Gartner(IT) - 2023 Q4 - Annual Report

Part I Business Overview Gartner provides actionable, objective insights to nearly 15,000 global enterprises through its Research, Conferences, and Consulting segments - Gartner's core business is providing actionable, objective insights to drive smarter decisions and stronger performance on critical priorities for organizations[9] - The company serves nearly 15,000 enterprises in approximately 90 countries across all major functions, industries, and enterprise sizes[9] - Gartner delivers products and services globally through its three business segments: Research, Conferences, and Consulting[10] - The Research segment offers independent, objective insights via subscription services, including published research, data, benchmarks, and direct access to approximately 2,500 research experts[17] - The Conferences segment provides learning, sharing, and networking opportunities for executives and teams, including the Gartner Symposium/Xpo series; 47 in-person conferences were held in 2023, attracting over 75,500 attendees[11][20] - The Consulting segment supports senior executives driving technology-driven strategic initiatives with experienced consultants, leveraging Gartner's market-leading research and custom analysis[12][20] - The company's fiscal year runs from January 1 to December 31[13] Risk Factors Gartner faces multiple risks, including market changes, AI uncertainties, subscription reliance, and global economic volatility - The company's success relies on providing high-quality, timely, and useful research and analysis; failure to adapt to rapidly changing markets, including AI and machine learning, could significantly harm the business[42][43][44] - Uncertainties in the development, deployment, and use of Artificial Intelligence (AI) technology, such as algorithm flaws or data biases, could negatively impact business and reputation or reduce demand for company products[46] - The Research business is highly dependent on subscription renewals and new sales, accounting for approximately 76% of total revenue in 2023 and 2022; failure to maintain historical retention rates or generate new sales would lead to revenue decline[48] Research Business Client Retention | Segment | 2023 Client Retention | 2022 Client Retention | | :------ | :-------------------- | :-------------------- | | Research | 84% | 86.3% | - Conference profitability and success are influenced by external factors like infectious diseases, labor strikes, transportation disruptions, economic slowdowns, geopolitical crises, and natural disasters; as of 2023, conference cancellation insurance does not cover cancellations due to infectious diseases[50][51] - The company's success depends on attracting and retaining highly qualified personnel, including senior management, research analysts, consultants, and sales staff; intense competition for talent and wage inflation could impact profit margins[54][55] - Intellectual property protection faces challenges, including unauthorized access to proprietary information by third parties and potentially inadequate legal and enforcement mechanisms for emerging technologies like AI and machine learning[56] - The company faces cybersecurity risks, including cyberattacks, malware, and distributed denial-of-service attacks; breaches could lead to reputational damage, customer loss, fines, regulatory actions, and litigation[61][63][64] - Global economic conditions, including inflation, slower growth, rising interest rates, and recessions, could negatively impact the company's business by reducing demand for its products and services[78] Unresolved Staff Comments The company reports no unresolved staff comments - No unresolved staff comments[92] Cybersecurity Gartner has implemented a layered cybersecurity program, aligned with the NIST framework, overseen by the Audit Committee, and managed by the CIO and CISO - The company has implemented a layered cybersecurity program designed to assess, identify, and manage cybersecurity threat risks, aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework[93][99] - The Audit Committee oversees cybersecurity matters, while the CIO and CISO manage and communicate cybersecurity risks and ensure compliance with legal, regulatory, and contractual security requirements[94][95][96] - The cybersecurity program employs a risk-based, cross-functional approach, utilizing multi-layered security controls, processes, and procedures (e.g., vulnerability management, multi-factor authentication, encryption) to identify, prevent, and mitigate threats[98][99] - The company has developed an incident response plan, following the NIST 800-61 framework, encompassing preparation, detection and analysis, containment, eradication and recovery, and post-incident remediation[101] - All Gartner associates and third-party contractors receive security training and awareness programs[102] - Gartner maintains cybersecurity insurance covering the company and its subsidiaries[102] - To date, the company has not experienced any material cybersecurity threats or incidents[103] Properties As of December 31, 2023, Gartner leased approximately 15 domestic and 60 international office properties, with its headquarters in Stamford, Connecticut, and believes its current real estate footprint supports future growth - As of December 31, 2023, the company leased approximately 15 domestic and 60 international office properties for ongoing business operations[104] - The company's headquarters are located in Stamford, Connecticut, with a lease expiring in 2027 and including three five-year renewal options[105] - The company transitioned to a hybrid work model in early 2022, allowing most associates to work remotely[106] - The company believes its current real estate footprint is sufficient to support future growth[106] Legal Proceedings Gartner is involved in legal and administrative proceedings arising in the ordinary course of business, but believes any potential liability beyond amounts accrued will not materially impact its financial condition, cash flows, or operating results - The company is involved in legal and administrative proceedings arising in the ordinary course of business[107] - The company believes any potential liability beyond amounts accrued will not materially impact its financial condition, cash flows, or operating results[107] Mine Safety Disclosures (Not Applicable) This disclosure item is not applicable to Gartner - This disclosure item is not applicable[108] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Gartner's common stock is listed on the NYSE under "IT"; as of February 2, 2024, 77,967,884 shares were outstanding, with $987 million remaining for authorized share repurchases as of December 31, 2023 - The company's common stock is listed on the New York Stock Exchange under the trading symbol “IT”[3][109] - As of February 2, 2024, the company had 77,967,884 shares of common stock outstanding[5] - The Board of Directors has authorized multiple share repurchase programs, including $1.2 billion in 2015, and additional authorizations of $1.6 billion in 2021, $1 billion in 2022, and $900 million in 2023; as of December 31, 2023, $987 million remained available for repurchases[111][347] Q4 2023 Stock Repurchase Summary | Period | Total Number of Shares Purchased () | Average Price Paid Per Share ($) | Total Number of Shares Purchased Under Announced Programs () | Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | | :----------------------------- | :----------------------------------- | :------------------------------- | :---------------------------------------------------------- | :------------------------------------------------------------------------------------------------------- | | October 1, 2023 to Oct 31, 2023 | 298,097 | 338.40 | 297,247 | 1,010,159 | | November 1, 2023 to Nov 30, 2023 | 107,493 | 370.36 | 65,148 | 987,098 | | December 1, 2023 to Dec 31, 2023 | 6,039 | 457.60 | — | 987,098 | | Total for the quarter | 411,629 | 348.49 | 362,395 | | RESERVED This item is reserved with no specific information - This item is reserved[114] Management's Discussion and Analysis of Financial Condition and Results of Operations Gartner's 2023 financial performance was marked by revenue and net income growth, supported by segment strength and a business divestiture Forward-Looking Statements This report contains forward-looking statements whose actual results may differ materially due to various known and unknown risks and uncertainties, including macroeconomic conditions, market volatility, strategic execution, geopolitical events, and technological developments - This annual report contains forward-looking statements regarding the company's expectations, beliefs, hopes, intentions, predictions, or strategies for the future[117] - Actual results may differ materially from those projected or assumed in forward-looking statements due to key risk factors including general economic conditions (e.g., inflation), macroeconomic and market volatility, ability to implement strategies, conference timing, acquisition integration, debt repayment capacity, product and service maintenance and expansion, customer base growth, talent attraction and retention, intellectual property protection, AI technology development, international operation risks, geopolitical conflicts, cybersecurity incidents, government contract risks, ESG commitment achievement, and tax policy changes[118] - Readers should not place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date of this filing[119] Business Overview Gartner provides actionable, objective insights to nearly 15,000 global enterprises through its Research, Conferences, and Consulting segments, optimizing technology investments and enhancing business performance - Gartner provides actionable, objective insights to drive smarter decisions and stronger performance on critical priorities for organizations[121] - The company is a trusted advisor and objective resource for nearly 15,000 enterprises in approximately 90 countries worldwide[121] - Gartner delivers products and services globally through its three business segments: Research, Conferences, and Consulting[122][124] Business Measurements Gartner uses specific business measurements to evaluate segment performance, focusing on contract value, client and wallet retention for Research, number of destination conferences and attendees for Conferences, and consulting backlog and utilization for Consulting - Research business measurements include: contract value (annualized value of all subscription-related contracts), client retention (measures client satisfaction and renewal of business relationships), and wallet retention (measures contract value retained with clients)[125] - Conferences business measurements include: number of destination conferences (total virtual or in-person conferences completed during the period) and destination conference attendees (total number of individuals attending virtual or in-person conferences)[125] - Consulting business measurements include: consulting backlog (future revenue from in-progress consulting and benchmarking engagements) and utilization (consultant productivity measure, total billable hours divided by total available billable hours)[125] Executive Summary of Operations and Financial Position Gartner's 2023 total revenue reached $5.9 billion, an 8% increase, with net income of $882.5 million and diluted EPS of $11.08, driven by growth across all segments and $1.2 billion in operating cash flow Key Financial Data 2023 vs 2022 | Metric | 2023 (in millions) | 2022 (in millions) | Change (YoY) | Percentage Change (YoY) | | :-------------------- | :----------------- | :----------------- | :----------- | :---------------------- | | Total Revenues | $5,900 | $5,475.8 | $431.1 | 8% | | Net Income | $882.5 | $807.8 | $74.7 | 9% | | Diluted EPS | $11.08 | $9.96 | $1.12 | 11.2% | - Research revenue grew 6% with a gross margin of 74%; contract value (foreign currency neutral) reached $4.8 billion as of December 31, 2023, an 8% year-over-year increase[129] - Conferences revenue increased 30% to $505.2 million with a gross margin of 50%; 47 in-person conferences were held in 2023, compared to 25 in-person and 16 virtual conferences in 2022[130] - Consulting revenue grew 7% to $514.7 million with a gross margin of 35%; backlog was $162.1 million as of December 31, 2023[131] - Operating cash flow for 2023 was $1.2 billion; as of December 31, 2023, the company had $1.3 billion in cash and cash equivalents and approximately $1 billion in available borrowing capacity under its revolving credit facility; approximately $600 million of common stock was repurchased in 2023[132] Critical Accounting Policies and Estimates Gartner's financial statements involve complex judgments and estimates for revenue recognition, income tax accounting, and share-based compensation, requiring management assumptions about future events that can significantly impact reported financial results - Revenue recognition, income tax accounting, and share-based compensation accounting are critical accounting policies and estimates in the company's financial statement preparation, requiring complex and subjective management judgments and estimates[133][135] - Research revenue primarily derives from subscription contracts and is recognized ratably over the contract term; Conference revenue is recognized upon completion of the conference; Consulting revenue is recognized based on satisfaction of performance obligations (fixed-fee contracts) or work delivered (time-and-materials contracts), with contract optimization revenue being contingent and recognized when payment conditions are met[136] - Income taxes are accounted for using the asset and liability method, involving estimates for current taxes and deferred tax assets and liabilities, as well as judgments regarding the realizability of deferred tax assets and uncertain tax positions[139] - Share-based compensation expense is based on the grant-date fair value and recognized over the relevant service period; fair value calculations involve subjective assumptions about expected life and stock price volatility, and estimates of the probability of achieving performance targets[140] Results of Operations Gartner's 2023 total revenue grew 8% to $5.9 billion, with operating income increasing 12% to $1.237 billion due to revenue growth and a $135.4 million gain from the TalentNeuron sale, partially offset by higher operating expenses; net income rose 9% to $882.5 million, and diluted EPS increased to $11.08 Consolidated Results of Operations 2023 vs 2022 | Metric (in thousands) | 2023 | 2022 | Increase (Decrease) | Percentage Change | | :-------------------- | :---------- | :---------- | :------------------ | :---------------- | | Total revenues | $5,906,956 | $5,475,846 | $431,110 | 8% | | Operating income | $1,236,894 | $1,100,106 | $136,788 | 12% | | Net income | $882,466 | $807,799 | $74,667 | 9% | | Diluted EPS | $11.08 | $9.96 | $1.12 | 11% | Revenue by Geographic Market 2023 vs 2022 | Primary Geographic Market | 2023 (in thousands) | 2022 (in thousands) | Increase (Decrease) | Percentage Increase | | :------------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | United States and Canada | $3,911,042 | $3,619,382 | $291,660 | 8% | | Europe, Middle East and Africa | $1,332,070 | $1,234,659 | $97,411 | 8% | | Other International | $663,844 | $621,805 | $42,039 | 7% | | Total revenues | $5,906,956 | $5,475,846 | $431,110 | 8% | Revenue by Business Segment 2023 vs 2022 | Segment | 2023 (in thousands) | 2022 (in thousands) | Increase (Decrease) | Percentage Increase | | :---------- | :------------------ | :------------------ | :------------------ | :------------------ | | Research | $4,887,046 | $4,604,791 | $282,255 | 6% | | Conferences | $505,164 | $389,273 | $115,891 | 30% |\ | Consulting | $514,746 | $481,782 | $32,964 | 7% | | Total revenues | $5,906,956 | $5,475,846 | $431,110 | 8% | - Cost of services and product development increased 12% to $1.9 billion in 2023, primarily due to higher compensation costs from increased headcount and higher conference-related expenses[145] - Selling, general and administrative (SG&A) expenses increased 9% to $2.7 billion in 2023, mainly due to higher personnel costs, partially offset by reduced facility expenses from a smaller real estate footprint; impairment charges for right-of-use assets and other long-lived assets were $20.4 million in 2023, compared to $54 million in 2022[146] - Total quota-bearing sales headcount increased 2% year-over-year in 2023[147] - A pre-tax gain of $135.4 million was recognized from the sale of the TalentNeuron business in February 2023[149] - Net interest expense decreased by $27.1 million in 2023, primarily due to increased interest income and the expiration of a $700 million fixed-to-floating interest rate swap in March 2022, partially offset by higher interest expense on term loans[151] - Income tax provision for 2023 was $264.7 million (effective tax rate of 23.1%), higher than $219.4 million (effective tax rate of 21.4%) in 2022, primarily due to changes in unrecognized tax benefits[154] Segment Results Gartner evaluates segment performance based on gross contribution; in 2023, Research revenue grew 6% with a 74% gross margin, Conferences revenue increased 30% due to in-person event recovery with a 50% gross margin, and Consulting revenue grew 7% with a 35% gross margin - The company evaluates the performance of its reportable segments and allocates resources based on gross contribution[156][158] Gross Contribution by Business Segment 2023 vs 2022 | Segment | 2023 Gross Contribution (in thousands) | 2022 Gross Contribution (in thousands) | Change (YoY) | Percentage Change (YoY) | | :---------- | :------------------------------------- | :------------------------------------- | :----------- | :---------------------- | | Research | $3,600,143 | $3,414,574 | $185,569 | 5% | | Conferences | $253,739 | $210,726 | $43,013 | 20% | | Consulting | $181,501 | $189,834 | $(8,333) | (4)% | Research Segment In 2023, Research segment revenue grew 6% to $4.9 billion, maintaining a 74% gross margin, with foreign currency neutral contract value increasing 8% to $4.8 billion, primarily driven by new business from existing clients, while client and wallet retention rates slightly declined - Research segment revenue increased 6% year-over-year (reported and foreign currency neutral) to $4.887 billion in 2023[162] - Research gross contribution margin was 74% in both 2023 and 2022[162] - Contract value (foreign currency neutral) increased to $4.8 billion as of December 31, 2023, an 8% year-over-year increase[163] - Contract value growth was primarily driven by new business from existing clients, with the public, energy, and manufacturing sectors showing the fastest growth[163] Research Business Client and Wallet Retention 2023 vs 2022 | Metric | 2023 | 2022 | Change (points) | | :-------------- | :---- | :---- | :-------------- | | GTS Client Retention | 83% | 86% | (3) | | GTS Wallet Retention | 101% | 105% | (4) | | GBS Client Retention | 87% | 89% | (2) | | GBS Wallet Retention | 107% | 112% | (5) | - The decline in wallet retention was primarily due to lower incremental spending by existing clients compared to the prior year[164] Conferences Segment In 2023, Conferences segment revenue grew 30% to $505.2 million, primarily due to the recovery of in-person destination conferences (47 held in 2023 vs 25 in-person and 16 virtual in 2022), though gross contribution margin decreased to 50% from 54% due to higher in-person event costs - Conferences revenue increased 30% year-over-year (reported and foreign currency neutral) to $505.2 million in 2023[167] - 47 in-person destination conferences were held in 2023, compared to 25 in-person and 16 virtual conferences in 2022[167] - Gross contribution margin decreased from 54% in 2022 to 50% in 2023, primarily due to the increase in in-person destination conferences[167] - Destination conference attendees increased 26% to 75,569 in 2023, up from 60,104 in 2022[165] Consulting Segment In 2023, Consulting segment revenue grew 7% to $514.7 million, driven by 6% growth in labor-based consulting and 10% in contract optimization, while gross contribution margin decreased to 35% from 39% due to higher personnel costs from increased headcount, and backlog grew 21% to $162.1 million - Consulting revenue increased 7% year-over-year (reported and foreign currency neutral) to $514.7 million in 2023[170] - Revenue growth was driven by a 6% increase in labor-based consulting and a 10% increase in contract optimization[170] - Gross contribution margin decreased from 39% in 2022 to 35% in 2023, primarily due to higher personnel costs from increased headcount[170] - Backlog increased 21% to $162.1 million from December 31, 2022, to December 31, 2023[171] - Average billable headcount increased 13% to 934 in 2023, up from 827 in 2022[168] - Consultant utilization decreased by 5 percentage points to 65% in 2023, down from 70% in 2022[168] Liquidity and Capital Resources Gartner funds operations through cash flow from operating activities and borrowings; in 2023, operating cash flow was $1.2 billion, with $1.3 billion in cash and cash equivalents and $1 billion in available revolving credit at year-end, while the company repurchased $600 million in stock and repaid $7.8 million in debt principal - The company funds its operations through cash flow generated from operating activities and borrowings[173] - As of December 31, 2023, the company had $1.3 billion in cash and cash equivalents and approximately $1 billion in available borrowing capacity under its revolving credit facility[173] Cash Flow Summary 2023 vs 2022 | Metric | 2023 (in thousands) | 2022 (in thousands) | Increase (Decrease) | | :------------------------------------------ | :------------------ | :------------------ | :------------------ | | Cash provided by operating activities | $1,155,737 | $1,101,422 | $54,315 | | Cash provided by (used in) investing activities | $54,157 | $(117,558) | $171,715 | | Cash used in financing activities | $(588,881) | $(1,027,442) | $438,561 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $621,013 | $(43,578) | $664,591 | | Ending cash and cash equivalents and restricted cash | $1,319,599 | $698,599 | $621,000 | - Operating cash flow for 2023 was $1.2 billion, an increase year-over-year, primarily due to higher operating income and strong collections, partially offset by increased income tax payments[178] - Cash flow from investing activities in 2023 was $54.2 million, primarily from the gain on the sale of the TalentNeuron business in February 2023[179] - Cash outflow from financing activities in 2023 was $600 million, primarily for stock repurchases ($600 million) and debt principal repayments ($7.8 million)[180] - As of December 31, 2023, 55% of the company's cash and cash equivalents were held overseas and are planned for reinvestment[175] Consolidated Financial Performance Summary 2023 vs 2022 | Metric | 2023 (in millions) | 2022 (in millions) | Change (YoY) | Percentage Change (YoY) | | :-------------------- | :----------------- | :----------------- | :----------- | :---------------------- | | Total Revenues | $5,906.9 | $5,475.8 | $431.1 | 8% | | Net Income | $882.5 | $807.8 | $74.7 | 9% | | Diluted EPS | $11.08 | $9.96 | $1.12 | 11.2% | - The company's strategic core focuses on creating actionable insights for executives and their teams, delivering innovative and highly differentiated products, building strong sales capabilities, providing world-class client service, and continuously improving operational efficiency[127] - The sale of the non-core TalentNeuron business was completed in February 2023, generating approximately $161.1 million in cash and recognizing a pre-tax gain of $135.4 million[123][149] Business Segment Performance Summary 2023 vs 2022 | Segment | 2023 Revenue (in millions) | 2022 Revenue (in millions) | Revenue Change (YoY) | Gross Contribution Margin 2023 | Gross Contribution Margin 2022 | | :---------- | :------------------------- | :------------------------- | :------------------- | :----------------------------- | :----------------------------- | | Research | $4,900 | $4,600 | +6% | 74% | 74% | | Conferences | $505.2 | $389.3 | +30% | 50% | 54% | | Consulting | $514.7 | $481.8 | +7% | 35% | 39% | - Operating cash flow for 2023 was $1.2 billion; as of December 31, 2023, the company had $1.3 billion in cash and cash equivalents and approximately $1 billion in available borrowing capacity under its revolving credit facility; approximately $600 million of the company's common stock was repurchased in 2023[132] Quantitative and Qualitative Disclosures About Market Risk Gartner faces interest rate risk from floating-rate debt and foreign currency risk from international operations, which it mitigates through interest rate swaps and forward foreign exchange contracts - As of December 31, 2023, the company had $2.5 billion in total outstanding principal debt[189] Interest Rate Risk Gartner has approximately $274 million in floating-rate debt exposed to rising interest rates, which the company mitigates by effectively converting floating rates to fixed rates through interest rate swap contracts - As of December 31, 2023, approximately $274 million of the company's outstanding debt was based on floating benchmark interest rates, exposing it to the risk of rising interest rates[190] - The company mitigates its overall exposure to rising interest rates through interest rate swap contracts, which effectively convert the floating benchmark interest rates on all floating-rate borrowings to fixed rates[190] Foreign Currency Risk Gartner's international operations, with most revenue denominated in local currencies, expose it to foreign currency translation and transaction risks, which are partially hedged using forward foreign exchange contracts - The majority of the company's revenue is derived from sales outside the United States, typically transacted in local currencies, exposing it to foreign currency translation and transaction risks[191] - Foreign currency translation risk can cause cash and cash equivalents to increase or decrease due to exchange rate fluctuations; for example, a 10% change in exchange rates could result in a fluctuation of approximately $79.3 million[192] - The company typically hedges a portion of its foreign currency transaction risk through forward foreign exchange contracts[193] Credit Risk Gartner's credit risk is concentrated in cash equivalents, accounts receivable, interest rate swaps, and forward foreign exchange contracts, with limited concentration due to diverse customers and investment-grade banking partners - The financial instruments that expose the company to credit risk primarily include short-term highly liquid investments (cash equivalents), accounts receivable, interest rate swap contracts, and forward foreign exchange contracts[194] - The majority of the company's cash and cash equivalents, interest rate swap contracts, and forward foreign exchange contracts are with large, investment-grade commercial banks, and credit risk concentration for accounts receivable is limited due to a diverse and geographically dispersed customer base[194] Financial Statements and Supplementary Data This item incorporates Gartner's financial statements for 2023, 2022, and 2021, along with KPMG LLP's report, into this annual 10-K report - The company's financial statements for 2023, 2022, and 2021, along with the report of independent registered public accounting firm KPMG LLP, have been filed as part of this report[195] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with accountants on accounting and financial disclosure - No changes or disagreements[196] Controls and Procedures Gartner's management, including the CEO and CFO, assessed and determined that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2023, with the latter also audited by KPMG LLP - As of December 31, 2023, the company's Chief Executive Officer and Chief Financial Officer have concluded that disclosure controls and procedures are effective[200] - Management is responsible for establishing and maintaining effective internal control over financial reporting and assessed its effectiveness based on the COSO framework[201][202] - Management concluded that Gartner's internal control over financial reporting was effective as of December 31, 2023, and this assessment was audited by the independent registered public accounting firm KPMG LLP[203] Disclosure Controls and Procedures Gartner has established disclosure controls and procedures to ensure timely and accurate recording, processing, summarizing, and reporting of information required in reports filed under the Securities Exchange Act, which management deemed effective as of December 31, 2023 - Disclosure controls and procedures are designed to ensure that information required to be filed in reports under the Securities Exchange Act is recorded, processed, summarized, and reported on a timely and accurate basis[199] - Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[200] Management's Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining effective internal control over financial reporting, which it assessed as effective as of December 31, 2023, based on the COSO framework, and KPMG LLP also audited this assessment - Gartner's management is responsible for establishing and maintaining effective internal control over financial reporting[201] - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2023, based on the criteria established in Internal Control—Integrated Framework (2013) issued by COSO[202] - Management concluded that Gartner's internal control over financial reporting was effective as of December 31, 2023[203] - KPMG LLP has audited management's report on the effectiveness of internal control over financial reporting[203] Changes in Internal Control Over Financial Reporting No changes in the company's internal control over financial reporting occurred during the quarter ended December 31, 2023, that materially affected or are reasonably likely to materially affect internal control - No material changes in the company's internal control over financial reporting occurred during the quarter ended December 31, 2023[204] Other Information No directors or Section 16 officers adopted or terminated Rule 10b5-1(c) trading arrangements or non-Rule 10b5-1 trading arrangements during the three months ended December 31, 2023 - No directors or Section 16 officers adopted or terminated Rule 10b5-1(c) trading arrangements or non-Rule 10b5-1 trading arrangements during the three months ended December 31, 2023[205] Disclosure Regarding Foreign Jurisdictions That Prevent Inspections The company reports no disclosures regarding foreign jurisdictions that prevent inspections - No relevant disclosures[206] Part III Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference into the company's 2024 Proxy Statement - The information required for this item is incorporated by reference into the company's 2024 Proxy Statement[207] Executive Compensation Information regarding executive compensation is incorporated by reference into the company's 2024 Proxy Statement - The information required for this item is incorporated by reference into the company's 2024 Proxy Statement[208] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference into the company's 2024 Proxy Statement - The information required for this item is incorporated by reference into the company's 2024 Proxy Statement[209] Certain Relationships and Related Transactions and Director Independence Information regarding certain relationships and related transactions and director independence is incorporated by reference into the company's 2024 Proxy Statement - The information required for this item is incorporated by reference into the company's 2024 Proxy Statement[210] Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference into the company's 2024 Proxy Statement - The information required for this item is incorporated by reference into the company's 2024 Proxy Statement[211] Part IV Exhibits and Financial Statement Schedules This item lists the exhibits and financial statement schedules filed as part of the 10-K report, including the independent registered public accounting firm's report and consolidated financial statements, along with corporate charters, debt indentures, credit agreements, equity incentive plans, and executive compensation policies - The report of the independent registered public accounting firm and financial statements have been filed as part of this report[213] - The exhibit list includes the company's certificate of incorporation, bylaws, senior note indentures, amended and restated credit agreement, equity incentive plans, executive employment agreements, and compensation policies[214][215] Index to Consolidated Financial Statements This section provides an index to the consolidated financial statements of Gartner, Inc. and its subsidiaries, including the independent auditors' report, consolidated balance sheets, statements of operations, comprehensive income, stockholders' equity, cash flows, and notes to consolidated financial statements - The index to consolidated financial statements includes: Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Stockholders' Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements[217] Report of Independent Registered Public Accounting Firm (Financial Statements) KPMG LLP, as the independent registered public accounting firm, issued an unqualified opinion on Gartner's consolidated financial statements for the three years ended December 31, 2023, affirming their fair presentation in all material respects in accordance with U.S. GAAP, with the assessment of unrecognized tax benefits related to transfer pricing identified as a critical audit matter - KPMG LLP issued an unqualified opinion on the company's consolidated financial statements for the three years ended December 31, 2023[220] - The auditors believe the consolidated financial statements fairly present, in all material respects, the financial position, results of operations, and cash flows of the company in accordance with U.S. Generally Accepted Accounting Principles[220] - A critical audit matter identified was the assessment of unrecognized tax benefits related to transfer pricing, which required complex audit judgment[224][225] Report of Independent Registered Public Accounting Firm (Internal Control) KPMG LLP issued an unqualified opinion on Gartner's internal control over financial reporting as of December 31, 2023, concluding that the company maintained effective internal control in all material respects based on the COSO framework - KPMG LLP issued an unqualified opinion on the company's internal control over financial reporting as of December 31, 2023[230] - The auditors believe the company maintained effective internal control over financial reporting in all material respects based on the criteria established in Internal Control—Integrated Framework (2013) issued by COSO[230] Consolidated Balance Sheets As of December 31, 2023, Gartner's total consolidated assets increased to $7.836 billion from $7.3 billion in 2022, primarily due to higher cash and accounts receivable, while total liabilities slightly rose to $7.155 billion, and total stockholders' equity significantly increased to $680.6 million Consolidated Balance Sheets Key Data (in thousands) | Metric | December 31, 2023 | December 31, 2022 | Change (YoY) | | :-------------------------- | :---------------- | :---------------- | :----------- | | Total Assets | $7,835,919 | $7,299,736 | +$536,183 | | Total Liabilities | $7,155,285 | $7,071,938 | +$83,347 | | Total Stockholders' Equity | $680,634 | $227,798 | +$452,836 | - Among current assets, cash and cash equivalents increased from $698 million in 2022 to $1.319 billion in 2023, and net accounts receivable increased from $1.557 billion to $1.601 billion[237] - Among current liabilities, deferred revenue increased from $2.444 billion in 2022 to $2.641 billion in 2023[237] - Long-term debt (net of deferred financing costs) remained largely stable at $2.449 billion, compared to $2.454 billion in 2022[237] Consolidated Statements of Operations Gartner's consolidated statements of operations show an 8% increase in total revenue to $5.907 billion in 2023, with operating income growing 12% to $1.237 billion, and net income rising 9% to $882.5 million, resulting in diluted EPS of $11.08, significantly benefiting from the gain on the sale of a divested business Consolidated Statements of Operations Key Data (in thousands) | Metric | 2023 | 2022 | 2021 | | :-------------------------- | :---------- | :---------- | :---------- | | Total revenues | $5,906,956 | $5,475,846 | $4,733,962 |\ | Operating income | $1,236,894 | $1,100,106 | $915,751 | | Net income | $882,466 | $807,799 | $793,560 | | Diluted EPS | $11.08 | $9.96 | $9.21 | - Total revenue increased 8% year-over-year in 2023[238] - A pre-tax gain of $135.4 million from the sale of a divested business was recognized in 2023[238] - Interest income significantly increased to $38.5 million in 2023, compared to $4.9 million in 2022[238] Consolidated Statements of Comprehensive Income Gartner's comprehensive income increased to $907.7 million in 2023 from $787.6 million in 2022, primarily driven by higher net income and a favorable shift in foreign currency translation adjustments from a loss in 2022 to a gain in 2023 Consolidated Statements of Comprehensive Income Key Data (in thousands) | Metric | 2023 | 2022 | 2021 | | :-------------------------- | :---------- | :---------- | :---------- | | Net income | $882,466 | $807,799 | $793,560 | | Other comprehensive income (loss), net of tax | $25,279 | $(20,179) | $17,797 | | Comprehensive income | $907,745| $787,620| $811,357| - Foreign currency translation adjustments shifted from a $39.7 million loss in 2022 to an $11.7 million gain in 2023[240] - Net change in deferred gains and losses on interest rate swaps was $15.1 million in 2023, compared to $17.1 million in 2022[240] Consolidated Statements of Stockholders' Equity Gartner's total stockholders' equity significantly increased to $680.6 million as of December 31, 2023, from $227.8 million in 2022, primarily due to $882.5 million in net income and other comprehensive income, partially offset by $609.9 million in common stock repurchases Total Consolidated Stockholders' Equity (in thousands) | Metric | December 31, 2023 | December 31, 2022 | December 31, 2021 | | :-------------------------- | :---------------- | :---------------- | :---------------- |\ | Total Stockholders' Equity | $680,634 | $227,798 | $371,058 | - Key changes in stockholders' equity in 2023 included: $882.5 million in net income, $25.3 million in other comprehensive income, $25.2 million issued under share-based compensation plans, $609.9 million in common stock repurchases, and $129.8 million in share-based compensation expense[242] Consolidated Statements of Cash Flows Gartner generated $1.2 billion in cash flow from operating activities in 2023, up from $1.1 billion in 2022, with investing activities providing $54.2 million primarily from the TalentNeuron divestiture, and financing cash outflows decreasing to $600 million mainly due to reduced stock repurchases Consolidated Statements of Cash Flows Key Data (in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------------ | :---------- | :---------- | :---------- | | Cash provided by operating activities | $1,155,737 | $1,101,422 | $1,312,470 | | Cash provided by (used in) investing activities | $54,157 | $(117,558) | $(80,467) | | Cash used in financing activities | $(588,881) | $(1,027,442)| $(1,157,609)|\ | Net increase (decrease) in cash and cash equivalents and restricted cash | $621,013 | $(43,578) | $74,394 | | Ending cash and cash equivalents and restricted cash | $1,319,599 | $698,599 | $760,602 | - The increase in operating cash flow was primarily attributable to higher operating income (excluding the gain on divested business) and strong collections, partially offset by increased income tax payments[178] - Cash flow from investing activities shifted from an outflow in 2022 to an inflow in 2023, primarily due to $161.1 million in proceeds from the sale of the TalentNeuron business in 2023[179] - Cash outflow from financing activities decreased, mainly due to lower stock repurchases of $600 million in 2023 compared to $1 billion in 2022[180] Notes to Consolidated Financial Statements The notes to consolidated financial statements provide detailed information on Gartner's business, significant accounting policies, acquisitions and divestitures, goodwill and intangible assets, debt, leases, stockholders' equity, revenue recognition, share-based compensation, EPS calculation, income taxes, derivatives and hedging, fair value disclosures, and employee benefits, offering comprehensive context for understanding the company's financial position and operating results - Note 1, "Business and Significant Accounting Policies," covers the company's business, basis of consolidation, use of estimates, business acquisitions, revenue recognition, allowance for doubtful accounts, cost of services, selling, general and administrative expenses, commission expense, share-based compensation expense, income taxes, cash and cash equivalents, leases, property and equipment, goodwill, intangible assets, impairment of long-lived assets, debt, foreign currency risk, fair value disclosures, credit risk, share repurchase programs, and event cancellation insurance proceeds[245][250][252][255][257][258][259][260][262][265][266][268][271][272][273][274][276][277][278][279][280][282] - Note 2, "Acquisitions and Divestitures," discloses the 2023 acquisition of a Czech sales agency ($7.9 million), the 2022 acquisition of UpCity ($6.4 million), the 2021 acquisition of Pulse Q&A ($29.9 million), and the February 2023 sale of the TalentNeuron business ($161.1 million in proceeds, recognizing a $135.4 million pre-tax gain)[286][287][288][292] - Note 3, "Goodwill and Intangible Assets," shows a goodwill balance of $2.937 billion and net finite-lived intangible assets of $502 million as of December 31, 2023; intangible asset amortization expense was $92.5 million in 2023[296][298][301] - Note 6, "Debt," indicates total outstanding debt of $2.5 billion as of December 31, 2023, including term loans and senior notes due in 2028, 2029, and 2030; the weighted-average annual effective interest rate on outstanding debt was 5.00% in 2023[310] - Note 7, "Leases," discloses right-of-use assets of $366.8 million and lease liabilities of $611.9 million as of December 31, 2023; lease-related asset impairment losses of $20.4 million, $54 million, and $49.5 million were recognized in 2023, 2022, and 2021, respectively[237][265][342] - Note 9, "Revenue and Related Matters," shows revenue recognized over time of $4.9 billion and revenue recognized at a point in time of $1 billion in 2023; total unsatisfied performance obligations with original contract terms greater than one year were approximately $5.6 billion as of December 31, 2023, with $3.3 billion expected to be recognized in 2024; deferred commission amortization expense was $550.5 million in 2023[366][372][379] - Note 10, "Share-Based Compensation," discloses total share-based compensation expense of $129.8 million in 2023; unrecognized share-based compensation cost was $142.7 million as of December 31, 2023, expected to be amortized over a weighted-average service period of approximately 1.6 years[383][384] - Note 12, "Income Taxes," shows an effective tax rate of 23.1% in 2023, compared to 21.4% in 2022; total unrecognized tax benefits were $148.4 million as of December 31, 2023, primarily related to transfer pricing[413][415] - Note 16, "Segment Information," shows total segment gross contribution of $4.035 billion in 2023, compared to $3.815 billion in 2022; long-lived assets (excluding goodwill and intangible assets) were $968.8 million as of December 31, 2023[457][460] Form 10-K Summary This item indicates "None," meaning no summary of the Form 10-K report is provided - No Form 10-K summary provided[465] Signatures This report was signed by CEO Eugene A. Hall, Executive Vice President and CFO Craig W. Safian, and other directors on February 15, 2024, affirming compliance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 - This report was signed by CEO Eugene A. Hall, Executive Vice President and CFO Craig W. Safian, and other directors[468] - The signing date is February 15, 2024[468] - The signatures affirm that this report meets the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934[467]