Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this Management’s Discussion and Analysis (“MD&A”) is to facilitate an understanding of significant factors influencing the quarterly operating results, financial condition and cash flows of Gartner, Inc. Additionally, the MD&A conveys our expectations of the potential impact of known trends, events or uncertainties that may impact future results. You should read this discussion in conjunction with our Condensed Consolidated Financial Statements and related notes included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). Historical results and percentage relationships are not necessarily indicative of operating results for future periods. References to “Gartner,” the “Company,” “we,” “our” and “us” in this MD&A are to Gartner, Inc. and its consolidated subsidiaries.

FORWARD-LOOKING STATEMENTS

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

We operate in a very competitive and rapidly changing environment that involves numerous known and unknown risks and uncertainties, some of which are beyond our control. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future quarterly and annual revenues, operating income, results of operations and cash flows, as well as any forward-looking statement, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, among others, the following: the impact of general economic conditions, including inflation (and related monetary policy by governments in response to inflation), recession, and national elections in a number of large countries on economic activity and our operations; changes in macroeconomic and market conditions and market volatility, including interest rates and the effect on the credit markets and access to capital; our ability to carry out our strategic initiatives and manage associated costs; the timing of conferences and meetings, in particular our Gartner Symposium/Xpo series that normally occurs during the fourth quarter; our ability to achieve and effectively manage growth, including our ability to integrate our acquisitions and consummate and integrate future acquisitions; our ability to pay our debt obligations; our ability to maintain and expand our products and services; our ability to expand or retain our customer base; our ability to grow or sustain revenue from individual customers; our ability to attract and retain a professional staff of research analysts and consultants as well as experienced sales personnel upon whom we are dependent, especially in light of labor competition; our ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; our ability to successfully compete with existing competitors and potential new competitors; our ability to enforce and protect our intellectual property rights; our ability to keep pace with technological developments in artificial intelligence; additional risks associated with international operations, including foreign currency fluctuations; the impact on our business resulting from changes in global geopolitical conditions, including those resulting from the conflict in the Middle East, the war in Ukraine and current and future sanctions imposed by governments or other authorities; the impact of restructuring and other charges on our businesses and operations; cybersecurity incidents; risks associated with the creditworthiness, budget cuts, and shutdown of governments and agencies; our ability to meet ESG commitments; the impact of changes in tax policy (including global minimum tax legislation) and heightened scrutiny from various taxing authorities globally; changes to laws and regulations; and other risks and uncertainties. The potential fluctuations in our operating income could cause period-to-period comparisons of operating results not to be meaningful and could provide an unreliable indication of future operating results. A description of the risk factors associated with our business is included under “Risk Factors” in Item 1A. of the 2023 Form 10-K, which is incorporated herein by reference.

Forward-looking statements are subject to risks, estimates and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those listed above or described under “Risk Factors” in Item 1A of the 2023 Form 10-K. Readers should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date hereof, and forward-looking statements in documents attached that are incorporated by reference speak only as of the date of those documents. Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

BUSINESS OVERVIEW

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

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

• Research** equips executives and their teams from every function and across all industries with actionable, objective insight, guidance and tools. Our experienced experts deliver all this value informed by 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.

As of September 30, 2024 we had 20,990 employees globally, an increase of 3.6% from September 30, 2023.

Recent Event

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

BUSINESS MEASUREMENTS

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

BUSINESS SEGMENT						BUSINESS MEASUREMENT
Research						Contract value represents the dollar value attributable to all of our subscription-related contracts. It is calculated as the annualized value of all contracts in effect at a specific point in time, without regard to the duration of the contract. Contract value primarily includes Research deliverables for which revenue is recognized on a ratable basis, as well as other deliverables (primarily Conferences tickets) for which revenue is recognized when the deliverable is utilized. Comparing contract value year-over-year not only measures the short-term growth of our business, but also signals the long-term health of our Research subscription business since it measures revenue that is highly likely to recur over a multi-year period. Our contract value consists of Global Technology Sales contract value, which includes sales to users and providers of technology, and Global Business Sales contract value, which includes sales to all other functional leaders.
						Client retention rate represents a measure of client satisfaction and renewed business relationships at a specific point in time. Client retention is calculated on a percentage basis by dividing our current clients, who were also clients a year ago, by all clients from a year ago. Client retention is calculated at an enterprise level, which represents a single company or customer.
						Wallet retention rate represents a measure of the amount of contract value we have retained with clients over a twelve-month period. Wallet retention is calculated on a percentage basis by dividing the contract value of our current clients, who were also clients a year ago, by the contract value from a year ago, excluding the impact of foreign currency exchange. When wallet retention exceeds client retention, it is an indication of retention of higher-spending clients, or increased spending by retained clients, or both. Wallet retention is calculated at an enterprise level, which represents a single company or customer.
Conferences						Number of destination conferences represents the total number of hosted virtual or in-person conferences completed during the period. Single day, local meetings are excluded.
						Number of destination conferences attendees represents the total number of people who attend virtual or in-person conferences. Single day, local meetings are excluded.
Consulting						Consulting backlog represents future revenue to be derived from in-process consulting and benchmark analytics engagements.
						Utilization rate represents a measure of productivity of our consultants. Utilization rates are calculated for billable headcount on a percentage basis by dividing total hours billed by total hours available to bill.

EXECUTIVE SUMMARY OF OPERATIONS AND FINANCIAL POSITION

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

We had total revenues of $1.5 billion during the third quarter of 2024, an increase of 5% compared to the third quarter of 2023. During the third quarter of 2024, revenues for Research increased by 5%, Conferences revenue increased by 32% and Consulting revenues decreased by 4%, compared to the third quarter of 2023. For a more complete discussion of our results by segment, see Segment Results below.

For the third quarter of 2024 and 2023, we had net income of $415.0 million and $180.0 million, respectively, and diluted income per share of $5.32 and $2.26, respectively. Cash provided by operating activities was $1.1 billion and $0.9 billion during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had $1.8 billion of cash and cash equivalents and approximately $0.7 billion of available borrowing capacity on our revolving credit facility. For a more complete discussion of our cash flows and financial position, see the Liquidity and Capital Resources section below.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For information regarding our critical accounting policies and estimates, please refer to Part II, Item 7, “Critical Accounting Policies and Estimates” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. There have been no material changes to the critical accounting policies previously disclosed in that report.

RECENTLY ISSUED ACCOUNTING STANDARDS

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

RESULTS OF OPERATIONS

Consolidated Results

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

			Three Months Ended September 30, 2024						Three Months Ended September 30, 2023						Increase (Decrease)						Increase (Decrease) %
Total revenues			$	1,484,306					$	1,408,784					$	75,522					5		%
Costs and expenses:
Cost of services and product development			475,342						450,841						24,501						5
Selling, general and administrative			711,729						660,527						51,202						8
Depreciation			29,082						24,547						4,535						18
Amortization of intangibles			22,170						23,989						(1,819)						(8)
Acquisition and integration charges			159						4,463						(4,304)						(96)
Operating income			245,824						244,417						1,407						1
Interest expense, net			(17,961)						(21,820)						(3,859)						(18)
Gain on event cancellation insurance claims			300,000						—						300,000						nm
Other (expense) income, net			(991)						1,877						(2,868)						(153)
Less: Provision for income taxes			111,823						44,465						67,358						151
Net income			$	415,049					$	180,009					$	235,040					131		%
nm = not meaningful.

			Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2023						Increase (Decrease)						Increase (Decrease) %
Total revenues			$	4,552,292					$	4,320,838					$	231,454					5		%
Costs and expenses:
Cost of services and product development			1,448,097						1,373,398						74,699						5
Selling, general and administrative			2,113,633						1,997,785						115,848						6
Depreciation			82,993						72,155						10,838						15
Amortization of intangibles			68,100						69,625						(1,525)						(2)
Acquisition and integration charges			977						7,804						(6,827)						(87)
Gain from sale of divested operation			—						(135,410)						135,410						nm
Operating income			838,492						935,481						(96,989)						(10)
Interest expense, net			(57,170)						(73,769)						(16,599)						(23)
Gain on event cancellation insurance claims			300,000						3,077						296,923						nm
Other income, net			4,404						5,086						(682)						(13)
Less: Provision for income taxes			230,584						196,040						34,544						18
Net income			$	855,142					$	673,835					$	181,307					27		%
nm = not meaningful.

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

Total revenues for the three months ended September 30, 2024 were $1.5 billion, an increase of $75.5 million, or 5% compared to the same period in 2023 on a reported basis and 6% excluding the foreign currency impact. Total revenues for the nine months ended September 30, 2024 were $4.6 billion, an increase of $0.2 billion, or 5% compared to the same period in 2023 on a reported basis and 6% excluding the foreign currency impact. Refer to the section of this MD&A below entitled “Segment Results” for a discussion of revenues and results by segment.

Cost of services and product development was $475.3 million during the three months ended September 30, 2024, an increase of $24.5 million compared to the same period in 2023, or 5% on both a reported basis and excluding the foreign currency impact. The increase in Cost of services and product development was primarily due to increased compensation costs associated with merit increases. Cost of services and product development as a percent of revenues was 32% for each of the three months ended September 30, 2024 and 2023. Cost of services and product development was $1.4 billion during the nine months ended September 30, 2024, an increase of $74.7 million compared to the same period in 2023, or 5% on a reported basis and 6% excluding the foreign currency impact. The increase was primarily due to the same factor that caused the year-over-year quarterly increase. Cost of services and product development as a percent of revenues was 32% for both the nine months ended September 30, 2024 and 2023.

Selling, general and administrative (“SG&A”) expense was $711.7 million during the three months ended September 30, 2024, an increase of $51.2 million compared to the same period in 2023, or 8% and on both reported basis and excluding the foreign currency impact. The increase in SG&A expense during the three months ended September 30, 2024 was primarily a result of higher personnel expenses due to increased headcount and merit increases. SG&A expense was $2.1 billion during the nine months ended September 30, 2024, an increase of $115.8 million compared to the same period in 2023, or 6% on both reported basis and excluding the foreign currency impact. The increase was primarily due to the same factors that caused the year-over-year quarterly increase. The number of quota-bearing sales associates in Global Technology Sales increased by 1% to 3,666 and in Global Business Sales, increased by 8% to 1,244 compared to September 30, 2023. On a combined basis, the total number of quota-bearing sales associates increased by 3% when compared to September 30, 2023. We expect that quota-bearing headcount will increase in the mid single digits from 2023 levels by the end of 2024. SG&A expense as a percent of revenues was 48% and 47% during the three months ended September 30, 2024 and 2023, respectively. SG&A expense as a percent of revenues was 46% for both the nine months ended September 30, 2024 and 2023.

Depreciation increased by 18% and 15% during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The increase for the three and nine months ended September 30, 2024 was primarily due to increased software additions during the last twelve months.

Amortization of intangibles decreased by 8% and 2% during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

Acquisition and integration charges decreased by $4.3 million and $6.8 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

Gain from sale of divested operation was attributable to the sale of the TalentNeuron business in February 2023. We recognized a pre-tax gain of $135.4 million during the nine months ended September 30, 2023.

Operating income was $245.8 million and $244.4 million during the three months ended September 30, 2024 and 2023, respectively. Operating income was $838.5 million and $935.5 million during the nine months ended September 30, 2024 and 2023, respectively. The slight increase in operating income for the three months ended September 30, 2024 as compared to the prior year period was primarily due to increased revenue, partially offset by increases in cost of services and product development and selling, general and administrative expenses. The decrease in operating income for the nine months ended September 30, 2024 as compared to the prior year period was primarily due to the gain from sale of divested operation recognized during the nine months ended September 30, 2023 and increases in cost of services and product development and selling, general and administrative expenses, partially offset by increased revenue.

Interest expense, net decreased by $3.9 million and $16.6 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The decrease for both the three and nine months ended September 30, 2024 was due to increased interest income, primarily as a result of higher cash balances than the prior year.

Gain on event cancellation insurance claims of $300.0 million during the three and nine months ended September 30, 2024 reflected proceeds from a settlement agreement to resolve litigation concerning the Company's event cancellation insurance for 2020 and 2021. The settlement resolved all remaining 2020 and 2021 event cancellation insurance claims. Gain on event

cancellation insurance claims of $3.1 million during the nine months ended September 30, 2023 reflected proceeds related to 2020 conference cancellation insurance claims.

Other (expense) income, net for the periods presented herein included the net impact of foreign currency gains and losses from our hedging activities. Other (expense) income, net for the three and nine months ended September 30, 2024 also included a loss of $2.9 million and a gain of $2.2 million, respectively, on de-designated interest rate swaps. Other (expense) income, net for the three and nine months ended September 30, 2023 included gains of $2.5 million and $7.7 million, respectively, on de-designated interest rate swaps.

The provision for income taxes was $111.8 million and $44.5 million for the three months ended September 30, 2024 and 2023, respectively and $230.6 million and $196.0 million for the nine months ended September 30, 2024 and 2023, respectively. The effective income tax rate was 21.2% and 19.8% for the three months ended September 30, 2024 and 2023, respectively, and 21.2% and 22.5% for the nine months ended September 30, 2024 and 2023, respectively. The higher effective income tax rate for the three months ended September 30, 2024 compared to the same period in the prior year was primarily due to favorable impact of the expiration of statutes for uncertain tax positions in the three months ended September 30, 2023. The lower effective income tax rate for the nine months ended September 30, 2024 was primarily due to the impact of the sale of the TalentNeuron business on the prior year rate.

Net income for the three months ended September 30, 2024 and 2023 was $415.0 million and $180.0 million, respectively, while net income for the nine months ended September 30, 2024 and 2023 was $855.1 million and $673.8 million, respectively. Our diluted net income per share during the three and nine months ended September 30, 2024 increased by $3.06 and $2.46, respectively. The increase in net income during the three months ended September 30, 2024 was primarily due to the gain on event cancellation insurance claims, as well as an increase in revenue and lower interest expense, net, partially offset by an increase in operating expenses. The increase in net income during the nine months ended September 30, 2024 was primarily due to the gain on event cancellation insurance claims, as well as an increase in revenue and lower interest expense, net, partially offset by the gain from sale of divested operation recognized during the nine months ended September 30, 2023 and increased operating expenses.

SEGMENT RESULTS

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

Reportable Segments

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

Research

			As Of And For The Three Months Ended September 30, 2024						As Of And For The Three Months Ended September 30, 2023						Increase (Decrease)						Percentage Increase (Decrease)						As Of And For The Nine Months Ended September 30, 2024						As Of And For The Nine Months Ended September 30, 2023						Increase (Decrease)						Percentage Increase (Decrease)
Financial Measurements:
Revenues (1)			$	1,280,908					$	1,218,739					$	62,169					5		%				$	3,815,072					$	3,643,815					$	171,257					5		%
Gross contribution (1)			$	943,426					$	894,149					$	49,277					6		%				$	2,821,116					$	2,678,945					$	142,171					5		%
Gross contribution margin			74		%				73		%				1 point						—						74		%				74		%				0 point						—
Business Measurements:
Contract Value (1), (3)			$	5,042,000					$	4,698,000					$	344,000					7		%
Global Technology Sales (2):
Contract value (1), (3)			$	3,865,000					$	3,643,000					$	222,000					6		%
Client retention			83		%				83		%				0 point						—
Wallet retention			101		%				102		%				(1) point						—
Global Business Sales (2):
Contract value (1), (3)			$	1,177,000					$	1,055,000					$	122,000					12		%
Client retention			87		%				88		%				(1) point						—
Wallet retention			106		%				108		%				(2) points						—

(1)Dollars in thousands.

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

(3)Contract values are on a foreign currency neutral basis. Contract values as of September 30, 2023 have been calculated using the same foreign currency rates as 2024.

Research revenues increased by $62.2 million during the three months ended September 30, 2024 compared to the same period in 2023, or 5% on both a reported basis and excluding the foreign currency impact. For the nine months ended September 30, 2024, research revenue increased by $171.3 million compared to the same period in 2023 or 5% on both a reported basis and excluding the foreign currency impact. The increase in revenues during 2024 was primarily due to Research contract value growth in 2023. The segment gross contribution margin was 74% and 73% for the three months ended September 30, 2024 and 2023, respectively, and 74% for both the nine months ended September 30, 2024 and 2023.

Contract value increased to $5.0 billion at September 30, 2024, or 7% compared to September 30, 2023 excluding the foreign currency impact. The majority of industry sectors grew high single-digit rates or faster. Growth was led by the energy, manufacturing and healthcare sectors. Global Technology Sales (“GTS”) contract value increased by 6% at September 30, 2024 when compared to September 30, 2023. The increase in GTS contract value was primarily due to new business from existing clients. GTS contract value increased by mid single-digit rates or faster for all enterprise sizes except small enterprises and nearly half of industry sectors. Global Business Sales (“GBS”) contract value increased by 12% year-over-year, also primarily driven by new business from existing clients. The majority of our GBS practices achieved double-digit growth rates, with all enterprise sizes and the majority of sectors growing double-digits year-over-year.

GTS client retention was 83% as of both September 30, 2024 and 2023, while wallet retention was 101% and 102%, respectively. GBS client retention was 87% and 88% as of September 30, 2024 and 2023, respectively, while wallet retention was 106% and 108%, respectively. The decrease in GBS wallet retention was largely due to lower levels of spending by existing clients compared to the same period in 2023.

Conferences

			Three Months Ended September 30, 2024						Three Months Ended September 30, 2023						Increase (Decrease)						Percentage Increase (Decrease)						Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2023						Increase (Decrease)						Percentage Increase (Decrease)
Financial Measurements:
Revenues (1)			$	75,776					$	57,200					$	18,576					32		%				$	331,929					$	290,739					$	41,190					14		%
Gross contribution (1)			$	30,489					$	20,449					$	10,040					49		%				$	161,856					$	145,687					$	16,169					11		%
Gross contribution margin			40		%				36		%				4 points						—						49		%				50		%				(1) point						—
Business Measurements:
Number of destination conferences (2)			10						9						1						11		%				38						36						2						6		%
Number of destination conferences attendees (2)			12,208						9,808						2,400						24		%				52,434						45,453						6,981						15		%

(1)Dollars in thousands.

(2)Single day, local meetings are excluded.

Conferences revenues increased by $18.6 million during the three months ended September 30, 2024 compared to the same period in 2023, or 32% on a reported basis and 30% excluding the foreign currency impact. Conferences revenues increased by $41.2 million during the nine months ended September 30, 2024 compared to the same period in 2023, or 14% on both a reported basis and excluding the foreign currency impact. The increase in revenue for the three and nine months ended September 30, 2024 was primarily due to increased exhibitor revenue and an increase in attendees compared to the same periods in 2023. We held 10 and 9 in-person destination conferences during the three months ended September 30, 2024 and 2023, respectively. We held 38 and 36 in-person destination conferences during the nine months ended September 30, 2024 and 2023, respectively. Gross contribution increased to $30.5 million during the three months ended September 30, 2024 compared to $20.4 million in the same period last year. Gross contribution increased to $161.9 million during the nine months ended September 30, 2024 compared to $145.7 million in the same period last year. The increase in gross contribution during the three and nine months ended September 30, 2024 was primarily the result of the increase in revenue, partially offset by an increase in conference-related expenses and increased headcount.

Consulting

			As Of And For The Three Months Ended September 30, 2024						As Of And For The Three Months Ended September 30, 2023						Increase (Decrease)						Percentage Increase (Decrease)						As Of And For The Nine Months Ended September 30, 2024						As Of And For The Nine Months Ended September 30, 2023						Increase (Decrease)						Percentage Increase (Decrease)
Financial Measurements:
Revenues (1)			$	127,622					$	132,845					$	(5,223)					(4)		%				$	405,291					$	386,284					$	19,007					5		%
Gross contribution (1)			$	41,517					$	48,551					$	(7,034)					(14)		%				$	149,523					$	146,680					$	2,843					2		%
Gross contribution margin			33		%				37		%				(4) points						—						37		%				38		%				(1) point						—
Business Measurements:
Backlog (1), (2)			$	218,300					$	180,900					$	37,400					21		%
Billable headcount			960						946						14						1		%
Consultant utilization			65		%				64		%				1 point						—						66		%				65		%				1 point						—

(1)Dollars in thousands.

(2)Backlog is on a foreign currency neutral basis. Backlog as of September 30, 2023 has been calculated using the same foreign currency rates as 2024.

Consulting revenues decreased by 4% during the three months ended September 30, 2024 compared to the same period in 2023 on both a reported basis and excluding the foreign currency impact, with an increase in labor-based consulting revenue of 2% and a decrease in contract optimization revenue of 20%, each on a reported basis. Contract optimization revenue may vary significantly and, as such, revenues for the third quarter of 2024 may not be indicative of results for the remainder of 2024 or beyond. The segment gross contribution margin was 33% and 37% for the three months ended September 30, 2024 and 2023, respectively. The decrease in gross contribution margin for the three months ended September 30, 2024 was primarily due to the decrease in revenue.

For the nine months ended September 30, 2024, Consulting revenues increased 5% compared to the same period in 2023 on a reported basis and 6% excluding the foreign currency impact, with an increase in labor-based consulting revenue of 5% and an increase in contract optimization revenue of 4%, each on a reported basis. The segment gross contribution margin was 37% and 38% for the nine months ended September 30, 2024 and 2023, respectively.

Backlog increased by $37.4 million, or 21%, from September 30, 2023 to September 30, 2024, excluding the foreign currency impact.

LIQUIDITY AND CAPITAL RESOURCES

We finance our operations through cash generated from our operating activities and, to a lesser extent, borrowings. Note 8 — Debt in the Notes to Condensed Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt obligations. At September 30, 2024, we had $1.8 billion of cash and cash equivalents and approximately $707.0 million of available borrowing capacity on the revolving credit facility under our 2024 Credit Agreement. We believe that the Company has adequate liquidity to meet its currently anticipated needs for both the next twelve months and the foreseeable future.

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

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

Our cash and cash equivalents are held in numerous locations throughout the world with 48% held outside the U.S. at September 30, 2024. We intend to reinvest substantially all of our accumulated undistributed foreign earnings, except in instances where repatriation would result in minimal additional tax.

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

			Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2023						Increase (Decrease)
Cash provided by operating activities			$	1,149,567					$	931,407					$	218,160
Cash (used in) provided by investing activities			(79,796)						77,112						(156,908)
Cash used in financing activities			(615,557)						(434,024)						(181,533)
Net increase in cash and cash equivalents and restricted cash			454,214						574,495						(120,281)
Effects of exchange rates on cash and cash equivalents			(5,521)						(23,139)						17,618
Beginning cash and cash equivalents and restricted cash			1,319,599						698,599						621,000
Ending cash and cash equivalents and restricted cash			$	1,768,292					$	1,249,955					$	518,337

Operating

Cash provided by operating activities was $1.1 billion and $931.4 million during the nine months ended September 30, 2024 and 2023, respectively. The year-over-year increase was primarily due to the $300.0 million of insurance proceeds received during 2024 as well as increased operating income, excluding the 2023 gain from sale of divested operation, partially offset by the timing of collections.

Investing

Cash (used in) provided by investing activities was $(79.8) million and $77.1 million during the nine months ended September 30, 2024 and 2023, respectively. The decrease from 2023 to 2024 was the result of the proceeds received from the sale of the TalentNeuron business in February 2023.

Financing

Cash used in financing activities was $615.6 million and $434.0 million during the nine months ended September 30, 2024 and 2023, respectively. We used $633.4 million and $447.7 million of cash for share repurchases during the nine months ended

September 30, 2024 and 2023, respectively. In March 2024, the Company borrowed $274.4 million under the 2024 Credit Agreement. The initial borrowing was used to repay the outstanding amounts under the 2020 Credit Agreement.

Debt

On March 26, 2024, we entered into a Credit Agreement (the “2024 Credit Agreement”) among us, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”).

The 2024 Credit Agreement provides for a $1.0 billion senior unsecured five-year revolving facility. The facility may be increased, at the Company’s option and under certain conditions, by up to an additional $750 million in the aggregate. The facility may be used for revolving loans, and up to $75.0 million may be used for letters of credit. The revolving loans may be borrowed, repaid and re-borrowed until March 26, 2029, at which time all amounts borrowed must be repaid, subject to customary extension mechanics.

On March 26, 2024, the Company borrowed $274.4 million under the 2024 Credit Agreement. The initial borrowing was used to repay the outstanding amounts under the 2020 Credit Agreement. Additional amounts borrowed under the 2024 Credit Agreement will be used for working capital needs and general corporate purposes of the Company and its subsidiaries, including the funding of acquisitions and investments, payment of capital expenditures and the repurchase of shares.

As of September 30, 2024, the Company had $2.5 billion of principal amount of debt outstanding. Note 8 — Debt in the Notes to Condensed Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt obligations. From time to time, the Company may seek to retire or repurchase its outstanding debt through various methods including open market repurchases, negotiated block transactions, or otherwise, all or some of which may be effected through Rule 10b5-1 plans. Such transactions, if any, depend on prevailing market conditions, our liquidity and capital requirements, contractual restrictions, and other factors, and may involve material amounts.

OFF BALANCE SHEET ARRANGEMENTS

From January 1, 2024 through September 30, 2024, the Company has not entered into any material off-balance sheet arrangements or transactions with unconsolidated entities or other persons.