Gartner, Inc. (NYSE:IT)
Investor Day Call
February 16, 2012 09:00 ET
Brian Shipman –Group Vice President, Investor Relations
Gene Hall – Chief Executive Officer
Peter Sondergaard – Senior Vice President, Research
Alwyn Dawkins – Senior Vice President, Gartner Events
Per Anders Waern – Senior Vice President, Gartner Consulting
David Godfrey – Senior Vice President, Global Sales
Chris Lafond – Chief Financial Officer
Manav Patnaik – Barclays Capital
Dan Leben – Baird
Dave Lewis – JPMorgan
Andrew Albert – Invicta Capital
Ladies and gentlemen, please welcome Gartner GVP, Brian Shipman.
Brian Shipman – Group Vice President, Investor Relations
Good morning, everyone and welcome to Gartner Investor Day. My name is Brian Shipman and I serve as the Group Vice President of Investor Relations. I will begin this morning by highlighting our Safe Harbor statement. Please take careful note of it, on screen and in your handouts.
Today’s session will begin with our Chief Executive Officer, Gene Hall, who will describe Gartner’s compelling business opportunity. After Gene, we'll take an in-depth look at our three business segments. Peter Sondergaard, who runs Gartner Research, will describe how we create our industry leading insight and how that insight supports our double-digit growth strategy. Leading Events is Alwyn Dawkins. He will show you how our Events segment is a natural extension of our Research business driven by wining strategy. Per Anders Waern, who manages Consulting will share with you the unique value proposition. Our Consulting organization provides to our largest clients. After a short break, David Godfrey, who heads up our Global Sales organization will show you how we are pursuing and capturing our vast market opportunity.
Our CFO, Chris Lafond will go deeper into our business model, the operating metrics we use to manage our company, and how we are achieving double-digit growth over time, consistent with our long-term goals. Finally, Gene and Chris will close out our time together by taking questions from the audience.
Ladies and gentlemen, the Chief Executive Officer of Gartner, Gene Hall.
Gene Hall – Chief Executive Officer
Good morning and welcome to Gartner Investor Day 2012. To our returning guests, it's really great to see you again and for those of you that are joining us for the first time you are going to learn about a pretty exciting company. Well, it's a preeminent organization providing insight to IT decision makers, we at Gartner the center of IT and supply chain management and that is a continually relevant ever changing landscape. We've built the capabilities to sustain double-digit growth over the long-term in revenues, in EBITDA, in EPS, and in cash flow.
Let’s begin by thinking back to a time when there were no iPads or iPhones, the cretaceous period of technology, when there was no notion of the cloud, there was no Facebook, no Twitter, no LinkedIn, when the phrase social computing was an oxymoron. Think that even further, when the critical function of IT was to run reports and the input was on punch cards, then reports are done in the wide track-fed paper that weighed several pounds, the Jurassic period of IT. Now, it seems like ancient history, but it wasn’t all that long ago. In a business processes, customer interactions, information conception are fundamentally different from what they were just 15, 10 or even 5 years ago. Technology innovations have changed the way people work, where they work from and how they collaborate within our ever expanding global community.
Now, of the many IT innovations that are critically impacting organizations today, there are 5 that are particularly prominent: mobility, social computing, cloud, big data and the shift of IT to drive our cost optimization throughout the organization. The recent visit to a doctor’s office in Florida, I looked around the lobby and half the people sitting in the room look to be retired. They are actually playing Angry Birds on the smartphone instead of reading six-month-old copies of People Magazine. The other half of the room appear to be staying connected to the workplace, so that nobody knew they were out of the office. Mobility has fundamentally changed what you do and where you can get it done and the implications have just begun. In fact, as I look around this room, many of you rolling your BlackBerrys right now.
Well, social computing has permeated the institutions of all shapes and sizes. Organizations are trying to understand how do you social media with their clients, and that’s whether they are large B2B or B2C companies, government entities, or even small privately run institutions. The cloud is everywhere in every strategic conversation. CEOs and CIOs are looking to lower cost and increase service levels by offloading services to cloud providers. At the same time, the cloud offers an unprecedented ability to build new products and competitive advantage. And that applies to both every institution and their competitors.
Now, move this era of rapidly changing technology, we have more information than ever before. From baseball to marketing, big data is enabling better intelligence for every enterprise and in this information rich environment IT organizations are being called upon to use this data to create value. The fifth innovation is the way we look at and use IT. During the past when companies needed cost reductions, they often reduced IT budgets. Now, when companies need to reduce cost, they are likely to spend more on IT and use IT to reduce cost in other parts of the business. All of this puts IT in the spotlight. In fact at the World Economic Forum in Davos, Switzerland this year, (indiscernible) even the 102-page program guide had more references to technology and social media than any of the nerdiest Silicon Valley blogs that I read daily.
Well, every institution, every industry including private sector, public sector, for profit, not for profit, every size company in every geography around the world, is under pressure to improve. And they know that IT is a central part of driving that improvement. And they also know they need help. So, where can institutions turn to for this help, Gartner. Gartner is the single best source for clients do the insight if they need to understand where and how to successfully use IT and supply chain to achieve their objectives.
Now, the core progress differentiated value proposition is the insight generated by more than 800 analysts that are around the world and this insights delivered to our clients through our three business segments: Research, which comprises about 70% of our revenues; Consulting, which makes about 20%; and Events, which makes up the remaining 10%.
In our Research segment, we deliver world-class insight, primarily through subscription-based digital media service. The success in our Research segment is actually amplified by our Consulting segment. Through Gartner Consulting, we are able to deepen relationships with our clients while extending the reach of our research beyond what our analysts provide. Finally, our Events segment offers current, relevant, and actual technologies sessions led by Gartner analysts while facilitating pure exchange.
We also have a vast untapped market opportunity. We estimate the market opportunity for our Research segment to be at least $47 billion. That gives us oceans of opportunity. Within Research, IT professionals and IT functional leaders represent our largest market while CIOs, supply chain professionals, and other roles represent another opportunity. A little bit on the right represents the $1.1 billion of market penetration that we have today.
Now, for those of you who would follow us over time, you know that we have been pursuing the same winning growth strategy for several years. The fundamental building blocks are to first create extraordinary research insight, to build strong sales capability, to deliver high-value differentiated offerings, and to provide world-class service. And we do all of this while continually improving and innovating across all areas of our business. And our performance-driven leadership team drives that strategy to success.
The each element of our strategy has been built along two dimensions, which together continuously improve our capabilities. The first to mention is introducing innovative programs to deliver on our strategy. We then continually improve upon these programs. The second to mention is adding new innovative programs that drive higher performance over time. And these two dimensions compound together to strengthen our capabilities over time. So, I'll illustrate these two dimensions, we'd use an example from one of the elements of our strategy. So, one of our strategy is to deliver extraordinary research insight. The first program in generating extraordinary research insight is to focus on the most critical topics that are facing IT and supply chain professionals. We reevaluate this program on a continual basis and we've gotten better and better over time and making sure we are focused on the most critical topics. And we are going to continue to reevaluate and realign our research topics on a go-forward basis.
In fact, it’s built into the fabric of our organization. With this finely tuned program in place, working well and continually improving, we then add another high impact program. So, the second premium put in place is to expand our research coverage. We added in-depth enterprise architecture coverage through our META acquisition with the supply chain coverage through the acquisition of AMR and then we had a detailed technical research with our Burton acquisition. And we'll continue to expand our research coverage going forward.
We didn't stop there. We then added additional programs. Each of these programs strengthens our capabilities. Continually improving each of these programs further strengthens our capabilities and together the compound providing sustained and accelerating performance. We have programs in place such as these for all the elements of our strategy. We have programs to build strong sales capabilities. We have programs to develop high value depreciated offerings. We have programs to provide world-class service. For every one of our strategy, we are continually making improvements and innovations.
Another critical element of success is strong leadership. As you will see over the course of this day, ours is an experienced and highly talented leadership team. Each has a background of successful leadership in their area of responsibility and we work together as a team extremely well. And these leaders who have driven our culture are continuous improvement and innovation. It’s that culture that is generating a track record of sustained performance in our key operating metrics. They are eager to share with you the programs that they have in place to implement our strategy and achieve long-term profitable growth. This winning strategy has led to an impressive and sustained track record of performance.
Contract value has risen at a compound annual growth rate of 12%, including more than 14% during 2011. Normalized EBITDA has risen at a compound annual growth of 15%. EBITDA margin has risen by more than 700 basis points. Earnings per share has grown at a compound annual growth rate of 48%. So, we have achieved sustained double-digit growth in our key metrics.
For the fourth quarter, more than 5,000 CIOs attended our symposium event and I had the opportunity to meet with many of our clients at these events. These technology leaders are looking for solutions for mobile, for social, for cloud, for big data, and of course, all the traditional areas such as cost optimization. These leaders are driving the performance of their organizations and they see Gartner as central to their success. For January, I had the opportunity to meet with our sales leaders from around the world at our 2012 Sales Kickoff Meeting. These sales leaders represent clients from all geographies, all industries, and all sizes, and they have an incredible level of enthusiasm. They are confident and excited about Gartner, the value we provide our clients, and our fast market opportunity.
So, here is the message for today. Gartner is the strongest company it’s even been and we are committed to continuing improvement and innovation. We've got an incredibly strong value proposition, a vast market opportunity, a winning strategy, and an exceptional business model. We have achieved sustained double-digit in our key metrics. And I have never been more confident in or excited about our prospects for accelerated and sustained growth. To further deepen your understanding of Gartner and how a research business segment delivers that world class insight, I'd like to introduce our Global Research, Peter Sondergaard.
Peter Sondergaard – Senior Vice President, Research
Thank you, Gene and good morning everyone. Let’s start with our Research segment. The Research business segment provides access to 800 analysts who create highly differentiated insight delivered primarily through digital media subscriptions. We have a winning strategy, a strong value proposition, and a vast market opportunity to continue to deliver double-digit revenue growth. So, why do people in organizations continue to buy? Well, as we've just heard, IT is essential to economic growth. And Gartner is uniquely placed to not only realize the existing $47 billion market opportunity, but also to exploit the overall explosive growth in the usage of information technology the next 10 years.
On the surface, IT gets more and more simple, witness iPads in this room or even download even from an app store, but behind the façade, complexity and risk grows exponentially. The wings of impact and the influence of IT continues to grow, and Gartner is really at the epicenter. Today, there are 800 million smartphones in the world, 1.5 billion PCs, 2 billion people on the internet, 3.5 billion mobile phones, and 5 billion internet-connected devices. We do 87 billion Google searches a month and there are more than 1.2 billion people on at least one social network in the world.
This is a world of mass collaboration driven by the consumerization of IT. It is a world that is fueled by an explosion in information and in collaboration and in mobility enabled by the cloud. In fact this year, 350 organizations will each invest over a $1 billion in IT. Now, why do they do that? Well, it's because it matters that much to their business performance. Information technology is the primary driver of business growth.
In a survey that we did recently of CEOs, two-thirds of CEOs believe that IT will make a greater contribution to their industry the next 10 years than in any prior decade. So, this new era brings with it four urgent and compelling forces: the cloud, social networking, mobility, and an explosion in information. These forces are inhibitive and disruptive just taken on their own, but brought together they are revolutionizing business and society. And this nexus defines the next age of computing. It therefore ensures that Gartner can play an essential role in advising in this change, and to understand this change, you must also appreciate each of these forces.
So, I'll look briefly at some of them. First, cloud, cloud really combines the industrialization of IT capabilities and then the disruptive impact of IT led business models. Essentially what supply chain models did to manufacturing is what cloud computing is doing to in-house IT infrastructures and applications. We estimate that while in 2010 there was only $74 billion spent on public cloud services that's actually only 3% of overall enterprise IT spending. But over the next five years, public cloud services will grow five times faster than overall IT enterprise spending at about 19% annually.
The second force is social. The next stage of social computing is about mass customer, mass citizen, and mass employee involvement with enterprise systems, with 1.2 billion people on social networks, which is one-sixth of the world's population. Social computing is now in its next phase. It is about incorporating social software capabilities throughout in enterprise systems, and therefore success with social media is fundamentally a leadership and a management challenge, something that we can assist with.
Throughout this information, information is the oil of the 21st century that therefore makes analytics the combustion engine. The concept of one enterprise data storage warehouse that contains all information is now dead. Pursuing this environment strategically will create an unprecedented amount of information of enormous variety and complexity. This is leading to change in data management strategies known as big data.
The last is mobile. This is where the forefront of consumerization happens. The shift to mobile is actually overtaking many IT organizations who can’t move fast enough to catch up. Our industry spent two decades designing around the desktop, but now just in 2010, the installed base of mobile PCs and smartphones exceeded that of desktop PCs or consider media tablets, 2010 less than 20 million of them were sold, but by 2016, over 900 million of them will cumulatively have been purchased, one for every 8 person on earth. So, they will actually also be in the hands of your customers. But tablets is not only the only element of this bigger, bigger shift that we are seeing, by 2014, the installed base of devices based on all these new mobile operating systems will exceed the installed base of the traditional PC based operating systems. That is an incredible change not just where individuals, it requires all IT organizations, our customers to re-imagine the way they provide applications.
So cloud, social, information and mobile, combined with new nexus, where data centers give way to data clouds and mobile devices become Windows into personal clouds, and personal computing becomes massive collaborative computing, and information technologies become overshadowed by information ecologies.
We believe that the impact of these forces will make architectures of the last 20 years obsolete, yes, you hear right, obsolete. So, together, they accelerate mutually. They drive the increased needs for advice, for experts to assist in this change for Gartner services across a $47 billion market opportunity. Gartner is uniquely placed at the center of millions of IT decisions that are to be taken everyday over the next years. Decisions around how IT supports revenue and margin growth.
The issues of the projects that our clients face constantly change. Right now, the 10 most important projects center among others on those four forces that Gene and I have discussed. Our clients, in fact, continuously tell us what they are working on. We know what is most important to them. As you can see, cloud, mobile, and here information feature on the list right now, but still does things like, how I manage IT, how I improve my applications that won my organization or how to build a new IT infrastructure. All topics we have analysts that cover daily. But it's very easy to then assume that the organizations and the issues that they face are constant that they don’t change. Well, fact shows that the challenges of IT organizations change constantly.
So, we go back to 2006, the top 10 projects that client worked on were the following ones here, where IT strategy and security business intelligence one of the top three issues. So, as you can clearly see, there is a constant change in what is important to our clients. This makes a model of continuous access to extraordinary research insight highly efficient and cost effective to our clients. We leveraged this insight as the core foundation of our events business as input to our consulting engagements and obviously as a principle component of our Research business.
Now there are four unique elements at the core of the company, which enables Gartner to provide this unrivaled advice both to IT executives and supply chain management executives. These four unique elements are the people, the process, the proprietary data, and packaging. These four keys enable us to continuously innovate our products. Let's start with the right analysts. Over the last 30 years, we have find – ability to find and develop the right people, the right analytical and communication skills, capable of advising senior IT and supply chain management executives.
The over 810 analysts that are subject matter experts based in 26 countries have a background and experience similar to our clients. We do not hirer graduates straight from university. The analyst has been in the situation of the client as experienced a similar environment and has had success in the same role of the client. Therefore in fact more than 60% of the analysts exceed 20 years of experience.
The second core element of Gartner is process – the research process. This starts with a network of clients, technology providers, investors, and academic institutions that analysts constantly interact with. The interaction with senior decision-makers in the 12,400 organizations ensured that the analyst is constantly aware of what the most important issues and initiatives are.
Analysts will also conduct over 12,000 briefings with the most senior executives from technology and service providers across the globe. They will talk to over 1000 investor organizations about market trend and worked with some of the largest academic institutions such as MIT or Harvard or Oxford University. It is the confluence of these conversations. The fact of the analyst is at the center of this network, which gives Gartner the unique primary insight.
Now, the analyst continuously approached the development of this insight through principles of transparency in the conclusions in methodology that we used objectivity, collaboration with colleagues to ensure validation internally prior to external access, lastly of course focusing on the quality of the advice. Ultimately, this network of analyst is at the center allowing us to accurately understand what the most important key initiatives of our clients are.
Through a proprietary process on Gartner.com, clients constantly tell us which initiatives or projects they are working on, their planning cycle as well as the technology and service providers that are most important to their organizations. It is this knowledge that allows the analyst to provide insight and advice on the initiatives that are most important.
So our third key, proprietary data, this growing network of clients and interactions with clients creates and exponentially growing amount of data and information. Our clients gain access to this proprietary data. We aggregate things like interest trends in the $4.5 million end-user searches that we have annually, the areas of interest through looking at what documents clients reads or what the top questions are from the 290,000 interactions we had with clients just last year were through many other sources of data that we collect and aggregate. So, you could imagine as the number of clients grow the insight about what is important to users and technology providers continue to grow as well. The result is superior advice to our clients.
The last unique element is then the way in which we package this advice and there are really only two ways we do that. We provide written advice that can be leveraged many times and then targeted short interactions such as access to the analysts via the phone. Our written advice consists of over 8,600 documents just published last year all accessible by gartner.com. And not only if this written advice aligned to the key initiatives that are most important to the clients, it is also structured in a way that is easy to consume and recognizable in what we call methodologies.
Many of these methodologies are extremely well-known brands such as our Magic Quadrant or Hype Cycle. There are now 167 Magic Quadrants that help clients make informed decisions about which technology and service providers to use. There is 86 Hype Cycles that assist clients in finding the right technology to support their business innovation and many vendor ratings that assist clients in managing their portfolio of vendors.
The second component of packaging is interactions. We have a scalable structure and process to handle and rapidly respond to now more than 290,000 interactions. The client has access to short-targeted sessions of advice via the phone. And in specific products, the client has access to an ability to meet with the analyst face-to-face for more in-depth targeted advice on their initiatives. So, through people, process, proprietary data, and packaging, we deliver the products that drive the Research business. We are able to deliver specific targeted products to different market segments, the market segments that we serve. These segments make up the $47 billion market opportunity that Gene talked about.
Now, they are divided into first and foremost the end users the IT organizations, which constitutes the CIO, (his or her) direct report, so the functional IT leaders, and then further in the organization the IT professional was a technical specialist in the organization. Then it's the supply chain executives and then senior leaders in technology and service provider organizations.
Now, for each of these market segments, we have dedicated products, products that target the specific roles of that segment. So first, products that target CIOs and ensure that they continuously can excel in their organization and be successful. In the direct reports to the CIO, we have 8 specific roles and products that ensure that they are able to successfully address their key initiatives and to ensure their personal success. And for the technical architects deepen the IT organization, we offer products on how to practically implement the initiatives that the leaders further up in the organizations have that emotion.
Then in the supply chain segment we have products that cover how to be successful as a supply chain leader with the initiatives that all about optimizing their entire value chain. And lastly in the technology and service provider area, we have a wide range of products that address the needs for roles responsible for product management or marketing or other leadership roles.
Common to all these products is that we continue to deliver the content. We continue to innovate the technology platforms we use and the ways in which clients interact with our products. This ensures that the individual seat holder realizes enormous value of having access to the people and the processes and the proprietary data. This is what continuously ensures that we renew the client. This means continued improvement in our retention rate. The value that the client gets from all of the products thus summarized around four elements. One we save them time. We save the money through contracts, use and best practice budgeting. Third they gain access to resources, who having constant access to 800 analysts and fourth they gain confidence. By know that Gartner's has validated the decisions and initiatives that they take.
So in closing, Gartner Research has a strong value proposition that ensures that we continuously stay engaged with the clients, and know what the most important initiatives and projects are. We know more than anyone, what happens in IT right now. Our people, process, proprietary data and packaging ensure the highly leverageable business model both on strong operational excellence. This is a winning strategy. And last, we continue to innovate our products, they are built on a strong value proposition, which addresses the $47 billion market opportunity we have. This will drive profitable double-digit revenue growth. Thank you.
Gene Hall – Chief Executive Officer
Well, thanks Peter.So, you've just heard how our Research segment delivers world class insight and how that insight to key driver of double-digit growth. Now, I'd like to turn your attention to Alwyn Dawkins, who leads our Events segment. And that Events offers current, relevant, and actionable technology sessions that are led by these Gartner analysts, while also facilitating peer exchange among our clients. So, Alwyn?
Alwyn Dawkins – Senior Vice President, Gartner Events
President of Gartner Worldwide Events. It's great to be here again this year, to see some of you for the first time, I did see some familiar faces, and I think a couple of you may have actually attended our conferences in 2011. Obviously, I am never happy when I am at an event like this. So, in 2011, I shared a compelling story about Gartner Events. Like our Research business, we have a vast market opportunity and we know how to capture it. This is an exciting and a dynamic business with great value proposition was directly contributes to the overall growth of Gartner.
Our winning strategy is focused on continually improving the client experience to ensure every single event we produce, is the must attend conference to the communities that we serve in every geography, which we operate. Thanks to great execution. We continued the strong growth we saw in 2010 and in 2011 revenues grew 21% year-over-year.
Gartner Research content is at the core of our events value proposition. As you heard from Peter, we serve our research clients directly to our world based product. Our event attendees find incredible value in consuming our research and advice live and in person, while networking with their peers. A highly differentiated events unlike any other medium provide the dynamic and three-dimensional environment for this to happen serving their personal needs.
So, let me now share with you a short video that brings to life what we do.
My team is passionate about creating the most compelling and highest quality experience possible for our attendees. We are constantly innovating and finding new and better ways to differentiate our conferences, engage our audiences, and equip them with actionable advice. Our mission quite simply to make every event we produce the must-attend event for the communities we serve. By combining outstanding value of our research to the magic of live events every single have then we produced becomes the single most important annual gathering to the executives we serve.
As a result, the first thing needs executives do the beginning of each year is signup to attend the annual Gartner conference. We are a global business with more than 60 events across six continents attracting 42,800 attendees and 15,000 exhibitors in 2011. This makes us the world's leading IT conference producer. As Peter talked about earlier, our conference is filled by a people, process, and proprietary data generated by Gartner Research. This gives us an amazing competitive advantage. Other bank companies have to go outside of the organizations to find the content and the speakers. We on the other hand are able to leverage the assets and the intellectual property of the world most successful and most respected IT Research and advisory firm.
This differentiates us entirely from the rest of the conference industry. The proprietary content much us so appealing from most of our attendees. Gartner produces the only conference they attend each here. Our analysts handled 100s of 1000s of client enquiries and interactions every year. So, better than anyone else we are able to accurately identify and directly address personal issues and the initiatives, which were of most concern to them. Coupled with sort of continual surveying and the face-to-face interactions we have with our clients and we are uniquely positioned to be able to term in the right content and the best guidance at the right time. This continuous connection to the IT industry also allows us to quickly adjust the content we present them to be nimble with our agendas right up to each event. Thus ensuring our content is always current, relevant, and actionable. These are critical ingredients in creating must-attend events. So, let's now we directed from some of our attendees about their experiences at our conferences.
And beyond helping our clients make better decisions, Gartner Events offer an opportunity for them to develop professionally. So, let me give some more color and texture to this value proposition. Our attendees experienced thought leadership through direct access to Gartner's world leading analysts including live presentations, analyst workshops, and prearranged one-to-one consultations.
Every engagement is designed to help educate them into how to implement best practices and achieve their key initiatives. Because CIOs and senior level decision makers attend our conferences, we also attract the world's most influential leaders from the technology industry, leaders like Microsoft's Steve Ballmer, Cisco's John Chambers, Google's Eric Schmidt, and confirms the U.S. symposium in October this year, HP's Meg Whitman. These CEOs recognize the importance of Gartner's conferences in the value of our audiences and they are excited of the opportunity to address and to interact with them to be the industry defining events, where our star analysts and these leaders help literally shape the future of technology.
Beyond engaging with industry leaders, our attendees also come to meet with one another and they get tremendous value from networking with their peers. And we facilitate these exchanges through interactive face-to-face sessions and structured networking activities. The attendees also value the opportunity to evaluate potential technology solution providers through the exhibitor show flows that we have at our conferences. This is where vendor companies present their latest products in a low high, but a high content environment.
Most importantly though, our attendees leave our conferences better educated and better prepared to make smart IT decisions and address their key initiatives. They are able to learn more in two or three days at a Gartner conference than we're taking months in their offices and they can make an immediate impact when they return to their organizations.
Now, let's turn our attention specifically to the value we offer exhibitors. So, just look for a moment through the lands of the technology vendor seeking access to the most influential technology purchases in the world. Wouldn't you want to exhibit at these conferences? Our exhibitors used to invest with us, because it's the most cost effective means for them to meet face-to-face with large number of high-quality prospects in a short amount of time. Because many of the attendees only come to Gartner conferences, we offer the only means for them to engage with them as sight of their own independent marketing efforts. So, let's now hear directly from some of our exhibitors about their experiences at our conferences.
So, now we understand the value to both attendees and exhibitors. Let me now talk about how we in 2011 captured our market opportunity. So, last year, we held 60 conferences across 6 continents. The portfolio comprised of 7 symposia, 50 summits, 2 supply chain conferences, and 1 catalyst conference. This combination allowed us to capture our market opportunity in multiple geographies and drove over 42,000 attendees. This is an increase of 15% year-over-year. 2011 Symposium/ITxpo is Gartner's flagship conference series and it's the world's most important gathering of CIOs and senior IT executives. You've all heard of the World Economic Forum, well, you should think of symposium as the devils of the IT world.
In 2011, we achieved record breaking results for both exhibitor and attendance from attendees. Globally, we attracted more than 18,000 attendees. This is the highest number of total symposium attendees in our history, but perhaps even more significant is the fact that we drove in 2011 more than 5,000 CIOs. This is an increase of 18% compared to 2010 and again another all time record for us. We held symposium in 7 locations, Cape Town, South Africa; Tokyo, Japan; Orlando, North America; Sao Paulo, Brazil; Barcelona, Spain; Gold Coast, Australia, and for the first time Mumbai and India and this was one of the most successful launches ever into a fast growing energy market.
As you can see from this slide, our strategy for driving increased CIO attendance is really working. No other conference in the world brings together more than 5,000 CIOs. I think this achievement more than ever demonstrates the importance and the value technology decision-makers place on Gartner's insights and advice, but it also proves that we understand what it takes to build a must attend event.
In 2012, we'll grow the portfolio with 63 events and expand our global footprint. Now, we've taken the time to build what we believe is the perfect balance of symposia, summit, supply chain, and catalyst conferences to continue drive sustainable strong top-line growth.
In closing, Gartner Events is a vast market opportunity; we know how to capture it. This is an exciting and dynamic business with great value proposition and our winning strategies focused on continually improving the client experience to ensure every single event we produce is the must attend conference, the communities we serve in every geography in which we operate.
This combination positions us the sustainable, long-term top-line growth. If any of you would like to see Gartner action, please let Brian Shipman know, we would love to invite you to be our guest in Orlando at Symposium/ITxpo 2012. Thanks for your time. I look forward to seeing you again next year.
Gene Hall – Chief Executive Officer
Okay. Thanks Alwyn. So, you just heard our Events business segment offers current, relevant and actionable technology sessions that are led by these Gartner analysts, while also facilitating a great peer exchanging among our clients.
We now like to turn to Per Waern, who runs our Consulting segment. And as I mentioned earlier, this segment extends the reach of our search beyond what our analysts provides and it also amplifies our Research segment by keeping our client relationships.
Per Anders Waern – Senior Vice President, Gartner Consulting
Good morning. Thank you very much, Gene and welcome to consulting, which I have privilege to lead. Many Gartner clients have urgent needs to extend the value of the research offering. They need on-site extended systems with a key IT initiative inside their organization. The technology instruction to manage, the IT investment to benchmark, the extended contract process to navigate, for Gartner’s largest strategic clients these are needs that got consulting is exceptionally well positioned to address.
We have a strong and unique value proposition, a value that comes directly from the power of Gartner Research and benchmarking. We have a winning strategy that delivers value to our clients and we have a vast untapped market opportunity through existing relationships with Gartner’s largest clients.
Our team of deeply experienced and highly skilled consultants provides these clients with on-site longer term support. We help them to put Gartner Research insights to work to positively impact their organization and by providing high impact consulted value, we can help our clients to improve their businesses and at the same time deepen their overall relationships with Gartner.
Our business is divided into three practice areas, all of which are grounded on Gartner Research and our unique and proprietary benchmark data. The first is core consulting services, where clients engage just to support their key IT initiative. For example, in a world of disruptive technologists, we provide program management and quality assurance for our clients most important IT initiatives.
In a world, where complex multi-sourcing contract is the norm, we provide our clients with sourcing advisory services across the full sourcing lifecycle. In a world of sophisticated hacking and mobile devices, we provide our clients with consulting services in the important security and risk management space.
Secondly, benchmarking services, where clients engage us to benchmark key performance drivers of their IT infrastructure and applications in order for them to achieve tangible improvements, in the cost and the effectiveness of their IT investments, and in order for them to identify the most profitable initiative to modernize their infrastructure and application portfolio.
And third, our contract optimization services, where we help our client secured better technology provider contracts, leading to lower capital spending and operating expense. Our Consulting business is unique and wide. Well, because Gartner has a well-deserved reputation for independence and objectivity. Clients rely on this objectivity in making key strategic decisions. We do not sell software. We do not sell hardware. And we do not do implementation services. All our engagements are powered by the world's best research content and insights, Gartner's.
And finally, we have the largest proprietary benchmark database of IT and business performance metrics in the world. We benchmark more than 5,000 IT environments every year providing us with accurate peer data, represented by organizations of similar size and complexity drawn from more than 80% of the global 500. We have the most depth and breadth in competitive analytics for IC performance data in the world. This unique and proprietary data is instrumental for our clients and for us a powerful competitive asset.
Now, let me introduce you to the Gartner Consulting team. We have 481 billable consultants. The average annual revenue per consultant is $424,000 and for those of you not familiar with the consulting industry, this is well above the industry average. The clients value the experience of our senior practitioners. We have unique leveragable assets in our research and we have the powerful value proposition for attracting, developing, and retaining top talents. As many of you know, we’ve been on a journey to transform Gartner Consulting into a managing partner land organization.
Our managing partners are most senior consultants. They are responsible for growing our business and for leaving our engagement fees. We know consulting practice perform best using the managing partner model. And this is because the model drives long-term trust-based relationships and trust-based relationships drive predictable repeat business. We are currently transitioning from mobilizing mode to harvesting mode. Our managing partner to model, which now stands at 70 on the past over 100, will enable us to achieve our long-term growth and performance objectives.
Let me now turn to our market context and strong opportunities for growth. As Peter and Gene shared earlier, the new era of cloud computing, social networking, mobility, and an explosion in information is revolutionizing business and will have significant impact both on revenue, trust, and time to market for our clients. The nexus of these forces is making the IT architecture of the last 20 years obsolete. So, clients need to completely modernize the infrastructure and application and they need to secure the growing amount of information that is now in the cloud, on social platforms, and on mobile devices. And they need to do it in a world, where hacking gets increasingly sophisticated and organized. Our extraordinary research insights and proprietary benchmark data provides us leveragable consulting content to provide high value differentiated offerings to our clients across their key IT initiatives.
Let me share a few examples of how we provide unique value to our clients facing disruptive technologies. For a financial services company, we identified 50% cost savings for storing information in the cloud. For a space government, we developed the multi-year mobility roadmap for the Public Safety Communication System. And for an insurance company, we develop the cloud strategy that enabled them to setup their prototyping capabilities in days instead of weeks or months. In order to give me an example of how we help our clients a dimension to optimize also our costs.
Let me now move to our contract optimization services. Our contract optimization experts are in the market everyday and they see and work the deals are getting done. We know what could look like and how to help our clients to get the right terms. More than $1.4 billion – more than $1.4 billion, this is the total of documented client saving from Gartner Consulting contract optimization engagements during the last four years. This is what we mean when we say client impact and this $1.4 billion in client saving is read and it's measurable and we know that because we only get paid if our clients say, no impact, no fee, year-after-year, and an engagement-after-engagement, Gartner Consulting delivered results for our clients across our portfolio with the research driven benchmarking formed independent and objective fact-based consulting.
Now, what does it all add up to, driven by our continues in productivity improvement, we have achieved the 300 basis points improvement in our gross contribution margin and this includes the investments we have made and we continue to make in managing partners. We are now in a position to harvest the benefits from this unprecedented business development capacity and capability, which will enable us to achieve a long-term growth and performance objectives.
As we entered the year, we have more than a $100 million in consulting backlog. Last, the potential of our strongest ever managing partner lineup. So in summary, those consulting is exceptionally well-positioned to exist Gartner's largest strategic clients, extending the value of our research offerings by own site systems for the key IT initiatives. We have a strong and unique value proposition, a value that comes directly from the power of Gartner Research and benchmarking. We have a winning strategy that delivers value to our clients and we have a vast untapped market opportunity through existing relationships with Gartner clients, all contributing to Gartner's sustained double-digit growth, thank you.
Brian Shipman – Group Vice President, Investor Relations
Thanks, Per. So, from Per you heard how our Consulting segment extends the reach of our Research beyond what our analysts provide and also amplifies our Research segment by deepening our client relationships. So, this morning, you put how our three business segments drive long-term double-digit growth. We'll now take a short 15-minute break and after the break, you will hear how we build our strong sales capabilities.
Ladies and gentlemen, we will now take a 15-minute break. Please help yourself to refreshments just outside in the foyer.
Ladies and gentlemen, please welcome back Gartner's CEO, Gene Hall.
Gene Hall – Chief Executive Officer
Alright, I hope you had a good break, welcome back. Well, so far, you've heard about our three business segments and how they drive growth in Gartner. So now, I'd like to turn your attention to sales. Our Global Sales, David Godfrey is going to discuss how we build those strong sale capabilities that are so fundamental to our strategy.
David Godfrey – Senior Vice President, Global Sales
Thank you, Gene. So, good morning everyone, it's great to see you here again at the 2012 Gartner Investor Day. I am passionate about Gartner. If I know the value that we delivered to our clients and then we are simply scratching the surface, when it comes to taking advantage of the oceans of opportunity available to it. We have a high performance culture that delivers exceptional results. In 2011, we grew double-digits in every geography, in every vertical, in every sized organization. Again, we grew double-digit in every geography, in every vertical, and in every sized organization.
As you've heard from Gene, Peter, Alwyn, and Per, we have an incredible value proposition. We have outstanding offerings proven insight for people who spend vast sums of money in IT. The stakes are high for our clients personally and professionally. And our product is proven to increase their success rates. Our advice is often the difference between success and failure for massive IT projects. And as you've heard, we save clients huge amount of cash on the IT spend. Over-and-over, our clients get a tremendous return on their investment in Gartner.
The sales team is well-positioned to bring it altogether and take it to the market. Today, I'll talk about Gartner sales organization, our vast opportunity, and how we capture it in sales. I will then talks about wining sales strategy that we will continue to drive exceptional performance. Our gross strategy hasn't changed over the past two years, why, because it has delivered. Let me give you a flavor of the sales organization. These are just some of the quality sales people that we have a Gartner today. We don't have to attract and retain great talent and our growth strategy is working.
We have over 1,200 sales people and increased our sales headcount by 186% since 2004, 48% of our sales people are based outside of the U.S. Having the sales role at Gartner is a highly rewarding role that exposes you to some of the best minds in the industry. Let me give you a profile of the typical sales person, a bright highly motivated, comfortable at the sea level, and have great sales goals. We call an all industries in every region of the globe and every size organization. We have a short formula for success. Our sales people have a passion for our client success as well as being very goal oriented themselves. We value our sales people and give them a platform to excel. (indiscernible) for the market opportunity and our plan is to capture it.
I am going to illustrate how we break it down and look at the progress that we have made over the last four years. Firstly, we look at the number of enterprises that we can sell to. Since 2008, we see that number of grow from 80,000 to over 108,000. These are current enterprises in our database today. Now, knowing the size of one's market is one thing, but having it broken down to the level of detail that we do is another. We know the names, locations, industries and more of the 108,000 enterprises with IT and supply chain budgets big enough, but they need our services.
When we look at those enterprises that we have covered that is we have a sales person assigned to them, 19,000 in 2008 increased to 34,000 today. To do the rough math, that's 30 per sales person, you cannot effectively manage 30 enterprises. This is a great example of why we need more sales people. At this point, you may also wonder where we don’t have the full 108,000 covered. Well, we simply do not have enough sales people to spend time with them.
Let's look at our progress in terms of client enterprises during the same period. In 2008, we had 6,800 enterprises as clients increasing to 8,100 at the start of 2012. So, what about market opportunity in terms of dollars and the people that we actually sell to? In 2008, there were three key buyers of our services, CIOs, IT functional leaders, and another group that includes technology, telecommunications companies, professional service trends, and investors in technology like some of you here today.
These companies need to know what is happening in the marketplace, what we are telling their clients. CIOs are strategic business leaders who often report to the CEO and have responsibility for enormous budgets. Gartner helps them make the right decisions on topics like IT management, aligning IT to the business, and managing costs. Then you see IT functional leaders, these are the CIOs direct reports, they represent our largest market. Their role is typically responsible for specific area of IT like security or infrastructure and they too manage large budgets. The total market opportunity in 2008 was $21 billion.
In 2009, we make two strategic acquisitions. The acquisition of Burton Group opened up our ability to sell to the front-line IT professionals. That market we estimated to be another $12 billion. And with the acquisition of AMR Research also in 2009, we expanded the opportunity in the supply chain business which we estimated to be about $4 billion. In 2012, our market opportunity is a $47 billion opportunity. Acquisitions, brand new products as well as existing product enhancements, specifically at the IT functional leader level as well as more potential enterprises to sell to have been the main driver over 2008.
So, let's bring it altogether. We have a $47 billion market opportunity and our 2011 ending contract value was only $1.1 billion, just over 2% market penetration. This is just one of the reasons why I am so excited about our future. We have 108,000 enterprises sell through, of which 34,000 are covered by a sales person. We've only penetrated 7% of the enterprise population. We have proven that adding sales people allows us to further penetrate existing clients, cover more prospects, and convert them to clients. We have a 2% market penetration and have penetrated 7% of our enterprise population. This clearly demonstrates the growth potential in our existing clients.
Now, let's look at how we think about the opportunity at an account level. Our sales expansion allows us to cover more prospect enterprises, but it also allows us to expand our relationships in our existing clients. The average client spend equates to a few seats. If you take the average company with $1 billion in revenue, it has around 250 people in IT or a large financial services firm is in the thousands and some tens of thousands of IT staff. This really starts to put our opportunity into perspective. Focusing on selling to roles, I mean, there is plenty of opportunity for us. As an example, we have a product for everyone on this organization chart. Every single one of these people is a potential client. And of course, we have an existing relationship inside these organizations today. In fact as Peter alluded, we meet on regular basis with each of our stakeholders to ensure they are receiving the value they expect from our service thus ensuring high client satisfaction and a recurring revenue stream through high retention rates.
We'll talk later in the strategy piece and our plan is to execute up on this opportunity. Many of our best clients spent about 0.2% of their IT budget on Gartner, but most are not even close. If all our clients spent 0.2% of their IT budget with us it would equate to an additional $3 billion in revenues more than quadrupling our Research business.
As an example of how we grew an existing account in 2011, we recruited Gill the world class sales person to an account that already had and establish relationship with Gartner for over 10 years. Gill’s ability to break in at the C level further educate them on the value of Gartner enable to, to double the revenue in the account in one year. An increase of over $1 million of contract value and as you can see there is still plenty of opportunity available.
And by the way just to be clear, we don’t have to sell to everyone in this old chart to maximize our market potential. There is a strategic change in the organization affected their perspective on how technology was going to play a major role in that strategy and they came to Gartner for this key strategic advice. When we recruit quality sales people and focus on our accounts, the results are evident. So, we have a great market opportunity. You heard my colleagues talk about our value proposition for our clients. This is all fueled by our winning sales strategies. So, let’s take a look at that right now.
The strategy for the past seven years has been consistent and highly successful. We break it down into three years, capacity, coverage and effectiveness. First, we have to expand capacity, adding more sales people to address our market. Second, we will optimize coverage by putting the right people on the right account, in the right region. And third, we will continue to enhance sales effectiveness to drive productivity.
So, let’s take a capacity. Our objective is to add capacity at 15% to 20% a year. Over the past seven years, we managed to accomplish this and we will continue to do so. As you maybe aware in 2011, we grew the sales force by 21%. We have an architected recruitment and training plan that truly exceptional. My managers are equipped to hire and skill up at this rate and they know how to manage growing teams. We have proven that we can do it and do it well.
As you will see from the chart, we have increased our capacity nearly threefold since 2004. This continues to drive great results. We know for there is a vast talent for us to choose from. We know what to look for. We know where they are and they are plenty of them. We are growing as – our organization as fast as intelligently possible.
So, let’s hear from some of our sales people as to why Gartner is such a great place to work.
Such a happy bunch. As a leadership team, this is exactly the kind of environment that we are trying to build to ensure Gartner such a great place to work and will continue to attract world class sales talent.
Collaboration is a critical part of our culture and pervasive across the all organizations, not just in fails. We provide industry leading tools and best practices that enable our clients to do what they do best -- for our sales people to do what they do best. That is spent time, in front of their clients and prospects.
Gartner's tremendous brand also allows access to senior levels in the organizations with whom we work. Of course, this is where the most important decisions are made. This is highly rewarding. And as Peter referenced earlier through continuous innovation, through content, the technology platform, and usability as well as new product offerings to our clients ensures that they are real market leaders and as the final associate said our sales territories are full of opportunities.
The second piece of our strategy is coverage. Coverage means deciding where to add new headcount, which regions, which types of territories, and which accounts to focus on. We also have a channel specific approach, channel meaning different sales groups serving the different needs of the client base. This is also where our consulting offerings complement our research strategy enabling us to tailor our offerings based on client size and needs and help us drive our research revenue.
Coverage is about placing our reps in the right part of the market based on where we anticipate the highest prospect conversion, the best retention rates, and the most growth. In a rapidly growing sales force, planning territories required skill and experience we have it, we know who is higher and how is the method to coverage so, it matches all opportunity. Let me share with you how we look at the territory. A territory may consist of one or many enterprises. An enterprise is a company such as ExxonMobil, Bank of America or AT&T. Each of them may have many subsidiaries or buying centers we refer to attract them as organizations. Essentially, there may be many organizations in an enterprise.
The results are evidenced. We've increased the number of client organizations from 8,720 to 12,427 from '04 to 2011. We're making good progress and have plenty of opportunity available. In addition, this coverage strategy is designed to emphasize client intimacy, build long-term relationship. This client intimacy better enables us to focus on our client's needs and become a more valued partner. Our best to this on a daily basis and our clients expect this. As you will see from the second chart, our average CV per client organization is up 54% since 2004.
We're not only focused on increasing capacity. We are laser-focused in making the sales cap that we have more productive. There are three key elements to this, hiring great sales talent we know exactly what we are looking for based on detailed analysis of our most successful people. We deliver world-class training. In fact, our new hires often tell us this is the best training they have ever received in their career.
Finally, providing our sales executives for proprietary tools and best practices to ensure their success. We are very focused on increasing productivity and analyzing many metrics such as new hire effectiveness, (time to for-sale), the average deal size and more. We are seeing continued progress. We know what to do and the results speak for themselves. As you may already know retention rates and growth are at an all times high. The strategy is working.
So to conclude this is about opportunity and growth. We know that we have the market opportunity, we have a tremendous value propositions and our strategy is working with all the elements in place. We have the sales capacity and talent. We have the support infrastructure around us. I know exactly how to drive our performance to new height. Now, you all understand so I'm so excited about Gartner's opportunity to continue to deliver double-digit growth, thanks very much.
Gene Hall – Chief Executive Officer
Thanks, David. So you just heard David described how we build the strong capabilities – the strong sales capabilities, they are so essential and fundamental to our strategy and to our future growth. Now, our CFO, Chris Lafond who is going to take you through a detailed overview of our business model and the financial strategy is essential for us to sustain double-digit growth. Chris?
Chris Lafond – Chief Financial Officer
Thanks, Gene and hi, everyone. It’s great to once again see so many of you that have been following us over the past few years and for those of you that are hearing our story for the first time welcome.
There is no doubt that information technology and supply chain management is critically important organizations, companies, and government agencies around the world. And that importance is significant and growing as you heard today from Peter. Throughout the morning, you’ve heard about our strategy, a strategy with all the necessary elements in place to successfully execute and deliver on our long-term financial objectives for many years to come.
Earlier Peter described the unmatched competitive advantage, that is our research organization and the intellectual capital that our analysts create. Our strong sales capability provides a global platform for us to capture the market opportunity for our products and services as was just reviewed in detail by David. And all of the presentations today highlighted the uniquely differentiated offerings and value propositions that we have across all of our business segments, Research, Consulting, and Events. When all of this is combined with our world class client service continue its improvement and innovation in every aspect of our company and the experienced leadership team that you’ve heard from today, our business is very well-positioned. We are a key partner in the critical role that IT and supply chain professionals play in running efficient and innovative programs to drive growth in their organizations, programs that are crucial to the success or failure of their strategic initiatives.
So, now, I'd like to spend a few minutes helping you understand why we are so confident that we will achieve our long-term objectives and therefore why Gartner continues to be an excellent investment? The financial plan we established in conjunction with our strategy is simple. And for those of you that have been talking with us over the past few years, I will warn you that this is exactly what you hear every time we meet. But for those of you who that are hearing it for the first time, we’ve been consistently executing – consistently executing on these five financial objectives of this growth strategy since 2005. So, we know exactly what to do and we’ve been doing it exceptionally well.
First, grow the Research business. As we discussed throughout the day, we identified a number of key initiatives in order to do this. Deliver extraordinary research insight, increase our sales capabilities, evolve and grow our offerings, and provide world-class client service. Second, optimize our Events portfolio with a focus on growing the attendee base. Third, tightly manage the profitability of Consulting while investing in managing partners. Fourth, and something we haven’t discussed yet today, leverage our G&A infrastructure, and I’ll talk more about that in a few moments. And fifth, create shareholder value by taking advantage of our strong balance sheet and cash generation ability. We have successfully grown our Research business. Our contract value has more than doubled since we started executing this strategy.
We know exactly what to do to grow this business and I’ve been doing it consistently each year since 2005. The growth and contract value has been extremely broad-based with every geography, industries segment and client size contributing significantly to the results. In 2004, Research was 57% of our total revenue that increased to almost 70% in 2011. And Research will continue to grow as a percentage every year moving ahead.
And as I'll discuss in more detail in a few minutes, with the operating leverage provided by having incremental gross margins of 70% in the Research segment, the combination of contract value growth and this mix shift drives substantial EBITDA margin expansion annually. Alwyn shared with you the unique value proposition that our events provide to both attendees and exhibitors. And while the number of events has grown slightly to 60, the number of attendees has grown almost 40% to close to 43,000. And at our Symposium Series, the number of CIOs in attendance has grown to over 5,100. There are no other events in the world that attract this quality of audience. And as a result with this high-quality audience, the number of exhibitors has also grown by 16% to over 1,500. We have clearly optimized our portfolio and we know exactly what it takes to create and deliver a must attend event and this will drive continued growth at our conferences over time.
As you heard from Per we’ve been investing in managing partners as part of our strategy to improve the effectiveness of the Consulting business. Since 2004, we’ve increased Consulting revenues to $308 million or 19%. And during this time, billable headcount is actually decreased slightly. This has driven a significant increase in profitability. And as Per mentioned, we've increased contribution margin by 300 basis points in this segment.
We've made the investments to build the strong foundation for the future while at the same time improving profitability. And as a result, our Consulting business is very well-positioned as an important contributor not only to our clients, but also to the Gartner’s financial performance. We’ve also told you that our G&A infrastructure is scalable and will not grow at the same rate as revenue. We've consistently reduced G&A as a percent of revenue each year since 2004. G&A has now 15% of revenue, down almost 300 basis points and there is no reason we can’t continue this trend well into the future.
We have been and remain committed to delivering shareholder value. In addition to all of the operating initiatives that we’ve discussed so far today, we have utilized our strong cash flow and balance sheet to benefit our shareholders. And since the beginning of 2004, we’ve reduced our shares outstanding by over 20% by deploying cash to repurchase shares. From 2005 to 2011, we spent close to $1 billion repurchasing our shares. And as of December 31, we have approximately $293 million remaining under our current existing share repurchase program. And we absolutely believe repurchases remain a compelling use of our cash. In 2005, we told you that we would grow the Research business, optimize the Events portfolio improve the productivity of Consulting, leverage our G&A infrastructure, and drive shareholder value. And we’ve executed that – and we’ve executed that extremely well.
As Gene mentioned at the outset, our success on each of these objectives resulted in outstanding financial results. Since launching this strategy, EBITDA is almost three times higher than it was. EBITDA margin is over 7 points higher, EPS has grown 15-fold, and free cash flow is almost 10 times more than it was in 2004. We have consistently and successfully executed year-in and year-out and by doing so we have built a foundation for sustained profitable growth moving ahead into the future. And we have conviction in our long-term financial objectives for this business. The performance that I've just shared supports that conviction.
So, let me now turn to why Gartner remains a great investment? As you've heard throughout the morning, we have a great value proposition, vast market opportunity, winning strategy, and an exceptional business model. Our ability to successfully execute will deliver consistent annual double-digit growth in revenue, earnings and cash flow over the long-term.
Peter, Alwyn and Per discussed the value proportion across all three of our business segments. There is no other organization that has the resources that we have. No one else has over 800 analysts, a community of over 4,000 CIOs, 60 must attend events, with close to 43,000 attendees, and a truly independent and objective consulting organization with unique and unrivaled benchmarking and contract optimization assets.
A few minutes earlier, Dave discussed our vast market opportunity and how we are effectively executing a sales strategy to capture it. We do not lack for opportunity. Not only can we continue to penetrate the 100,000 enterprises that we do not have business with today, but we can further penetrate our 8,100 existing clients.
Today, the average research clients spends only $90,000 a year with us with an average seat price of less than 25,000, that’s only 3 to 4 seats per client. There is ample opportunity in every territory for both prospects and existing clients. We can continue to grow the size of our sales force and improve sales productivity for as long as we can see. And this is really important we will continue to invest in our sales capacity.
We have a business model that delivers great financial returns and is highly predictable, why? First, our largest business research is a subscription-based model, our research clients sign annual contract for a minimum of one year, and a third of our contract are multi-year linked and we retain our clients. Our 2011 client retention rate of 82% and wallet retention of 99% provide a great foundation for growth. Retention remains an important focus for us as we move ahead. The subscription model coupled with strong renewal rates provides for a highly predictable recurring renewing stream for 70% of our business.
The vast majority of our research clients pay upfront annually. This coupled with our strong expense management provides us with a business with negative working capital. As we grow research, we generate cash. We have high incremental margins across all three of our business segments and I’ll talk about this in more detail in a moment. Our balance sheet is strong. We have great liquidity and access to capital. As of December 31, our net debt position was $57 million and we had $375 million of borrowing capacity remaining under our existing credit facility which runs through 2015. And our free cash flow per share is substantially in excess of earnings per share. We convert over 1.5 times our earnings into free cash flow.
So, let me now talk about a couple elements of this business model in more detail. What do I mean by high incremental margins? For Research, we target 70% of every incremental revenue dollar to flow through to the gross margin line in this segment. And while it's certainly possible at points in time to exceed 70% as we have done in the past, we believe that the right balance between profit investment is 70% over the long-term.
So, how do we achieve 70% improve mental margins in this segment? The economics of research are driven by our ability to leverage the unique and differentiated assets that Peter discussed earlier, the analyst community and the intellectual capital that they create. While we must make investments in product development and analysts over time, our research expense will not grow at the same pace as revenue. The inherent operating leverage to this relatively fixed cost structure coupled with high retention rates and consistent new business growth is why the research business has great economics and we enjoy the significant incremental profit margins as research revenue grows. For Events, the incremental margin is 50% and for Consulting 40% is the incremental margin we expect to achieve over time. All of this has contributed to our EBITDA expansion we’ve delivered over the past 7 years.
For those of you new to Gartner, our ability to generate both operating and free cash flow substantially in excess of our net income is another key strength of our business model. So, let me now turn to our cash flow leverage. The strong cash flow performance over the past few years is driven by the fact that majority of our research contracts are build upfront. We’ve also continued to effectively manage costs and working capital. We're not a capital intensive business. Over the past two years, capital spending has ranged from between $20 million and $30 million. This is 2% or less of revenue.
And as a result, we’ve delivered significant growth in cash flow. In 2011, free cash flow was $214 million or $2.16 per share. This strong cash flow profile coupled with our existing credit facility gives us ample opportunity to continue to grow our business and execute investments to drive shareholder value. Our cash produced to fund initiatives to drive shareholder value. So, in addition, the share repurchases that I've already discussed. Over the past few years, we've completed acquisitions of META, AMR, and Burton for approximately $280 million. And we are able to utilize our cash flow to fund much of this allowing us to maintain a strong balance sheet.
Let me now move on to how all of this, our business model, our sales investment, and execution of the strategy will result in continued profitable growth over the long-term. The past seven years of actual results provide clarity and how our strategies working and we're absolutely confident in our long-term growth expectation.
Looking forward, we can expect research will grow between 15% and 20% annually, consulting between 3% and 8%, and events between 5% and 10% over the long-term. Even with the investments will may to sustain profitable growth, we expect to continue to expand margins over time. And to be clear, we are consciously focusing more of our incremental investments to grow in the Research business and are managing to the growth rates on the screen given the economics of our business model.
The leverage I discussed earlier will result in the expansion of normalized EBITDA margins by between 50 and 150 basis points each year. And our guidance for 2012, which is detailed in the appendix of this presentation calls for FX neutral total revenue growth of 11% to 15%, normalized EBITDA growth of 13% to 20%, EPS growth of 17% to 29%, and free cash flow growth of 12% to 20%. This is exactly the same guidance we reviewed on our earnings call last Tuesday, February 7. I encourage you to take the time to review the materials in the appendix regarding our guidance.
As you know, the seasonality to our Events and Consulting businesses as well as changes to the events calendar each year. We provided you with the information necessary to understand how we will deliver that annual guidance on a quarterly basis during 2012. Our business model is the foundation for the financial strength of Gartner where the significant market opportunity in all three of our businesses. Our products and services have a strong value proposition. We have a proven strategy and operational excellence to execute. All of this gives us the confidence to target double-digit revenue growth over the long-term.
Over the past few minutes, I've explained the leverage in our business and why consistent double-digit growth in revenue will be even faster growth in EBITDA, EPS, and cash flow. Our track record over the past seven years is demonstrated that we effectively managed and invested in our business. We insure that we continue to deliver double-digit growth in revenue and earnings and increasing returns to our shareholders over the long-term.
And with that, I'd like to ask Gene to comeback up for Q&A, which Brian Shipman will facilitate.
Thanks everyone. So, please wait for microphones to come around to the room and when if you handed the microphone, please introduce yourself for Gene and Chris. So, we will start here on the front with Peter please.
Hi guys, its (Peter Appert). So, two questions, Chris you guys done a phenomenal job in terms of the margin leverage story over the last couple of years. We're consistently talking about the 50 to 100 bps of leverage. So, I am wondering what's the upside limit? Is there are any reason this business couldn’t get back to the high 20% margin levels you guys achieved in the 90s, so that’s the question one. And two for Gene, in terms of the – what the expectation should be the contract value growth in 2012, if any added color in terms of how it plays out. Should we see and you talked to some extent about this on the call. How the sales force growth translates into contract value growth this year. Could we get to the high-teens in terms of the contract value growth? Thank you.
So, thanks Peter. To answer the first part of the question is you know and what we've been trying to do over the past few years is drive that EBITDA margin back to 20, which we have successfully done. As you can see from the chart I shared. We also believe that we can continue to drive that EBITDA margin well in to the 20s. And the reason for that is what I said earlier. So if you look at the three business segments, Research is driven by two things, Research becoming a bigger and bigger piece of the overall revenue stream, which will continue to happen as we grow faster than the other two. As well as it continues to move towards that 70% number. We are not quite there yet and that will move to that number.
In the short-term there is still some opportunity in both Events and Consulting. Both of those businesses are not still quite at the optimal 50% and 40% numbers. So, there is still some opportunity there. And finally as you saw, we still believe we get G&A leverage. So, we think all of those things; will continue to help us drive these numbers, you know, well into the 20s as we move in.
We haven't given long-term guidance, but if you continue to do the model over the next few years, you could certainly see get into the mid-20s. We don't see any reason, why we can't go further than that, but as we did with our last set of guidance to get us the 20, it's lets get to that mid-20s and see, where that brings us and find the right balance between investment and profitability over the long-term.
Unidentified Company Speaker
Mr. Peter with regards to the question contract value growth, there is two things that drive our contract value growth. It's sale force headcount growth and the second thing is sales with productivity. And we are equally focused on both. We're very focused on both growing each of those. And as those two things both kick in, we're very confident hitting the kind of long-term revenue growth in research we talked by over time. And you get the revenue growth up there we have to get the CD growth as well. So, as we focus almost two elements, we really feel confident over time we'll get there.
Manav Patnaik – Barclays Capital
Thank you. Manav Patnaik, Barclays Capital. I had a quick question just on your market size in the penetration angle. So, $47 billion obviously that sizable. Is there first question -- is there an angle to your research analyst count so to speak study over the last couple of years. Is then an angle to having that grow or target different research areas to help penetrate some of that $47 billion? And then the second part of that question is, on the M&A front, you guys have talked about the pipeline being healthy etcetera, etcetera. Other particularly areas that you see rate acquisitions could help you close that gap between $47 billion and the $1.1 billion contract value that you have?
So in terms of analyst growth, we've actually been growing, we believe about time period from 2004 until today. I was, actually I have been growing substantially over that time period. And so it's central to our business and we will expand our analyst population. We have been. We will continue to do it.
The great thing about our business is, we get the leverage, Chris just talked about until -- we talked about 70% incremental gross margins in research, we can invest in all the analyst we need to really serve our clients within that 30% that we have as we grow incrementally. So we have been growing the analysts. It's an important part of our gross strategy to make sure we get all of the -- as we capture more and more of that $47 billion and our economics allows to do it very effectively within that 70% gross margin. Chris you can add.
The only other thing I would add to that is as I talked about the reason we been able to deliver more than 70% incremental profit margin in the Research segment in the past few years. As we've done a great job of managing analyst productivity. And so we went, to your point, a number of years without adding significant analyst as we work through that productivity effort, which we've done a great job of and now we are beginning to add analyst.
I think this year we added a significant number of analysts in fact in 2011, but again as Gene said at a significantly slower pace than revenue. So, we still absolutely expect and the key point the people should understand as we move ahead in that analyst we will do that still within that 70% margin. So, you're not going to see a period of time, where we're going to suddenly have a big spike in analysts and that's going to cause the 70% incremental number to change as we do a one-time investment that is not how we think about managing our business.
The other part of your question on acquisition, as we talk about two places that we tend to look to use our cash, one is acquisitions, when we find them. We're very thoughtful about acquisitions. We've done three since 2004. So we will look for things that really we think make sense and it can add to our business primarily focused around our Research business and that's what you've seen us do, really the acquisitions were three Research acquisitions. We would look to continue to do those kinds of acquisitions, where they make sense if we can get the right valuation and we believe we can drive our shareholder value to doing those. And we're looking at things all the time. At any point in time, we have a number of things we're looking at and as I said very selective in terms of what we choose to do.
Right here in front Kelly.
Thanks. My question also relates to the addressable market. Do you list something in his comments about 0.2% of the overall IT budget and I think if everyone spent that quadruple of the Research revenue. Could you just reiterate what exactly the point was there among them larger clients, how much are they spending on average and then perhaps relate that to the $47 billion market opportunity. I think the $47 billion as soon as we get all of those 108,000 clients. But how much they have to spend each and as a percentage of the budget to took get to that number.
Okay, great questions. On the 0.2% of a percent basically, we had a look at, what we can really achieve -- we achieve in clients today. We have clients today they spent 0.2% per spent of their IT budget with us. With David basically said if you had just no more new clients, just existing clients and those clients actually spent as much as kind of our top tier clients 0.2% that would take our Research business we are going in $1 billion business roughly to be in $4 billion business roughly. And so that’s kind how you get that math.
Point to though is that represented kind of your biggest client.
No. It’s the clients that’s -- its not with regard to size we are in cross size ranges. So, we sort of look at.
Kind of the highest.
If you segment clients into our large sort of groups that’s been the most with us as a percent of IT spend then those has been less at least. That’s the group. That’s been the most we spend on average in that group 0.2% of their IT spending. As we get David math was just if we did get any additional clients all we do is increase the penetration of existing clients all to that 0.2% within for about $4 billion of revenue.
We use a similar kind of analysis are not down on 0.2%, but done more in terms of -- if you look at the pricing of our products and distribution of people in organizations in a recent level of penetration with those people that’s how we get the $47 billion. Again its organizations, where we actually know the name, address, who they are, how good they are, how much they spend in IT with the supply chain 10 years etcetera.
Unidentified Company Speaker
Just right behind there to Bill please.
Gene, you talked a bit earlier about productivity, what your thoughts on getting back to or exceeding former productivity highs and over what kind of timeframe do you think you can do that?
So sales productivity is really important to us, we are very focused on it. If you look back over the last few years like since 2004 our sales productivity has gone up in a very systematic way. We are very focused on it. Its one of the biggest areas of investment, because as I said, the two things that really drive our Research business are adding headcount, which we are doing very well on and also driving productivity, which we also doing very well it so. We are in a good track there. We are in good place and we continue to see that there is no sealing to that they can keep going up for a long period of time and it’s a real priority for us.
And just a follow on, on the consulting business you had somewhat regular growth in the contract optimization business. What do you see in terms of how that business is developing in 2012? Thank you.
Unidentified Company Speaker
In 2012, we see we had -- just to be clear on it. We had a very good year in that business for every year over the last several years. As you point it out, it is a bit lumpy because what happens is as P.A. said, we get paid our percentage of the savings will get to the client. And so part of it it's depends how many deals we have, part of it, it’s depends on how big those deals are.
And if you happen have a mix that has to particularly big deals, you do even better than we sort of thought what we're going do. If you have a mix it happens to be some smaller deals, just a pure size of the deal. It’s going to be little less and so that nature of it even if you can do the same number of deals each year. The fact that some clients has, some particularly, feel for some not quite as big deals in that mix what results in volatility.
Unidentified Company Speaker
Hi, (Robert Riggs). It’s kind of expands on the productivity commentary, but first your comments about the average client having kind of 90,000 spend with you. Where do is that realistically go over time or kind of what's your target and what are the challenges of getting there. Is that – it just a matter of spending time with the client educating them on what you have to offer or are there other initiatives can speed up?
So a couple things if you look back on Peter's presentation. He took you through pretty much the full portfolio we have for our clients and starting with CIO all the way down to the front-line IT professionals. And if you took each one of those products you could easily sell $400,000 to $500,000 of services into any individual client.
And as David said, we don’t have to penetrate every client -- every person in every IT organization with our set of products and services penetrating a reasonably small amount of the IT organization could easily get you there. And I think as David mentioned earlier, one of our key challenges is just sales coverage. We still do not have enough sales people, when you're covering 30 clients for them to really go deep and make sure that they're working on those, which is why we keep adding as we had sales capacity, reducing the number of clients per sales rep. We think we help us get there and it is getting in front of the clients making sure they understand the portfolio products and services we offer.
Dave Lewis – JPMorgan
Dave Lewis, JPMorgan. I was just curious if you guys could expand a little bit on the old chart that you’re selling to this might overlap with comments by Peter and David. Just looking through slightly different vent used to be focused on the disrupted technologies, which have clearly driving demand, but what are you seeing within your core organization chart that you sell into over the past few years. What changes there are fine example, tighter collaboration with the executive suite has a potential change there over the past few years or tighter collaboration within the -- all the products, when you can sell into the core CIOs suite just give us a little bit more detail there into those changes? Thanks.
To me the biggest single change is that company's more -- institutions more and more are looking at IT as a source of strategic innovation and positive change. Things like new products, new services for clients as opposed to kind of the backoffice. If you went back several years ago there was in terms of mostly of that way. And so on that continuum, it's striking to me how every year there is this March, where IT is becoming more and more strategic and that's driving is a demand in its institutions for much closer collaboration between the business side and the IT side. But that's not usual Alwyn into a CEO, who will say, hey I need a new CIO. I just fired my CIO and the reason I did is, I needed somebody not to just run the datacenters. I need somebody who could be a business collaborator with me to actually help grow this business because it's strategic to me. And that’s happen in the CEO and CIO level. It’s also happening down in the business unit level and throughout the business as well.
So anyway, if you look at -- I think that's the biggest single trend that I see there is doing that. If you look at kind of -- as the issues that are most important change, theirs things like that so if you just have people focus on quite computing, now they may have focus -- people focus on how we use the public file and things like that. But those things actually kind of small compared to this whole drive to have a much tighter linkage between the business side and the IT side.
Dave Lewis – JPMorgan
And last one from me is what budget when you guys decide the enterprise opportunity roughly what ex-budget are we thinking about there or using to size that. And then I'm speaking about the enterprise opportunity increasing that – that increasing from 80,000 to 108,000 in 2012 and what else is driving that increase in the opportunity obviously both in the economic -- global economy, but you said -- some of them in the presentation, but I was just looking to see what more details on trends there.
Yeah, if I understood your question right, so there is about -- there is a little more than $3 trillion being spent on IT globally. Whether it's $2.9 trillion or $3.1 trillion it’s not what's driving this. Basically we help people with that whether its $2.9 trillion, $3.1 trillion, $3.3 trillion that's the huge amount of spending they are doing and we help them with that spending. And so that's not fundamentally was driving. What drove the growth are two things. One is that we have been introducing new products and new services over time and so those things have allowed us to actually have whole new market segments we didn't have before.
And we didn't go in some of the details of some of them, but the big ones we did. So part of the expansion for example added the technical professionals, when we've got burden in that product that's a whole new segment that we gone in before. We've talked about supply chain where we want in that segment at all, never in that segment. But under the covers even among what have been sort of our traditional segments we've introduced additional products in those segment as well that have allowed the segments to grow.
And then the other piece of it has been that we don't count somebody, we don't put so money on that 100,000, 108,000 unless as David said we know exactly, where they are located, what they do, what their revenues are etcetera and so part of it also that we are marketing database if you will, our sales prospect database gets better and better over time. Well that’s gets the minor factor, the major factor is that we've actually spent the number of they could be products et cetera, which increases the size of our available market.
Unidentified Company Speaker
And Dave the one thing I would add to that is that the 108 enterprises are size and scale organizations. So, these are organizations that I have $10 million or more of IT budget so these are not tiny little organizations. We've really gone on. These are the kind of companies that really could get value out of Gartner's products and services.
Yeah, I mean JPMorgan Chase is one enterprise have a 108,000 as an example. We have excluded. In the U.S. there millions there -- several million, there about $10 million small business in U.S. those obviously are didn’t there. So, these are really the larger organization.
Unidentified Company Speaker
We will go to Bill here.
Bill Sutherland. So, Gene as you look at the expansion of social media, how you guys thinking about, how that may impact the delivery and potentially the cost structure of your research organization? Thanks.
So, great question Bill. We are absolutely looking at new delivery (methods) all the time and in fact these are product line it actually all to bet. And so we think social network is interesting, important part of it. We have built features like that in to our products that we introduced maybe two years ago and we expect that’s going continue. So, it’s important and we're going to evolve with the times.
Dan Leben – Baird
Dan Leben from Baird. Two questions first when you look at the near-term use of sales additions, where you get more bank for the buck, it’s by splitting the currently covered companies and decreasing that average in terms of the company's covered were that actually continue to expand that market. And then the second question is, average tenure of sales has a huge impact on sales productivity. Can you give us any steps around kind of retention and ramp of these new sales higher than the last couple of years and how that’s improved?
Let me take the first part and you take the second part, Chris. So, Dave mentioned in his presentation, when we hire new sales people, we don’t just kind of randomly put them out or he gives the same algorithm. We actually have a dedicated territory planning team and their job is to look ahead, okay, we are going to grow our sales force 15% to 20% a year. We can put them on big companies, a little companies, private sector, public sector in this country, that country whatever. Their job is to look across all of that and identify what is the lowest thing or where is the best opportunity. And so there is no simple rule like we divide territories in half, split or something like that.
It actually a more sophisticated approach that looks at, if you look across all the places we could add, you stock the 108,000 enterprises. If you look at which ones are the most productive wants us to pretty for us to go after next and that depends on things like what products that we have, may depend on things if it geographically the analyst that we have in that particular geography that supported. It’s kind of that kind of stuff and so it's fair first get process to identify the ones we think we are going to get the highest level of productivity.
And just in terms of overall productivity on your question, if you're growing your sales force 15% to 20% a year, which is our strategy and our goal. And you have normal sales turnover, most companies have sales turnover in the 15% to 20% range and we are right in the middle of that range. You're going to be 35% to 40% of your sales force is going to be in its first year every single year.
And that’s what we are aware off, that’s the way were running our business, that’s how we think about recruiting, that’s how we think about training, that’s how we think about the productivity. What I'll tell you that as we looked at and as we told you over time, when we continue to add sales capacity we do it when we continue to see improving productivity overall. And do it when we see improving productivity in every aspect. And so we track every aspect of productivity of our sales people in there, first six months, first year, second year, and I can tell you that our newest hires are as productive as they have ever been and that continues to improve for us. We feel very good about our productivity and what we are doing in terms of bringing the right people on and training them.
Thanks Brian. Two questions over here. First for Gene, you touched on margin improvement potential, I am wondering if retention improvement is a possible driver of yet further margin expansion and/or it’s kind of the 80% renewal rate structural because of SMB exposure and high churn rates or failure rates to low end?
So, we don’t think our current that we backup. So over time, we've been improving our retention rate. It’s a big focus for us. We want clients' very high rates. It’s a very good thing for our business. And we don’t think by any stretch we're at the limits of our retention. We are focused on it and we're going to keep improving it over time. So, and to your point as we improve retention, it fits in with the economics for the rest of our business. So, you could leverage from increasing that retention.
And then a follow-up for Chris, you talked about the very high cash conversion, free cash flow conversion rates, I think you said it's 1.5 times and I understand some of that is from the kind of the negative working capital model you have getting prepaid. I am wondering some of that is also due to cash tax rate being lower than the effective tax rate and will that converge over time and for us those I was trying to do longer term this Bcf, what might the ratio converge to over the long-term?
So, it’s a good point. And so when you look our conversion over time, there's been a couple of factors that have driven it over the last four, five years. One, we've significantly improved our cash collection turnover effort. So, if you look at our ageing, it's in the best position it's ever been and we were getting incremental benefits out of that.
We certainly get the benefits of the negative working capital business. In fact if you go back to the beginning parts of 2005 and 2006, we actually did not pay cash taxes at all. We are now starting to pay cash taxes. We are doing everything we can to keep that minimized and we'll see how the world progresses in terms of how we can continue to manage that. I think we're going to continue to see slight increases in cash taxes as we'd seen this year in fact – this year, it's gone up a little bit. It's actually down a little bit in the prior year, but it's up from where it was kind of in the beginning part of this journey. We expected to go up a little bit over the next couple of years. But I still think you can see this pretty significant 1.5 times conversion even as we move ahead there. In the back?
Andrew Albert – Invicta Capital
Hi, Andrew Albert with Invicta Capital. I was looking at the last previous cycle. I noticed that about the first half of 2007 as when the evaluation sort of company kind of reached a peak and right around that time is when the annual contract value started growing a little bit slower than sales growth and it seems to be moving into that scenario again here first half of 2011, investors kind of gave a peak valuation for the company. I'm just wondering is that play it all into any of your thinking about investments going forward that may be investors believe that growth at a lower sort of contribution margin from the additional sales people is more attractive. It seems like the EBITDA leverage over the last few years is come mostly from mid shift to research and not much leverage on the SG&A side. I'm just curious how you way those two pieces.
So, it's a great question. We think about the investment we make in the sales force all the time, it's one of the single largest investments I'm sure you can see that as you look at our P&L. We absolutely believe a couple of things happen as you look at sales force growth. First the timing of when those sales people come in. So, if you look at the timing of the sales people in 2011 many – at a pretty significant rent towards the back half of the year. All of those people will become much more productive as we move through and into 2012 and we believe start contributing substantially and materially to the number.
We absolutely don't believe that slowing our sales force growth is the right strategy. We absolutely believe that maintaining that 15% to 20% sales force growth with the productivity numbers we're seeing will ultimately allow us and we talked about earlier to drive our business into that long-term 15% to 20% growth in research that we have been targeting and we started to reach in 2011. I think we will consistently start to do that overtime and as we get there, the margin that we're going to drive off of that improvement in the sales force is going to be significant and is going to drive the kinds of margin expansion that we absolutely we'll reward the shareholder as well. So, we think that's an absolutely critical and the right investment for us to keep making given what we say.
Andrew Albert – Invicta Capital
Just as a follow-up, it seems if the guidance for 2012 doesn't suggest that the research business will be accelerating to that 15% to 20% revenue growth. So, how should be – is it will be may be 2013 when that eventually.
Yeah, so, it's a good question, so let me help you kind of understand how that plays out right so, the revenue in 2012 is driven by the ending contract value in 2011 primarily. So in 2011, we grew our contract value 14%, in 2012, the revenue guidance 14% is right in the middle of our guidance. The reason there is a range is because of foreign exchange and some other things can move it around. But borrowing foreign exchange, 14% revenue growth will convert to – sorry, contract value growth will convert to 14% the next year. And then the year in 2013, the revenue growth we delivered now will drive what that revenue is going to be in 2013, we're obviously not giving 2013 guidance sitting here today. So, as Gene said we remained extraordinary confident that as we continue this investment that's going to drives us into range over the longer term.
Any other questions from the audience? Okay, with that, we'll turn it back to Gene.
Gene Hall – Chief Executive Officer
All right, well, as you're seeing today, we've got an incredibly strong value proposition, a vast market opportunity, a winning strategy and exceptional business model. We've achieved sustained double-digit growth in all of our key metrics. And Gartner today is the strongest company than it's ever been. And we're committed to continually improving and innovating from here.
As I shared with you earlier, I've never been more confident in or excited about our prospects for accelerated and sustained growth. So, thanks for joining us for today and we hope you found this session valuable in deepening your understanding of Gartner and I look forward to reviewing our progress at our earnings calls throughout the upcoming year. Thanks.
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