on the new business pipelines, I guess, what's driving that? Is it new logo, upsell, cross-sell or seats or some mix of all?

As Craig noted, our new business experienced strong double-digit growth in both the GTS and GBS pipeline. The pipeline saw substantial increases for both GTS and GBS, reflecting high demand for our services. The primary area of interest is assisting clients with AI implementation, along with traditional services such as cybersecurity. Therefore, the rise in our pipeline is driven by robust demand for what we offer.

And Brendan, it's balanced across additional licenses with existing clients, new logos, etc.

Our next question coming from the line of Josh Chan with UBS.

I guess considering the magnitude of the slowdown in the ex Fed business, I guess what's your level of conviction that this is really tariff related versus clients just pulling back and blaming tariffs because I can't imagine the existence of tariffs is that much of a surprise in Q2 versus Q1, right? So I guess what's your confidence about tariffs being the precise driver there?

We closely monitor every deal and have established an effective system for a long time. We examine each deal in detail and inquire with clients and our sales team about the reasons for successes or failures. This thorough approach gives us confidence that the driving factors include tariff synergies and a strong emphasis on cost reduction, as highlighted by our clients. We also keep track of escalations. Notably, when clients focus on costs, they often escalate issues from their functional leaders, like the CHRO or CIO, up to the CEO or CFO. We have observed this pattern, similar to what we experienced during the pandemic and the 2009 recession, and it is evident in the current situation.

Sorry. And Josh, one other just add-on thing. As we're talking about the dynamics of the business, I wouldn't characterize us saying the slowdown was completely attributable to tariffs and tariff affected industries. We're just trying to provide incremental color around what we're seeing in the business. And because a large part of the economy and a large part of our client base are impacted by tariffs, we wanted to make sure we provide that incremental color around the business.

And again, due to the performance of the tariff-affected industries, it's much worse than the non-tariff affected industries.

That's helpful. That makes a lot of sense. And then maybe my follow-up question. I'm sure you're aware of the narrative that AI could be having some sort of impact on the demand of your services. I was just wondering how you would respond to that and how you would kind of ring-fence any impact on the negative side from AI?

Ladies and gentlemen, please standby. Our speakers are having technical issues. Please standby.

No, we're good. Did you not get that response?

Okay. Our next question coming from the line of Jeff Meuler with Baird.

Gene, we did not get that response, and I think a lot of us have a similar question. So yes, if you could try to ring-fence the AI risk, including from my perspective, just what you're hearing on pipeline conversion, and if that's coming up as an issue at all for those that may not understand the richness of the Gartner value proposition as well.

Jeff, I apologize for the oversight. Firstly, our pipeline is showing strong double-digit growth for both GTS and GBS, which I believe is a solid reflection of current demand. However, we are noticing that the time it takes to close deals has increased. This delay is largely due to many deals being escalated from functional leaders, such as CIOs or CHROs, to CFOs or CEOs. This means that our functional leaders need to build a strong business case, which takes additional time. Therefore, while demand has not decreased, the extended purchasing processes are lengthening the timeframe for closing deals. This trend is quite common during past recessions.

And I think, Jeff, the other thing I would just add and just sort of harken back to Gene's prepared remarks where he talked at length about the different types of incremental value that you get from Gartner, all of the proprietary insights that we have behind our firewalls that are completely independent objective and proprietary to us. And then I think perhaps most importantly, the fact that what we're helping our clients with are complex multi-quarter, often multiyear journeys on their most important mission-critical priorities. And I think there is sometimes a misconception around what the value is of Gartner for our clients in both GTS and GBS. But fundamentally, it's helping our executive clients solve their complex multi-quarter, multiyear mission-critical priority journeys. And we believe, and I think as Gene just highlighted, our pipeline reflects we are the best, most value-oriented solution to be able to help our clients accomplish those types of things. And we're going to keep improving what we do and keep growing the number of terabytes of data and eventually petabytes of data that we have behind our firewalls that inform the insights that help our clients with their mission-critical priorities. And we're going to keep improving our products. As Gene highlighted, the rollout of our Gen AI tool as Gartner is a step in that direction. That's not the only thing we've done from a product innovation perspective, but it's certainly one worth highlighting. And so we're going to continue to bang away at those things to make sure that we are the best most cost-effective way to help our executive clients accomplish their mission-critical priorities.

Jeff, I would also like to mention that we are training all of our sales and service delivery personnel on how to respond to client questions in a clear manner, so that potential clients and existing clients understand the value of what we offer and why it is important.

Got it. And then just for AskGartner, can you help us better understand like what service tiers it's going to be available in? And just what exactly is the rollout process or time line to it?

AskGartner is a generative AI tool that allows clients to access our research. It is designed to assist clients with their critical priorities. We have been testing it for some time to ensure its quality, and clients have been responding positively. We are now expanding its availability to thousands of clients each month, aiming to have all of our clients onboard by the end of the year. For clients who emphasize the importance of having it, we will prioritize their access even if they were originally scheduled for a later rollout.

So it's available to all of our licensed users that we have rolled it out to. Named license users. Again, there are some product carve-outs where it won't be enabled, but that's a small fraction of our contract value. So by the end of the year, our goal is to have all of the licensed users that we want enabled with AskGartner.

Our next question coming from the line of Surinder Thind with Jefferies.

Just following up on the idea of the behavior of clients around tariffs. Just any color around any differences you might have seen between perhaps your U.S. versus your international clients? I noticed you specifically called out Canada and Australia.

In terms of companies affected by tariffs, there is no distinction between automotive companies in Europe, Japan, or the U.S.; they are all impacted in the same way we previously discussed. There are additional factors at play, such as the situation in Canada and Australia. Canada has made changes to procurement processes that have made purchasing more challenging, and we are currently navigating this with our clients. There has also been some pushback, particularly in the public sector, against U.S. policies, with a tendency to avoid buying from American companies. In Australia, there was an election in May, and elections typically lead to significant changes in the government, causing a temporary halt in purchases and renewals as they establish the new government framework. These issues are largely separate from the tariffs.

That's helpful. And then when we think about just the headcount, headcount expectations, any incremental color there? It sounds like you're at a good headcount perspective, but there was anticipation of maybe growth later in the year. How should we think about that in light of just current trends continuing through the end of the year?

Surinder, it's Craig. From a QBH perspective, which I assume when you're saying headcount, you're focused on...

Yes, QBH.

We have invested a lot in growing the capacity of our QBH over the last several years and last decades actually, if you go back. And we're at a point now where we've got over 5,000 frontline QBH in both GTS and GBS. And we fundamentally believe that there is a lot of productivity upside across both GTS and GBS that will be part of that pathway back to double-digit growth in CV that both Gene and I highlighted. We are, of course, remaining very agile in our planning around where we invest and where we do contract. As you'd imagine, we have reduced the number of sales territories in the U.S. Fed just because there's less business there now. But we're keeping our best people and keeping them fully engaged and they're still working with their clients and prospects across U.S. Fed, but we've taken the territories down there in line with the declines that we've seen in that business. Across the rest of the portfolio, we have a practice, which we call territory optimization, which is every time we see turnover, we take a look to see if there's a better investment for us to make. And so we are very focused on doing that with the thinking being that trading out poor performing territories or less profitable territories or territories with more opportunity in the short, medium and long term is a no-brainer to do. And so while it may appear that headcount or territories are flat, know that under the covers, we are always doing this optimization of shutting down lower-performing and less profitable territories and reinvesting in what we believe to be higher opportunity and higher profitability territories. That all said, our expectation for this year is to end the year roughly flattish from a QBH perspective. And then as we start to reaccelerate across 2026 and into 2027, we will then turn back on the QBH growth that we know is an important input into driving sustained double-digit growth in 2027, 2028 and beyond.

Our next question coming from the line of Jason Haas with Wells Fargo.

There were some comments in the prepared remarks about focusing the sales force to ensure that your customers are getting the full value of the Gartner subscription. Is there any way to dimensionalize like what percentage of your customers do you see now is not getting the full value of the Gartner subscription?

When you subscribe to Gartner, you gain access to our content and our experts. You can reach out to the experts, and in many of our products, you receive a ticket for a conference. This enables you to connect with your peers both in person and online. We offer contract reviews that allow potential buyers to evaluate if they are receiving the right terms and appropriate materials. Additionally, we provide tools that assist with maturity models. These are just a few examples of the suite of services we offer. Not every client utilizes all of these services, despite the fact that many are highly valuable. Currently, we are ensuring that our sales and service teams are knowledgeable about the complete range of offerings, even if they are new to Gartner, so they can effectively educate clients, particularly those who may not be taking advantage of all the available services. For instance, we have tens of thousands of clients who engage in our peer interactions and find them extremely valuable. While many clients are utilizing this service, there are also many who could benefit from it but haven't been informed about it. We are focusing on raising awareness among clients about these valuable resources that many are not currently using.

Got it. That's very helpful. And then as a follow-up question, this came up a few times. You talked about the fact that every time you had a cancellation, you find out what the reason why was. Are you able to give us any sense of what percentage of folks are citing usage of like a publicly available large language model and therefore, not consuming the Gartner subscription? Is that coming up at all? What percentage is that?

Yes, that's one of the options, and it's not significant. It's essentially unmeasurable.

Our next question coming from the line of Jeff Silber with BMO Capital Markets.

I know it's late. I'll just ask one. I wanted to focus on the number of client enterprises. It's been going down at least in GTS for the past couple of years, and now we're seeing it in GBS. Is it just that clients are maybe centralizing the decision-making process and buying as one entity as opposed to multiple entities? I know there's probably some federal government impact this past quarter, but it's been going down for a while. So any color would be great.

Jeff, it's Craig. The biggest driver that we've seen on the enterprise count has been small tech vendor. And while small tech vendor, our small tech vendor business is improving and accelerating, there's still higher-than-average churn amongst that client base. As you know, with enterprises, everyone counts as one regardless of spending. And so we just see very high churn amongst our small tech vendors. That's the biggest thing driving that enterprise count that you're looking at.

And I'm showing there are no further questions in queue. I will turn the call back over to Gene Hall for any closing remarks.

So summarizing, there are two things I'd like to take away from today's discussion. First, AI is an important opportunity for Gartner across several dimensions. It's the highest spend topic that we're helping our clients with today. We're rolling out AskGartner to provide faster, easier access to our insights, and we're improving internal efficiency with AI tools. Second, we're making adaptations that will give us a clear path back to double-digit growth. Thanks for joining us today, and I look forward to updating you again next quarter.

This concludes today's conference. Thank you for your participation, and you may now disconnect.