IT
#There are assets in the US and there are assets outside the US as well.
And we are looking in both markets.
So you shouldn't take it as ---+ we are focused on one or the other.
We are focused on both and there's great opportunities on both.
So, Gartner is ---+ we are a leader in the technology industry.
It is a very cool industry to be in.
We are by any metric, if you look at glassdoor, et cetera, a great place to work and we have a great reputation in the marketplace.
Because of this tremendous reputation we have and also because we have a world-class recruiting organization, we don't have trouble hiring people.
In fact, as you saw this quarter, actually our sales hiring accelerated this quarter.
In addition to that, we don't just track numbers of people.
We actually have track metrics that indicate the fit of the people we hire.
One might call it quality.
We think about it as the fit of the quality we hire.
Not only did our growth rate accelerate but the actual forward-looking metrics on the fit of the people we're hiring now that just brought in, at this accelerated pace, are the best ever.
That keeps getting better over time.
So, because Gartner is such a great place to work, we are in a great industry, it's a great recruiting organization, we are able to attract great people at an accelerated rate.
In terms of attrition, our attrition is in the normal range in the range it has been in in the past.
Yes, that is correct.
We live in a very competitive marketplace.
There are lots of competitors, there are new innovators all the time.
That has been true forever.
We don't stand idly by.
We track competitors.
We've also talked many times in the past ---+ part of the core element in our strategy is continuous improvement and continuous innovation.
We every year introduce new products.
We don't rest on our Laurels.
We basically ---+ because innovation is central to our strategy, we are constantly improving getting better, stronger, faster every year with new products that are appealing to the most important things in the marketplace today.
So while we have today a very competitive marketplace with a lot of innovators, and we always have, and we have always done very well because we are aware of this.
We have respect for them.
We innovate to stay ahead and we're committed to continue to do that.
On the managing partners front, so we are very pleased that we have reached 100.
That's actually not the long-term target for us.
As our consulting business continues to grow, we will continue to bring on more managing partners to support and drive that business.
And so you shouldn't think of 100 as the finish line by any stretch of the imagination.
We will continue to grow the managing partner business to continue to support and drive growth on a long-term basis.
With regard to the second part of your question, in our consulting business we have the same strategy of continuous improvement and continuous innovation as we do across the entire business.
That business, the service lines we have, evolve continuously to reflect the changes in the marketplace.
And one of the things that we do in consulting is they build their service lines based on what's most important for our research organization.
So, by knowing what's most important to clients on things like digital best practices, the consultants can then apply that in the consulting space.
So, you shouldn't think that we are just adding more managing partners.
Actually our service lines are quite dynamic and innovate over time.
And that's what is driving the success of that business.
It is <UNK>.
So the two things that drive contract value are our sales productivity and the number of sales people we have.
And as I have talked before, in terms of sales productivity, we have a number of programs in place and we continue to innovate on those programs and others to drive sales productivity.
And in fact, as <UNK> mentioned, we are seeing sales productivity improve and that's because it that's the first thing that drives contract-value growth.
The second one is the actual size of our sales force.
As I mentioned before, as <UNK> mentioned, we have actually accelerated the growth rate in our sales force as well.
So both of those two things are the kind of forward-looking metrics you would expect to indicate that we can continue to grow our sales force over time.
We can continue to grow our contracts over time, in fact, at an ever-increasing rate.
And Joe, if you go back no our investor day materials, there is actually a slide that lays out the way we think about it in simple terms which is modest improvements in sales productivity coupled with 15% or 15% plus headcount growth, what that equates to in terms of contract value growth.
And so, that's why we have said long term our target is 15% to 20% from a research contract value growth perspective.
Again it is that combination of growing sales headcount and continued improvement to sales productivity.
So, Joe, there's, in terms of sales productivity, we have many programs, too numerous to name right here and some have been rolled out, some are in pilot and some are being developed.
And they all fall into the three categories I talked about ---+ either improved recruiting, meaning our ability to target the people that have the skills to be most successful at Gartner and the highest productivity.
We are getting better at that time all the time.
The second thing you mentioned is training.
In fact, we had a major improvement to our training which we are in the process, we're not quite finished rolling it around the world.
Or, I'm sorry, we just finished rolling it around the world, so you wouldn't actually have seen the full impact of that.
Of course because that's rolled out, we have other improvements in training behind that and we will have training improvements behind that as well.
Thirdly, again, we are continually improving our tool-sets as well.
And, again, we have a major new improvement for sales tools, particularly for new sales people that we're at the beginning of the roll-out for as an example.
We will continue with.
Again, when that's rolled out, we will have another thing behind that.
One way to think about it is we have version two, version three, version four, version five.
We don't ever say ---+ well, we got to version two and we are done.
And that's how we want to drive sales productivity over time.
Thanks, Joe.
What we are really, really laser-focused on is accelerating our growth rate in research which is our most profitable business, has the best flow through and really drives significant improvements to gross contribution margins.
And so we are 100% laser-focused on, as we just talked about, improving and accelerating research contract-value growth which then translates into research revenue growth and total company revenue growth.
As we accelerate and drive research contract value into the 16%, 17%, potentially 18%, 19% range, there is absolutely margin potential and upside there.
But we are very focused on making sure that the investments we put into the business ---+ whether it is new sales people, new tools, better recruiting, better training are actually supporting and driving long-term sustainable real accelerated growth in research contract value.
So no real disconnect, <UNK>.
We have improved our sales productivity and we are at roughly 15% contract-value growth.
As we have talked about in the past, the margin unlocks or there's more margin potential unlocking as we accelerate research contract value at an even greater rate.
So that's number one.
Number two there's always going to be a lag in terms of the productivity and research contract value actually converting into revenue and profit on a roll-forward basis.
I think it is the combination of those two things.
When we think about the business again, we reiterated, reaffirmed our guidance for the full year.
There's a margin expectation built into that guidance.
That is what we are managing to and that is where we are on a year-to-date basis.
But again as I mentioned to Joe on the last question, we are really laser-focused on how do we continue to accelerate sales productivity so that we can accelerate research contract value growth.
So <UNK>, we're obviously talking about 2015.
We have talked about guidance for 2015.
We are not at a point where we are discussing 2016 yet.
If you took it out an extra decimal point, there is acceleration.
So, on a year-to-date basis, we have repurchased $441 million of our shares this year.
Last quarter when we announced that $1.2 billion authorization, what we said was we expect that to last us 2.5 to 3 years.
That's basically the guidance around share repurchases.
So <UNK>, what I would say is we are not changing the statement around 2.5 to 3 years on the $1.2 billion authorization.
As always, business conditions may dictate slower, faster, what have you, but what we are basically reiterating is that $1.2 billion authorization should last us, roughly 2.5 to 3 years.
Hi, it is <UNK>.
So, we would clearly rather be at the high end of that range than at the low end of that range.
We set the range because, as we talked about, the pace of hiring depends on the readiness we have of our first-level managers to be able to absorb all the new people.
And so, we would much rather be at the high end of that range.
That's certainly our objective.
That's accurate, yes.
We had software advice for the full quarter last year and the full quarter this year.
The comp is actually accurate, so no benefit from M&A.
So <UNK>, what I would tell you is things move around from quarter to quarter on a year-over-year basis.
I would focus in on the full year where, if you take different ranges of the guidance, you can see roughly flat margins on the full-year basis is what our guidance roughly implies.
Again, things are going to move around from quarter to quarter.
The expectation for Q3, there's obviously more stuff going on than just two events moving or three events moving out of Q2 and into Q3.
But I would focus in on that full-year margin number.
So <UNK>, the contract optimization wouldn't be baked into that number.
FX will have a pretty significant impact on that number as our consulting business is very global with a significant portion of its revenues being generated in currencies outside the US dollar.
The other piece there is there was a 2 point dip in utilization rate, which we talked about, which would obviously also impact that annualized revenue for billable head count.
That number would have been slightly down on an FX-neutral basis.
You got it.
So these are small businesses.
They're great businesses but they're small businesses.
We don't see it as having a big impact now.
And, <UNK>, if you want to talk about it.
We are in this business and we have bought these businesses because we think they can be meaningful businesses.
But as <UNK> just mentioned, very small right now.
Makes sense, if you will.
But we will be focused on growing them.
The key for us, as <UNK> I think mentioned earlier, is we still have this enormous market opportunity on the organic business.
So even if we grow these new businesses at an accelerated rate, it is our absolute expectation that the core business will also continue to grow at an accelerated rate.
And so, maybe it becomes a slightly bigger piece but of a much larger pie over the long term.
So again we think there's tens of millions of small businesses.
We want to serve those businesses just like we do the larger businesses.
We are going to grow it at the rate that makes sense to grow it, to serve that marketplace.
Thanks to all of you for joining us today.
Let me summarize some of the key points of the call.
First, we are doing great as a company.
We are where we would expect to be at this point of the year and all of our underlying metrics are strong.
We continue to invest and improve recruiting capability training tools that drive sales productivity.
Our FX-neutral CD growth accelerated modestly.
We remain committed to enhancing shareholder value through investing in our business, strategic acquisitions and share repurchases.
And we are getting better, stronger, faster all the time.
I expect to see robust growth for years to come.
We look forward to updating you again at our next quarterly earnings call.
Thank you.
