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

Good afternoon. This is Heather Balsky, BofA's Business and Information Services analyst. I want to welcome you all to our fireside chat with Gartner's Senior Vice President, Investor Relations, David Cohen. David, I appreciate your time very much.

Glad to be here, Heather. Thanks for having us.

Yes. It's great to have you at our conference.

I wanted to start off by touching on the slower sales growth Gartner has been seeing from its tech-- from its vendor customers, which is an area of focus. Can you walk us through what happened? When it started? And how do you see that trending in 2023?

Yes, sure. It's a great question. So let me give a little bit of context if there are folks that are sort of newer to the story.

Yes, sure.

So Gartner provides actionable, objective insight to enterprise function leaders and their teams. That's the bulk of what we do. And so our value proposition is always focused around helping these leaders within these enterprises. They could be anywhere in the world, any industry, address their most important mission-critical priorities. And so we help them, and we grow as a result. And we've got a strong track record of double-digit top line growth. We use a measure we call contract value. It's the annualized revenue under contract at a point in time, and we've been able to grow that very well for many years, and we expect that to continue into the future. One of the things we talked about on the most recent earnings call, our growth had decelerated a little bit. We grew 12% contract value, that's FX neutral, for the quarter. That was up against a 16% compare that we had, as you know, in the year-ago period. And so we talked about roughly 3/4 of our contract value comes from enterprise function leaders. And so we serve all the functions of the enterprise. If you think about there's a CEO, he or she will typically have a number of direct reports, a CFO, a CIO, Chief Supply Chain Officer, Chief HR Officer, all the way across the functions. And the titles and the roles can vary a bit, but we serve all of those functions. And so when we talk about enterprise function leaders, it's the people in those roles. We sell to individual subscribers, the people in those roles, their direct reports and their direct reports. And so that's the enterprise function leader piece, and that continued to grow double digits, and we break it out into GTS, which are the technology leaders as well as the tech vendors, which I'm going to get to. And then we also sell to all of the other enterprise functions through GBS or Global Business Sales force, and that's HR and finance, sales, marketing, all the way across. And so that continued to grow double digits. And GBS, we break out separately and you can see that the growth there was high teens, also against a tough compare, but very strong growth. The implied growth for the technology enterprise function leaders was also double-digit growth, so very good performance there. And coming back to the tech vendors, to answer your question, we saw high single-digit growth there. So a little bit slower than where it had been. That was down against a very tough compare in the prior year, where we had grown high teens. And so a little bit slower growth, the premise of your question. For Gartner, still, we think, very good growth.

Yes. That's really helpful. And you talked about it, despite economic uncertainty, demand from your core enterprise function leader customers coming out of your fourth quarter was still very strong. Why do you think that is? How has Gartner kept these customers engaged?

Yes. So I think it comes back to the core value proposition that we offer. And so if you put yourself into the shoes of one of these enterprise function leaders, CIO, CFO, Chief Supply Chain Officer, at any point in time, each of those individuals is going to have their most important mission-critical priorities. They might have a short list, it might be 3, it might be 5, some people might have 10. At any point in time, they're going to have some priorities. These are the things that they need to be successful in doing their job in order to help make their companies successful. And so what we do is we have several thousand experts, Gartner associates, across all of these different areas. And we do primary research and we engage with market participants and we engage with our clients. And so we publish research that's available through gartner.com. And we also engage with the clients through interactions, they're largely virtual, as well as our Gartner Conferences. Even pre-pandemic, a lot of them were phone-based. Now we use video because people are more comfortable than before. And so really, it's about making sure that we have the breadth and the depth to enable us to be able to help them with whatever their priorities are. And these priorities, they can shift and change. So as you might imagine, in February of 2020, nobody was focused on remote work and work from home, and suddenly people's priorities changed. The priorities that people have very often will differ. They could be individual-specific, company-specific. They can be informed by geography or industry, but we're well positioned to be able to help them with whatever those priorities are.

This is really helpful. You touched on GBS, but a lot of people know Gartner for their technology research, the Magic Quadrant. But your GBS segment, I think, is less well understood. Can you walk us through what that business is and the transformation that's taken place over the last 5 or so years?

Sure. So the value proposition for GBS is exactly the same as the long-standing value proposition that we've had within GTS. And if you go back, we had this value proposition to help enterprise technology leaders address their mission-critical priorities. In 2009, we had a small acquisition. We launched our supply chain business effectively in 2010 to bring that same value proposition to supply chain leaders. In 2012, we started a marketing practice. We do that organically. And so we were able to adapt this value proposition for technology leaders to other functional areas. And so with GBS, through an acquisition in 2017, we expanded to all of the enterprise functions. And so our approach is to go to market consistently across all of the practice areas. We have separate sales teams for each of them. So our technology salespeople sell technology research to technology leaders, and our supply chain sales people sell supply chain research to supply chain leaders and so on across all of the different functions. And so I think there's a very large addressable market for the technology insights. There's an even larger addressable market for all of the insights beyond technology. And so that's given us the opportunity to really drive strong growth within the GBS areas.

Helpful. And you just mentioned it. One thing I thought was interesting is that each focus area, GBS has its own sales force. Why is that? Why isn't it one sales force across GBS?

Yes, it's a great question. And it's something that we've looked at over the years. And what we have decided is that our salespeople can be more effective when they're subject matter experts in one functional area. So if we asked our technology sellers to sell supply chain research to supply chain leaders, first of all, it's different folks than they might have interacted with. So they don't necessarily know the right people to call on. And then in addition, the technology salespeople might get distracted from selling technology research. And it's harder to be effective selling supply chain if you're not immersed in the supply chain dynamics, trends, themes and jargon. And so our approach that we found to be more effective is specialization within the sales -- different sales teams.

That's helpful. It makes sense. I want to shift. Conferences, we're back in person. It feels like it's a long time since we're all virtual, but a year ago, we were doing this virtually. Conference demand was robust for the back half of the year. It seems like people are very eager to return to in-person. Do you think you can hold up even in this economic environment in terms of corporate travel and all that?

Yes, it's a great question. So one of our 3 reportable segments is the Conferences business. We hold conferences in different locations around the world. We're expecting to have 47 in-person, what we call destination conferences, in 2023. It's a really important part of the business. It's an extension of our Research business. And our objective is to have conferences aligned with all of the roles that we serve within Research, across all different regions throughout the world. And so as you know, we had more conferences actually than that in 2019 before the pandemic. Temporarily, when the pandemic hit, we had to stop all of our conferences. We created a virtual capability. We were successful running virtual conferences for a number of years. During 2022, we were really excited to get back to in-person conferences. There was a lot of enthusiasm from the exhibitors, the sponsors of the conferences, the vendors that attend as well as the attendees, the clients. And the Conferences business is a great opportunity for us to showcase the Gartner brand and highlight the breadth and the depth of the insights that our analysts provide. It's a great opportunity for our clients to meet with vendors conveniently all in one place. And it's also a great place for our clients to network with one another. And so we're going to be back in person throughout 2023. A little bit more of a normal calendar seasonally than we've had for the last couple of years. So we're really excited to be back to in-person conferences. As far as cyclicality goes, it was extremely cyclical in the pandemic when it literally had to stop for a quarter. So we do expect that when companies decide to cut back on their travel costs, that could reduce the ability of some of our clients to attend. However, our goal with each of our conferences is to make it the must-attend conference. So if people are going to attend just 1 conference, our goal is to make sure that the Gartner Conference is the one that they're going to attend. So I think we're feeling very good. Gene spoke on the call about the advanced bookings. So we've got good visibility. Comfortably more than half of our exhibitor slots are set for of 2023. And so we'll have to see. I mean, we've been looking -- we've been hearing from investors about the risk of a slowdown for quite a while. And we're going to continue preparing to run the conferences and deliver great experiences for all of our clients and vendors.

One thing I wanted to ask is your conferences, when you think of the number of conferences you've returned to and your sales outlook around conferences, like it seems like your -- kind of the relative percentages are a little different. What's the -- in terms of your sales target and you're back to 49, you did a lot more before that. Kind of how are you -- what's driving the fact that sales in Conferences is recovering so quickly?

Yes. So we had, last year, a mix of both virtual and in-person conferences. And as we were returning to in-person, our focus was to bring back our largest conferences. And so if you think back to 2019, there was a mix. Some were very large, some were very small, some were in between. And so we prioritized bringing back the largest, most impactful conferences. And so we've -- we're generating a lot of the revenue relative to where we had been pre-pandemic. We didn't quite get all the way back there. We expect that we will over time. And part of the strategy going forward, as it has been in the past, is to make sure that we're running conferences aligned to the different roles. And so we've got a much more built out set of conferences in technology than we do in the other areas. And so both geographically and by function. So we have conferences for CIOs and conferences for data analytics leaders and conferences for information security leaders and so on, and we replicate those around the globe. When it comes to the GBS roles that we serve, we have conferences for most of the major roles that we serve at sort of the headline level. But there's an opportunity over time for us to build out. So we'll have conferences for Chief HR officers, and down the road, we can have conferences for their primary direct reports, and we can replicate those around the world. So we're not going to go too quickly. We want to make sure that we deliver an extraordinary experience for all of our attendees and the vendors. Sometimes, we get the question, "Well, why not just go faster?" And Gartner Conferences are really an amazing experience. You've been, so you know. And so we want to make sure that everybody has a great experience. And so we're not going to go so fast just for the sake of rolling out more conferences. We're going to be prudent and measured in how we do that. And we expect that the revenue will grow over time and the profits along with it. And the conferences will support continued strong growth in the Research business as well.

Yes. Our BofA team puts together a good conference, but your conferences are pretty impressive. Shifting to the Consulting side of the business. And if you want to talk about sort of what you guys do there. But you do have a strong pipeline of projects. What's the type of work that's in that pipeline right now?

Sure. So the Consulting is 1/3 of our segments, Research, Conferences and Consulting. And within Consulting, broadly speaking, there are 2 things that we do. We have IT, labor-based consulting. This is, again, tied to the Gartner Research business, where we're helping our largest clients solve their problems where they need an extended engagement beyond the context of a research subscription. And you could think about that as IT strategy and IT project management work. And so we'll do things like helping clients with technology modernization products -- projects, helping them with things like information security strategy, cost optimization, right? So there's a broad range, but it's really at the strategy and the project management level. And as you noted, demand has been very good. The growth there has been very strong. And so coming out of the fourth quarter, we had good backlog, the teams have been doing a great job there. The other piece, which is smaller within the Consulting segment, is a business we call contract optimization. We help our clients win their -- in contract conversations with their vendors. And that can be more variable as we talk about, but it's probably a little bit more acyclical, maybe even potentially countercyclical relative to the Consulting business, which historically has been somewhat of a cyclical business.

EBITDA margins, and I know you get this a lot. So margins were almost 27% in '22 despite a significant ramp in hiring to catch up with sales. Your guidance is for 21.5% in 2023. Can you help us understand the bridge from nearly 27% to 21.5%? And if you want to use 4Q, too, because I know that one comes up a lot [indiscernible] the sort of best way to think about it.

Yes, sure. So again, maybe just a little bit of context for those who are somewhat newer. I think historically, Gartner EBITDA margins had run sort of in the 18% to 19% range. We've been through a little bit of an investing period pre-pandemic where the margins had dropped down below that. I think what we saw over the last few years was that the margins got a benefit from initially reacting to the pandemic. We had frozen hiring and we resumed backfills. We faced a very competitive labor market in 2021. In the second quarter of '21, we really hit the gas pedal on ramping up our recruiting capacity. I think because of the tougher labor market, it took us a little longer than we would have expected, but we did get fully caught up on the hiring that we needed to do. And the hiring is across our sales organizations as well as across all of the other teams within Gartner. So I think we got a little bit of a benefit for a number of years. The travel costs temporarily went to 0. Our real estate cost dropped dramatically because everybody was working remotely, and then with the hiring needing to get caught up. So as we're coming into 2023, we guided to at least a 21.5% margins. And I think the way to approach understanding that is to look at the dollars in terms of revenue and costs. And one of the things that I think investors have found helpful is there's sort of an inclination to say, "Well, okay. I understand that you have catch-up hiring and there's an annualization effect. But shouldn't a lot of that be baked into the fourth quarter numbers?" That's fine. So if you take the fourth quarter revenue minus EBITDA, call those operating expenses, and that was probably just under $1.1 billion. We annualize that, multiply it by 4, you get to -- there's some rounding, but you get to about $4.3 billion in sort of the costs. Well, those aren't the only costs we're going to have because there's merit increases that go into effect April 1, and about 3/4 of our costs are people costs. And so 3 quarters of the year, those costs will be higher in '23 than the run rate from fourth quarter. And then we also have the other 25%, the other 1/4 of the costs. There's just general cost price increases in the world, so food and beverage at conferences and travel and all that. And so there's some incremental spending in 2023 as well. And then the other sort of large category, as we think about it, just because we caught up on hiring in 2022, it doesn't mean that we're done hiring, right? As a growth company in the people business, we're pretty much always hiring. And so we finished the year with almost 20,000 associates. And so that's going to increase. We haven't given a specific number. You can pick your number for the growth, but certainly, we're going to be adding people. And as that -- as we add those people, you can come up with an estimate of around what the spend would be. If you put a reasonable number on a reasonable growth in the associate population, we didn't hire them all January 1, so there's a midyear convention you can use and do some math. And the combination of all of those factors will get you to an operating expense number for 2023. That's in the ballpark of what's implied by the guidance that we've given for revenue.

And as people kind of go into that bridge themselves, the fourth quarter isn't necessarily a proxy for every quarter, though, right? There are different cost seasonality?

That's exactly right. So in 2022, it wasn't a perfectly normal year from a seasonality perspective. We get seasonality in the Conferences business. Our biggest quarter normally for Conferences is in the fourth quarter. The second-largest is in the second quarter. And so there's seasonality there. We have very few conferences in the first quarter, and so the revenue moves. And there are variable costs that move seasonally as well. The Consulting business is also somewhat seasonal, not quite to the same degree. Also fourth quarter and second quarter, slightly larger than the first and the third. So it's not a perfect analog. There are moving parts, puts and takes. But I think the fourth quarter operating expense number is at least a reasonable starting point for a framework of how to think about what the cost might look like in 2023.

That's helpful. And another bridge, which is you mentioned margins were in the teens before COVID, and now you've got something with a 2 handle. You have 21.5% for -- is your guide. What enabled you to rebase margins by that delta? Because it is a big change.

Yes. It's a good question. And I think as you're thinking about the margins, our view is that from the at least 21.5%, over time, we expect that we'll be able to expand the margins modestly going forward into the future. And some of the factors there which we can talk about are similar to some of the factors that have moved us up structurally from where we had been in the past. And so I think one is travel. So the new normal for travel is going to be lower than where we had been pre-pandemic. So one of the things that we learned is that we can run the business very successfully with lower levels of travel spend than we had in the past. A second factor, again, a pandemic learning, is that we can run the business with lower real estate costs. And so we've become a virtual, hybrid-first company. And so we've long had people who were fully remote. We continue to have people who are fully remote. That was even pre-pandemic. There are a lot of roles where that makes sense and is a good fit. It helps us with recruiting and retention. It allows the people to be flexible and successful in their roles. We do have some people who are full time in the offices, and then a large portion of our associates are now flexible. So they're in the office when they need to be. So when teams are getting together, when there's project work going on, when it's helpful for collaboration. And we're always looking for opportunities to bring our teams together where it can make an impact, where that collaboration is going to be effective and allow people to be better at their jobs. It's really good for the culture to have people getting together. It's great when people are new to Gartner to give them exposure to the way we do things, the way we do business, which is really important. Particularly for us as a people business, those cultural aspects are really important. The last structural point is that there's operating leverage in the business. And so we're bigger than we were before. And so as, for example, GBS growth has picked up, we've got more scale and we're able to get benefits from that, and that's helped push the margins up from where they have been.

Yes. That makes sense. I feel like because of COVID, you didn't really -- the turnaround in GBS got lost a little bit. We're starting to really kind of see -- you can see it now because you don't have all that disruption.

Yes. So I mean, I think at the time of the acquisition we've done in 2017, our view is that it would probably be about 3 years to get to double-digit growth. When we bought it, this was a business that wasn't growing. And so that would have put you to around 2020. And so we were actually set. And you could sort of start to see that the growth was accelerating heading in the right direction and then the pandemic hit. The good news is that the GBS business, I think, proved a lot more resilient than people had expected. The growth bottomed there at plus 6% in 2020. And then from there, it accelerated. And as you know, we've been growing very well since then.

Yes. Yes. That's helpful. And then last one on margins. Your management is committed to modest annual margin expansion in the out years. Where is that coming from?

Yes. So the margin algorithm looks at the key expense lines. And so I think there's a little bit of operating leverage within the Research gross margin line. And then we'll get a benefit on a consolidated gross margin basis from mix. So the highest incremental margins are Research over time. That's the faster -- the fastest-growing of the 3 segments. And so consolidated gross margins have the ability to move higher, even just on the mix. But we do get some operating leverage within the Research segment. Our view is that sales are a critical driver of contract value. And so our expectation is that sales costs should be roughly neutral for EBITDA margins. So in other words, the sales costs should grow roughly in line with revenue growth. And then finally, there will be some G&A leverage. I think there's probably a little bit less G&A leverage than people might want to naturally assume. There are parts of our G&A that are closely tied to our sales functions. And so not all of the areas are sort of quite as leveraged because we want to be investing in the sales organization because the sales team is going to help drive future growth. So that's a very important part of the growth algorithm, and therefore, it's an important part of how we think about margins.

Okay. That's helpful. I mean, you talked about the sales cost. Like you've talked about spread, certain spread in terms of headcount growth versus CV growth. But then I'm assuming that you also have some merit increases and inflation and that kind of thing.

That's right. Yes. So when you're thinking about the relationship between the sales cost and the contract value from a growth perspective, the headcount -- our expectation is the headcount will grow slower than CV. CV has the benefit of price increases. The price increases roughly align with the wage inflation in the markets we serve, including our markets. And so when you gross up the headcount to reflect the merit, you end up with costs that then align with the CV dollars. And so there's a nice balance that we're able to strike there because we're able to increase prices consistently over time and consistently what we see for wage inflation.

That's helpful. You know what? Just in case -- I'm going to pause. It's been a quiet day for Q&A. But just in case someone might have a question, we do have mics available. Common theme. No one wants to be on the webcast. Gartner has put a big focus on customer retention. Can you talk about what you've done there? it's been very successful, too.

Yes. So retention, whether you measure in terms of client or dollar, or we have a wallet retention measure, as you know, that captures the fact that the clients we keep spend more with us each and every year. I think this has been an important focus for us operationally because we know how important retention is to our recurring revenue business. And when we retain clients, it increases the opportunity for us to go ahead and expand the relationship because we're selling to individual subscribers. And when they're happy, we'll have an understanding of what their priorities are that potentially helps us understand what their colleagues' priorities might be. It's also a great internal reference to have and say, "Hey, you know what? If I'm benefiting, here are some colleagues that also might be benefiting." And so there's a lot of good that comes from strong retention. So it's been an important focus area for us. And it will continue to be an important focus area for us. And the way we approach it is that we've seen over the years that strong engagement tends to drive strong retention. And so we do a lot of things to drive engagement. We have service teams that help engage with our clients. Our salespeople obviously engage with our clients. Our research analysts are important contributors to the retention rates through the insight that they provide to the clients. The conferences are a great tool that we have for engaging as well. And so all of these factors combine to allow us to drive engagement and in turn drive retention. And I think if you look back over a long period of time, what you'll find is that the engagement has moved up. The trend line is positive. There's always some normal course variability around the trend line, but in general, we've moved retention rates higher.

Being at your conference to see customers interact with their sales reps, looks like there's a very close relationship there. It's really, really interesting to see. New business growth. That was a bit soft last year in terms of growth. And partly part of this was your sales force was relatively new. Can you elaborate on that? What was going on there? And what are management's expectations for that line as the new salespeople start to ramp?

Yes. So when we talk about new business growth, we're talking about the growth of the new business dollars, not the growth from the new business. And so if you think about what we're measuring are the new business dollars that we've added this year versus the new business dollars that we added a year ago. And so that new business is going to include the price increases, it's going to include new business with existing clients as well as new business from new logos. And so I think in 2021, we had very, very strong performance in terms of new business. We were at record levels for new business. And in 2023, for GTS, we were at near-record levels, slightly off. GBS, we were at record levels, again. Modest growth above where we had been in 2022. So the teams have been doing a tremendous job in terms of driving new business. I think we talked in the call, hundreds of millions of dollars of new business. So that's all been going very well. In terms of the sales teams, I think the new sellers, when they come on board, there's a little bit of a learning curve. We're selling an intangible. It's not really a replacement for something that they have -- that the client might have. And so our sales teams, who are very capable, will go out and they will engage with the clients to understand those clients' prospects' mission-critical priorities, as we talked about earlier. And understanding those, the salespeople can help the clients understand how we can help them address those priorities, right? So there's that dialogue that happens, the relationship that you saw at the conferences. And so in general, it's 3 years to full productivity. We're always looking to help our salespeople get more productive faster. We focus on recruiting. We focus on training. We focus on tools to enable and empower and support them to come up the learning curve faster. And so as we look back, we had, going into 2021, some of our most experienced mix of sellers that we've ever had. Coming into this year, we have a lot more newer sellers relative to where we normally would be. But we're excited because, as they come up the learning curve, as they get more experience, as we move through the year, that's going to put them in a position to be strong contributors heading into the second half and looking out to 2024 and beyond.

Got it. Got it. And last question is, we often get questions about your market potential and how you get to your 12% to 16% growth target. How do you think about your market potential? How do you get there? And then where does the 12% to 16% come from? What drives that?

Yes. So the addressable market is really important. So our view is we've got a really large addressable market. And sometimes, people are surprised. We measured it around $200 billion. And I think as people dig in, they get comfortable. Maybe they conclude that it's not $200 billion. That's fine. If it's 1/2 or 1/4 of what we think it is, it's still an extraordinary runway relative to where our contract value is. We're very comfortable with the $200 billion because we've done the work to identify 140,000 enterprises globally. So people sometimes say, "Well, that's a lot of enterprises." And I think a lot of investors sometimes start with the framework of a lot of companies sell into one vertical market, right? But Gartner sells horizontal. We sell into all industries. Some companies are more focused on a geography and then they expand outside their home geography, but Gartner is global. And so this 140,000 enterprises reflects companies or, it could be nonprofits, government entities, not just commercial enterprises. But that's around the world. And they're large enough to be able to afford and benefit from at least 1 Gartner subscription across most of the practice areas. Not everybody has a supply chain function. We don't, you probably don't, but lots of companies do. And so we know the products that we have available to sell to the individuals across these organizations. And we know by size, how many subscribers there are likely to be based on our experience. And we know where we sell the products -- where they price, what we sell them for. And so you do the price times quantity math and you roll that out across all of the people across all the organizations. And we get that bottom-up view to get to the $200 billion. And we have -- you've probably seen a little video at investor.gartner.com that talks through what I sort of just described is a little bit more audio sound track and a little bit more detail, sort of rounding out some of the thought process there. So I think, as you look at just one slice of the opportunity, there's $55 billion that we've sized for technology. About $10 billion of that is tech vendor. So $45 billion for the users or consumers of technology, the enterprise function leaders there. And with that $45 billion, the value proposition is very broad. But even if you took just the opportunity for us to help those leaders with their tech spending, there's more than $4 trillion of global tech spending every year. And so we're a very, very small piece of the tech spending, and we can help them with that as well as whatever their other mission-critical priorities might happen to be.

Cool. And just on the 12% to 16%?

Sure. Yes. So I think given the size of the addressable market, the question is often, well, why don't you just grow faster? And I think it comes down to we need to be able to manage the growth. And so what that means is that we need to make sure that we can hire the salespeople and have them be successful. And we can't just hire them and send them out into the field. They need guidance and support. And so to be able to scale up the business, there are -- we found sort of some operational sort of people management limitations in how fast we can go while being successful in delivering both the growth and the margins and ultimately the free cash flow, which is, I think, probably worth touching on, if it's okay?

Yes. If you want to, I agree.

As we run out the clock?

Yes, I know.

Yes. So we generate, as you know, a lot of free cash flow, well in excess of net income. Very strong conversion, whether you think about it from revenue or EBITDA or net income. We have modest CapEx needs. It runs around 2% of revenue. So very much not a capital-intensive business. And working capital is an important source of cash for us consistently because we get paid in advance when we sign up clients. And so the free cash flow is a very important part of -- from our perspective of the business and the opportunity. And we expect, over time, we'll have more free cash flow. We'll have fewer shares. Where -- our capital structure is very strong. We're actually running currently a little bit below our leverage target, which is around 2x to 2.5x. And all of our opportunities we talk about is organic. So we'll do small and midsized tuck-in acquisitions to support the Research business when they make both strategic and financial sense, but that leaves a lot of free cash flow available to return to shareholders through our buyback program. And our buyback program is, as you know, price sensitive and opportunistic. So we look to buy more when the market sells off, often for inexplicable reasons. And then we'll go a little bit slower if the stock runs.

That makes a lot of sense. Thank you, David. Yes, down to the wire. I appreciate it very much. Thank you very much for your time.

Thanks for having us, Heather.

All right, sure.