Gartner, Inc. (NYSE:IT) Q3 2023 Earnings Call Transcript

Unidentified Analyst: Okay. Thank you. Sorry to drag you back to it. I know you said you have sufficient sales capacity. I just want to make sure I am understanding the management of sales headcount appropriately. So, is this that you have already seen a slowing environment and you have already rebuilt your sales capacity? So, with those dynamics, you are well-calibrated? Or should we be reading into it that there’s any sort of, like, incremental weakening you are seeing because we are not seeing that in any of your externally reported metrics?

Gene Hall: Yeah, Jeff. So, you should not read into it in any way that we are seeing any kind of weakening. It is what we talked about earlier, which is that we expanded our salesforce a lot over the last two years. For general GTS, it’s up about 18% since the end of 2021, that’s a lot of capacity. So, we have added a lot of capacity. On top of that, as Craig mentioned, a lot of those people are now coming into tenure. And so, as we look, especially for ’24, we feel like we are really well-situated in terms of actual capacity between the larger number of additions we have made in the last two years and the fact that those people we come up with tenure curve and kind of being at the really, really good spot at the tenure curve during ’24. And by the way, the ’25 as well.

Unidentified Analyst: Okay. And then, Craig, you just alluded to this, but, I guess, I was surprised to see subscription revenue performance as well as it did in research. And I am not sure if there is some FX impact or divestiture impact or something. But, to see it on Slide 7 actually accelerate, while CV’s still been decelerating, if you can just address why research subscription revenue would be accelerating, with those dynamics.

Craig Safian: Jeff, I think there is a little bit of FX in there. Obviously, I do think, over the course of Q3, and this is part of the reason why we are able to increase the research guide a little bit too is, NCBI or growth came in earlier in the quarter than we had originally anticipated. And so again, the combination of, it if books in July, we get to take two months of it. If it books at the end of September, it’s all in Q4. And so, we got a little bit of that benefit flowing through into Q3. And then, obviously, we are able to raise the full-year guide for the research segment as well because of the beating our expectations for the third quarter in NCBI.

Operator: Comes from the line of Andrew Nicholas with William Blair. Please proceed.

Andrew Nicholas: Hi, good morning. Thanks for taking my question. I wanted to — again, ask on the headcount question and maybe ask it a different way, which is given where you feel you are with headcount and territory coverage and the ramp for what was previously a lower tenured Salesforce, is it fair for us to expect next year for a bigger gap between CV growth and headcount growth than maybe the 4% to 5% that you’ve talked about historically as all those dynamics kind of come together?

Craig Safian: Hey, good morning, Andrew. It’s Greg. I think the way we’re thinking about it again, we’ll provide full guidance in February, but as we’ve mentioned throughout the course of this year, we are constantly recalibrating based on the external situation and how our business is performing. Looking at the headcount, sort of quarter-to-quarter, there can obviously be a little bit of noise in those numbers. And so, as Gene and I both included too, there’s really nothing to see there. And as we roll into next year and beyond the algorithm that we continue to think about is we’re going to grow our territories and our headcount in that kind of within four points – four points to five points of contract value growth. And the four points to five points is really dependent on what we’re seeing from a wage inflation perspective.