10-Q 1 it-20220331.htm 10-Q it-20220331
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission File Number 1-14443
Gartner, Inc.
(Exact name of Registrant as specified in its charter)
Delaware04-3099750
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification Number)
  
P.O. Box 1021206902-7700
56 Top Gallant Road(Zip Code)
Stamford, 
Connecticut
(Address of principal executive offices) 
Registrant’s telephone number, including area code: (203) 316-1111
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $.0005 par value per shareITNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerNon-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 29, 2022, 80,539,048 shares of the registrant’s common shares were outstanding.
1


Table of Contents

 Page
 
 
PART II. OTHER INFORMATION
 

2


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited; in thousands, except share data)
 March 31,December 31,
20222021
Assets  
Current assets:  
Cash and cash equivalents$456,175 $756,493 
Fees receivable, net of allowances of $8,000 and $6,500, respectively
1,326,398 1,365,180 
Deferred commissions360,093 380,569 
Prepaid expenses and other current assets131,263 117,838 
Total current assets2,273,929 2,620,080 
Property, equipment and leasehold improvements, net258,364 273,562 
Operating lease right-of-use assets513,290 548,258 
Goodwill2,949,321 2,951,317 
Intangible assets, net684,529 714,418 
Other assets306,020 308,689 
Total Assets$6,985,453 $7,416,324 
Liabilities and Stockholders’ Equity   
Current liabilities:  
Accounts payable and accrued liabilities$832,290 $1,134,814 
Deferred revenues2,421,726 2,238,035 
Current portion of long-term debt6,400 5,931 
Total current liabilities3,260,416 3,378,780 
Long-term debt, net of deferred financing fees 2,456,166 2,456,833 
Operating lease liabilities677,616 697,766 
Other liabilities473,102 511,887 
Total Liabilities6,867,300 7,045,266 
Stockholders’ 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 capital2,107,596 2,074,896 
Accumulated other comprehensive loss, net(82,811)(81,431)
Accumulated earnings3,221,542 3,049,027 
Treasury stock, at cost, 82,358,309 and 81,205,504 common shares, respectively
(5,128,256)(4,671,516)
Total Stockholders’ Equity 118,153 371,058 
Total Liabilities and Stockholders’ Equity $6,985,453 $7,416,324 
 

See the accompanying notes to Condensed Consolidated Financial Statements.
3


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share data)
Three Months Ended
 March 31,
 20222021
Revenues:
Research$1,136,380 $979,732 
Conferences10,354 24,802 
Consulting116,006 99,504 
Total revenues1,262,740 1,104,038 
Costs and expenses:
Cost of services and product development377,033 334,467 
Selling, general and administrative617,904 487,255 
Depreciation23,201 25,750 
Amortization of intangibles25,148 30,514 
Acquisition and integration charges2,207 640 
Total costs and expenses1,045,493 878,626 
Operating income 217,247 225,412 
Interest expense, net(31,394)(26,149)
Other income, net29,206 15,490 
Income before income taxes215,059 214,753 
Provision for income taxes42,544 50,653 
Net income $172,515 $164,100 
Net income per share:
Basic$2.10 $1.86 
Diluted$2.08 $1.84 
Weighted average shares outstanding:
Basic82,020 88,352 
Diluted82,973 89,139 

See the accompanying notes to Condensed Consolidated Financial Statements.
4


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited; in thousands)
Three Months Ended
 March 31,
 20222021
Net income $172,515 $164,100 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments(6,798)677 
Interest rate swaps – net change in deferred gain or loss5,370 5,270 
Pension plans – net change in deferred actuarial loss48 103 
Other comprehensive (loss) income, net of tax(1,380)6,050 
Comprehensive income$171,135 $170,150 

See the accompanying notes to Condensed Consolidated Financial Statements.
5


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited; in thousands)


Three Months Ended March 31, 2022
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss, NetAccumulated EarningsTreasury StockTotal
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 

Three Months Ended March 31, 2021
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss, NetAccumulated EarningsTreasury StockTotal
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 loss— — 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 

See the accompanying notes to Condensed Consolidated Financial Statements.
6


GARTNER, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited; in thousands)
Three Months Ended
 March 31,
 20222021
Operating activities:  
Net income $172,515 $164,100 
Adjustments to reconcile net income to cash provided by operating activities:  
Depreciation and amortization 48,349 56,264 
Stock-based compensation expense32,121 36,086 
Deferred taxes(7,502)3,883 
Loss on impairment of lease related assets, net23,878  
Reduction in the carrying amount of operating lease right-of-use assets17,951 18,575 
Amortization and write-off of deferred financing fees1,133 923 
Gain on de-designated swaps(29,896)(15,765)
Changes in assets and liabilities:  
Fees receivable, net30,700 54,192 
Deferred commissions18,909 (237)
Prepaid expenses and other current assets(13,596)(9,933)
Other assets(1,082)(10,081)
Deferred revenues195,306 131,786 
Accounts payable and accrued and other liabilities(321,001)(272,495)
Cash provided by operating activities167,785 157,298 
Investing activities:  
Additions to property, equipment and leasehold improvements(17,293)(12,521)
Cash used in investing activities(17,293)(12,521)
Financing activities:  
Proceeds from employee stock purchase plan6,949 5,357 
Payments on revolving credit facility (5,000)
Payments on borrowings(1,331)(5,127)
Purchases of treasury stock(451,070)(398,450)
Cash used in financing activities(445,452)(403,220)
Net decrease in cash and cash equivalents and restricted cash(294,960)(258,443)
Effects of exchange rates on cash and cash equivalents(5,358)(8,145)
Cash and cash equivalents and restricted cash, beginning of period 760,602 712,583 
Cash and cash equivalents and restricted cash, end of period $460,284 $445,995 

See the accompanying notes to Condensed Consolidated Financial Statements.
7


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 our 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 months ended March 31, 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).
March 31,December 31,
20222021
Cash and cash equivalents$456,175 $756,493 
Restricted cash classified in (1):
Prepaid expenses and other current assets4,109 4,109 
Cash and cash equivalents and restricted cash$460,284 $760,602 
(1)Restricted cash consists of escrow accounts established in connection with certain of the Company’s business acquisitions. Generally, such cash is restricted to use due to provisions contained in the underlying stock or asset purchase agreement. The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims, etc.).
8



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.

Adoption of new accounting standards. The Company adopted the accounting standard described below during the three months ended March 31, 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, etc.). 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 $29.1 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 at closing. In addition to the purchase price, the Company may also be required to pay up to $4.5 million in cash in the future based on the continuing employment of certain key employees. Such
9


amount will be recognized as compensation expense over three years 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 for Pulse and $1.9 million of liabilities on a net basis. The allocation of the purchase price is preliminary with respect to certain tax matters.

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, 2021 that indicated no impairment. Subsequent to completing the 2021 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 three months ended March 31, 2022 (in thousands).
 ResearchConferencesConsultingTotal
Balance at December 31, 2021 (1)$2,670,934 $184,021 $96,362 $2,951,317 
Foreign currency translation impact (1,652)(27)(317)(1,996)
Balance at March 31, 2022 (1)$2,669,282 $183,994 $96,045 $2,949,321 
(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).
March 31, 2022Customer
Relationships
Technology-relatedOtherTotal
Gross cost at December 31, 2021$1,096,358 $61,216 $10,436 $1,168,010 
Foreign currency translation impact (7,603)(112) (7,715)
Gross cost1,088,755 61,104 10,436 1,160,295 
Accumulated amortization (1)(432,550)(38,366)(4,850)(475,766)
Balance at March 31, 2022$656,205 $22,738 $5,586 $684,529 
December 31, 2021Customer
Relationships
Technology-relatedOther 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 
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(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 $25.1 million and $30.5 million during the three months ended March 31, 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 nine months)$75,065 
2023100,071 
202492,890 
202582,361 
202679,686 
Thereafter254,456 
$684,529 

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 March 31, 2022
Primary Geographic MarketResearchConferencesConsultingTotal
United States and Canada$740,529 $7,652 $68,789 $816,970 
Europe, Middle East and Africa263,129 1,238 32,444 296,811 
Other International132,722 1,464 14,773 148,959 
Total revenues $1,136,380 $10,354 $116,006 $1,262,740 

Three Months Ended March 31, 2021
Primary Geographic MarketResearchConferencesConsultingTotal
United States and Canada$631,333 $19,599 $57,486 $708,418 
Europe, Middle East and Africa230,201 2,713 30,362 263,276 
Other International118,198 2,490 11,656 132,344 
Total revenues $979,732 $24,802 $99,504 $1,104,038 
(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

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Three Months Ended March 31, 2022
Timing of Revenue RecognitionResearchConferencesConsultingTotal
Transferred over time (1)$1,025,810 $ $96,436 $1,122,246 
Transferred at a point in time (2)110,570 10,354 19,570 140,494 
Total revenues $1,136,380 $10,354 $116,006 $1,262,740 

Three Months Ended March 31, 2021
Timing of Revenue RecognitionResearchConferencesConsultingTotal
Transferred over time (1)$894,087 $ $84,342 $978,429 
Transferred at a point in time (2)85,645 24,802 15,162 125,609 
Total revenues $979,732 $24,802 $99,504 $1,104,038 

(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 March 31, 2022 was approximately $4.3 billion. The Company expects to recognize $2.0 billion, $1.7 billion and $580.9 million 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).

March 31,December 31,
20222021
Assets:
Fees receivable, gross (1)$1,334,398 $1,371,680 
Contract assets recorded in Prepaid expenses and other current assets (2)$21,820 $20,054 
Contract liabilities:
Deferred revenues (current liability) (3)$2,421,726 $2,238,035 
Non-current deferred revenues recorded in Other liabilities (3)46,257 48,176 
Total contract liabilities$2,467,983 $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 restriction.
(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).
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The Company recognized revenue of $833.9 million and $726.7 million during the three months ended March 31, 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 months ended March 31, 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
 March 31,
 20222021
Numerator:  
Net income used for calculating basic and diluted income per share$172,515 $164,100 
Denominator:  
Weighted average common shares used in the calculation of basic income per share 82,020 88,352 
Dilutive effect of outstanding awards associated with stock-based compensation plans (1)953 787 
Shares used in the calculation of diluted income per share 82,973 89,139 
Basic income per share$2.10 $1.86 
Diluted income per share $2.08 $1.84 
(1)Certain potential shares of common stock were not included in the computation of diluted income per share because the effect would have been anti-dilutive. These potential shares of common stock totaled approximately 0.2 million and 0.4 million for the three months ended March 31, 2022 and 2021, respectively.

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 March 31, 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
 March 31,
Award type20222021
Stock appreciation rights$1.9 $2.0 
Restricted stock units (2)30.0 33.9 
Common stock equivalents0.2 0.2 
Total (1)$32.1 $36.1 

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Three Months Ended
 March 31,
Expense category line item20222021
Cost of services and product development$11.5 $13.7 
Selling, general and administrative20.6 22.4 
Total (1) (2)$32.1 $36.1 

(1)Includes charges of $19.2 million and $21.5 million during the three months ended March 31, 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 three months ended March 31, 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 March 31, 2022ResearchConferencesConsultingConsolidated
Revenues$1,136,380 $10,354 $116,006 $1,262,740 
Gross contribution849,379 (2,876)51,012 897,515 
Corporate and other expenses   (680,268)
Operating income   $217,247 

14


Three Months Ended March 31, 2021ResearchConferencesConsultingConsolidated
Revenues $979,732 $24,802 $99,504 $1,104,038 
Gross contribution 724,372 13,896 39,098 777,366 
Corporate and other expenses   (551,954)
Operating income   $225,412 

The table below provides a reconciliation of total segment gross contribution to net income for the periods indicated (in thousands).
Three Months Ended
March 31,
20222021
Total segment gross contribution$897,515 $777,366 
Costs and expenses:
Cost of services and product development - unallocated (1)11,808 7,795 
Selling, general and administrative 617,904 487,255 
Depreciation and amortization48,349 56,264 
Acquisition and integration charges2,207 640 
Operating income 217,247 225,412 
Interest expense and other, net(2,188)(10,659)
Less: Provision for income taxes42,544 50,653 
Net income $172,515 $164,100 
(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).
March 31,December 31,
Description20222021
2020 Credit Agreement - Term loan facility (1)$286,400 $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)5,400 5,531 
Principal amount outstanding (7)2,491,800 2,493,131 
Less: deferred financing fees (8)(29,234)(30,367)
Net balance sheet carrying amount$2,462,566 $2,462,764 
(1)The contractual annualized interest rate as of March 31, 2022 on the 2020 Credit Agreement Term loan facility and the Revolving credit facility was 1.50%, which consisted of a floating Eurodollar base rate of 0.250% plus a margin of 1.250%. 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 March 31, 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.
15


(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 $0.4 million as of March 31, 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 months ended March 31, 2022, including the effects of its interest rate swaps discussed below, was 4.82%.
(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
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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 March 31, 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 March 31, 2022, the Company had two fixed-for-floating interest rate swap contracts with a total notional value of $700.0 million that mature in 2025. The Company pays base fixed rates of 3.04% and in return receives a floating Eurodollar base rate on 30-day notional borrowings. 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.

As a result of the payment under the then outstanding 2016 Credit Agreement term loan and revolving credit facility, the Company de-designated all of its interest rate swaps effective June 30, 2020. Accordingly, hedge accounting is not applicable, and 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 March 31, 2022, $67.8 million is remaining in Accumulated other comprehensive loss, net. The interest rate swaps had negative unrealized fair values (liabilities) of $15.3 million and $53.7 million as of March 31, 2022 and December 31, 2021, respectively, of which $51.0 million and $56.3 million were recorded in Accumulated other comprehensive loss, net of tax effect, as of March 31, 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 $0.5 billion of the Company’s common stock during 2021 and February 2022, respectively. $677.8 million remained available under the share repurchase program as of March 31, 2022. 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. See Note 15 — Subsequent Event for a discussion regarding an increase in the Company’s share repurchase authorization.

The Company’s share repurchase activity is presented in the table below for the periods indicated.
Three Months Ended
 March 31,
 20222021
Number of shares repurchased (1) 1,627,709 2,274,710 
Cash paid for repurchased shares (in thousands) (2)$451,070 $398,450 
(1)The average purchase price for repurchased shares was $284.53 and $180.44 for the three months ended March 31, 2022 and 2021, respectively. The repurchased shares during the three months ended March 31, 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 three months ended March 31, 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
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purchases with trade dates in March 2021 that settled in April 2021. The cash paid for repurchased shares during the three months ended March 31, 2022 excluded $12.1 million of open market purchases with trade dates in March 2022 that settled in April 2022.

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 March 31, 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  (6,798)(6,798)
  Reclassifications from AOCL to income (2), (3)5,370 48  5,418 
Other comprehensive income (loss), net5,370 48 (6,798)(1,380)
Balance – March 31, 2022$(50,953)$(6,624)$(25,234)$(82,811)

Three Months Ended March 31, 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  677 677 
  Reclassifications from AOCL to income (2), (3)5,270 103  5,373 
Other comprehensive income (loss), net5,270 103 677 6,050 
Balance – March 31, 2021$(72,834)$(9,206)$(11,138)$(93,178)
(1)Amounts in parentheses represent debits (deferred losses).
(2)$7.2 million and $7.0 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the three months ended March 31, 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 March 31, 2022 that is expected to be reclassified into earnings within the next 12 months is $20.6 million.

Note 10 — Income Taxes

The provision for income taxes for the three months ended March 31, 2022 and 2021 was $42.5 million and $50.7 million, respectively. The effective income tax rate was 19.8% and 23.6% for the three months ended March 31, 2022 and 2021, respectively. The year-over-year decrease in the effective income tax rate was primarily due to the relative impact of tax benefits from stock-based compensation.

The Company had gross unrecognized tax benefits of $153.4 million on March 31, 2022 and $150.0 million on December 31, 2021. It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $29.5 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
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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).

March 31, 2022
Derivative Contract TypeNumber 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)2 $700,000 $(6,266)Other liabilities$(50,953)
(9,019)Accrued liabilities
Foreign currency forwards (2)41 318,622 (167)Accrued liabilities