Gartner, Inc. ($IT)

My name is Wahid Amin, and I'm part of the business and information services team here at BofA. This session will be on Gartner. I'm pleased to have David Cohen here, who runs Investor Relations at Gartner. We're going to structure this session as a fireside conversation, and then we'll field questions towards the end if time permits. So David, I appreciate you joining us today.

Thanks for having me. Thanks to everyone in the room and those of you who are listening on the webcast.

Awesome. So let's start off with a question that we're asking all information services companies this quarter or this year. And across the info services space, there's been a debate amongst investors regarding the defensibility of the Insights business by LLMs. Given that LLMs are trained on vast amount of public data, how do you define the moat around Gartner's proprietary research in an area where AI can synthesize general business advice into?

Yes. So thanks. It's an important place to start because it's a top of mind focus for investors. And I think understanding how we're positioned starts with the client value proposition. It's our long-standing client value proposition, and it remains very compelling. And we're very focused on helping senior operating executives make better decisions when they're addressing their strategic priorities. When I talk about senior operating executives, think about the direct reports to a CEO. So we're helping the Chief Information Officer, the Chief Supply Chain Officer and across the other major enterprise functions. The problems that they're looking to us to help address are complex multidimensional challenges. They don't lend themselves to, hey, I've got a question, give me an answer. And more important, perhaps, they don't lend themselves to answers that are based on publicly available. And the foundation of the value proposition starts really with our 2,400-plus experts. These are often former practitioners. They've got lots of knowledge, lots of experience. And so they offer tremendous value. When you combine that with more than 500,000 client interactions a year, more than 20,000 vendor briefings every year and several terabytes of proprietary data, there's a really important moat. In addition, our clients have confidence that the insights that we're providing to them are independent, they're objective, they're unbiased. And so if you're a Chief Information Officer and you're looking to provide reassurance to your Board of Directors, for example, about your information security strategy, there's no way to benchmark that with publicly available data. Companies don't disclose their information security architecture, they're spending the skill set and so on. These are hard complicated problems and questions where our clients are looking to us for help. And so that's the foundation really for, why we continue to be extremely helpful to our clients, extremely relevant as they're addressing their strategic priorities.

Awesome. So we've talked about why there is more on Gartner's proprietary data, but -- let's switch to how gen AI is helping the business. So management has described gen AI as a huge opportunity for both internal efficiency and for client demand. On the client side, are you seeing AI inquiries replace traditional optimization research? Or is AI acting as a massive top of funnel driver that is bringing entirely new type of business leaders to Gartner?

Yes. The first place where AI is important to us is that it's important to our clients. So roughly 40% of our content in 2025 was related to AI. A similar percentage of our client interactions were related to AI. Across all of the major enterprise functions, IT, finance, legal, AI is an important topic. And we're uniquely positioned to help our clients navigate how they can and should be addressing AI in their organization. We've got a database of several thousand use cases, because clients are coming to us and saying, well, I've made some investments in AI, I'm not seeing the returns that I wanted. Am I doing something wrong? Is somebody else doing something differently? And because of the network benefit of the extensive number of clients we have and the interactions we have with our clients, we can bring that visibility. We can bring that perspective to help these senior operating executives think through their AI strategy. It's also a really important topic with our technology vendor clients. One of the ways that Gartner has talked about AI is that there are 2 races being run: there's a vendor race, which is an all-out sprint. And then there's the enterprise consumption of AI, which is moving at a more measured pace. Obviously, there's a wide range with some people out front, more early adopters, other people taking a more gradual approach. But with the technology vendors, every time there's an incremental or even step function change, the tech companies need to think about the competitive landscape they're facing, the product road map, how fast do they need to introduce features? What are their clients saying about their needs from an AI perspective. And so we're able to add a lot of value, not just for the enterprise function leaders, but for the technology companies as well. I would point out, part of our long-standing value proposition is that we're going to help our clients with their priorities no matter how they may shift and change over time. So we serve individuals and roles within the functions. We don't price or sell products discretely by a given topic. There's no AI module because the value proposition is that, if you're a Gartner licensed user, we're going to help you, whether the topic is AI or information security, developing the next generation of leaders or whatever else it might be. So that's the first area, serving our clients from an AI perspective, really, really important, really going well because they need to help. And again, we're uniquely positioned to provide that. The next place I would point to from an AI perspective is that we're leveraging gen AI. We've created a front end to gartner.com. So when you subscribe to the Gartner Insights, you can log in and you'll get information about topics that are trending among your peers. You can pick up where you've left off. There's a long-standing search capability. But now with AskGartner, you can ask a natural language question. And by the way, it doesn't have to be in English. We're seeing increasing use of AskGartner in other languages. The natural language answer will also offer you questions that you didn't ask, but that you should consider. We're going to give you access to the underlying written content pointers to all of that as well. And so we started to roll out the beta release in mid-2025. We finished the beta rollout to all of our licensed users by the end of October last year. Uptake has gone well. The adoption is growing. We've gotten very encouraging feedback. And we're seeing increased usage of the platform because of AskGartner. So the clients that are using AskGartner are spending more time at gartner.com. They're coming back to AskGartner. And so that's -- we're very encouraged, very excited about that. It's still relatively early. But during the fourth quarter, with the small sample size that we had, we saw retention rates for clients that have been using AskGartner notably better than retention rates for clients who had not yet AskGartner. So I don't want to overstate that just yet because it is a small sample size, but going well and certainly very encouraging. Beyond improving the user experience, we're leveraging AI. And by the way, AI is a broad set of technologies, although often, I think people think about it in the context of gen AI. We've used different types of AI throughout the organization in the past. In terms of gen AI, a couple of exciting internal use cases our service people are able to be more efficient preparing for client meeting because we're able to use gen AI to synthesize for our service people, what our clients have been reading. We've had very good success with training our salespeople with the tool that we built leveraging AI. The sale of the Gartner product is a consultative sale. And one of the ways that we train our sellers is a [ real-time ] approach. Well, being able to leverage gen AI frees up the colleagues who had historically been supporting the training of the new sellers, and that's been going quite well. And so we've got more selling capacity time because we've freed people up by leveraging AI. For our -- we've got a neural network-based demand sensing tool that helps our experts prioritize and focus their time on the topics that matter most. There's been a lot of focus on reinforcing best practices at Gartner around making sure that the content we're creating is maximally impactful, that it's as timely as it needs to be, and that we've got the breadth of coverage to be able to serve and support all of our clients. So we're finding lots of opportunities, as I mentioned, serving clients, delivering insights to clients and then looking for ways to get better at doing what we do internally.

Awesome. And a point you brought up was AskGartner, I just want to unpack that a bit more. Gartner analysts remain the human element of the value proposition. How does the role of the Gartner analysts evolve when the client can use AskGartner for the what and the how, what does the add value come beyond that?

Yes. As I mentioned earlier, our experts are the foundation for all of the insights that we're providing to our clients. Probably 90% or so of our contract value comes with products where the clients will have access to speak to our experts. So there's a tremendous amount of value that our experts are able to deliver, and that's critically important to our clients in being able to go deeper, dig down, optimize the insights for their specific needs. Our experts have lots of knowledge in their head. that doesn't sit within the written product. It doesn't necessarily sit within the proprietary data sets that we have. And so there's always going to be a critical role for our experts, both in terms of creating the insights as well as in delivering the insights to our clients. As we think about AskGartner, one of the things that we've started to see is that, because our clients are able to find the insights that they need faster than they had historically. And one of the things that clients have told us in the past is that we have so much valuable content that historically, it was sometimes a challenge to find exactly what they needed. AskGartner has gone a long way to helping the clients find what they need. And so I think we're starting to see the clients leveraging AskGartner and then going into the discussions that they have with our experts at a whole deeper level. And so to the extent that our clients are able to get up to speed on a lot of the insights more quickly, our view is that they can have a much more impactful conversation than perhaps they would have in the past. And so we see a lot of value that AskGartner is bringing at an underlying level to helping really enhance the value of the expert.

Great. I know we've talked a lot about AI. So let's switch a little bit to contract value. Total CV growth has moderated to, let's say, low -- flat to low single-digit growth recently. It's a departure from the historical double-digit growth algorithm. While the macro environment is always a factor usually this time of the year, how much of the deceleration is a timing issue of when new sales hires reach full capacity versus before?

Yes. I think people sometimes forget that during 2024, contract value had been reaccelerating, right? So the growth had gotten better as we were moving to '24. We went into 2025, hoping for a normal year, right? It's been a long time, I think, since the world has had a normal year. But -- and we felt really good about the opportunity to continue to accelerate in 2025. And then to your point about the macro, I'll broaden it to external factors. The U.S. federal business was about 5% of contract value at the start of 2025, and it finished the year a little bit less than half of that. The DOGE and related initiatives put a lot of pressure on that U.S. federal business. That was unrelated to the client value proposition. This was essentially an external force within the federal government, essentially dictating that the spend with Gartner needed to be reduced. Our client, the licensed users continued to see the value, oftentimes pushed back and said, no, this is really important because if the mission of DOGE is to leverage technology to make government more efficient, there are very few ways, if any, to look to leverage technology to make government more efficient outside of the Gartner subscription for a very reasonable price point. It's an annual subscription, you get access to all of the insights. And so the value proposition is very compelling. The drag to the growth was not related to the value proposition. It wasn't people saying, I'm not sure where the value is. Our clients understand the value that we're able to deliver. It was also a more difficult selling environment on the commercial side. So downstream of the federal government, there's a lot of belt tightening going on. The tariff dynamic affected different industries in different ways. About 40% of Gartner's contract value comes from enterprises within tariff-affected industries. So this is another example where it was not about the Gartner client value proposition, which remains compelling throughout the year, it was companies looking to tighten their belt. Because if you're a CEO or a CFO in a tariff-affected business, when the tariffs hit and they've been pretty dynamic in terms of the levels and where they apply, if you can't pass those costs along, you have to manage your other expenses very aggressively. And that just made for longer sales cycles, more escalations, and that became a headwind to growth in 2025 that we hadn't expected at the start of the year. I think we finished the year with mid-single-digit growth in contract value, excluding the Federal business, which I think reflects the level of resilience that it's not Gartner historical growth rates. It's not the Gartner growth rates that we know we're capable of delivering. But it was a pretty resilient performance in the face of a much more challenging selling environment, in particular, more challenging than we'd expected at the start of the year.

Okay. And then just on the topic of businesses tightening the belts and the budget constraints, how would you describe sort of the client engagement with those type of clients? And as those contracts are coming up for renewals, are you seeing a higher level of engagement bringing some of those conversations towards the finish line?

Yes. In terms of client engagement, client engagement increased in 2025 versus 2024. We measure engagement across many different variables, things like AskGartner, which we talked about earlier, analyst inquiries, conference attendance. And so broadly, engagement levels improved in 2025. And they've been tracking consistent with historical levels. I think there's a spike back in 2020 when everybody went home because of the pandemic, and then we had a renormalization. And so engagement tends to be a leading indicator of retention. One of the things that Gene talked about on the last earnings call related to efforts we're making to drive improvements in the content because we know that, that will drive improvements in engagement. And we're looking for even higher-than-normal improvements in engagement to be able to drive improving retention. In an environment where there are these external factors, we recognize that we need to be delivering even more value than normal to offset sort of those Gartner, not related to Gartner spending constraints that companies might feel that there on.

Okay. On that last point, when there are times of uncertainty. Then Gartner view that sometimes as countercyclical. During these times, clients need more data, more information to decide what to do. When you have these conversations, how are they like on the defensive side versus when they're on the offense?

Yes. Well, I mean, I think we've got a track record of being resilient in the face of external factors, macro, geopolitical. If you look back to the financial crisis, if you look back to the pandemic, contract value growth was resilient. We're not immune to these factors. But because we've got the ability to serve our clients and help them in good times and in challenging times, we're adding a lot of value regardless of where they are. There are going to be times when the budget constraints are such that it's harder to drive incremental licenses within the existing clients. And in 2025, we saw slightly less than normal levels of upsell. We saw slightly higher levels of down sell because of these budget constraints. Historically, what we've seen is that when external factors drive budget constraints, we tend to see win backs of those licenses. In any event, we've got insights related to things like cost optimization. When the pandemic started, we rolled out pandemic-related insight. In 2025, we rolled out tariff-related insights beyond the content that we already had. Our teams are nimble, they adapt, and we're very commercially oriented, prioritizing the topics that matter most to our clients. And we've got an ability to adapt and pivot to changing needs of the client. So if a client is moving from growth mode to cost -- in cost discipline mode, we've got the ability to support them with benchmarking and best practices, context perspective and deep insights to help them.

Got it. Okay. So just shifting over to the other parts of your business. The Conferences segment, shown strong pricing power and attendance recovery post-COVID. Do you view the attendance at a conference as a leading indicator for future Insights CV growth, I think as a proof of concept for future prospects?

Yes. The Conferences business is a really important complement to the Insights business. It's one of the ways that we really bring the Insights to life. We -- our strategy for Conferences is to have a conference for each of the roles we serve within the Insights business replicated across geographies. The Conferences business is a great tool for delivering insights and value to our clients. It's an opportunity for them to network with peers, engage with vendors. There's really tremendous value that we have to offer. It's a great tool for retention as well as for driving new business with perspectives. It reinforces the strength of the Gartner brand. In some ways, it's a marketing function that we run with 50% gross margins. So it's a really good business. The team had a good year as they usually do in 2025. The results were good. Ex-Fed, the attendance was good across the Conferences portfolio. And we're excited for another good year in 2026 for the Conferences business.

Awesome. And then just touching a little bit on the Consulting business, some variability, particularly in the contract optimization side. how much of the consulting performance is currently tied to clients asking for help specifically with AI implementation road maps versus traditional IT cost?

Yes. The Consulting business is another important complement to the Insights business. The primary goal is to support clients on technology strategy and technology project management, when they want to go beyond the scope of an Insight subscription, they want to engage with us on an extended project basis. About 3/4 of the Consulting business relates to IT, labor-based strategy and project management work. We don't do any software development. We don't do any system integration work there. And certainly, we're helping clients with things like their AI strategies. There continues to be important engagement around things like legacy modernization, migrating to the cloud, cost optimization, digital transformation. So there's a wide range of topics, including AI, where we're helping our clients think through their strategies. The other part of the Consulting segment, we call [ cont-opt ], contract optimization. That part of the business, it's very good, but it's highly variable. We're helping our clients save money when they're negotiating contract with their vendors. And we're getting a percentage of the savings. That business -- part of the business has been very strong for several years. Aside from the variability that's inherent in the timing of when the revenue comes in based on when we help our clients. It's a very good business. It's generally going to be a cyclical, maybe even a little bit counter-cyclical.

Okay. Just switching topics here. Many investors look at Gartner as a proxy for the global IT economy. Gartner is the canary in the coal mine? And what is the canary telling us right now about the health of IT spending over the next few years?

Yes, it's an interesting question. There's often a perception that our business is tied to IT spending. We certainly help both the vendors and the enterprise consumers of technology with decision-making. But because of the nature of the value proposition, we're probably more closely tied to global expense trend broadly rather than tech spending itself. So for example, in 2025, our growth was slower than our typical level. If you looked at, for example, and I use this not because it represents the whole client base, but because the numbers are readily available, at the S&P 500, EBITDA expense growth moderated. I think the Gartner's view is that technology spending is and will remain strong. It was strong in '25. It will remain strong in '26. And so I don't think there's any reason sitting here today, to think that there's some read-through for tech spending, partly because, again, we're not a direct player on tech spending. If we were, it wouldn't make sense that we've been wildly successful in supply chain and HR and finance and all these other areas. And so I think the outlook from the Gartner experts is continued strength in technology spending, demand for technology broadly across industries, across sectors, across companies.

Awesome. And then just before we open the floor for questions, we're asking those who are presenting with us today to do a quick word association.

Okay.

So tell me the first thing that comes to mind when I say the following.

When you say what?

When I say the following.

Okay.

CV stabilization.

Imminent.

Okay. proprietary data.

Foundational to the Gartner business.

Workflows.

An important way where we have outcome.

Tech spending.

We just talked about tech spending. Tech spending is good.

And the last one for you, Gene Hall.

Extraordinary leader.

Awesome. Okay. We'll open up to questions for now. If anyone have any.

I'll kick it off. Yes. So thanks, David, for being here. So you're saying so tech spending, I'm just trying to get a better sense on the correlation, especially with AI spend certainly impacting how companies are thinking when you referenced S&P 500 expenses that have moderated here. So is it more maybe tied to corporate headcount? So in other words, if banks are saying we can cut our headcount by 15% over the next 5 years because of AI, and we'll see on maybe the retail side versus wholesale. What impact would that mean for your business if headcount actually starts to come down or at least moderate from here?

Yes, it's an important question. And just for the webcast, if you couldn't hear, the question had to do with headcount as a potential factor in the growth outlook for Gartner. We sell to the senior operating executives within an enterprise. So think about C level and 1 or 2 down. So the CIO, his or her direct reports, their direct reports. That's our primary focus and client base. The average client today has about 5 licenses. We're not selling to the frontline programmers or accountants that I think people are wondering if those jobs might be at risk. So we have an individual licensed user go-to-market sales model, but it's not sort of the broad-based model that you might find with lots of software businesses. In terms of what drives the growth, there's a very large underpenetrated addressable market opportunity. There are millions of senior operating executives that don't have a Gartner license today, but have overlapping priorities with the clients that we're serving and supporting and helping right now. And so really, the Gartner growth opportunity is about retaining the existing clients and then going and selling to all of those who don't yet realize how much they can benefit from a Gartner license.

Maybe just a follow-up question. So as some companies are in information services are potentially looking going from a seat-based model to maybe more of an enterprise model. It doesn't sound like that's necessarily an issue with Gartner just because the number of seats are very consolidated at the top. But I don't know, is there any rethinking on that? And again, you referenced earlier partnerships. Is that maybe on sales model? Do you need more partnerships to maybe address that TAM opportunity?

Yes. So the question was about some info services companies maybe exploring enterprise models, would Gartner consider that? And then a little bit about potential partnerships and how we go to market. On the first point, I think our view has long been and remains that we're delivering value to the individual license user. It's really important for us to stay close to them to understand what their priorities are to make sure that we can help them address those priorities. So that individualized relationship becomes very critical to how we deliver the insight. The creation of the content is scaled on the back end. We get the benefit of scale and network effects, but the value delivery ends up being individualized. So I think that model remains the right one for Gartner sitting here today. I certainly understand how there might be other businesses where the model might need to change over time depending on how things play out. From a go-to-market perspective, it's a product that's an intangible. It's not a replacement. It's very much of a consultative sale. It takes feet on the street. It takes our excellent frontline salespeople interacting with a prospect, understanding their mission-critical priorities and mapping how we can help them with those priorities. So that direct sale model is also very important to how we go to market. The value that we're able to deliver to our clients, again, highly individualized in the realization, and having that direct relationship with the clients is very important and very valuable, both to us and to the client.

Thank you. I think we have time for one short question before we end.

You mean, a short answer, I think, is what you mean.

All right. With that, well, David, I appreciate your time. Thank you so much, and thank you all for joining us.

Thank you for having us.