CEB (CEB) Thomas L. Monahan, III on Q1 2016 Results - Earnings Call Transcript

| About: CEB Inc. (CEB)
This article is now exclusive for PRO subscribers.

CEB, Inc. (NYSE:CEB) Q1 2016 Earnings Call April 26, 2016 9:00 AM ET

Executives

Unverified Participant

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Richard S. Lindahl - Chief Financial Officer

Analysts

Timothy McHugh - William Blair & Co. LLC

Gary Bisbee - RBC Capital Markets LLC

Ryan C. Leonard - Barclays Capital, Inc.

David E. Ridley-Lane - Bank of America Merrill Lynch

Kwan Hong Kim - SunTrust Robinson Humphrey, Inc.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

Joseph Foresi - Cantor Fitzgerald Securities

Unknown Speaker

[Abrupt Start]

Unverified Participant

....by going to the company's website and reviewing yesterday's news release.

You will also find a PDF of the supporting materials that the company will use in its prepared remarks this morning by going to the company's website at, cebglobal.com and following the Investors link to the Q1 2016 Earnings Conference Call. Please review the second page of these materials, which includes important information about any forward-looking information included in the presentation.

This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding CEB's expected quarterly and annual financial performance for fiscal 2016 or beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing discussions of forecast, estimates, targets, plans, beliefs, expectations and the like are intended to identify forward-looking statements.

You're hereby cautioned that these statements may be affected by important factors set forth in CEB's filings with the Securities and Exchange Commission, and in its first quarter news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

At this time, for opening remarks, I'd like to turn the conference over to the company's Chairman and Chief Executive Officer, Mr. Tom Monahan. Please go ahead, sir.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Thanks, everyone, for calling and/or logging in. We appreciate the opportunity to bring you up to speed on the continued impact, growth and profitability of our business. I'll kick-off the call with comments about our performance in the first quarter, perspective on our pending acquisition of Evanta, and some thoughts on the year ahead. Rich will then provide a more detailed discussion of our financial results and outlook for the remainder of the year. I will then close with a look at our strategic priorities before we take your questions.

I'll begin my remarks on slide three. We accomplished a lot in the first quarter, and have set ourselves up to deliver client impact, bookings growth and solid profit through the rest of the year. The overall volume of change, along with continued stress in a few challenged sectors did cost us a mid-quarter bookings momentum. By the end of the quarter, however, our teams are rapidly settling into new roles and driving growth, and bookings momentum improved as we entered Q2. In addition to managing significant internal change, our teams confronted a fast-changing external environment.

Earlier in the quarter, turbulent equity markets and some mixed economic news put executives in a very cautious frame of mind. As has been for the past several quarters, this caution was particularly concentrated in a few sectors. By the end of the quarter, executives in most sectors were leaning forward again, even though growth forecasts aren't at the top of – either growth forecasts aren't that strong for many sectors, executives across the board are focused again on driving their business forward.

Our efforts in the quarter focused on five areas. First, engaging and renewing our installed base of great companies. Q1 is by far our biggest renewal quarter, and our teams focus at this point in the year on securing their renewals for the coming year or two years, and where we can, adding some incremental growth through cross-sell. As I mentioned, we did see somewhat more caution this year than in previous years. The bulk of that caution was concentrated in the few sectors as we have discussed before.

Across the broader market, we generally saw solid renewal performance. You can see the combination of these dynamics reflected in our Wallet retention rate, which dipped from the 90%s down to 89% this quarter, reflecting a world where most industries are comfortably in the 90%s and a few are in the low 80%s.

By the end of the quarter, we're seeing and hearing signals that the challenged industries have begun gearing back up to a new normal. We're open to discussions of relationship growth again. While we're optimistic that this will become a tailwind over time, we'd expect that growth this year will come from industries with already healthy economic profiles.

Our second area of focus was evolving our go-to-market approach in North America. As we have discussed, our goals here were twofold. Continuing to deepen and standardize service to our members in all areas, and in particular, integrating our commercial teams much closer to the client and our large and growing product sets in talent management and sales and service. This was a major effort requiring great coordination and focus from hundreds of commercial team members in North America. Thousands of relationships changed hands and our teams did an incredible job in showing seamless member and client conversations.

While the change sets us up very well for the rest of the year and beyond, it did creates a mid-quarter performance drag in North America which led to slower growth in North America than in EMEA and APAC, across both the CEB and Talent Assessment segments. And in particular, impacting the timing of some services revenue. Since North America is our largest region by far, that obviously had an impact on our overall growth in the quarter. Given that we are making these changes using the successful blueprint from other global markets, we're optimistic that the largest portion of the cost of change is behind us.

Third, we focused on continuing to build a great CEB team globally. Our efforts at recruiting the best talent and ensuring that we're delivering high-quality career experiences are paying off, as we have sustained our earlier staffing strength into the second quarter. Even as we concentrate on marketing and delivering our employment value proposition, we are now devoting intense energy to ramping the productivity of our newest colleagues, particularly at the front-end of our commercial system. Our goal here is to make sure that these folks are in a position to help deliver great client impact and grow the new and cross-sells pipeline.

As Q1 is traditionally a light new and cross-sells quarter, the proof really won't be in the pudding until we see bookings growth later in the year. But we do see pockets of real progress as well as some areas that still require continuing attention. And particularly, we need to make sure that we are supporting staff in our newest locations and pushing harder to link all of our teams work with augmented marketing and branding efforts.

Fourth, we sustained our emphasis on margin performance and returning capital to shareholders. We continue to be on track to deliver strong margin performance for the year, and also took advantage of weakness in the stock price to buyback more than $47 million in stock, in addition to paying dividend amounting to $13 million.

We also invested in capabilities that will strengthen our ability to deliver on our core strategic priorities. The biggest news on this front was our agreement to acquire Evanta, which we announced in early April and expect to close in the coming days. We've incorporated the financial impact of the transaction into our guidance, but I want to share a few thoughts about the business and its strategic value to CEB starting on slide four.

First and foremost, we are adding a CEB caliber business with solid growth, high-visibility, and attractive margins. As you can see to the left, the Evanta team fosters collaborative exchange between IT, HR, and Finance leaders through three business models you see on the left-hand side of the page.

The largest part of its business is its In-Person platform which serves executives primarily through 200 local events in 36 U.S. cities. Each year, the business convenes about 11,500 participating executives in the IT, HR and Finance functions via invite-only events supported exclusively by underwriting partners. As you see at the bottom left, the Evanta team has also created some additional Professional Development & Subscription offerings to support the needs of the executives they serve, which we think is a great indicator of the potential for cross-selling the broader CEB product side.

We've had the privilege of partnering with the Evanta team over the years, and have long appreciated the unique strength of their businesses, which you see on the right-hand side of the page. First and foremost, it is a great business with strong growth and high margins. This performance springs from a unique, by CXOs for CXOs approach that has driven a very loyal following from both underwriting partners and invited attendees. Their focus on senior executives, largely local platform, and underwriting partner model also helps the business avoid the cyclicality of more traditional events businesses. With foundational strength in some key domains they are poised to grow in a variety of functional and geographic end-markets. Finally, it almost goes without saying, that we also acquired a great team as part of this transaction.

For CEB, adding the Evanta team represents an opportunity to directly reinforce our growth strategy. You can see the headline benefits on page five. Mostly importantly, as you can see at the top, we are tightly aligned around a single mission. We share a commitment to empowering corporate practitioners, and Evanta helps us accomplish our strategic objective of achieving brand and market leadership in several of our key domains. It also helps to strengthen relationships with our existing clients, providing a broader platform to build our brand, and drive interest in CEB offerings. We're also adding Evanta's strong economics to our own and welcoming a very talented group of professionals. Finally, adding Evanta also gives us an opportunity to engage a wider universe of underwriting partners.

Let me share some detail here on slide six. This not only strengthens our core business, but gives us a much stronger footprint into the adjacent addressable market that we had just begun to penetrate. As several of you know and have directly experienced, we have been steadily building out a small-scale events platform, which complements our Leadership Council, Predictive Analytics, and Leadership Development businesses in several ways.

First and most importantly, it provides a way to facilitate broader networks than our traditional 20-person meetings allowed. Second, it helps us expose the breadth of our resource to a wide target audience. Third, it helps us to create high-value interactions between enterprise executives and key service partners. This has two benefits. First, it not only helps us engage and access new budgets to grow our business, but it also supports a key executive need of being able to engage with key solutions providers around adapting and evolving strategy. The CEB platform now has situations and events where people can connect only with their peers for those topics that merit that type of consideration and broader events where they can engage with key solutions providers, and gives us broader coverage of the types of problems sitting on executives' desks.

In addition to nicely complementing our existing business, adding events and scaling our summits business gives us a meaningful revenue stream, albeit still a fraction of our peer companies as a percentage of the business. As you can see in the upper left of the slide, our exposure to this market pro forma for the Evanta acquisition is now north of 5% of our revenue, much smaller than most of our peers, but a meaningful footprint in a key adjacent market.

And to the bottom left, we do this now in a way that creates unique value for both underwriting partners and executive participants – content-focused senior conversations with minimal commercial activity. To the right, this unique platform will help us to engage a large adjacent market worth more than $1 billion, which not only adds to our $10 billion-plus opportunity, but allows us to create unique new sources of value for both markets. In a nutshell, we're delighted to welcome the Evanta team to our platform and look forward to helping our targeted executives drive even greater impact in their organizations.

Pulling back up to the quarter as a whole, the net result of all of these factors is some puts and takes to our overall outlook for 2016. Obviously, revenue and EBITDA targets go up as a result of adding Evanta and our target range has widened out a bit due to timing of synergies and bookings. We also see some impact on EPS due to our buyback in early 2016. Rich will take you through this in more detail.

In short, we've accomplished a lot in Q1, but still have clear areas for acceleration and improvement. I'm pleased with the caliber of our team and the progress we are making on key strategic goals, but equally focused on ensuring that we work to rapidly turn these foundations into accelerated growth and profit.

I'll now turn the call over to Rich.

Richard S. Lindahl - Chief Financial Officer

Thanks, Tom, and good morning, everyone. Please turn to slide seven for a summary recap of our financials. Revenue was $223.2 million in the first quarter of 2016, an increase of 0.7% on a year-over-year basis. This modest growth reflects continued challenges in some sectors of our base, as well as the transition impact of changes to our go-to-market structure in North America.

Adjusted EBITDA margin was 23.6% compared to 23.9% in the first quarter of 2015. Diluted earnings per share was $0.14 compared to $0.56 in the first quarter of 2015. We remain focused on solid earnings growth, and you can see that non-GAAP diluted earnings per share was $0.82 versus $0.71 in the comparable prior year quarter.

Now, let's turn to slide eight, and I'll review our key operating metrics for the quarter. CEB segment Contract Value at March 31 was $667.1 million, which is up 0.6% year-over-year. On a constant currency basis, Contract Value growth was 0.5%. Constant currency CEB segment Wallet retention rate was 89% versus 95% a year ago. CEB's Talent Assessment segment Wallet retention rate was 96% versus 104% last year.

CEB Talent Assessment segment Contract Value was $108.3 million at March 31, 2016. This metric represents the aggregate annualized revenue attributed to all subscription agreements for online product access plus the aggregate annual revenue attributed to all advance purchases of online testing units. Accordingly, it does not include the value of professional services, in arrears usage or other items included in revenue for that segment. We introduced this metric last quarter and we'll continue to report it on a go-forward basis, so that investors can track growth in the most highly recurring portion of CEB Talent Assessment revenue.

Total CEB segment member institutions grew 3.5% to 7,202 in the first quarter. CEB segment Contract Value per member institution on a constant currency basis was $92.1 thousand at March 31. CEB segment Contract Value per institution on a constant currency basis was $131.7 thousand for large corporate members, and $30.6 thousand in middle market.

Please turn to slide nine and I'll review key segment highlights for the quarter. Total company adjusted revenue was $224 million in the quarter, an increase of 0.9% compared to the prior year. On a constant currency basis, total company adjusted revenue grew by 2.6%. CEB segment adjusted revenue was $178.8 million in the first quarter, an increase of 3.4% versus the first quarter of 2015. On a constant currency basis, CEB segment adjusted revenue growth was 4.2%.

As compared to the prior year, CEB Talent Assessment segment adjusted revenue declined 7.8% to $45.2 million in the first quarter. On a constant currency basis, CEB Talent Assessment segment adjusted revenue decreased 2.9%.

Consolidated operating expenses increased $2.3 million on a year-over-year basis, reflecting among other things the impact of higher sales head count. As compared to the first quarter of 2015, cost of services increased $1.1 million, member relations and marketing expense increased $1.9 million, and general and administrative costs decreased $700,000.

In the CEB segment, adjusted EBITDA margin of the quarter was 24.9%. In this segment, the net currency impact lifted adjusted EBITDA margin by 50 basis points. Accordingly, on a constant currency basis, CEB segment adjusted EBITDA margin was 24.4% in the first quarter of 2016 versus 25.7% in the first quarter of 2015.

Adjusted EBITDA margin for the CEB Talent Assessment segment was 18.7%. In this segment, the impact of foreign exchange rates on operating profit reduced adjusted EBITDA margin by approximately 30 basis points. And so, on a constant currency basis, CEB Talent Assessment segment adjusted EBITDA margin was 19% in the first quarter of 2016 versus 17.9% in the first quarter of 2015.

Depreciation and amortization in the first quarter was $25.6 million, an increase of $8.8 million compared to the first quarter of 2015. This change was primarily due to increased intangible amortization of the SHL trade name, as we discussed on our last earnings call. The amortization of this intangible asset will be completed by December 31 in connection with the branding efforts across the year.

During the first quarter, we incurred $3.3 million to support the initial work on Program Atlas, which we are reporting as business transformation costs. We also had $1.5 million of acquisition-related costs and additional restructuring charges of $900,000.

Interest income and other was a net expense of $1.3 million in the first quarter of 2016, compared to income of $5.7 million in the first quarter of 2015, driven primarily by a loss on other investments and a net foreign currency loss. Interest expense in the first quarter of 2016 was $5.8 million compared to $4.4 million in the first quarter of 2015 as a result of the issuance of the senior notes in June of 2015.

The provision for income taxes was $4.5 million in the first quarter and the effective tax rate was 49.8% versus 38.9% in the first quarter of 2015. After removing the effects on the tax rate for discrete items and non-GAAP adjustments using statutory rates, our adjusted effective tax rate was 31.6%.

Please turn to slide 10 for balance sheet and other highlights. At March 31, we had $160.1 million of cash. Accounts receivable was $215.3 million. And the current portion of deferred revenue was $484.6 million. As compared to March 31, 2015, deferred revenue increased 1.2%. On a constant currency basis, the deferred revenue growth rate was 1.4%.

We ended the quarter with $555.4 million of debt on the balance sheet, net of related issuance costs, and our ratio of net debt to a trailing 12 months adjusted EBITDA was approximately 1.6 times. Additionally, we had access to approximately $174 million of undrawn availability under our revolver as of March 31.

Cash flows from operations for the first quarter were $121.4 million, which is down 2.2% compared to the prior year, as typical seasonal strength was offset to some degree by slower bookings growth. During the first quarter, we spend $4.2 million on capital expenditures, and we also used $2.5 million of cash for other investments.

We continue to execute on our enhanced cash distribution strategy. In the first quarter, we paid $13.4 million in dividends and allocated $47.3 million to repurchase 828,000 shares of our stock. As you can see, we started the year more aggressively given the market context in our pre-Evanta transaction credit profile. As Tom mentioned, we expect this level of activity to favorably impact our diluted average share count for the year which is down 2.9% as compared to the first quarter of last year.

Although, we have not yet closed our purchase of Evanta, we do expect the closing to occur in the very near future. And so let me share some details regarding our financing plan for the acquisition. Specifically, our bank group has provided firm commitments to enable us to increase our term loan by $150 million, and our revolver by $100 million. In addition, we will be extending the maturity date of the entire credit facility to the year 2021. All other terms in the credit facility will remain substantially unchanged.

Please turn to slide 11, and we'll move on to our outlook. The following comments are intended to fall under the Safe Harbor provisions outlined at the beginning of the call and reflect assumptions which are subject to change.

Before getting into the details, I'll highlight three factors that are influencing our revised outlook. First, as Tom mentioned in his earlier remarks, our bookings volume in the quarter was impacted by both continued market volatility and the go-to-market changes we implemented at the turn of the year. These elements create a small incremental headwind to our previous 2016 revenue and earnings growth assumptions.

Next, we are incorporating foreign currency exchange rates as of April 1, consistent with our normal practice of linking our guidance to the FX rates in place at the beginning of the quarter. In particular, the following guidance assumes an average exchange rate of $1.44 to the British Pound, $1.14 to the Euro, and $0.77 to the Australian Dollar. Overall, these rates reflect a somewhat weaker U.S. Dollar and, therefore, also reduce our full year revenue expectations.

Finally, we're including the projected contribution from Evanta, assuming May 1, acquisition day. These anticipated results provide a net tailwind to both revenue and earnings in 2016. We currently expect our full year 2016 adjusted revenue to be between $970 million and $1,005 million, and that the reduction in revenue from the deferred revenue fair value adjustment will be approximately $2 million. So the GAAP revenue outlook is between $968 million and $1,003 million. As compared to 2015, these outcomes imply full year constant currency growth of about 6% to 9%. Please note, these figures exclude any additional deferred revenue fair value adjustment that would result from Evanta pending completion of the purchase price allocation after we close the transaction.

We now expect full year 2016 adjusted EBITDA margin to be at least 26.25% or slightly better than in 2015. Depreciation and amortization in 2016 is expected to be between $99 million and $101 million with approximately $30 million of this amount resulting from the change of the amortization of the SHL trade name. Note that this range also excludes additional amortization of intangible assets that will be associated with Evanta pending completion of the purchase price allocation.

Capital expenditures are anticipated to be between $33 million and $35 million, which is in line with our target range of 3% to 4% of revenue. We currently expect the full year 2016 adjusted effective tax rate to be approximately 32% to 34%. Of course, the adjusted effective tax rate is subject to a number of uncertainties including the global allocation of income across tax jurisdictions, tax law changes, and other discrete items.

Incorporating all of these factors, for 2016, we now expect non-GAAP diluted earnings per share to be in the range of $3.95 to $4.20.

In addition to our full year outlook, we are also providing an estimate of second quarter activity. Our current forecast anticipates revenue of at least $245 million, adjusted EBITDA margin of at least 24% and non-GAAP diluted earnings per share of at least $0.90.

Finally, a comment on capital allocation. We remain confident in the liquidity and cash flow profile of our business, which gives us the financial flexibility to pursue attractive capital allocation opportunities such as Evanta, while also returning cash to shareholders via our dividend and buyback strategies. Given that we are now meaningfully increasing our debt for the Evanta transaction, in the near-term, we're likely to place increased emphasis and priority on deleveraging. Management will continue to use its best, best judgment to determine the amount and timing of buybacks going forward.

That concludes the financial summary. I'll now turn the call back over to Tom to review our strategic priorities.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Thanks, Rich. I'll pick up my remarks on slide 12 with an update on our strategic priorities for 2016. CEB's mission has never been more relevant to the 10,000 companies that we are privileged to support. My over 4,600 colleagues and I go to work each day united by a single mission, unlocking the potential of organizations and leaders by advancing the science and practice of management. The five priorities you see on slide 12 are key to realizing that opportunity and I'm encouraged by our progress against these goals in the first month of the year.

Let me briefly share detail on each of these and add a bit more color in a few places. I'll start with, must-have insights and analytics. Our business is driven by an innovative model that allows us to tap the collective experience and workflows of thousands of companies. This model allows us to build deep datasets and continuously distill insights on the biggest and often hidden drivers of corporate performance. We now have more than 35 billion data points from which to drive these insights.

We've made an exciting investment in the first quarter to strengthen our efforts here, as we opened a Data Innovation Center at the University of Illinois Research Park. The facility will host undergraduate and graduate students from this school alongside CEB'ers, as they work to apply emerging technologies such as natural language processing, machine learning and data visualization. We're excited about the prospects for this partnership as it will further our use of Big Data technology and techniques to deliver powerful insight and reinforce CEB's leadership position in cutting-edge research, talent strategy and analytics.

Our second priority is cultivating highly valued relationships. I shared highlights in my opening on the largest work stream here, evolving our go-to-market approach in North America. In addition to our efforts in our largest markets, we also continue to refine our approach globally identifying processes and tools that support a sustained high-level of high-impact service. Our goal remains creating surplus value for our CXOs by connecting our data, IP and solutions with the very real and very pressing challenges on their desks.

Our third priority is achieving brand and market leadership. On the last call, I talked about reinforcing CEB strength in the vital few areas we are targeting market leadership. I'm encouraged by our work on multiple dimensions to build this strength. Including improving our digital footprint to investments in our web presence, in our SEO and SEM efforts. We've also continued to build and leverage our PR and social media program. Events are also an important part of this effort, and the Evanta acquisition is obviously a great reinforcement in a number of areas. We're very excited to have new platforms to engage executives in the IT, HR and Finance domains.

Our fourth priority is building compelling careers. As I mentioned in my opening, we're able to sustain year-on-year staffing strength into the second quarter and continue to ramp our new teams to productivity. I've been consistently impressed with the caliber of people we've added and our shared commitment to making them successful at CEB.

Longer term, we are focused on ensuring that CEB remains an Employer of Choice for promising candidates with all of our critical skills in key labor markets around the world. Ultimately, this means working diligently to ensure that we offer and communicate a strong employment value proposition. Our efforts here also include a special focus on building a diverse workplace that helps us better understand and include the needs of our global members and enables varied thinking and innovation. Our goal is to recruit, develop and manage exceptional talent from all backgrounds, and we're committed to fostering a respectful, inclusive workplace, in which our staff can thrive.

Our final priority is agility and operational excellence. More than 10,000 companies around the world lean on us to drive their performance, and we need to be relentless in ensuring that we both deliver on what we promised, and rapidly change as their needs change. A few areas of focus for us this year beyond on-boarding the talent we've brought into the organization are making sure that we tightly connect our growing marketing efforts to our sales operations, that we deliver unique value to our planned upgrades for talent management technology platforms, and that we seamlessly install our resources into the workflow of first-time users.

So to summarize my remarks on slide 13, we believe that the current environment continues to offer huge opportunities for us, as we have unique resources and talented people ready to help companies navigate a complex world of strategic and operational choices. We've also accomplished a lot at the start of the year, but have clear areas for acceleration and improvement. Most importantly, the core elements of the CEB value creation formula remain in place: Solid double-digit returns powered by non-GAAP EPS growth, and sustained return of capital to shareholders. We remain committed to delivering this value to our investor.

We'll now take your questions.

Question-and-Answer Session

Operator

Thank you. And we'll take our first question from Timothy McHugh with William Blair.

Timothy McHugh - William Blair & Co. LLC

Yes, thanks. I apologize that I joined a little late, but I heard the commentary about, I guess, weakest bookings activity earlier in the quarter and improving late in the quarter. I guess can you quantify the difference or give us some sort of magnitude, a sense of the magnitude? And, I guess, why is that kind of – you talked about a bit that the bookings in Q1 being a surprise, I guess, given the timing of the last earnings call, I would have thought you knew that the bookings were weak to start the quarter at that point?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah, Tim, this always was kind of more mid-quarter when we drove the staffing transitions in North America. That definitely dented the momentum for a couple of weeks. So I think the progress across the quarter just reflected what we had going on. We went through a major, major change effort with our large enterprise organization in North America. And given the intensity with which they were working, we thought we'd be able to sail right through from a momentum perspective, but it took us a few weeks to get back on our feet, and by the end of the quarter we saw teams really settling in and driving performance. So we were off to such a good start, when we did the initial call that we thought that focus and intensity would allow us to keep pushing right through. But it did cost us a couple of weeks of momentum.

Timothy McHugh - William Blair & Co. LLC

Okay. And you talked about – I think there was a comment you made about – kind of the proof will be in the pudding in the second half of the year. Comparisons should be much easier to even as we get to 2Q. So, do we have to wait until even 3Q or 4Q to start to see bookings growth improve here, or I would hope, I guess, against easier comparisons and with everything you've set in place, we might see some progress in 2Q, but what's your expectation around that?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yes, I think, we are seeing the new staff members we've added come online and begin to contribute. They're building sales pipelines and cross-sales pipelines, and some of that should start to show up in Q2, but I think the bigger impact will be in Q3 and Q4. That's the normal seasonality in our business. So, you're not wrong that we should see people starting to get on the board and drive outcomes, but I think the bigger impact will be across the full year.

Timothy McHugh - William Blair & Co. LLC

And what's the seasonality comment, because it's year-over-year, and I guess – and then, why is that?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah, we just normally found historically that new and cross-sales tend to gather momentum towards the end of the year as people gain budget certainty looking into the next year. So you certainly can do some of it in Q2, but the rhythms in our business tend to be anchored on the corporate budgeting cycle.

Timothy McHugh - William Blair & Co. LLC

Okay. Thanks.

Operator

And we'll take our next question from Gary Bisbee with RBC Capital Markets.

Gary Bisbee - RBC Capital Markets LLC

Hi guys, good morning. Let me dig into that a little more. Clearly, we've heard the story change here in terms of what's been impacting bookings from – you fell short on staffing, had some higher turnover, but you got the people onboard by August and it was starting to help. Then it was a few industries that have weakened and impacted bookings a bit, and now it's the disruption from the sales changes.

So, help us think through what the impact of each of the three was, or at least directionally, bigger, smaller, in the middle. And I guess, please clarify for me, what exactly the changes were that caused the disruption? It sounded like it was much more at a senior level, leadership now overseeing a bunch of people. I guess, I'm not sure how that significantly impacts the performance of the salespeople for the few week period that you mentioned? Thank you.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah, I think the biggest impact was definitely the sectoral stuff we've seen. There are a set of sectors out there that are just facing real caution in budgets. In those sectors, the relationships are more likely to be shrinking than growing. And that, as you said, that kind of runs about 15% of book of business and that just creates a top line bookings headwinds. I'd put that firmly at the top of the chart, and that's been consistent now for three quarters.

By the end of the quarter, we were hearing people say, okay, we're kind of adjusting to a new normal in our operating environment, and we're looking forward to mapping a plan. But our view has been that's not going to be a driver of growth this year. So we're trying to work to support those executives and not abandon them when they need help, but at the same time make sure we're digging in to drive growth elsewhere.

The channel change we've talked about is real. What we did was we brought together all of our Talent Management and all of our sales and service products under leaders who have smaller territories closer to the marketplace. And that did require transition in territory ownership and management across North America. So it's not a wholesale group of new people coming in, but it is people coming in, working, switching territories, transitioning relationships, et cetera. And so it's – that did have an impact.

What we saw there was basically the delta between – the reason we have some sense of the size of that is – you can look at the delta between, let's say, North America and EMEA and APAC, large corporate, which didn't go through the similar transitions and we saw a meaningful – they have the same sector stuff there – we're going to see meaningful differences in growth between our geographies. So we think we're through the bulk of it. The teams executed really well and sharply, and as I have talked to the customers that felt really well-served by this process, and are really excited about the platform we have in place now. But it did take some change effort to get all that done seamlessly in a way that didn't disrupt customer experiences.

Gary Bisbee - RBC Capital Markets LLC

Okay. And then, I guess the second question, so we've now gone a year with little to no revenue growth at SHL. And I guess, I just want to ask a bigger picture question here, what's the issue? I mean, is there something wrong with the offering that it's just not resonating in the North American market or you're proving unable to sell it? Is this an execution issue like you said last quarter, you acknowledged that you wished you'd done a better job of unleashing the whole firm to sell that product? What's it going to take to get better, better operation? And if you don't, is there like a massive goodwill write-down coming at some point, because it clearly has been a disappointment to date.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah, the biggest issue in the Talent Assessment business is the fact that we haven't grown in North America at the rate we would like to see it grow and given the size of the opportunity in front of us. And that was not the only reason we drove the channel change in Q1, but it was a principal reason we drove the channel change in Q1, which is to bring our teams together in narrower territories closer to the end market so that we could facilitate cross-sell and drive deeper relationship growth. So that's number one with a bullet for seeing that business grow at a rate that we'd consider consistent with the opportunity we have in front of it.

And we've done that work now. Now, we've got to drive the outcomes. But, we feel – and again, it was caution that drove us to keep the commercial conversations a little more separate than was optimal, and certainly that our clients would have liked. So, the feedback we've heard so far from clients has been great, because we're facilitating more and better conversations and the benefit should show up to that business in North America. Again, it's not a Monday morning thing, but I'd expect to see consistent progress as we drive forward.

On the product side, there's always – we are not 100% gross margin product for a reason. There's always product stuff you need to be developing and delivering, and that team is working on a variety of new features and platforms to make sure that that product is highly relevant, but the real opportunity is to drive the business in North America.

Gary Bisbee - RBC Capital Markets LLC

Okay. And then just one last one, if I could. Can you review the seasonality of events? Is there anything we should look for in terms of the timing of those events? And within that, I guess help us understand, it sounds like $60 million of revenue and $21 million of EBITDA or thereabout that they are expecting for this year. How much of that is in the eight months that you'll have it versus the four months that you'll have? Thanks a lot.

Richard S. Lindahl - Chief Financial Officer

Yeah, Gary, this is Rich. On the last part, the full year revenue expectation was actually closer to $50 million than $60 million. I think the margins in that business are in the high 30%s for 2016. And so that's sort of your starting point. There is definitely seasonality in the business. The events tend to cluster into the second and the fourth quarters, and the revenue recognition is triggered off of delivery of the events, and the events comprised the majority of the revenue base at this point in time. So, at this point, baked in our guidance, we've got kind of at least $40 million of revenue assumed in 2016 as being contributed from Evanta.

Gary Bisbee - RBC Capital Markets LLC

And just one last one, sorry, but does it lose money in the two quarters when it doesn't have as much conference, or is that not a material thing we should think about modeling? Thank you.

Richard S. Lindahl - Chief Financial Officer

I mean, there's also some seasonality in the margins that goes along with that. And so, certainly, the contribution is lighter in those other quarters, and that's the way to think about it.

Gary Bisbee - RBC Capital Markets LLC

Okay. Thank you.

Operator

And we'll take our next question from Manav Patnaik with Barclays.

Ryan C. Leonard - Barclays Capital, Inc.

Hi, this is Ryan filling in for Manav. So just to go back, I guess, some of the ongoing integration of the two businesses in North America. I think looking back at the first quarter call, there's discussion about how this is an evolution versus kind of the revolution that it was in the European side of things. And I think looking back at the transcript, you even said that some teams were already integrated and rapidly going out and executing. So I guess, if some of this was worse than you had expected, is there any fear that that kind of lingers into 2Q, or are there any other milestones out there that could again pop-up with having some of these, particularly, where this was just renewal focus that cross-selling could actually be weaker now as the integration continues?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah. Hi, Ryan. We are rolling out a blueprint we ran in several of our midsized markets last year. So we've got a high degree of confidence that what we're doing is something that has a pretty clear blueprint and set of milestones. I'm certain there will be teams that are ahead of where they're supposed to be, and I'm certain there will be teams that are behind where they're supposed to be, but I am overall feeling good about the change effort.

But we – again, it is more evolutionary. If you think back to, let's say, when we did our compass channel rebuild back in 2009, 2010, which obviously paved the way for some really attractive growth deep in our target sectors, everyone was kind of doing a new job. This is people with very consistent sets of responsibilities, but often with new territories, new boss and seasons, new process overlays to drive cross-sell.

So it's a – again, it's more of an evolutionary set of activities from an individual behavior perspective. But there is territory transition. And I think our team's put a lot of care in making sure that any customer who woke up one day with this or her contact changed, because we decided it, put a lot of effort in making sure that was a seamless process from the customer perspective and on balance that probably does cost you some time from going out and forging new things. But we feel pretty confident given that we're rolling out a playbook that we ran in Australia, New Zealand, and Germany and China and some other markets last year that we should see most teams progress along a pretty predictable timeline.

Ryan C. Leonard - Barclays Capital, Inc.

Okay. Thanks. And so, I guess, on the Talent Measurement side, there was the – Talent Assessment, sorry, the – contrary to that, it actually decelerated in the first quarter. Is that – I guess is that part of it, is that a fairly new metric for us, or is that just kind of the normal, how that rolls out, or how should we think about throughout the year?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

I think there's some seasonality in that -- there will be seasonality in that metric. That metric is great. We're glad we've been able to convert the majority of the business to a highly recurring revenue business that was a key goal of ours. And you'll see that grow probably even a little bit ahead of revenue in that business as more and more business comes in line as the subscription business. I think the news in the quarter was probably some of the services-type stuff on top of that that didn't get done because we were transitioning. I think that number just reflected some seasonality and the progression through that.

Ryan C. Leonard - Barclays Capital, Inc.

Okay. Thanks. And just given that kind of the slowdown in parts of the business, could we get the organic revenue growth rate in the quarter? I know it's been hard to break out that in the past, but just to get a sense of what the impact was and whether there was any Contract Value impact from M&A in the quarter?

Richard S. Lindahl - Chief Financial Officer

There certainly was some help from some of the stuff that we acquired in 2015. I think as we've talked about, in particular, these acquisitions that we did in 2015 are very tightly aligned with existing product sets. And so, we really don't break that out separately. We really think of it as all as kind of part of the same base of revenue production.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah, if you sort of look at the way it works internally is, generally, most anytime we do an acquisition it's taken a new product launch we were going to do anyway off the board. So it's effectively trading some higher margin revenue for what have been a more dilutive new product investment. We even see a little bit of that around the margin of Evanta that some of the things that we would had lined up to do this year, they are already down the field on and we'll just – we'll ride those horses rather than trying to build things ourselves.

Ryan C. Leonard - Barclays Capital, Inc.

Okay. Thank you.

Operator

And we'll take our next question from David Ridley-Lane with Bank of America Merrill Lynch.

David E. Ridley-Lane - Bank of America Merrill Lynch

Sure. Good morning. Just so I have it kind of crystal clear in my mind, prior 2016 revenue guidance was 3% to 6% constant currency. What is the current guidance excluding Evanta? Is it still 3% to 6%, or...?

Richard S. Lindahl - Chief Financial Officer

Well, like I said, Evanta is going to contribute at least $40 million of revenue this year. And so that certainly helps probably 300 basis points in terms of the growth for the year.

David E. Ridley-Lane - Bank of America Merrill Lynch

Got it. Okay. And then, I saw you raise the 2016 adjusted EBITDA margin guidance by 25 basis points. But Evanta's higher margins does give you a mixed benefit. So is it just a little bit of the booking shortfall and not having as much revenue to kind of cover the cost base, or are you doing a little bit of more incremental spending?

Richard S. Lindahl - Chief Financial Officer

It's puts and takes. I would say it certainly having a little bit less revenue than we planned at the beginning of the year. It puts a little bit of pressure on what the EBITDA would have been without the benefits of adding in Evanta.

David E. Ridley-Lane - Bank of America Merrill Lynch

Got it. And then, so just thinking about the CEB segment Wallet retention, this is kind of a fifth consecutive quarter of declines. As you are thinking that we kind of touch bottom in the back-half of 2016, or as long as those industries remain challenged, it's just tough because you have 15% of your book-of-business with just structurally lower renewals?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah. If history is a guide, when people are going through challenges, they tend to – if you think of the whole portfolio in kind of 2008, 2009 where people were saying, okay, this is what I need to live and I'm going to try to live without either things that I'm not doing anymore, or things that – and so we tend to find out it's a one-time step down and then people re-grow. So we'd expect to see this. Again, by the end of the quarter, we were hearing some of these sectors start to make encouraging noises. I'll believe it when I see checks coming in. I think we're unlikely to see them be a net contributor of growth in the near-term. We'll try to drive the other sectors to growth while we support these people through. But, again, it's a mix issue. So, if we can drive the other sectors a little faster, that can drive the Wallet retention rate back-up.

David E. Ridley-Lane - Bank of America Merrill Lynch

Got it.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

For us, it's a little bit of making sure we are both allocating resources to the highest growth opportunities, and at the same time not abandoning sectors that need help, and that's a day-in, day-out calculation to make sure we're doing the right stuff, because we've seen in the past when you stick with someone through a downturn they tend to come back pretty strong when they need your help.

David E. Ridley-Lane - Bank of America Merrill Lynch

Thank you, very much.

Operator

We'll take our next question from Tobey Sommer with SunTrust.

Kwan Hong Kim - SunTrust Robinson Humphrey, Inc.

Hi. This is Kwan Kim on for Tobey. Thanks for taking my question. Following up on the CEB segment's Wallet retention rate, could you give us more color on which sectors are weighing it down?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah, I mean, some stuff we've talked about has been out there. You think of the easiest lens is energy, commodities, and sectors deeply exposed to that, so industrial, it's got deep industrial product it's been a little bit of challenging area. I know there is some pockets of stuff like, you've seen, segments of, let's say, FS that are exposed specifically to that sector that have its knock-on effects. So, not a lot of news there, and not a lot of sectors you wouldn't guess, if you look through the – if you just looked in the newspaper, said whose unlikely to be growing their CEB relationship this year.

Kwan Hong Kim - SunTrust Robinson Humphrey, Inc.

Got it. Thank you.

Operator

And we'll take our next question from Shlomo Rosenbaum with Stifel.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

Hi. Good morning. Thank you for taking my questions. Hey, Tom, maybe if you could just talk a little bit more about the Talent Assessment? Is there an area particularly impacted by the internal changes you made in terms of reallocating sales areas and stuff like that, or just a decline in that business where you have actually the most opportunity? I'm just trying to dig into that a little bit more.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yes, there is probably a couple of things that have hit that business. One is there is that ongoing transition to subscription, which we like, smoothes out the revenue overtime. On the margin that does cost you a little bit of upside when there is – and someone would be buying spot market assessments from us, it's now baked into our broader subscription contracts. So that's going to have some noise in the revenue growth.

GTM in North America which is intended to accelerate that business, which has changed our go-to-market approach, ultimately probably did net-net dampened down growth in that business. And that's – it's job one to grow that businesses get in North America, getting that business growing in line with the potential in that market. In other markets we're seeing that we have a great position, and we're able to grow at healthy clip and we saw this transition benefit other markets globally, and we got to take advantage of that here. And again, we probably – we can – internally we do it all day long with, around with it, we should have pulled the trigger in our largest market first, I think conservatism led us to say, let's try it in some others, and then I use that blueprint to move forward. So I think it's those three...

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

So If I....

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Sorry.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

So if I understand you correctly, you're saying that the change in the go-to-market where you're focusing on selling it more had an increased impact on the – dampening the growth, because you're selling more of the business as a membership as opposed to one-off? Is that the answer to the question?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

No, I just think there was – the impacts were, first and foremost, the transition to subscription does hit the revenue growth rate some quarters. And this would be through that quarter. And then, secondly, every – in North America, which is the market we are most focused on growing, there was a lot of transition in the quarter. Yeah.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

Okay. And then, Rich, what was the change in organic growth last quarter to this quarter when you exclude Evanta? I understand it's 300 basis points is what Evanta is contributing. That sounds like there's no change, but when you do the kind of the math over there, I mean, it seems there is some change. So 100 basis points of growth lower when you kind of point to organic constant currency?

Richard S. Lindahl - Chief Financial Officer

It's certainly – the Evanta acquisition is – if you just look at the difference in the mid-point of our guidance versus that at least $40 million I gave you, certainly, it's implied that excluding Evanta, the guidance would have been a little bit lower. And so, I think that's a function of where we were in terms of bookings in the first quarter and the implications that has on the rest of the year.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

So there's probably two factors that play there. One is, just, if you look at first quarter bookings momentum, that probably create a little bit of a revenue headwind for the full year. The second is, there's some things that we would have done organically that we won't do in an Evanta world. We had a couple of new products lined up to go that just – we were putting our energy into making our acquisition of Evanta successful – so there's a little bit of a mix issue there is will drive through the year. Helps on the profit side, but net-net becomes a mix issue on the guidance as well.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

Okay. And then you bought a lot of stock in the quarter, but the share count increased 500,000. Is this due to timing or is there a particular stock grant that went out, and what share count are you assuming for the annual guidance now?

Richard S. Lindahl - Chief Financial Officer

Yeah, I saw that in your note this morning, Shlomo. I didn't see the share count going up. I saw it coming down, sequentially and year-over-year. But regardless, I think if you look at what's assumed for the rest of the year, obviously, there will be puts and takes on where we go from here. Some of the benefit from the first quarter will flow through gradually in the average share count through the rest of the year. I think, probably the most sensible thing to do is just use the share count that we had at the end of this quarter for guidance purposes.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

Okay. I'll go back and check my model on that. Thank you for that color.

Operator

And we'll take our next question from Joseph Foresi with Cantor Fitzgerald.

Joseph Foresi - Cantor Fitzgerald Securities

Hi. I wanted to go back to the comment that you made about maybe seeing a revival in the Contract Value. It sounds like the areas that are kind of coming back a little bit are the same ones that you were kind of concerned about before. First of all, am I right about that? And second of all, do you think you can trust the rebound in those segments if you saw a decline when maybe the end markets weren't doing as well?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Our view for this year is that growth is going to come from healthy sectors. That the sectors that are challenged, I mean a lot of those companies are just smaller. They've gotten a lot smaller in terms of head count, a lot smaller in terms of activity level. So, we're optimistic that we can re-grow them across time, but the rest of the year our focus is on the sectors that have been pretty healthy and haven't gone through that cycle. So, we're staying close to the others because we found in the past that when you actually stay close to them during tough times, they re-buy us, they emerge from this. But right now, I think they're kind of hunkered down, getting by with what they desperately need from us, but not looking to grow.

Joseph Foresi - Cantor Fitzgerald Securities

So the Contract Value growth uptick towards the end of the quarter, that was driven by the healthy accounts?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah. Yeah, it's...

Joseph Foresi - Cantor Fitzgerald Securities

Okay.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

...when we saw momentum at the end of the quarter, it was more – the verbiage from the more challenged sectors got healthier – but overall, it was just our team settling into their jobs and executing on the highest value opportunities in their territories.

Joseph Foresi - Cantor Fitzgerald Securities

Got it. And then help me understand SHL, or I guess the Talent Assessment segment. I think when you first took on the acquisition, the initiative was to add sales people in North America. How many were added? And what challenge did you run into with the people that were added, that were in the spot, a couple of, I guess, quarters later trying to figure out what's going on with the sales process in North America?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah, I think sales head count in North America, if you looked across the multi-year, probably grew roughly in line with the revenue in that business; probably a little bit ahead as we geared up for go-to-market this year. Our thesis was twofold. Grow the footprint in North America a little bit above revenue, and then really make that head count productive by opening doors for them with our large installed base. So, I think we did an okay job on the first. And the work ahead of us is to do a better job on the second, that using our great relationships to broaden the opportunity for that business in North America is now the work of 2016 and beyond.

Joseph Foresi - Cantor Fitzgerald Securities

Okay. And then, how should we think about the trajectory of that business kind of Q2 through the rest of the year as far as growth in seasonality and the efforts that you're putting into it?

Richard S. Lindahl - Chief Financial Officer

I mean, certainly, we would – there is a typical seasonality that you see where typically second and fourth quarters tend to be stronger revenue than first and third. Obviously, as we move forward and continue to drive the efforts from this new go-to-market structure, we hope to drive continued improvement in that business through the rest of the year.

Joseph Foresi - Cantor Fitzgerald Securities

Got it. And then the last one for me, it sounds like based on what you've got there in from Evanta, to maybe the business that we're looking at right now, the CEB aggregate will be flat or slightly down, just kind of backing into the math for the full year of 2016. I'm wondering, do you expect CEB core to be the growth driver, and that we should think about SHL being flat or down, and maybe that's how we net out on that number?

Richard S. Lindahl - Chief Financial Officer

No, I don't think – we're not expecting that absent Evanta that the business would be down year-over-year. We definitely would expect there still to be some growth. Obviously, the amount depends on how we execute as we go through the rest of the year, but that is not the case.

Joseph Foresi - Cantor Fitzgerald Securities

Okay.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Yeah. And we expect both segments to contribute to that growth.

Joseph Foresi - Cantor Fitzgerald Securities

Got it. Okay. Thank you.

Operator

And we'll take our next question from Gary Bisbee with RBC Capital Markets.

Gary Bisbee - RBC Capital Markets LLC

Yeah, just one follow-up. Will any of the Evanta revenue be in the CEB Contract Value, or since that's more episodic, is that not Contract Value? And outside of the answer to that one, how do we think about Contract Value? I mean it's stepped down hard from almost 5% to 0.5% constant currency. Does this go negative for a quarter or two before you get the bookings really coming in, or is this the low watermark? Any thought process on how we think about that in the near-term? Thank you.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

On CV, the Evanta view is right, and no, it's not Contract Value, it's not Contract Value in the traditional sense. So, we will work to give you visibility – create as we've done with Talent Assessment, find some ways to create visibility of the book of business in that business, but our Contract Value won't be the vehicle in the near-term for that. Again, we're looking to drive bookings growth from here through the rest of the year. That should flow-through to (sic) CV – starts with bookings growth flows-through to the CV growth – so I think that's how we'd expect to see it flow-through across time. That's the natural progression of things, and that's how we'd expect to see it show up.

Gary Bisbee - RBC Capital Markets LLC

Okay. I mean, why did the CVs slowed some much? I mean, was bookings sharply negative in Q1, or is that aggregate impact of a few quarters of weaker?

Richard S. Lindahl - Chief Financial Officer

Yeah, I mean, you're really seeing a cumulative impact, and with slower bookings beginning in the second quarter of last year, really it's kind of flow-through to slower overall Contract Value growth, relative to the first quarter of last year.

Gary Bisbee - RBC Capital Markets LLC

Okay. All right. Thank you.

Operator

And we'll take our next question from Shlomo Rosenbaum with Stifel.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

Hi. Thank you for squeezing me back in. And Tom, once you've kind of worked through the talent issues, and kind of the internal transition issues, given the economic environment that we're in and those kind of challenged sectors, if it kind of stays the same as 8% to 13% still a reasonable target, or should we be thinking about the low end of that, or below that? I am just trying to – when I think about it – the talent stuff should be done with by the end of the year. The transitional stuff should be done with by the end of the year. And the comments you made about some of the markets that were most challenged, it's kind of a step-down function, so we should have seen most of that. I'm trying to think about how you're viewing that long-term target in the context of what you see in front of you right now?

Thomas L. Monahan, III - Chairman & Chief Executive Officer

The way we've always thought about the 8% to 13% is I mean, first off, it's proven to be a pretty accurate long-term view of the business' growth opportunity given the scale of the market in front of us. The 13%, the upper end of that register, assumes a pretty consistently favorable operating environment across all of our markets. We're not seeing that right now. So in a market context like this, that's probably – that probably – that 13% end of the spectrum probably assumes consistent global growth in healthy markets everywhere we operate, and probably – and so, I think over the long-term, we'd stepped up sales force head count about double-digits this year, with some headwinds, that's probably a decent proxy of what we hope we can consistently deliver across time is adding sales force head count that drive us into that range. And if economic support it, getting to the upper registers.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

So, if we're in the same kind of environment that we're in today, next year, does that support 8%? I mean, when you think about it given what you have in front of you, what kind of growth does that support?

Richard S. Lindahl - Chief Financial Officer

We're obviously not going to have next year's guidance today but, yeah, I mean we'll take the – we've got work to do internally. That's job one. The one thing we don't lag for is market opportunity. So, when we do our market up view of the world, we see the opportunity to keep growing the business at a very healthy rate. Our job right now is getting – managing around some of the challenged pockets in the business first and foremost, and then stepping up our execution with the additions we made in the strong organizational platform we have.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

Okay. I mean, what I'm trying to do is just frame the long-term market. I mean, you've given us the 13% what you see is kind of what would drive you to that. I'm just trying to figure out what's going to drive us to the 8%, I mean, right now, we're at the lower end of single-digits?

Richard S. Lindahl - Chief Financial Officer

Yeah, I mean, it's first and foremost restoring momentum in our largest market, North America, which we've set up with the really good platform for long-term growth for both the CEB segment and the Talent Assessment segment. So that's job one, to push back up to the high-end of the single-digit range. And then beyond then it's finding great opportunities to continue to execute out in the market.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

Okay. And Rich, what's the $890,000 loss in other investments? What are those?

Richard S. Lindahl - Chief Financial Officer

There was a small investment that we had in an entity that we wrote down in the quarter.

Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.

All right. Thank you.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Thank you.

Operator

And we have no further questions. I would now like to turn the conference back over to Mr. Monahan for additional or closing remarks.

Thomas L. Monahan, III - Chairman & Chief Executive Officer

Thanks everyone for calling and/or logging in today. We appreciate the opportunity to highlight the continued impact, future growth, and profitability of the business. Rich and I'll be out on the road a lot. In the quarter ahead we'll be at the Bank of America Merrill Lynch event, the JPMorgan event, the Baird event and the Blair event. So, we look forward to seeing many of you on our travels and keeping you up to-date on the CEB story.

Operator

And this conclude today's conference. Thank you for your participation. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!