Gartner, Inc. (IT) Earnings Call Transcript & Summary

Hello, good morning. It's Jeff Silber with BMO Capital Markets. I'm the analyst that covers the business services industry and thrilled you are able to join us here this morning for our fireside chat with management of Gartner, and IT is the ticker. I'm thrilled to introduce Craig Safian, who is the CFO; and David Cohen, who also will be on the line, he's the group Vice President for Investor Relations. Before we start, just a couple of logistics. We do have a chat room that is available. If you do want me to ask any questions on your behalf, please either submit it in a chat room or if you'd rather just send me an e-mail. My e-mail address is [email protected], and I'll be happy to ask the questions on your behalf. So we've got about 45 minutes. I've got enough questions to last, but hopefully, we will be able to get some interaction from the audience, and you can ask questions as well. So I'm just going to start high level. We might have seen some folks that are relatively new to the Gartner story on the call. So Craig, maybe you can just give us a brief overview of the company before we get into some of the details.

Yes, sure, absolutely. Jeff, thank you for that, and good morning, everyone. So Gartner at a high level, we provide research, insight and advice to functional leaders across the enterprise. And in these unprecedented times, functional leaders across an enterprise around the world, whether they are in a large enterprise or a small enterprise, regardless of industry, they really need insight and advice. We have about 16,000 associates serving more than 14,000 client enterprises globally. We do business in about 100 countries around the world, and we're in just about every major country you can imagine. We go-to-market and operate in 3 business segments. In a normal environment, about 80% of our revenue is derived from research, 11% from conferences and 9% from consulting. Both the conferences and consulting segments are aligned with and support our Research business, which is really the heart and the majority of our business. As you likely know, our Conferences business has been significantly impacted by the pandemic, and we've obviously adjusted our guidance to reflect that impact, and I'm sure we'll get into that a little bit later. If you think about just real high level in terms of the value proposition that we provide to our clients within our Research business -- and again, we're surveying enterprise functions, not only IT, which is where we started and really our base and foundation comes from surveying technology leaders, but we now also serve marketing leaders, supply chain leaders, finance leaders, HR leaders, sales leaders, leaders of legal functions, HR leaders. And so when you think about the overall value proposition, the way I think about it is really simply in 4 categories. And again, Jeff, we can drill into this a little bit later, but essentially, we save our clients' time. Having access to our research and our analysts and our experts helps them get to the right decision or better decisions more quickly than they would without our services. We save them money. We help them find, pick, select the right software, hardware, services partners, you name it and really save them money in the course of their contracting. We add resources for them, so they gain resources. Most companies cannot afford to have 100-plus security experts on staff at all time. If you have a subscription to Gartner, you actually have access to all of our experts across the board. And then lastly, you gain confidence. Often, Boards and CEOs will want to make sure that the decisions you're making are the right ones and the Gartner stamp of approval or running it through a Gartner analyst or leveraging Gartner Research also helps you gain confidence. So real simply: save time, save money, gain resources, gain confidence.

All right. Fantastic. I think you've answered all my questions. So thanks so much. Why don't we start maybe with the Research segment, we'll just drill down a little bit further. So obviously, the pandemic has led to both a deep recession and an acceleration in the use of technology. How has it impacted your Research business so far in terms of new business and retention?

Yes. It's been interesting because as you allude to, obviously, with a lot of companies going virtual, almost like turning on a dime from an in-person environment to a virtual environment, it's put a lot of stress on their technology infrastructure, whether it be the applications they are using, their actual data and network infrastructure or what have you. And so for us, what I'd say is the situation has created both headwinds and tailwinds for us. In the immediate term, right now, as we've just sort of entered into the recession and we're only 4 months into this or 5 months into this, the short-term headwinds are outweighing the tailwinds. And the headwinds are really around budget constraints being felt to varying degrees across the global economy. Most enterprises, us included, are facing pressures to either avoid spend or cut spend. On the flip side, enterprise leaders are dealing with a dynamic world that is very different than environments they have ever encountered before. It's really unique. And obviously, we're in a position to be able to help them in that. And so I think what I'd say is, the demand for our services is strong. We're seeing really high levels of engagement. So our existing clients are engaging with our content through our website and in live conversations with our analysts at or above historical levels, and it's a combination of the normal stuff of running the business. But obviously, in March and April, there was a significant uptick in specific COVID-19 research we were doing across each of the enterprise functions. And now it's on collaboration software on how do you prepare for the rebound, how do you think about your real estate portfolio, how do you deal with a hybrid workforce that's part work-at-home and part in-office, all those things. We have great research on that, and the demand for that research has been fantastic. I think given the macro environment and the recession and the real pressure on spending, what we are seeing, though, is longer sales cycles, more challenges on retention than we've had historically. And what I'd say is, we still have a large cohort of very engaged, very happy clients who are getting great value out of the research and great pipelines where we are finding new people, new prospects that we can sell to. Just given the environment, it's a little bit of a bigger challenge of getting it over the hump, whether it be from a retention perspective or from a new business perspective. That said, I think the Research businesses have been pretty darn resilient to date. Obviously, what we experienced in the last couple of weeks of March, as the pandemic really rolled across Western Europe and North America and through Q2 is -- March and April and May were probably the worst. June was a little bit better. And so hopefully, at a minimum, we've sort of stabilized. And again, we think we're in a great position to provide both existing clients and new clients with a ton of value in this sort of environment.

That's great. You mentioned the longer sales cycle. So maybe we could focus on sales for a minute. I know the company has been very sales-driven growth model. Can we talk about how the pandemic has impacted sales productivity or sales strategy? Any color would be great.

Yes. Absolutely. And obviously, again, when the whole company, and quite frankly, the whole economy went from working in offices to working at home, we all had challenges in terms of that transition. I think we were well prepared for something like this from a business continuity perspective and technology perspective. So not to overemphasize this, but our standard tech sort of deliverable for our associates is a laptop that has preloaded on it all the collaboration and communication software, you can imagine. And so we were prepared to say, "Hey, tomorrow, you're working from home. And as long as you have WiFi, you can do your job." And so I think we were in a good position from that perspective and that people didn't have to go in and grab desktops or go back to the office and get equipment. Just about everybody had what they needed to immediately transition to the work-from-home environment. I think the -- if you think about it, our inside sales teams, who work in large hubs, are generally earlier career people. So we're hiring a lot of people right out of university, et cetera. They had to adapt from being all together in large groups to being distributed. And the good thing we were able to pull from a lot of our own research on how to best manage in that sort of environment. And so there were a couple of bumps in the early days, as you'd imagine, but at the end of the day, what we want our sales teams to do is be interacting with clients and prospects, either in person or over the phone. Now in the case of our inside sellers, it's always been sort of a virtual interaction with our clients. And so that was really no different. They just had to adapt from being altogether in sort of a center of excellence model to being more distributed. Our field sales team had to adapt because they were used to interacting with clients in person, and obviously, now they had to adapt to leveraging tools like WebEx and Zoom and Microsoft Teams and what have you. And so I think the short answer is, we adapted and we adapted really, really quickly. And I think in the early days, the hardest thing was actually finding the clients because we generally had their office contact information. And there was a period of sort of disruption and dislocation where people were just getting reset up. Once we got through that, we saw a couple of things happen. One is, we're actually able to find our clients and interact with them. Two is, we saw them interacting with gartner.com and our analysts back at historical levels. So the last 2 weeks of March were a little wonky and that people were getting set up, they were dealing with crises at work, dealing with crises at home, quite frankly, as schools were shutting and what have you. And then coming out of that into April, things started to sort of normalize a little bit at a minimum from our perspective of interacting with our clients both from a sales perspective and from a servicing and research perspective. At the same time, we didn't sit back and just rest on our laurels and hope things would get better, we started rerunning a lot of the plays that we've run historically when we've run into macro dislocations or economic challenges or what have you. And so we've got, within our sales playbook, lots of plays that we can run in this sort of environment. We generally are running them in kind of micro slices around the world. Here, we had to make a quick pivot. Obviously, cost optimization being one of the big things that our sales team and research teams were highlighting and leveraging, and that's what our clients were interacting with quite a bit. And so I think we have adapted -- we've gone virtual really, really, really quickly. In some offices around the world, we've reopened and are back to sort of normal operating environments. But I think the key for us was making sure that we stay engaged with our clients and prospects that our clients stay engaged with the research, and we've been doing that. And as I mentioned earlier, our engagement levels are at or above historic levels as well.

Yes, that's great. We've all had to go through a lot in the past few months. So it's good to see you guys are on top of it. So just continuing with the Research segment, I think that many folks were surprised that your GBS business, the former CEB business, has held up fairly well so far in this environment. I know a lot of people thought that, that was going to be much more economically sensitive. Why do you think that is? And do you think that's something that can continue?

Yes. Look, I think it's a clear indication that we have a really good, strong and compelling client value proposition, not only in tech, but that same value proposition applies across all of the other enterprise functions that we serve through our global business sales business. And the nice thing that we saw, and obviously, it was a more challenging environment, and we did see challenges with new business. It was down year-over-year, but we saw sequential improvements in a lot of the practices, most notably in our finance practice and our sales practice. But I think it's just an indication that the things we've been saying about the GBS business is being very similar to GTS and having a similar value proposition, and people being willing to spend roughly the same amount and get roughly same amount of value. I think that is what's being proved out now as we go through this crisis with GBS. I think we're really -- we're not through it, obviously, but your point is right that the business has proven to be pretty resilient so far. And we believe that, that resiliency can maintain itself. And the reason that is, is because we're providing clients real value, and they are seeing it, and they are voting with their dollars, whether it's on the retention side or on the new business side.

So you've mentioned the resiliency and let's hope things continue to move in the right direction. As the economy slowly recovers, what are the key factors for a rebound in Gartner's Research business?

Yes. It's interesting. I think it's really about willingness and propensity to spend and sort of budget being known. I think the biggest challenge for executives is broad reductions or cuts in spending or deferrals in spending. When that happens, when a dictate like that comes down from the CFO or CEO, you're living in a world of unknown, and you're less willing to make commitments because you just don't know if you're going to get a 20% budget cut, a 10% budget cut, a 30% budget cut or no budget cut. And so I think as the world starts to stabilize and 2020 and 2021 operating budgets are known, that will be a help to us because the operating in the unknown is probably the most challenging thing from a selling perspective; and quite frankly, from a buying perspective, not knowing what you're going to be able to afford. So I think propensity spend and stabilized and known budgets will be a good thing. I think our experience coming out of the last major economic downturn in 2008, 2009, is really 2 things. One is maintaining -- roughly maintaining our selling capacity, our analyst capacity and our service capacity. And so we've been very mindful of while making sure that we want to maintain financial flexibility and maintain cash flow and avoid costs, we don't want to cut into our muscle of research analysts, salespeople and services people who support our clients. And so we've been very mindful of making sure that we maintain that capacity so that when the economy does rebound or at a minimum, it stabilizes, we're poised to spring from that. And so I think that's one big thing. And then the second big thing is, in the last downturn, we took hits from a retention perspective as we move through the recession, those became amazing win-back opportunities for us as things stabilized. And so I think our team knows how to run those plays, and we'll be all over those things. But I think making sure that we don't cut into muscle on sales, research or service is probably the biggest thing we're doing. And we've actually now that we've sort of stabilized, and we talk about this on our last earnings call, is we've selectively resumed growth hiring and restoring certain expenses. And again, this is all about so that we are poised to rebound quickly when the economy does stabilize and start to rebound.

All right. That's great to hear. In the past, the company has talked about a large addressable market for Research. Can you walk us through how you view the world now? I'm just curious if the pandemic has provided any opportunities for you there?

Yes. I'd say, Jeff, as it stands right now, we had an enormous untapped market opportunity going into the pandemic, and I'd say coming out of the pandemic, we will have an enormous untapped market opportunity as well. I think it's a very large TAM. As we've talked about it, it's just under -- we believe it's just under $200 billion of addressable market. It is largely unpenetrated. We only have a little over $3 billion of penetration, and there aren't a host of other competitors there. And so we still believe that we have the combination of being able to find new enterprises who currently don't do business with Gartner and sort of bring them into the franchise in both GTS and GBS, and then almost as importantly, further penetrate enterprises that are currently clients. Even on the GTS side, where you would argue is our most mature market, the average spend per enterprise is a little over $200,000 per year in terms of annualized contract value. And depending on how you count, that's like between, let's say, 4 and 6 seats within that enterprise. And we know that there are, in many of the enterprises we serve, dozens, hundreds or even thousands of IT people that we can go get, and we've got 4 to 6 of them. And so we really do believe that there's a huge untapped opportunity in terms of enterprises that we don't do business with yet. We have 0 CV with them, and there's a huge opportunity to further penetrate existing enterprises as well and add triple or quadruple underscore that on the GBS side, where we are significantly even less underpenetrated than we are on the tech side.

All right. That's great. I know we've spent most of the time on the Research business, but you do have 2 other segments, so I want to start with those. Why don't we start with Consulting. Can you talk about how the pandemic has impacted that business line? And do you envision any changes in that business line once we get through this?

Yes. The -- so let me just start with sort of a brief description of how we view our Consulting business. And as I talked about earlier, in 2019, Consulting represented about 9% of our total revenues. And so we really view our Consulting business as an extension of our Research business. We help sort of our largest clients who have the biggest IT budgets and the sort of the biggest problems when they need to go deeper and complement the research, our Consulting business is there to help and our Consulting business also has a very strong cost optimization element as well. So sort of when clients are looking to reduce costs or avoid costs or what have you. We have practice areas within our Consulting business that are really, really helpful. Our Consulting business is focused on IT strategy and project management. We don't do implementations. We don't do integrations. And so we're -- sort of part of our core value proposition is being independent and objective that applies on our Research business but it also extends to the Consulting business as well. And so we're serving large enterprises, and again, as I mentioned earlier, sort of extending the value of our research offerings. In the short term, we've seen some headwinds. We expected them. The business is still holding up pretty well. It was down a little bit. Our backlog is down a little bit, but we still have a healthy amount of backlog. We're refilling our backlog with new bookings as we progress through the quarter. So we expect a little bit of a challenge in the Consulting business. We did do a very small reduction in force in the second quarter to make sure that supply and demand were aligned with sort of this new reality. It wasn't a major reduction. It was a minor reduction. And we just feel like, even as we compare to, again, the recession back in '08, '09, our Consulting business was down 20-plus-percent. In 2009, we believe that will be much more resilient this time around as well. And it's largely because we've made sure that our consulting offerings are really aligned with our research offerings.

[Technical Difficulty] for a second. So just continuing on Consulting, we're going to get through this hopefully. Any reason that the business would be different post-pandemic than it was pre-pandemic?

I don't think so. I mean, I think the one thing we're seeing, really, I'd say, 2 large areas of client demand on the consulting side, one, is around cost optimization, and one part of our Consulting business is something we call contract optimization, which has had a number of strong quarters in a row and continues to perform really well, and you'd expect that to perform well. I think the other area that has been really strong from a demand perspective is really around digital transformation, and there's a number of sort of subcategories underneath that, but broadly speaking, digital transformation. And so we sort of follow what's important to our clients and make sure that we are in a position to help them with those sorts of things. And again, we've got this great, I'd say, synergy between our Research business and our Consulting business. In that, from a research perspective, at scale, we know what people are interested in and what they are worried about, based on their search strings on gartner.com, their lines of inquiry or the analysts and advisers that they want to speak to, and then we've got the live experience with our consultants as well. So we've got our fingers on the pulse of the market. And so I don't see any major structural changes to the way we think about our Consulting business. We may have ebbs and flows in terms of which topics are hotter than others over time. But we think our Consulting business will look a lot like it does today in terms of size, performance, et cetera, as we roll out of the recession.

Okay. Great. You mentioned in your introduction about the Conferences business, the area you've seen the most impact. What are you doing there to at least generate some revenues in the near term?

Yes. I think -- so it's a great question. I think the #1 thing we've been focused on -- so I'll back up for a second. So obviously, given the environment, we have not been able to run any in-person conferences since February. And we've actually assumed that we will not be able to run any in-person conferences for the balance of the year. We're operationally planning to run some local 1 day conferences, if we can, but our guidance assumes we're not able to do any of that stuff. In that void that that has created, we have not just sat back and just let it be a vacuum. We've been filling it with lots of different ways for our clients to engage. And so from the early days of the recession back in late February and early March, we've been running dozens of webinars, again, to sort of drive engagement both from a client perspective and a prospect perspective that normally would have been fulfilled via in-person conferences. On top of that, we've been piloting real virtual conferences. So not just a webinar, which is sort of a one-way broadcast but real virtual conferences. And so we did one in the April time frame. We did a bunch more over the course of Q2. And we're rolling out a calendar of virtual conferences in place of our in-person destination conferences for the balance of the year. With those pilot conferences, the real focus has been on the attendee value proposition. And what I mean by that is, can we deliver a compelling-enough experience so that, a, people sign up and either buy a ticket or use a contractual entitlement; b, they block it off on their calendar; c, they come; d, they stay; and E, they actually interact with us over the course of the virtual summit. And making that happen, obviously, we need the technology to do that. We need the marketing, expertise to go do that. And then we've obviously got to deliver the value from a content and intellectual property perspective. And so we've been very focused on that piece of the puzzle initially. Our strong view is that if we are able to do those things, A, B, C, D and E, and really get a similar, highly qualified attendee audience like we would at an in-person destination conference, we will be able to figure out ways to monetize it on the back end. So the focus has really been on the attendee experience with an eye towards monetizing in the future. But for now, we're just laser-focused on making sure that we can actually deliver a high-value virtual conference for attendees, where they want to come, they get great value out of coming and they stay and interact with us over the course of that virtual conference.

Great. That's great. So again, let's look through the pandemic. And I've been lucky enough to attend your ITxpo a few times. It's really an incredible event. Do you think we're ever going to go back to events like that post-pandemic?

It's a great question. And I think -- as we think about the long term, our view of conferences and the role it plays in supporting overall Gartner and the Gartner Research business has not changed. And so conferences whether they are in person or virtual, we still believe is a compelling way for clients to immerse themselves in Gartner Research, engage with our analysts and network with our peers. And so that fundamentally and strategically has not changed. Obviously, in this environment, we've pivoted to virtual. And as I mentioned, we're focused right now on maximizing the value we deliver to the -- our clients and attendees. I think that as we think about the future virtual conferences, which we are developing right now as a stand-in for in-person conferences, we believe that in the future, our portfolio, when we do come out of this, will be a combination of in-person and virtual conferences. Virtual, as we are discovering broadly in business, and I think this will apply from a conference perspective as well, does open up the opportunity for potentially even more people to engage with Gartner. So if they don't want to travel, can't travel, don't have the budget to travel, we've now opened up a whole another segment of the market that previously would not have come to a Gartner conference. And so it's hard to say what everything will look like in the future, whether or not we'll be able to run large Gartner Symposium/ITxpo, like the ones you've experienced down in Orlando, that remains to be seen, but we do believe that in the future, we'll have this great combination, sort of 3 legs of the stool from a Conferences business which will be in-person destination conferences, size of those to be determined, local 1-day conferences, which have been a great source of growth for us and open up the market again to those who don't want to travel and then virtual conferences as well. And so we think those 3 elements will be an important part of our Conferences business going forward. As we think about next year and year's future, it's hard to predict what the mix will look like. And it's also hard to predict sort of the monetization elements of it since we haven't, quite frankly, landed on or perfected what the monetization model will look like for virtual conferences. But rolling forward, again, if you fast forward to 2022, 2023, 2024, when hopefully, we're through this, live in-person conferences, live in-person local 1 day conferences and virtual conferences will be what the portfolio probably looks like.

All right. Great. We do have some questions coming in online. And again, anybody that wants to ask, put it in the chat or send me an e-mail, [email protected]. Let me start with some of these. So you had mentioned, I guess, you alluded to some of the changes you've made internally to your operating structure. Can you give us a little bit more color on those changes? Do you think any of those might be somewhat permanent post-pandemic?

Yes. We -- obviously, as we went into the pandemic in March and April, we started running the scenarios that looked at us not being able to run any conferences for the balance of the year. And obviously, our initial guidance for this year was north of $500 million of revenue from that segment and generally very profitable revenue as well. And so we had to make some quick moves. And I think we made some quick -- took some quick decisive actions around avoiding costs, reducing costs, et cetera. And that was all around ensuring financial stability in a really tough environment and making sure that we maintain stability and financial flexibility moving forward. Now that we've stabilized and we talked about this on the Q2 call as well, given where we are through Q2 from a profitability and cash flow perspective and the fact that June looked a little bit better than March and April, we started to restore some of the things that we avoided in the first part of this year. And so I think, though, what likely structurally can change in the future, and it's not an automatic structural change, but we can -- we'll work through it into the future. I think there are 2 or 3 primary potentially structural foundational changes. So one would be the amount of travel that our teams do, and we're a pretty travel-heavy company. We hire experts all over the world. And they were traveling to our 70-plus conferences, in-person conferences, that we deliver all over the world and our salespeople and service people were also doing a fair amount of traveling. And I think what the pandemic has proven is that some of that is necessary and required, but not all of it. And so I think that we will be able to reduce on a per-cap basis or however you want to look at it, the amount of money we're actually spending on travel, which for us is not an insignificant number. I think that will be one primary structural change. The second one will be around our facilities footprint. We've grown really rapidly from a headcount perspective over the last decade and we've needed to scale up our facilities infrastructure to support all of that growth, and that has 2 costs associated with it. Obviously, the rent and the lease cost and the operating cost of having these facilities but also CapEx as we build out those facilities and open up new floors or new offices or new whatever. It still remains to be seen what our post-pandemic facilities infrastructure is going to look like. What I would say is, and I think everyone is sort of having this experience is that working virtually either part of the time or all the time does work, and we can definitely take advantage of that. And so I think we'll, at a minimum, not have to increase significantly our facility spend into the future, and there may be opportunities for us to trim it down as well. I think those are the 2 big structural things, but I think it's also figuring out ways to operate more efficiently, figuring out ways to do things with less in-person, getting more reach with our clients via virtual conferences or webinars or what have you, just leveraging new sort of engagement models, I think will be a lasting impact as well.

Okay. So I guess, segueing off of that one is another one about setting longer-term targets once we get through this. Again, we get through this, where do you think we -- the company could be in terms of revenue growth and margins going forward?

So from a revenue growth perspective, if you look at our medium-term guidance, that still stays. So once we come out of this, we firmly believe that we can grow our top line at double-digit rates, our EBITDA at double-digit rates and our free cash flow at double-digit rates. And so once we come out of this, we would expect to get back on that path relatively quickly. We talked on the earnings call -- in the last couple of earnings calls about what 2021 may look like from a margin perspective versus what our longer-term margin expectation might be. Given the lag in revenue growth and trailing contract value growth, we might see some margin pressure in 2021, a lot of that is dependent on where we finish this year, 2020, from an ending contract value perspective. But one of the parts of fuel of our growth has been investing in increasing our selling capacity. And so if we're going to do that in 2021 and revenue growth is lagging a little bit, that relationship could put a little bit of pressure on the overall operating margins of the company in 2021. The way we've talked about margin is, we will deliver at least what we did in 2019, where we had an EBITDA margin, adjusted EBITDA margin, of 16.1%. We're committed to full year margins in a normal operating environment of at least 16.1%. And part of the reason we're making the commitment that way is, we want to make sure we maintain the flexibility to be able to resume growth hiring and restore certain expenses and what have you. So 2020 is a little bit of a wonky year and that we are avoiding a lot of cost, as you'd imagine. And so I think our guidance sort of extrapolates out to about a 16.3% or 16.4% margin in 2020. As I mentioned, 2021, we'll see some headwinds from a revenue lag perspective. In 2022, we're committed to seeing margins of at least the 16.1% we delivered in 2019.

Great. That was helpful. I'm going to combine a couple of these questions on capital allocation and strategy. Hasn't changed during the pandemic and post-pandemic, will it be any different than what we saw from what you used to do before [Technical Difficulty]?

No, I'd say the -- our capital allocation strategy is the same, and it continues to be returning capital through a combination of deleveraging potentially opportunistic and price-sensitive buybacks and strategic value-enhancing M&A. One of the things we did a couple of months ago from a balance sheet perspective is, we sort of restructured our balance sheet, push out maturities and we actually reduced our overall debt balance by about $200 million as well. So today, we're sitting with about $2 billion worth of debt. We -- as I mentioned earlier, one of the key things that we wanted to accomplish as we started to set up our cost avoidance programs and manage the business in 2020 was making sure that we maintained a significant amount of flexibility. We've got, as you've seen on June 30, we had over $350 million of cash on our balance sheet. We need about $150 million to operate the business. So we had $200 million of sort of excess cash there, which in this environment, we like that, that war chest. In addition to that, we had over $1 billion of revolver flexibility as well. And so I think as we think about our balance sheet and our capital allocation strategy, it's maintaining financial strength, it's maintaining financial flexibility regardless of how things play out in the second half, given all the uncertainty, and then when we get to a more stable operating environment, returning to our stated capital allocation strategy, which is really around returning capital to shareholders through price-sensitive opportunistic buybacks, strategic value-enhancing M&A, probably more on the small- and medium-sized tuck-in variety and potentially reducing debt balances as well. But those are kind of the big 3 from a capital allocation strategy perspective.

Okay, great. Again, I'm going to try to combine some of these questions. So we've got an election coming up in a few months. Some of the other companies here are a lot more regulatory-sensitive. But is there anything on the horizon that a democratic administration might do that could impact your business positive or negative?

Not that we see right off the bat. I mean, obviously, tax policy will impact everybody, so that's not unique to us, and we'll obviously keep an eye on that. But no, I mean, we don't really see a positive or negative with either outcome in the Presidential election, again, largely because we operate in a non-regulated or unregulated industry. And so I think tax is probably the biggest potential impact.

Okay, great. I've got a couple of minutes left. I'm going to finish up with one that I've been asking throughout this conference. So God-willing 5 years from now, we'll be sitting next to each other at one of these conferences instead of looking at each other on a screen, how would your company look different than it does today?

I think it's hard to say, but we fundamentally believe, as we talked about earlier, we've got this enormous untapped market opportunity that we're going after, both on the tech side and on all the other enterprise functions that we are now serving through the GBS practice. I think, hopefully, 5 years from now, we've delivered on our medium-term guidance... [Audio Gap] So I would just assume that we continue to innovate in the way we deliver value to our clients. We are delivering as much value as frequently as possible and consistently as possible for the executives that we serve. I think like everything else, will be a better combination of virtual and in-person. So maybe we'll be sitting next to each other at a conference, and hopefully, that is the case. But our clients will want to engage with us, both virtually and in-person. And I think that's going to be sort of the case across the board as we look at the business. But I would expect us to continue to grow at strong double-digit rates so we'd be a lot larger at that point. And we'll have generated significant amounts of profitability and free cash flow and continue to innovate in the way we sell, service, deliver research, all those things which is sort of core to the way we run our business, which is really about continuous improvement and continuous innovation over that time period.

All right. Great. Well, I see our time is up, and this has been really insightful. I really appreciate Craig and David, joining us today. Thank you for sharing Gartner story, and thank you for all of those in the audience that have attended. Thanks so much.

Thanks, Jeff. Take care.

You, too.