Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited; in thousands, except share data)


	September 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	528,687	$	756,493
Fees receivable, net of allowances of $7,500 and $6,500, respectively	1,047,140		1,365,180
Deferred commissions	269,310		380,569
Prepaid expenses and other current assets	135,118		117,838
Total current assets	1,980,255		2,620,080
Property, equipment and leasehold improvements, net	256,176		273,562
Operating lease right-of-use assets	460,910		548,258
Goodwill	2,936,140		2,951,317
Intangible assets, net	603,833		714,418
Other assets	288,640		308,689
Total Assets	$	6,525,954	$	7,416,324
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable and accrued liabilities	$	848,910	$	1,134,814
Deferred revenues	2,229,648		2,238,035
Current portion of long-term debt	7,335		5,931
Total current liabilities	3,085,893		3,378,780
Long-term debt, net of deferred financing fees	2,454,853		2,456,833
Operating lease liabilities	614,442		697,766
Other liabilities	435,692		511,887
Total Liabilities	6,590,880		7,045,266
Stockholders’ (Deficit) Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none issued or outstanding	—		—
Common stock, $0.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods	82		82
Additional paid-in capital	2,161,940		2,074,896
Accumulated other comprehensive loss, net	(130,548)		(81,431)
Accumulated earnings	3,600,012		3,049,027
Treasury stock, at cost, 84,433,523 and 81,205,504 common shares, respectively	(5,696,412)		(4,671,516)
Total Stockholders’ (Deficit) Equity	(64,926)		371,058
Total Liabilities and Stockholders’ (Deficit) Equity	$	6,525,954	$	7,416,324

See the accompanying notes to Condensed Consolidated Financial Statements.

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited; in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenues:
Research	$	1,147,823	$	1,037,124	$	3,426,532	$	3,020,094
Conferences	77,031		24,415		200,910		107,396
Consulting	107,014		94,743		343,687		300,149

Total revenues	1,331,868		1,156,282		3,971,129		3,427,639
Costs and expenses:
Cost of services and product development	416,837		359,237		1,218,405		1,044,506
Selling, general and administrative	613,031		512,573		1,835,846		1,488,324
Depreciation	22,882		25,371		68,993		76,972
Amortization of intangibles	24,369		27,109		74,271		83,777
Acquisition and integration charges	1,331		1,771		5,827		3,713
Total costs and expenses	1,078,450		926,061		3,203,342		2,697,292
Operating income	253,418		230,221		767,787		730,347
Interest expense, net	(30,286)		(31,599)		(91,399)		(85,138)
Gain on event cancellation insurance claims	—		—		—		135,545


Other income, net	8,930		211		46,684		12,019
Income before income taxes	232,062		198,833		723,072		792,773
Provision for income taxes	58,517		49,968		172,087		208,572
Net income	$	173,545	$	148,865	$	550,985	$	584,201

Net income per share:
Basic	$	2.19	$	1.78	$	6.84	$	6.80
Diluted	$	2.17	$	1.76	$	6.77	$	6.72
Weighted average shares outstanding:
Basic	79,259		83,566		80,516		85,877
Diluted	80,059		84,766		81,373		86,925

See the accompanying notes to Condensed Consolidated Financial Statements.

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited; in thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income	$	173,545	$	148,865	$	550,985	$	584,201
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(29,961)		(6,488)		(62,190)		(1,172)
Interest rate swaps – net change in deferred gain or loss	3,886		5,529		13,125		16,256
Pension plans – net change in deferred actuarial loss	43		100		(52)		307
Other comprehensive (loss) income, net of tax	(26,032)		(859)		(49,117)		15,391
Comprehensive income	$	147,513	$	148,006	$	501,868	$	599,592

See the accompanying notes to Condensed Consolidated Financial Statements.

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity

(Unaudited; in thousands)


Three and Nine Months Ended September 30, 2022
	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss, Net		Accumulated Earnings		Treasury Stock		Total
Balance at December 31, 2021	$	82	$	2,074,896	$	(81,431)	$	3,049,027	$	(4,671,516)	$	371,058
Net income	—		—		—		172,515		—		172,515
Other comprehensive loss	—		—		(1,380)		—		—		(1,380)
Issuances under stock plans	—		579		—		—		6,385		6,964
Common share repurchases	—		—		—		—		(463,125)		(463,125)
Stock-based compensation expense	—		32,121		—		—		—		32,121
Balance at March 31, 2022	$	82	$	2,107,596	$	(82,811)	$	3,221,542	$	(5,128,256)	$	118,153
Net income	—		—		—		204,925		—		204,925
Other comprehensive loss	—		—		(21,705)		—		—		(21,705)
Issuances under stock plans	—		4,634		—		—		427		5,061
Common share repurchases	—		—		—		—		(473,755)		(473,755)
Stock-based compensation expense	—		24,454		—		—		—		24,454
Balance at June 30, 2022	$	82	$	2,136,684	$	(104,516)	$	3,426,467	$	(5,601,584)	$	(142,867)
Net income	—		—		—		173,545		—		173,545
Other comprehensive loss	—		—		(26,032)		—		—		(26,032)
Issuances under stock plans	—		4,288		—		—		706		4,994
Common share repurchases	—		—		—		—		(95,534)		(95,534)
Stock-based compensation expense	—		20,968		—		—		—		20,968
Balance at September 30, 2022	$	82	$	2,161,940	$	(130,548)	$	3,600,012	$	(5,696,412)	$	(64,926)


Three and Nine Months Ended September 30, 2021
	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss, Net		Accumulated Earnings		Treasury Stock		Total
Balance at December 31, 2020	$	82	$	1,968,930	$	(99,228)	$	2,255,467	$	(3,034,823)	$	1,090,428
Net income	—		—		—		164,100		—		164,100
Other comprehensive income	—		—		6,050		—		—		6,050
Issuances under stock plans	—		(1,543)		—		—		6,923		5,380
Common share repurchases	—		—		—		—		(410,450)		(410,450)
Stock-based compensation expense	—		36,086		—		—		—		36,086
Balance at March 31, 2021	$	82	$	2,003,473	$	(93,178)	$	2,419,567	$	(3,438,350)	$	891,594
Net income	—		—		—		271,236		—		271,236
Other comprehensive income	—		—		10,200		—		—		10,200
Issuances under stock plans	—		2,063		—		—		2,017		4,080
Common share repurchases	—		—		—		—		(675,662)		(675,662)
Stock-based compensation expense	—		26,190		—		—		—		26,190
Balance at June 30, 2021	$	82	$	2,031,726	$	(82,978)	$	2,690,803	$	(4,111,995)	$	527,638
Net income	—		—		—		148,865		—		148,865
Other comprehensive loss	—		—		(859)		—		—		(859)
Issuances under stock plans	—		3,411		—		—		720		4,131
Common share repurchases	—		—		—		—		(364,694)		(364,694)
Stock-based compensation expense	—		19,426		—		—		—		19,426
Balance at September 30, 2021	$	82	$	2,054,563	$	(83,837)	$	2,839,668	$	(4,475,969)	$	334,507

See the accompanying notes to Condensed Consolidated Financial Statements.

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited; in thousands)


	Nine Months Ended
	September 30,
	2022		2021
Operating activities:
Net income	$	550,985	$	584,201
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	143,264		160,749
Stock-based compensation expense	77,543		81,702
Deferred taxes	2,476		449

Loss on impairment of lease related assets	37,546		—
Reduction in the carrying amount of operating lease right-of-use assets	52,686		56,162
Amortization and write-off of deferred financing fees	3,420		3,036
Gain on de-designated swaps	(51,745)		(12,149)
Changes in assets and liabilities:
Fees receivable, net	258,543		257,541
Deferred commissions	96,841		6,783
Prepaid expenses and other current assets	(19,936)		(18,418)
Other assets	6,371		(23,979)
Deferred revenues	92,527		103,565
Accounts payable and accrued and other liabilities	(352,208)		(121,958)
Cash provided by operating activities	898,313		1,077,684
Investing activities:
Additions to property, equipment and leasehold improvements	(70,461)		(38,670)
Acquisitions - cash paid (net of cash acquired)	(4,109)		(23,030)


Cash used in investing activities	(74,570)		(61,700)
Financing activities:
Proceeds from employee stock purchase plan	16,980		13,527
Proceeds from borrowings	—		600,000

Payments of deferred financing fees	—		(7,320)

Payments on revolving credit facility	—		(5,000)
Payments on borrowings	(3,996)		(106,585)
Purchases of treasury stock	(1,026,414)		(1,438,808)
Cash used in financing activities	(1,013,430)		(944,186)
Net (decrease) increase in cash and cash equivalents and restricted cash	(189,687)		71,798
Effects of exchange rates on cash and cash equivalents	(42,228)		(14,651)
Cash and cash equivalents and restricted cash, beginning of period	760,602		712,583
Cash and cash equivalents and restricted cash, end of period	$	528,687	$	769,730

See the accompanying notes to Condensed Consolidated Financial Statements.

GARTNER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 — Business and Basis of Presentation

Business. Gartner, Inc. (NYSE: IT) delivers actionable, objective insight to executives and their teams. Our expert guidance and tools enable faster, smarter decisions and stronger performance on an organization’s mission critical priorities.

Segments. Gartner delivers its products and services globally through three business segments: Research, Conferences and Consulting. Revenues and other financial information for the Company’s segments are discussed in Note 7 — Segment Information.

Basis of presentation. The accompanying interim Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270 for interim financial information and with the applicable instructions of U.S. Securities and Exchange Commission (“SEC”) Rule 10-01 of Regulation S-X on Form 10-Q, and should be read in conjunction with the consolidated financial statements and related notes of the Company in its Annual Report on Form 10-K for the year ended December 31, 2021.

The fiscal year of Gartner is the twelve-month period from January 1 through December 31. In the opinion of management, all normal recurring accruals and adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented herein have been included. The results of operations for the three and nine months ended September 30, 2022 may not be indicative of the results of operations for the remainder of 2022 or beyond. When used in these notes, the terms “Gartner,” the “Company,” “we,” “us,” or “our” refer to Gartner, Inc. and its consolidated subsidiaries.

Principles of consolidation. The accompanying interim Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

Use of estimates. The preparation of the accompanying interim Condensed Consolidated Financial Statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of fees receivable, goodwill, intangible assets and other long-lived assets, as well as tax accruals and other liabilities. In addition, estimates are used in revenue recognition, income tax expense or benefit, performance-based compensation charges, depreciation and amortization. Management believes its use of estimates in these interim Condensed Consolidated Financial Statements to be reasonable.

Management continually evaluates and revises its estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. Management adjusts these estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time. As a result, differences between estimates and actual results could be material and would be reflected in the Company’s consolidated financial statements in future periods.

Cash and cash equivalents and restricted cash. Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company’s Condensed Consolidated Balance Sheets and the total cash amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands).


	September 30,		December 31,
	2022		2021
Cash and cash equivalents	$	528,687	$	756,493
Restricted cash classified in (1):
Prepaid expenses and other current assets	—		4,109
Cash and cash equivalents and restricted cash	$	528,687	$	760,602

(1)Restricted cash consisted of an escrow account established in connection with the Company’s 2021 business acquisition. Generally, such cash is restricted to use due to provisions contained in the underlying stock or asset purchase agreement. During the three months ended September 30, 2022, the Company paid $4.1 million of restricted cash for deferred

consideration related to a 2021 acquisition. Note 2 - Acquisition provides additional information regarding the 2021 acquisition.

Revenue recognition. Revenue is recognized in accordance with the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). Revenue is only recognized when all of the required criteria for revenue recognition have been met. The accompanying Condensed Consolidated Statements of Operations present revenue net of any sales or value-added taxes that we collect from customers and remit to government authorities. ASC Topic 270 requires certain disclosures in interim financial statements around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Note 4 — Revenue and Related Matters provides additional information regarding the Company’s revenues.

Gain on event cancellation insurance claims. In May 2021, the Company received $150.0 million of proceeds related to 2020 event cancellation insurance claims, and recorded a pre-tax gain of $135.5 million. The Company does not record any gain on insurance claims in excess of expenses incurred until the receipt of the insurance proceeds is deemed to be realizable.

Adoption of new accounting standards. The Company adopted the accounting standard described below during the nine months ended September 30, 2022.

Business Combinations — In October 2021, the FASB issued ASU No. 2021-08, Business Combinations, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU No. 2021-08”). ASU No. 2021-08 provides guidance for a business combination on how to recognize and measure contract assets and contract liabilities from revenue contracts with customers and other contracts that apply the provisions of ASC Topic 606, Revenue from Contracts with Customers. Specifically, the proposed amendments would require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606. Generally, this would result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements (if the acquiree prepared financial statements in accordance with U.S. GAAP). The rule will be effective for public entities on January 1, 2023, with early adoption permitted. Gartner has elected to adopt ASU No. 2021-08 effective January 1, 2022. ASU No. 2021-08 will not impact acquired contract assets or liabilities from business combinations occurring prior to January 1, 2022, and the impact in future periods will depend on the contract assets and contract liabilities acquired in future business combinations.

Accounting standards issued but not yet adopted. The FASB has issued accounting standards that have not yet become effective and may impact the Company’s consolidated financial statements or related disclosures in future periods. Those standards and their potential impact are discussed below.

Accounting standard effective immediately upon voluntary election by Gartner

Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). ASU No. 2020-04 provides that an entity can elect not to apply certain required modification accounting in U.S. GAAP to contracts where all changes to the critical terms relate to reference rate reform (e.g., the expected discontinuance of LIBOR and the transition to an alternative reference interest rate). In addition, the rule provides optional expedients and exceptions that enable entities to continue to apply hedge accounting for hedging relationships where one or more of the critical terms change due to reference rate reform. The rule became effective for all entities as of March 12, 2020 and will generally no longer be available to apply after December 31, 2022. The Company is currently evaluating the potential impact of ASU No. 2020-04 on its consolidated financial statements, including the rule’s potential impact on any debt modifications or other contractual changes in the future that may result from reference rate reform.

Accounting standard effective later in 2022

Government Assistance — In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance (“ASU No. 2021-10”). ASU No. 2021-10 requires business entities to annually disclose information about certain government assistance they receive. The rule will be effective for public entities for annual periods beginning after December 15, 2021. The adoption of ASU No. 2021-10 is currently not expected to have a material impact on the Company’s financial statement disclosures.

Note 2 — Acquisition

On June 17, 2021, the Company acquired 100% of the outstanding capital stock of Pulse Q&A Inc. (“Pulse”), a privately-held company based in San Francisco, California, for an aggregate purchase price of $29.9 million. Pulse is a technology-enabled community platform.

During 2021, the Company paid $22.9 million in cash for Pulse after considering the cash acquired with the business, amounts held in escrow and certain other purchase price adjustments. During the three months ended September 30, 2022, the Company paid $4.1 million of deferred consideration held in escrow. In addition to the purchase price, the Company may also be required to pay up to $4.5 million in cash based on the continuing employment of certain key employees. Such amounts are recognized as compensation expense over three years post-acquisition and reported in Acquisition and integration charges in the Condensed Consolidated Statements of Operations.

The Company recorded $31.0 million of goodwill and finite-lived intangible assets and $1.1 million of liabilities on a net basis for the Pulse acquisition.

Note 3 — Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired. Evaluations of the recoverability of goodwill are performed in accordance with FASB ASC Topic 350, which requires an annual assessment of potential goodwill impairment at the reporting unit level and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

When performing the annual assessment of the recoverability of goodwill, the Company initially performs a qualitative analysis evaluating whether any events or circumstances occurred or exist that provide evidence that it is more likely than not that the fair value of any of the Company’s reporting units is less than the related carrying amount. If the Company does not believe that it is more likely than not that the fair value of any of the Company’s reporting units is less than the related carrying amount, then no quantitative impairment test is performed. However, if the results of the qualitative assessment indicate that it is more likely than not that the fair value of a reporting unit is less than its respective carrying amount, then a quantitative impairment test is performed. Evaluating the recoverability of goodwill requires judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of the estimates are subject to uncertainty.

The Company’s most recent annual impairment test of goodwill was a qualitative analysis conducted during the quarter ended September 30, 2022 that indicated no impairment. Subsequent to completing the 2022 annual impairment test, there were no events or changes in circumstances noted that required an interim impairment test.

The table below presents changes to the carrying amount of goodwill by segment during the nine months ended September 30, 2022 (in thousands).


	Research		Conferences		Consulting		Total
Balance at December 31, 2021 (1)	$	2,670,934	$	184,021	$	96,362	$	2,951,317

Foreign currency translation impact	(12,751)		(148)		(2,278)		(15,177)
Balance at September 30, 2022 (1)	$	2,658,183	$	183,873	$	94,084	$	2,936,140

(1)The Company does not have any accumulated goodwill impairment losses.

Finite-Lived Intangible Assets

The tables below present reconciliations of the carrying amounts of the Company’s finite-lived intangible assets as of the dates indicated (in thousands).


September 30, 2022	Customer Relationships		Technology-related		Other		Total
Gross cost at December 31, 2021	$	1,096,358	$	61,216	$	10,436	$	1,168,010


Foreign currency translation impact	(60,366)		(888)		—		(61,254)
Gross cost	1,035,992		60,328		10,436		1,106,756
Accumulated amortization (1)	(454,382)		(43,189)		(5,352)		(502,923)
Balance at September 30, 2022	$	581,610	$	17,139	$	5,084	$	603,833


December 31, 2021	Customer Relationships		Technology-related		Other		Total
Gross cost	$	1,096,358	$	61,216	$	10,436	$	1,168,010
Accumulated amortization (1)	(413,266)		(35,727)		(4,599)		(453,592)
Balance at December 31, 2021	$	683,092	$	25,489	$	5,837	$	714,418

(1) Finite-lived intangible assets are amortized using the straight-line method over the following periods: Customer relationships—6 to 13 years; Technology-related—3 to 7 years; and Other—4 to 11 years.

Amortization expense related to finite-lived intangible assets was $24.4 million and $27.1 million during the three months ended September 30, 2022 and 2021, respectively, and $74.3 million and $83.8 million during the nine months ended September 30, 2022 and 2021, respectively. The estimated future amortization expense by year for finite-lived intangible assets is presented in the table below (in thousands).


2022 (remaining three months)	$	23,979
2023	95,901
2024	88,802
2025	78,302
2026	75,628
Thereafter	241,221
	$	603,833

Note 4 — Revenue and Related Matters

Disaggregated Revenue — The Company’s disaggregated revenue by reportable segment is presented in the tables below for the periods indicated (in thousands).

By Primary Geographic Market (1)


Three Months Ended September 30, 2022
Primary Geographic Market	Research		Conferences		Consulting		Total
United States and Canada	$	771,534	$	44,499	$	67,194	$	883,227
Europe, Middle East and Africa	245,093		18,034		26,644		289,771
Other International	131,196		14,498		13,176		158,870
Total revenues	$	1,147,823	$	77,031	$	107,014	$	1,331,868

Three Months Ended September 30, 2021
Primary Geographic Market	Research		Conferences		Consulting		Total
United States and Canada	$	671,517	$	14,171	$	56,715	$	742,403
Europe, Middle East and Africa	242,273		7,975		26,707		276,955
Other International	123,334		2,269		11,321		136,924
Total revenues	$	1,037,124	$	24,415	$	94,743	$	1,156,282

Nine Months Ended September 30, 2022
Primary Geographic Market	Research		Conferences		Consulting		Total
United States and Canada	$	2,264,733	$	139,418	$	208,799	$	2,612,950
Europe, Middle East and Africa	763,639		40,308		93,135		897,082
Other International	398,160		21,184		41,753		461,097
Total revenues	$	3,426,532	$	200,910	$	343,687	$	3,971,129

Nine Months Ended September 30, 2021
Primary Geographic Market	Research		Conferences		Consulting		Total
United States and Canada	$	1,949,282	$	74,098	$	173,806	$	2,197,186
Europe, Middle East and Africa	709,230		25,156		92,528		826,914
Other International	361,582		8,142		33,815		403,539
Total revenues	$	3,020,094	$	107,396	$	300,149	$	3,427,639

(1)Revenue is reported based on where the sale is fulfilled.

The Company’s revenue is generated primarily through direct sales to clients by domestic and international sales forces and a network of independent international sales agents. Most of the Company’s products and services are provided on an integrated worldwide basis and, because of this integrated delivery approach, it is not practical to precisely separate the Company’s revenue by geographic location. Accordingly, revenue information presented in the above tables is based on internal allocations, which involve certain management estimates and judgments.

By Timing of Revenue Recognition


Three Months Ended September 30, 2022
Timing of Revenue Recognition	Research		Conferences		Consulting		Total
Transferred over time (1)	$	1,045,425	$	—	$	90,316	$	1,135,741
Transferred at a point in time (2)	102,398		77,031		16,698		196,127
Total revenues	$	1,147,823	$	77,031	$	107,014	$	1,331,868

Three Months Ended September 30, 2021
Timing of Revenue Recognition	Research		Conferences		Consulting		Total
Transferred over time (1)	$	944,206	$	—	$	77,538	$	1,021,744
Transferred at a point in time (2)	92,918		24,415		17,205		134,538
Total revenues	$	1,037,124	$	24,415	$	94,743	$	1,156,282


Nine Months Ended September 30, 2022
Timing of Revenue Recognition	Research		Conferences		Consulting		Total
Transferred over time (1)	$	3,109,099	$	—	$	281,953	$	3,391,052
Transferred at a point in time (2)	317,433		200,910		61,734		580,077
Total revenues	$	3,426,532	$	200,910	$	343,687	$	3,971,129

Nine Months Ended September 30, 2021
Timing of Revenue Recognition	Research		Conferences		Consulting		Total
Transferred over time (1)	$	2,755,047	$	—	$	247,869	$	3,002,916
Transferred at a point in time (2)	265,047		107,396		52,280		424,723
Total revenues	$	3,020,094	$	107,396	$	300,149	$	3,427,639

(1)Research revenues are recognized in connection with performance obligations that are satisfied over time using a time-elapsed output method to measure progress. Consulting revenues are recognized over time using labor hours as an input measurement basis.

(2)The revenues in this category are recognized in connection with performance obligations that are satisfied at the point in time that the contractual deliverables are provided to the customer.

Performance Obligations — For customer contracts that are greater than one year in duration, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied) as of September 30, 2022 was approximately $4.9 billion. The Company expects to recognize $0.8 billion, $2.6 billion and $1.5 billion of this revenue (most of which pertains to Research) during the remainder of 2022, the year ending December 31, 2023 and thereafter, respectively. The Company applies a practical expedient that is permitted under ASC Topic 606 and, accordingly, it does not disclose such performance obligation information for customer contracts that have original durations of one year or less. The Company’s performance obligations for contracts meeting this ASC Topic 606 disclosure exclusion primarily include: (i) stand-ready services under Research subscription contracts; (ii) holding conferences and meetings where attendees and exhibitors can participate; and (iii) providing customized Consulting solutions for clients under fixed fee and time and materials engagements. The remaining duration of these performance obligations is generally less than one year, which aligns with the period that the parties have enforceable rights and obligations under the affected contracts.

Customer Contract Assets and Liabilities — The timing of the recognition of revenue and the amount and timing of the Company’s billings and cash collections, including upfront customer payments, result in the recognition of both assets and liabilities on the Company’s Condensed Consolidated Balance Sheets. The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers (in thousands).


	September 30,		December 31,
	2022		2021
Assets:
Fees receivable, gross (1)	$	1,054,640	$	1,371,680
Contract assets recorded in Prepaid expenses and other current assets (2)	$	23,474	$	20,054
Contract liabilities:
Deferred revenues (current liability) (3)	$	2,229,648	$	2,238,035
Non-current deferred revenues recorded in Other liabilities (3)	31,049		48,176
Total contract liabilities	$	2,260,697	$	2,286,211

(1)Fees receivable represent an unconditional right to payment from the Company’s customers and include both billed and unbilled amounts.

(2)Contract assets represent recognized revenue for which the Company does not have an unconditional right to payment as of the balance sheet date because the project may be subject to a progress billing milestone or some other billing restrictions.

(3)Deferred revenues represent amounts (i) for which the Company has received an upfront customer payment or (ii) that pertain to recognized fees receivable. Both situations occur before the completion of the Company’s performance obligation(s).

The Company recognized revenue of $931.6 million and $818.4 million during the three months ended September 30, 2022 and 2021, respectively, and $1.8 billion and $1.5 billion during the nine months ended September 30, 2022 and 2021, respectively, that was attributable to deferred revenues that were recorded at the beginning of each such period. Those amounts primarily consisted of Research revenues that were recognized ratably as control of the goods or services passed to the customer during the reporting periods. During each of the three and nine months ended September 30, 2022 and 2021, the Company did not record any material impairments related to its contract assets.

Note 5 — Computation of Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS reflects the potential dilution of securities that could share in earnings. Potential shares of common stock are excluded from the computation of diluted earnings per share when their effect would be anti-dilutive.

The table below sets forth the calculation of basic and diluted income per share for the periods indicated (in thousands, except per share data).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Numerator:
Net income used for calculating basic and diluted income per share	$	173,545	$	148,865	$	550,985	$	584,201
Denominator:
Weighted average common shares used in the calculation of basic income per share	79,259		83,566		80,516		85,877
Dilutive effect of outstanding awards associated with stock-based compensation plans (1)	800		1,200		857		1,048
Shares used in the calculation of diluted income per share	80,059		84,766		81,373		86,925
Basic income per share	$	2.19	$	1.78	$	6.84	$	6.80
Diluted income per share	$	2.17	$	1.76	$	6.77	$	6.72

(1)Certain outstanding awards associated with stock-based compensation plans were not included in the computation of diluted income per share because the effect would have been anti-dilutive. These anti-dilutive outstanding awards associated with stock-based compensation plans totaled approximately 0.1 million for both of the three and nine months ended September 30, 2022. For both of the three and nine months ended September 30, 2021, the number of anti-dilutive shares was de minimis.

Note 6 — Stock-Based Compensation

The Company grants stock-based compensation awards as an incentive for employees and directors to contribute to the Company’s long-term success. The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents. As of September 30, 2022, the Company had 3.9 million shares of its common stock, par value $0.0005 per share, (the “Common Stock”) available for stock-based compensation awards under its current Long-Term Incentive Plan as amended and restated in January 2019 (the “Plan”).

The tables below summarize the Company’s stock-based compensation expense by award type and expense category line item during the periods indicated (in millions).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Award type	2022		2021		2022		2021
Stock appreciation rights	$	2.2	$	2.1	$	6.6	$	6.1
Restricted stock units (2)	18.6		17.1		70.4		75.0
Common stock equivalents	0.2		0.2		0.6		0.6
Total (1)	$	21.0	$	19.4	$	77.6	$	81.7


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Expense category line item	2022		2021		2022		2021
Cost of services and product development	$	7.6	$	6.9	$	27.0	$	28.6
Selling, general and administrative	13.4		12.5		50.6		53.1
Total (1) (2)	$	21.0	$	19.4	$	77.6	$	81.7

(1)Includes costs of $5.4 million and $5.5 million during the three months ended September 30, 2022 and 2021, respectively, and $32.7 million and $38.3 million during the nine months ended September 30, 2022 and 2021, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis.

(2)On February 5, 2020, prior to the COVID-19 related shutdown in the U.S., the Compensation Committee (“Committee”) of the Board of Directors of the Company established performance measures for the performance-based restricted stock units (the “PSUs”) awarded to the Company’s executive officers in 2020 under the Plan. Based on preliminary corporate performance results for the 2020 performance measures, the 2020 PSUs would have been earned at 50% of target. However, on February 3, 2021, the Committee determined to use its discretion under the Plan to approve a payout at 95% of target. In deciding to exercise this discretion to adjust the PSU payout, the Committee considered the Company’s strong overall performance in 2020 despite the significant negative impact of the COVID-19 pandemic. As a result of the modification, the Company recognized $6.5 million of incremental compensation cost during the nine months ended September 30, 2021.

Note 7 — Segment Information

The Company’s products and services are delivered through three segments – Research, Conferences and Consulting, as described below.

Research** equips executives and their teams from every function and across all industries with actionable, objective insight, guidance and tools. Our experienced experts deliver all this value informed by an unmatched combination of practitioner-sourced and data-driven research to help our clients address their mission critical priorities.
Conferences** provides executives and teams across an organization the opportunity to learn, share and network. From our Gartner Symposium/Xpo series, to industry-leading conferences focused on specific business roles and topics, to peer-driven sessions, our offerings enable attendees to experience the best of Gartner insight and guidance.
Consulting** serves senior executives leading technology-driven strategic initiatives leveraging the power of Gartner’s actionable, objective insight. Through custom analysis and on-the-ground support we enable optimized technology investments and stronger performance on our clients’ mission critical priorities.

The Company evaluates segment performance and allocates resources based on gross contribution margin. Gross contribution, as presented in the tables below, is defined as operating income or loss excluding certain Cost of services and product development expenses, Selling, general and administrative expenses, Depreciation, Amortization of intangibles, and Acquisition and integration charges. Certain bonus and fringe benefit costs included in consolidated Cost of services and product development are not allocated to segment expense. The accounting policies used by the reportable segments are the same as those used by the Company. There are no intersegment revenues. The Company does not identify or allocate assets, including capital expenditures, by reportable segment. Accordingly, assets are not reported by segment because the information is not available by segment and is not reviewed in the evaluation of segment performance or in making decisions regarding the allocation of resources.

The tables below present information about the Company’s reportable segments for the periods indicated (in thousands).


Three Months Ended September 30, 2022	Research		Conferences		Consulting		Consolidated
Revenues	$	1,147,823	$	77,031	$	107,014	$	1,331,868
Gross contribution	848,438		40,318		37,213		925,969
Corporate and other expenses							(672,551)
Operating income							$	253,418

Three Months Ended September 30, 2021	Research		Conferences		Consulting		Consolidated
Revenues	$	1,037,124	$	24,415	$	94,743	$	1,156,282
Gross contribution	769,091		11,456		30,972		811,519
Corporate and other expenses							(581,298)
Operating income							$	230,221


Nine Months Ended September 30, 2022	Research		Conferences		Consulting		Consolidated
Revenues	$	3,426,532	$	200,910	$	343,687	$	3,971,129
Gross contribution	2,541,782		110,968		138,448		2,791,198
Corporate and other expenses							(2,023,411)
Operating income							$	767,787


Nine Months Ended September 30, 2021	Research		Conferences		Consulting		Consolidated
Revenues	$	3,020,094	$	107,396	$	300,149	$	3,427,639
Gross contribution	2,235,594		67,954		112,840		2,416,388
Corporate and other expenses							(1,686,041)
Operating income							$	730,347

The table below provides a reconciliation of total segment gross contribution to net income for the periods indicated (in thousands).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Total segment gross contribution	$	925,969	$	811,519	$	2,791,198	$	2,416,388
Costs and expenses:
Cost of services and product development - unallocated (1)	10,938		14,474		38,474		33,255
Selling, general and administrative	613,031		512,573		1,835,846		1,488,324
Depreciation and amortization	47,251		52,480		143,264		160,749
Acquisition and integration charges	1,331		1,771		5,827		3,713
Operating income	253,418		230,221		767,787		730,347
Interest expense and other, net	(21,356)		(31,388)		(44,715)		(73,119)
Gain on event cancellation insurance claims	—		—		—		135,545

Less: Provision for income taxes	58,517		49,968		172,087		208,572
Net income	$	173,545	$	148,865	$	550,985	$	584,201

(1)The unallocated amounts consist of certain bonus and fringe costs recorded in consolidated Cost of services and product development that are not allocated to segment expense. The Company’s policy is to allocate bonuses to segments at 100% of a segment employee’s target bonus. Amounts above or below 100% are absorbed by corporate.

Note 8 — Debt

The Company’s total outstanding borrowings are summarized in the table below (in thousands).


	September 30,		December 31,
Description	2022		2021
2020 Credit Agreement - Term loan facility (1)	$	284,000	$	287,600
2020 Credit Agreement - Revolving credit facility (1), (2)	—		—
Senior Notes due 2028 (“2028 Notes”) (3)	800,000		800,000
Senior Notes due 2029 (“2029 Notes”) (4)	600,000		600,000
Senior Notes due 2030 (“2030 Notes”) (5)	800,000		800,000
Other (6)	5,135		5,531
Principal amount outstanding (7)	2,489,135		2,493,131
Less: deferred financing fees (8)	(26,947)		(30,367)
Net balance sheet carrying amount	$	2,462,188	$	2,462,764

(1)The contractual annualized interest rate as of September 30, 2022 on the 2020 Credit Agreement Term loan facility and the Revolving credit facility was 4.50%, which consisted of a floating Eurodollar base rate of 3.125% plus a margin of 1.375%. However, the Company has interest rate swap contracts that effectively convert the floating Eurodollar base rates on outstanding amounts to a fixed base rate.

(2)The Company had approximately $1.0 billion of available borrowing capacity on the 2020 Credit Agreement revolver (not including the expansion feature) as of September 30, 2022.

(3)Consists of $800.0 million principal amount of 2028 Notes outstanding. The 2028 Notes bear interest at a fixed rate of 4.50% and mature on July 1, 2028.

(4)Consists of $600.0 million principal amount of 2029 Notes outstanding. The 2029 Notes bear interest at a fixed rate of 3.625% and mature on June 15, 2029.

(5)Consists of $800.0 million principal amount of 2030 Notes outstanding. The 2030 Notes bear interest at a fixed rate of 3.75% and mature on October 1, 2030.

(6)Consists of two State of Connecticut economic development loans. One of the loans originated in 2012, has a 10-year maturity and the outstanding balance of $0.1 million as of September 30, 2022 bears interest at a fixed rate of 3.00%. The second loan, originated in 2019, has a 10-year maturity and bears interest at a fixed rate of 1.75%. Both of these loans may be repaid at any time by the Company without penalty.

(7)The weighted average annual effective rate on the Company’s outstanding debt for the three and nine months ended September 30, 2022, including the effects of its interest rate swaps discussed below, was 4.68% and 4.69%, respectively.

(8)Deferred financing fees are being amortized to Interest expense, net over the term of the related debt obligation.

2029 Notes

On June 18, 2021, the Company issued $600.0 million aggregate principal amount of 3.625% Senior Notes due 2029. The 2029 Notes were issued pursuant to an indenture, dated as of June 18, 2021 (the “2029 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee.

The 2029 Notes were issued at an issue price of 100.0% and bear interest at a rate of 3.625% per annum. Interest on the 2029 Notes is payable on June 15 and December 15 of each year, beginning on December 15, 2021. The 2029 Notes will mature on June 15, 2029.

The Company may redeem some or all of the 2029 Notes at any time on or after June 15, 2024 for cash at the redemption prices set forth in the 2029 Notes Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to June 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the 2029 Notes in connection with certain equity offerings, or some or all of the 2029 Notes with a “make-whole” premium, in each case subject to the terms set forth in the 2029 Note Indenture.

2030 Notes

On September 28, 2020, the Company issued $800.0 million aggregate principal amount of 3.75% Senior Notes due 2030. The 2030 Notes were issued pursuant to an indenture, dated as of September 28, 2020 (the “2030 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee.

The 2030 Notes were issued at an issue price of 100.0% and bear interest at a rate of 3.75% per annum. Interest on the 2030 Notes is payable on April 1 and October 1 of each year, beginning on April 1, 2021. The 2030 Notes will mature on October 1, 2030.

The Company may redeem some or all of the 2030 Notes at any time on or after October 1, 2025 for cash at the redemption prices set forth in the 2030 Note Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to October 1, 2025, the Company may redeem up to 40% of the aggregate principal amount of the 2030 Notes in connection with certain equity offerings, or some or all of the 2030 Notes with a “make-whole” premium, in each case subject to the terms set forth in the 2030 Note Indenture.

2028 Notes

On June 22, 2020, the Company issued $800.0 million aggregate principal amount of 4.50% Senior Notes due 2028. The 2028 Notes were issued pursuant to an indenture, dated as of June 22, 2020 (the “2028 Note Indenture”), among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee.

The 2028 Notes were issued at an issue price of 100.0% and bear interest at a rate of 4.50% per annum. Interest on the 2028 Notes is payable on January 1 and July 1 of each year, beginning on January 1, 2021. The 2028 Notes will mature on July 1, 2028.

The Company may redeem some or all of the 2028 Notes at any time on or after July 1, 2023 for cash at the redemption prices set forth in the 2028 Note Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to July 1, 2023, the Company may redeem up to 40% of the aggregate principal amount of the 2028 Notes in connection with certain equity offerings, or some or all of the 2028 Notes with a “make-whole” premium, in each case subject to the terms set forth in the 2028 Note Indenture.

2020 Credit Agreement

The Company has a credit facility that currently provides for a $400.0 million Term loan facility and a $1.0 billion Revolving credit facility (the “2020 Credit Agreement”). The 2020 Credit Agreement contains certain customary restrictive loan covenants, including, among others, financial covenants that apply a maximum consolidated leverage ratio and a minimum consolidated interest expense coverage ratio. The Company was in compliance with all financial covenants as of September 30, 2022.

The Term loan is being repaid in consecutive quarterly installments that commenced on December 31, 2020, plus a final payment to be made on September 28, 2025. The Revolving credit facility may be borrowed, repaid and re-borrowed through September 28, 2025, at which all then-outstanding amounts must be repaid.

Interest Rate Swaps

As of September 30, 2022, the Company had one fixed-for-floating interest rate swap contract with a notional value of $350.0 million that matures in 2025. The Company pays a base fixed rate of 3.04% and in return receives a floating Eurodollar base rate on 30-day notional borrowings. In June 2022, the Company terminated a fixed-for-floating interest rate swap contract with a notional value of $350.0 million, and received proceeds of $0.5 million. The Company had two other fixed-for-floating interest rate swap contracts with a total notional value of $700.0 million that matured during the three months ended March 31, 2022.

Effective June 30, 2020, the Company de-designated all of its interest rate swaps and discontinued hedge accounting. Accordingly, subsequent changes to the fair value of the interest rate swaps are recorded in Other income, net. The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments. As of September 30, 2022, $57.5 million is remaining in Accumulated other comprehensive loss, net. The interest rate swaps had an unrealized fair value of $10.3 million and a negative unrealized fair value (liability) of $53.7 million as of September 30, 2022 and December 31, 2021, respectively, of which $43.2 million and $56.3 million were recorded in Accumulated other comprehensive loss, net of tax effect, as of September 30, 2022 and December 31, 2021, respectively. See Note 12 — Fair Value Disclosures for the determination of the fair values of Company’s interest rate swaps.

Note 9 — Equity

Share Repurchase Authorization

In 2015, the Company’s Board of Directors (the “Board”) authorized a share repurchase program to repurchase up to $1.2 billion of the Company’s common stock. The Board authorized incremental share repurchases of up to an additional $1.6 billion and $1.0 billion of the Company’s common stock during 2021 and the first half of 2022, respectively. As of September 30, 2022, $612.8 million remained available under the share repurchase program. The Company may repurchase its common stock from time-to-time in amounts, at prices and in the manner that the Company deems appropriate, subject to the availability of stock, prevailing market conditions, the trading price of the stock, the Company’s financial performance and other conditions. Repurchases may be made through open market purchases (which may include repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended), accelerated share repurchases, private transactions or other transactions and will be funded by cash on hand and borrowings. Repurchases may also be made from time-to-time in connection with the settlement of the Company’s stock-based compensation awards.

The Company’s share repurchase activity is presented in the table below for the periods indicated.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Number of shares repurchased (1)	375,076		1,255,218		3,783,922		6,624,634
Cash paid for repurchased shares (in thousands) (2)	$	96,534	$	355,458	$	1,026,414	$	1,438,808

(1)The average purchase price for repurchased shares was $254.71 and $290.54 for the three months ended September 30, 2022 and 2021, respectively, and $272.84 and $219.00 for the nine months ended September 30, 2022 and 2021, respectively. The repurchased shares during the three and nine months ended September 30, 2022 and 2021 included purchases for both open market purchases and stock-based compensation award settlements.

(2)The cash paid for repurchased shares during the nine months ended September 30, 2022 excluded $6.0 million of open market purchases with trade dates in September 2022 that settled in October 2022. The cash paid for repurchased shares during the nine months ended September 30, 2021 included $8.0 million of open market purchases with trade dates in December 2020 that settled in January 2021 and excluded $20.0 million of open market purchases with trade dates in September 2021 that settled in October 2021.

The cash paid for repurchased shares during the three months ended September 30, 2022 included $7.0 million of open market purchases with trade dates in June 2022 that settled in July 2022, and excluded $6.0 million of open market purchases with trade dates in September 2022 that settled in October 2022. The cash paid for repurchased shares during the three months ended September 30, 2021 included $10.8 million of open market purchases with trade dates in June 2021 that settled in July 2021, and excluded $20.0 million of open market purchases with trade dates in September 2021 that settled in October 2021.

Accumulated Other Comprehensive Loss, net (“AOCL”)

The tables below provide information about the changes in AOCL by component and the related amounts reclassified out of AOCL to income during the periods indicated (net of tax, in thousands) (1).

Three Months Ended September 30, 2022


	Interest Rate Swaps		Defined Benefit Pension Plans		Foreign Currency Translation Adjustments		Total
Balance – June 30, 2022	$	(47,084)	$	(6,767)	$	(50,665)	$	(104,516)
Other comprehensive income (loss) activity during the period:
Change in AOCL before reclassifications to income	—		—		(29,961)		(29,961)
Reclassifications from AOCL to income (2), (3)	3,886		43		—		3,929
Other comprehensive income (loss), net	3,886		43		(29,961)		(26,032)
Balance – September 30, 2022	$	(43,198)	$	(6,724)	$	(80,626)	$	(130,548)

Three Months Ended September 30, 2021


	Interest Rate Swaps		Defined Benefit Pension Plans		Foreign Currency Translation Adjustments		Total
Balance – June 30, 2021	$	(67,377)	$	(9,102)	$	(6,499)	$	(82,978)
Other comprehensive income (loss) activity during the period:
Change in AOCL before reclassifications to income	—		—		(6,488)		(6,488)
Reclassifications from AOCL to income (2), (3)	5,529		100		—		5,629
Other comprehensive income (loss), net	5,529		100		(6,488)		(859)
Balance – September 30, 2021	$	(61,848)	$	(9,002)	$	(12,987)	$	(83,837)

Nine Months Ended September 30, 2022


	Interest Rate Swaps		Defined Benefit Pension Plans		Foreign Currency Translation Adjustments		Total
Balance – December 31, 2021	$	(56,323)	$	(6,672)	$	(18,436)	$	(81,431)
Other comprehensive income (loss) activity during the period:
Change in AOCL before reclassifications to income	—		(189)		(62,190)		(62,379)
Reclassifications from AOCL to income (2), (3)	13,125		137		—		13,262
Other comprehensive income (loss), net	13,125		(52)		(62,190)		(49,117)
Balance – September 30, 2022	$	(43,198)	$	(6,724)	$	(80,626)	$	(130,548)

Nine Months Ended September 30, 2021


	Interest Rate Swaps		Defined Benefit Pension Plans		Foreign Currency Translation Adjustments		Total
Balance – December 31, 2020	$	(78,104)	$	(9,309)	$	(11,815)	$	(99,228)
Other comprehensive income (loss) activity during the period:
Change in AOCL before reclassifications to income	—		—		(1,172)		(1,172)
Reclassifications from AOCL to income (2), (3)	16,256		307		—		16,563
Other comprehensive income (loss), net	16,256		307		(1,172)		15,391
Balance – September 30, 2021	$	(61,848)	$	(9,002)	$	(12,987)	$	(83,837)

(1)Amounts in parentheses represent debits (deferred losses).

(2)$5.2 million and $7.4 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the three months ended September 30, 2022 and 2021, respectively. $17.5 million and $21.7 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the nine months ended September 30, 2022 and 2021, respectively. See Note 8 — Debt and Note 11 — Derivatives and Hedging for information regarding the cash flow hedges.

(3)The reclassifications related to defined benefit pension plans were recorded in Other income, net.

The estimated net amount of the existing losses on the Company’s interest rate swaps that are reported in Accumulated other comprehensive loss, net at September 30, 2022 that is expected to be reclassified into earnings within the next 12 months is $20.3 million.

Note 10 — Income Taxes

The provision for income taxes was $58.5 million and $50.0 million for the three months ended September 30, 2022 and 2021, respectively, and $172.1 million and $208.6 million for the nine months ended September 30, 2022 and 2021, respectively.

The effective income tax rate was 25.2% and 25.1% for the three months ended September 30, 2022 and 2021, respectively, and 23.8% and 26.3% for the nine months ended September 30, 2022 and 2021, respectively. During the second quarter of 2021, the United Kingdom enacted legislation raising its corporate tax rate from 19% to 25% effective April 2023, which led to a higher effective income tax rate for the nine months ended September 30, 2021 as compared to the same period in 2022.

The Company had gross unrecognized tax benefits of $158.2 million on September 30, 2022 and $150.0 million on December 31, 2021. It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $30.9 million within the next twelve months due to the anticipated closure of audits and the expiration of certain statutes of limitation.

Note 11 — Derivatives and Hedging

The Company enters into a limited number of derivative contracts to mitigate the cash flow risk associated with changes in interest rates on variable-rate debt and changes in foreign exchange rates on forecasted foreign currency transactions. The Company accounts for its outstanding derivative contracts in accordance with FASB ASC Topic 815, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value. The tables below provide information regarding the Company’s outstanding derivative contracts as of the dates indicated (in thousands, except for number of contracts).


September 30, 2022
Derivative Contract Type	Number of Contracts	Notional Amounts		Fair Value Asset (Liability), Net (3)		Balance Sheet Line Item	Unrealized Loss Recorded in AOCL, net of tax
Interest rate swaps (1)	1	$	350,000	$	5,915	Other assets	$	(43,198)
				4,351		Other current assets
Foreign currency forwards (2)	34	220,831		(259)		Accrued liabilities	—
Total	35	$	570,831	$	10,007		$	(43,198)


December 31, 2021
Derivative Contract Type	Number of Contracts	Notional Amounts		Fair Value Asset (Liability), Net (3)		Balance Sheet Line Item	Unrealized Loss Recorded in AOCL, net of tax
Interest rate swaps (1)	4	$	1,400,000	$	(31,942)	Other liabilities	$	(56,323)
				(21,795)		Accrued liabilities
Foreign currency forwards (2)	138	533,506		(91)		Accrued liabilities	—
Total	142	$	1,933,506	$	(53,828)		$	(56,323)

(1)Effective June 30, 2020, the Company de-designated all of its interest rate swaps and discontinued hedge accounting. Accordingly, subsequent changes to fair value of the interest rate swaps are recorded in Other income, net. The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments. See Note 8 — Debt for additional information regarding the Company’s interest rate swap contracts.

(2)The Company has foreign exchange transaction risk because it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income, net because the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding foreign currency forward exchange contracts at September 30, 2022 matured before October 31, 2022.

(3)See Note 12 — Fair Value Disclosures for the determination of the fair values of these instruments.

At September 30, 2022, all of the Company’s derivative counterparties were investment grade financial institutions. The Company did not have any collateral arrangements with its derivative counterparties and none of the derivative contracts contained credit-risk related contingent features. The table below provides information regarding amounts recognized in the accompanying Condensed Consolidated Statements of Operations for derivative contracts for the periods indicated (in thousands).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Amount recorded in:	2022		2021		2022		2021
Interest expense, net (1)	$	5,185	$	7,380	$	17,515	$	21,695
Other expense (income), net (2)	1,295		2,558		(17,456)		(11,771)
Total expense, net	$	6,480	$	9,938	$	59	$	9,924

(1)Consists of interest expense from interest rate swap contracts.

(2)Consists of net realized and unrealized gains and losses on foreign currency forward contracts and gains and losses on de-designated interest rate swaps.

Note 12 — Fair Value Disclosures

The Company’s financial instruments include cash equivalents, fees receivable from customers, accounts payable and accrued liabilities, all of which are normally short-term in nature. The Company believes that the carrying amounts of these financial

instruments reasonably approximate their fair values due to their short-term nature. The Company’s financial instruments also include its outstanding variable-rate borrowings under the 2020 Credit Agreement. The Company believes that the carrying amounts of its variable-rate borrowings reasonably approximate their fair values because the rates of interest on those borrowings reflect current market rates of interest for similar instruments with comparable maturities.

The Company enters into a limited number of derivatives transactions but does not enter into repurchase agreements, securities lending transactions or master netting arrangements. Receivables or payables that result from derivatives transactions are recorded gross in the Company’s Condensed Consolidated Balance Sheets.

FASB ASC Topic 820 provides a framework for the measurement of fair value and a valuation hierarchy based on the transparency of inputs used in the valuation of assets and liabilities. Classification within the valuation hierarchy is based on the lowest level of input that is significant to the resulting fair value measurement. The valuation hierarchy contains three levels. Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs such as internally-created valuation models. Generally, the Company does not utilize Level 3 valuation inputs to remeasure any of its assets or liabilities. However, Level 3 inputs may be used by the Company when certain long-lived assets, including identifiable intangible assets, goodwill, and right-of-use assets are measured at fair value on a nonrecurring basis when there are indicators of impairment. Additionally, Level 3 inputs may be used by the Company in its required annual impairment review of goodwill. Information regarding the periodic assessment of the Company’s goodwill is included in Note 3 — Goodwill and Intangible Assets. The Company does not typically transfer assets or liabilities between different levels of the valuation hierarchy.

The table below presents the fair values of certain financial assets and liabilities that are measured at fair value on a recurring basis in the Company's financial statements (in thousands).


Description	September 30, 2022		December 31, 2021
Assets:
Values based on Level 1 inputs:
Deferred compensation plan assets (1)	$	8,916	$	7,428
Total Level 1 inputs	8,916		7,428
Values based on Level 2 inputs:
Deferred compensation plan assets (1)	75,391		96,627
Foreign currency forward contracts (2)	48		1,122
Interest rate swap contracts (3)	10,266		—
Total Level 2 inputs	85,705		97,749
Total Assets	$	94,621	$	105,177
Liabilities:
Values based on Level 2 inputs:
Deferred compensation plan liabilities (1)	$	90,402	$	110,861
Foreign currency forward contracts (2)	307		1,213
Interest rate swap contracts (3)	—		53,737
Total Level 2 inputs	90,709		165,811
Total Liabilities	$	90,709	$	165,811

(1)The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees. The assets consist of investments in money market funds, mutual funds and company-owned life insurance contracts, which are valued based on Level 1 or Level 2 inputs. The related deferred compensation plan liabilities are recorded at fair value, or the estimated amount needed to settle the liability, which the Company considers to be a Level 2 input.

(2)The Company enters into foreign currency forward exchange contracts to hedge the effects of adverse fluctuations in foreign currency exchange rates (see Note 11 — Derivatives and Hedging). Valuation of these contracts is based on observable foreign currency exchange rates in active markets, which the Company considers to be a Level 2 input.

(3)The Company has interest rate swap contracts that hedge the risk of variability from interest payments on its borrowings (see Note 8 — Debt). The fair values of interest rate swaps are based on mark-to-market valuations prepared by a third-party broker. Those valuations are based on observable interest rates from recently executed market transactions and other observable market data, which the Company considers to be Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker by using an electronic quotation service.

The table below presents the carrying amounts (net of deferred financing costs) and fair values of financial instruments that are not recorded at fair value in the Company’s Condensed Consolidated Balance Sheets (in thousands). The estimated fair value of the financial instruments was derived from quoted market prices provided by an independent dealer, which the Company considers to be a Level 2 input.


	Carrying Amount				Fair Value
	September 30,		December 31,		September 30,		December 31,
Description	2022		2021		2022		2021
2028 Notes	$	792,654	$	791,833	$	711,704	$	836,632
2029 Notes	593,745		593,139		499,416		608,346
2030 Notes	792,112		791,491		653,264		816,208
Total	$	2,178,511	$	2,176,463	$	1,864,384	$	2,261,186

Assets and liabilities measured at fair value on a non-recurring basis

The Company’s certain long-lived assets, including identifiable intangible assets, goodwill, right-of-use assets and other long-lived assets, are measured at fair value on a nonrecurring basis when there are indicators of impairment. During the three and nine months ended September 30, 2022, the Company recorded impairment charges of $2.0 million and $37.5 million, respectively, on right-of-use assets and other long-lived assets primarily related to certain office leases that the Company determined will no longer be used. The impairments were derived by comparing the fair value of the impacted assets to the carrying value of those assets as of the impairment measurement date, as required under ASC Topic 360 using Level 3 inputs. See Note 14 — Leases for additional discussion related to these impairment charges.

Note 13 — Contingencies

Legal Matters. The Company is involved in legal proceedings and litigation arising in the ordinary course of business. A provision is recorded for pending litigation in the Company’s consolidated financial statements when it is determined that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. The Company believes that the potential liability, if any, in excess of amounts already accrued from all proceedings, claims and litigation will not have a material effect on its financial position, cash flows or results of operations when resolved in a future period.

Indemnifications. The Company has various agreements that may obligate it to indemnify the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arising in the normal course of business under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations related to matters such as title to assets sold and licensed or certain intellectual property rights. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of the Company’s obligations and the unique facts of each particular agreement. Historically, payments made by the Company under these agreements have not been material. As of September 30, 2022, the Company did not have any material payment obligations under any such indemnification agreements.

Note 14 — Leases

The Company’s leasing activities are primarily for facilities under cancelable and non-cancelable lease agreements expiring during 2022 and through 2038. These facilities support our executive and administrative activities, sales, systems support, operations, and other functions. The Company also has leases for office equipment and other assets, which are not significant. Certain of these lease agreements include (i) renewal options to extend the lease term for up to ten years and/or (ii) options to terminate the agreement within one year. Additionally, certain of the Company’s lease agreements provide standard recurring escalations of lease payments for, among other things, increases in a lessor’s maintenance costs and taxes. Under some lease agreements, the Company may be entitled to allowances, free rent, lessor-financed tenant improvements and other incentives. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company subleases certain office space that it does not intend to occupy. Such sublease arrangements expire during 2023 and through 2032 and primarily relate to facilities in Arlington, Virginia. Certain of the Company’s sublease agreements: (i) include renewal and termination options; (ii) provide for customary escalations of lease payments in the normal course of business; and (iii) grant the subtenant certain allowances, free rent, Gartner-financed tenant improvements and other incentives.

All of the Company’s leasing and subleasing activity is recognized in Selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations. The table below presents the Company’s net lease cost and certain other information related to the Company’s leasing activities as of and for the periods indicated (dollars in thousands).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Description:	2022		2021		2022		2021
Operating lease cost (1)	$	29,052	$	32,583	$	88,948	$	98,068
Lease cost (2)	4,148		4,251		11,199		12,674
Sublease income	(11,621)		(10,721)		(34,358)		(31,644)
Total lease cost, net (3) (4)	$	21,579	$	26,113	$	65,789	$	79,098
Cash paid for amounts included in the measurement of operating lease liabilities	$	34,255	$	35,322	$	103,114	$	105,573
Cash receipts from sublease arrangements	$	11,500	$	11,669	$	34,130	$	32,128
Right-of-use assets obtained in exchange for new operating lease liabilities	$	7,438	$	18,787	$	19,120	$	28,081

(1)Included in operating lease cost was $10.4 million and $10.6 million for the three months ended September 30, 2022 and 2021, respectively, and $31.3 million and $31.8 million for the nine months ended September 30, 2022 and 2021, respectively, for costs related to subleasing activities.

(2)These amounts are primarily variable lease and nonlease costs that are not fixed at the lease commencement date or are dependent on something other than an index or a rate.

(3)The Company did not capitalize any operating lease costs during any of the periods presented.

(4)Amount excludes impairment charges on lease related assets totaling $2.0 million and $37.5 million, for the three and nine months ended September 30, 2022, respectively, as discussed below.

The table below indicates where the discounted operating lease payments from the above table are classified in the accompanying Condensed Consolidated Balance Sheets (in thousands).


	September 30,		December 31,
Description:	2022		2021
Accounts payable and accrued liabilities	$	97,370	$	89,754
Operating lease liabilities	614,442		697,766
Total operating lease liabilities included in the Condensed Consolidated Balance Sheets	$	711,812	$	787,520

During the nine months ended September 30, 2022, as a result and in consideration of the changing nature of the Company’s use of office space for its workforce and the impacts of the COVID-19 pandemic, the Company continued to evaluate its existing real estate lease portfolio. This evaluation included the decision to abandon a portion of one leased office space and the cease-use of certain other leased office spaces that the Company intends to sublease. In connection with this evaluation, the Company reviewed certain of its right-of-use assets and related other long-lived assets for impairment under ASC 360.

As a result of the evaluation, the Company recognized impairment losses during the three and nine months ended September 30, 2022 of $2.0 million and $37.5 million, respectively, which is included as a component of Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. The impairment losses recorded include $1.7 million and $27.0 million related to right-of-use assets for the three and nine months ended September 30, 2022, respectively. The impairment losses also include $0.3 million and $10.5 million related to other long-lived assets, primarily leasehold improvements, for the three and nine months ended September 30, 2022, respectively.

The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs. The significant assumptions used in estimating fair values include the

expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates that reflect the level of risk associated with receiving future cash flows.

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