What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-01 compared with 2023-05-02 · 202 added, 103 removed, 566 unchanged (35% of the section changed)

4 unchanged sentences

in thousands, except share data)

March 31, December 31,

June 30, December 31,

Current assets:

40 unchanged sentences

in thousands, except per share data)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Research $ 1,207,885 $ 1,142,329 $ 2,425,076 $ 2,278,709

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Gain on event cancellation insurance claims — — 3,077 —

Other (expense) income, net ( 2,366 ) 29,206

Other income, net 5,575 8,548 3,209 37,754

Income before income taxes 264,124 275,951 645,401 491,010

12 unchanged sentences

in thousands)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Net income $ 198,043 $ 204,925 $ 493,826 $ 377,440

8 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

in thousands)

Three Months Ended March 31, 2023

Three and Six Months Ended June 30, 2023

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss, Net Accumulated Earnings Treasury Stock Total

1 unchanged sentence

Net income — — — 295,783 — 295,783

Other comprehensive income (loss), net — — 5,700 — — 5,700

Other comprehensive income — — 5,700 — — 5,700

Issuances under stock plans — ( 2,141 ) — — 9,520 7,379

2 unchanged sentences

Balance at March 31, 2023 $ 82 $ 2,222,511 $ ( 95,910 ) $ 4,152,609 $ ( 5,806,434 ) $ 472,858

Three Months Ended March 31, 2022

Net income — — — 198,043 — 198,043

Other comprehensive income — — 10,783 — — 10,783

Issuances under stock plans — 4,313 — — 1,586 5,899

Common share repurchases (including excise tax) — — — — ( 133,310 ) ( 133,310 )

Stock-based compensation expense — 32,233 — — — 32,233

Balance at June 30, 2023 $ 82 $ 2,259,057 $ ( 85,127 ) $ 4,350,652 $ ( 5,938,158 ) $ 586,506

Three and Six Months Ended June 30, 2022

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss, Net Accumulated Earnings Treasury Stock Total

1 unchanged sentence

Net income — — — 172,515 — 172,515

Other comprehensive income (loss), net — — ( 1,380 ) — — ( 1,380 )

Other comprehensive loss — — ( 1,380 ) — — ( 1,380 )

Issuances under stock plans — 579 — — 6,385 6,964

2 unchanged sentences

Balance at March 31, 2022 $ 82 $ 2,107,596 $ ( 82,811 ) $ 3,221,542 $ ( 5,128,256 ) $ 118,153

Net income — — — 204,925 — 204,925

Other comprehensive loss — — ( 21,705 ) — — ( 21,705 )

Issuances under stock plans — 4,634 — — 427 5,061

Common share repurchases — — — — ( 473,755 ) ( 473,755 )

Stock-based compensation expense — 24,454 — — — 24,454

Balance at June 30, 2022 $ 82 $ 2,136,684 $ ( 104,516 ) $ 3,426,467 $ ( 5,601,584 ) $ ( 142,867 )

See the accompanying notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

in thousands)

Three Months Ended

Six Months Ended

Operating activities:

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Amortization and write-off of deferred financing fees 2,330 2,273

Loss (gain) on de-designated swaps 1,393 ( 29,896 )

Gain on de-designated swaps ( 5,101 ) ( 40,547 )

Changes in assets and liabilities, net of acquisitions and divestitures:

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Gartner, Inc.

IT) delivers actionable, objective insight to executives and their teams.

Our expert guidance and tools enable faster, smarter decisions and stronger performance on an organization’s mission-critical priorities.

IT) delivers actionable, objective insight that drives smarter decisions and stronger performance on an organization’s mission-critical priorities.

Gartner delivers its products and services globally through three business segments:

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In the opinion of management, all normal recurring accruals and adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented herein have been included.

The results of operations for the three months ended March 31, 2023 may not be indicative of the results of operations for the remainder of 2023 or beyond.

The results of operations for the three and six months ended June 30, 2023 may not be indicative of the results of operations for the remainder of 2023 or beyond.

When used in these notes, the terms “Gartner,” the “Company,” “we,” “us,” or “our” refer to Gartner, Inc.

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Below is a table presenting the beginning-of-period and end-of-period cash amounts from the Company’s Condensed Consolidated Balance Sheets and the total cash amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands).

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 1,172,828 $ 697,999

Restricted cash classified in (1):

Prepaid expenses and other current assets 600 —

Other assets — 600

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Adoption of new accounting standard.

The Company adopted the accounting standard described below during the three months ended March 31, 2023.

The Company adopted the accounting standard described below during the six months ended June 30, 2023.

Reference Rate Reform — In March 2020, the FASB issued ASU No.

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In addition, the rule provides optional expedients and exceptions that enable entities to continue to apply hedge accounting for hedging relationships where one or more of the critical terms change due to reference rate reform.

The rule became effective for all entities as of March 12, 2020 and will generally no longer be available to apply after December 31, 2022.

2022-06, which was issued in December 2022, extended the deadline to December 31, 2024.

During 2023, the Company adopted the practical expedient provided under ASU 2020-04 related to its debt and interest rate swap arrangements and as such, any amendments are treated as a continuation of the existing agreements and no gain or loss on the modification is recorded.

The rule became effective for all entities as of March 12, 2020 and, after the issuance of ASU 2022-06, will generally no longer be available to apply after December 31, 2024.

During 2023, the Company adopted the practical expedient provided under ASU 2020-04 related to its debt and interest rate swap arrangements and as such, the amendments in the second quarter of 2023 are treated as a continuation of the existing agreements and no gain or loss on the modification was recorded.

Note 2 — Acquisition and Divestiture

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UpCity’s online marketplace helps small businesses by connecting them to ratings and reviews of more than 50,000 B2B service providers.

In February 2023, the Company completed the sale of a non-core business, TalentNeuron, for approximately $ 164.2 million and realized $ 158.7 million in cash from the sale, which was net of certain closing expenses.

The sale is subject to certain post-closing adjustments.

The Company recorded a pre-tax gain of $ 139.3 million on the sale of TalentNeuron, which is included in Gain from sale of divested operation in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2023.

In February 2023, the Company completed the sale of a non-core business, TalentNeuron, for approximately $ 161.1 million after consideration of post-close adjustments.

$ 156.1 million cash was received from the sale during the six months ended June 30, 2023.

The Company recorded a pre-tax gain of $ 135.4 million on the sale of TalentNeuron, which is included in Gain from sale of divested operation in the Condensed Consolidated Statement of Operations for the six months ended June 30, 2023.

For the three months ended June 30, 2023, post-close adjustments were settled and resulted in a $ 3.9 million reduction to the gain.

TalentNeuron was included in the Company’s Research segment.

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Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired.

Evaluations of the recoverability of goodwill are performed in accordance with FASB ASC Topic 350, which requires an annual assessment of potential goodwill impairment at the reporting unit level and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

Evaluations of the recoverability of goodwill are performed in accordance with

FASB ASC Topic 350, which requires an annual assessment of potential goodwill impairment at the reporting unit level and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

When performing the annual assessment of the recoverability of goodwill, the Company initially performs a qualitative analysis evaluating whether any events or circumstances occurred or exist that provide evidence that it is more likely than not that the fair value of any of the Company’s reporting units is less than the related carrying amount.

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Subsequent to completing the 2022 annual impairment test, there were no events or changes in circumstances noted that required an interim impairment test.

The table below presents changes to the carrying amount of goodwill by segment during the three months ended March 31, 2023 (in thousands).

The table below presents changes to the carrying amount of goodwill by segment during the six months ended June 30, 2023 (in thousands).

Research Conferences Consulting Total

1 unchanged sentence

Foreign currency translation impact 1,033 22 555 1,610

Balance at March 31, 2023 (1) $ 2,650,803 $ 183,952 $ 95,186 $ 2,929,941

Balance at June 30, 2023 (1) $ 2,652,226 $ 183,973 $ 95,622 $ 2,931,821

(1) The Company does no t have any accumulated goodwill impairment losses.

1 unchanged sentence

The tables below present reconciliations of the carrying amounts of the Company’s finite-lived intangible assets as of the dates indicated (in thousands).

March 31, 2023 Customer

June 30, 2023 Customer

Relationships Technology-related Other Total

Gross cost at December 31, 2022 $ 1,060,541 $ 11,200 $ 10,436 $ 1,082,177

Intangible assets fully amortized — ( 632 ) — ( 632 )

Foreign currency translation impact 16,292 38 — 16,330

1 unchanged sentence

Accumulated amortization (1) ( 537,103 ) ( 6,873 ) ( 6,105 ) ( 550,081 )

Balance at March 31, 2023 $ 554,889 $ 4,667 $ 4,582 $ 564,138

Balance at June 30, 2023 $ 539,730 $ 3,733 $ 4,331 $ 547,794

December 31, 2022 Customer

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and Other— 4 to 11 years.

Amortization expense related to finite-lived intangible assets was $ 22.7 million and $ 25.1 million during the three months ended March 31, 2023 and 2022, respectively.

Amortization expense related to finite-lived intangible assets was $ 22.9 million and $ 24.8 million during the three months ended June 30, 2023 and 2022, respectively, and $ 45.6 million and $ 49.9 million during the six months ended June 30, 2023 and 2022, respectively.

The estimated future amortization expense by year for finite-lived intangible assets is presented in the table below (in thousands).

2023 (remaining nine months) $ 68,301

2023 (remaining six months) $ 46,004

Thereafter 173,305

2 unchanged sentences

By Primary Geographic Market (1)

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Primary Geographic Market Research Conferences Consulting Total

3 unchanged sentences

Total revenues $ 1,207,885 $ 168,897 $ 126,403 $ 1,503,185

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Primary Geographic Market Research Conferences Consulting Total

3 unchanged sentences

Total revenues $ 1,142,329 $ 113,525 $ 120,667 $ 1,376,521

Six Months Ended June 30, 2023

Primary Geographic Market Research Conferences Consulting Total

United States and Canada $ 1,622,123 $ 172,018 $ 153,388 $ 1,947,529

Europe, Middle East and Africa 526,912 48,010 66,803 641,725

Other International 276,041 13,511 33,248 322,800

Total revenues $ 2,425,076 $ 233,539 $ 253,439 $ 2,912,054

Six Months Ended June 30, 2022

Primary Geographic Market Research Conferences Consulting Total

United States and Canada $ 1,493,199 $ 94,919 $ 141,605 $ 1,729,723

Europe, Middle East and Africa 518,546 22,274 66,491 607,311

Other International 266,964 6,686 28,577 302,227

Total revenues $ 2,278,709 $ 123,879 $ 236,673 $ 2,639,261

(1) Revenue is reported based on where the sale is fulfilled.

The Company’s revenue is generated primarily through direct sales to clients by domestic and international sales forces and a network of independent international sales agents.

Most of the Company’s products and services are provided on an integrated worldwide basis and, because of this integrated delivery approach, it is not practical to precisely separate the Company’s revenue by geographic location.

revenue by geographic location.

Accordingly, revenue information presented in the above tables is based on internal allocations, which involve certain management estimates and judgments.

By Timing of Revenue Recognition

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Timing of Revenue Recognition Research Conferences Consulting Total

2 unchanged sentences

Total revenues $ 1,207,885 $ 168,897 $ 126,403 $ 1,503,185

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Timing of Revenue Recognition Research Conferences Consulting Total

2 unchanged sentences

Total revenues $ 1,142,329 $ 113,525 $ 120,667 $ 1,376,521

(1) Research revenues are recognized in connection with performance obligations that are satisfied over time using a time-elapsed output method to measure progress.

Consulting revenues are recognized over time using labor hours as an input measurement basis.

Six Months Ended June 30, 2023

Timing of Revenue Recognition Research Conferences Consulting Total

Transferred over time (1) $ 2,223,124 $ — $ 200,928 $ 2,424,052

Transferred at a point in time (2) 201,952 233,539 52,511 488,002

Total revenues $ 2,425,076 $ 233,539 $ 253,439 $ 2,912,054

Six Months Ended June 30, 2022

Timing of Revenue Recognition Research Conferences Consulting Total

Transferred over time (1) $ 2,063,674 $ — $ 191,637 $ 2,255,311

Transferred at a point in time (2) 215,035 123,879 45,036 383,950

Total revenues $ 2,278,709 $ 123,879 $ 236,673 $ 2,639,261

(1) Research revenues in this category are recognized in connection with performance obligations that are satisfied over time using a time-elapsed output method to measure progress.

Consulting revenues in this category are recognized over time using labor hours as an input measurement basis.

(2) The revenues in this category are recognized in connection with performance obligations that are satisfied at the point in time that the contractual deliverables are provided to the customer.

Performance Obligations — For customer contracts that are greater than one year in duration, the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied) as of March 31, 2023 was approximately $ 5.3 billion.

The Company expects to recognize $ 1.7 billion, $ 2.5 billion and $ 1.0 billion of this revenue (most of which pertains to Research) during the remainder of 2023, the year ending December 31, 2024 and thereafter, respectively.

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The remaining duration of these performance obligations is generally less than one year, which aligns with the period that the parties have enforceable rights and obligations under the affected contracts.

Customer Contract Assets and Liabilities — The timing of the recognition of revenue and the amount and timing of the Company’s billings and cash collections, including upfront customer payments, result in the recognition of both assets and liabilities on the Company’s Condensed Consolidated Balance Sheets.

liabilities on the Company’s Condensed Consolidated Balance Sheets.

The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers (in thousands).

March 31, December 31,

June 30, December 31,

Fees receivable, gross (1) $ 1,279,792 $ 1,565,786

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Both situations occur before the completion of the Company’s performance obligation(s).

The Company recognized revenue of $ 924.9 million and $ 833.9 million during the three months ended March 31, 2023 and 2022, respectively, that was attributable to deferred revenues that were recorded at the beginning of each such period.

The Company recognized revenue of $ 1.2 billion and $ 1.0 billion during the three months ended June 30, 2023 and 2022, respectively, and $ 1.6 billion and $ 1.4 billion during the six months ended June 30, 2023 and 2022, respectively, that was attributable to deferred revenues that were recorded at the beginning of each such period.

Those amounts primarily consisted of Research revenues that were recognized ratably as control of the goods or services passed to the customer during the reporting periods.

During each of the three months ended March 31, 2023 and 2022, the Company did not record any material impairments related to its contract assets.

During each of the three and six months ended June 30, 2023 and 2022, the Company did not record any material impairments related to its contract assets.

Note 5 — Computation of Earnings Per Share

3 unchanged sentences

The table below sets forth the calculation of basic and diluted income per share for the periods indicated (in thousands, except per share data).

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Net income used for calculating basic and diluted income per share $ 198,043 $ 204,925 $ 493,826 $ 377,440

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(1) Certain outstanding awards associated with stock-based compensation plans were not included in the computation of diluted income per share because the effect would have been anti-dilutive.

These anti-dilutive outstanding awards associated with stock-based compensation plans totaled approximately 0.3 million and 0.2 million for the three months ended March 31, 2023 and 2022, respectively.

These anti-dilutive outstanding awards associated with stock-based compensation plans totaled approximately $ 0.2 million and $ 0.4 million for the three months

ended June 30, 2023 and 2022, respectively, and $ 0.2 million and $ 0.3 million for the six months ended June 30, 2023 and 2022, respectively.

Note 6 — Stock-Based Compensation

1 unchanged sentence

The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents.

As of March 31, 2023, the Company had 1.9 million shares of its common stock, par value $ 0.0005 per share, (the “Common Stock”) available for stock-based compensation awards under its current Long-Term Incentive Plan as amended and restated in January 2019 (the “Plan”).

As of June 30, 2023, the Company had 5.9 million shares of its common stock, par value $ 0.0005 per share, (the “Common Stock”) available for stock-based compensation awards under the Gartner, Inc.

Long-Term Incentive Plan as amended and restated in June 2023 (the “Plan”).

The tables below summarize the Company’s stock-based compensation expense by award type and expense category line item during the periods indicated (in millions).

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

Award type 2023 2022 2023 2022

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Total (1) $ 32.3 $ 24.5 $ 77.3 $ 56.6

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

Expense category line item 2023 2022 2023 2022

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Total (1) $ 32.3 $ 24.5 $ 77.3 $ 56.6

(1) Includes costs of $ 26.8 million and $ 19.2 million during the three months ended March 31, 2023 and 2022, respectively, for awards to retirement-eligible employees.

(1) Includes costs of $ 13.1 million and $ 8.1 million during the three months ended June 30, 2023 and 2022, respectively, and $ 39.9 million and $ 27.3 million during the six months ended June 30, 2023 and 2022, respectively, for awards to retirement-eligible employees.

Those awards vest on an accelerated basis.

1 unchanged sentence

The Company’s products and services are delivered through three segments – Research, Conferences and Consulting, as described below.

• Research equips executives and their teams from every function and across all industries with actionable, objective insight,

guidance and tools.

• Research equips executives and their teams from every function and across all industries with actionable, objective insight, guidance and tools.

Our experienced experts deliver all this value informed by an unmatched combination of practitioner-sourced and data-driven research to help our clients address their mission critical priorities.

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Certain bonus and fringe benefit costs included in consolidated Cost of services and product development are not allocated to segment expense.

The accounting policies used by the reportable segments are the same as those used by the Company.

The accounting policies used by

the reportable segments are the same as those used by the Company.

There are no intersegment revenues.

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The tables below present information about the Company’s reportable segments for the periods indicated (in thousands).

Three Months Ended March 31, 2023 Research Conferences Consulting Consolidated

Three Months Ended June 30, 2023 Research Conferences Consulting Consolidated

Revenues $ 1,207,885 $ 168,897 $ 126,403 $ 1,503,185

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Operating income $ 283,107

Three Months Ended March 31, 2022 Research Conferences Consulting Consolidated

Three Months Ended June 30, 2022 Research Conferences Consulting Consolidated

Revenues $ 1,142,329 $ 113,525 $ 120,667 $ 1,376,521

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Operating income $ 297,122

Six Months Ended June 30, 2023 Research Conferences Consulting Consolidated

Revenues $ 2,425,076 $ 233,539 $ 253,439 $ 2,912,054

Gross contribution 1,784,796 125,238 98,129 2,008,163

Corporate and other expenses ( 1,317,099 )

Operating income $ 691,064

Six Months Ended June 30, 2022 Research Conferences Consulting Consolidated

Revenues $ 2,278,709 $ 123,879 $ 236,673 $ 2,639,261

Gross contribution 1,693,344 70,650 101,235 1,865,229

Corporate and other expenses ( 1,350,860 )

Operating income $ 514,369

The table below provides a reconciliation of total segment gross contribution to net income for the periods indicated (in thousands).

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Total segment gross contribution $ 1,031,053 $ 967,714 $ 2,008,163 $ 1,865,229

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The Company’s total outstanding borrowings are summarized in the table below (in thousands).

March 31, December 31,

June 30, December 31,

Description 2023 2022

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Net balance sheet carrying amount $ 2,460,137 $ 2,461,407

(1) The contractual annualized interest rate as of March 31, 2023 on the 2020 Credit Agreement Term loan facility and the Revolving credit facility was 6.13 %, which consisted of a floating Eurodollar base rate of 4.875 % plus a margin of 1.250 %.

However, the Company has an interest rate swap contract that effectively convert the floating Eurodollar base rates on outstanding amounts to a fixed base rate.

(2) The Company had approximately $ 1.0 billion of available borrowing capacity on the 2020 Credit Agreement revolver (not including the expansion feature) as of March 31, 2023.

(1) The contractual annualized interest rate as of June 30, 2023 on the amended 2020 Credit Agreement Term loan facility and the Revolving credit facility was 6.475 %, which consisted of Term Secured Overnight Financing Rate ("SOFR") of 5.125 % plus a margin of 1.350 %.

However, the Company has an interest rate swap contract that effectively convert the floating SOFR on outstanding amounts to a fixed base rate.

(2) The Company had approximately $ 1.0 billion of available borrowing capacity on the 2020 Credit Agreement revolver (not including the expansion feature) as of June 30, 2023.

(3) Consists of $ 800.0 million principal amount of 2028 Notes outstanding.

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This loan may be repaid at any time by the Company without penalty.

(7) The weighted average annual effective rate on the Company’s outstanding debt for the three months ended March 31, 2023, including the effects of its interest rate swaps discussed below, was 5.03 %.

(7) The weighted average annual effective rate on the Company’s outstanding debt for the three and six months ended June 30, 2023, including the effects of its interest rate swaps discussed below, was 5.02 %.

(8) Deferred financing fees are being amortized to Interest expense, net over the term of the related debt obligation.

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The 2020 Credit Agreement contains certain customary restrictive loan covenants, including, among others, financial covenants that apply a maximum consolidated leverage ratio and a minimum consolidated interest expense coverage ratio.

The Company was in compliance with all financial covenants as of March 31, 2023.

The Company was in compliance with all financial covenants as of June 30, 2023.

The Term loan is being repaid in consecutive quarterly installments that commenced on December 31, 2020, plus a final payment to be made on September 28, 2025.

The Revolving credit facility may be borrowed, repaid and re-borrowed through September 28, 2025, at which all then-outstanding amounts must be repaid.

In May 2023, the Company entered into an amendment of the 2020 Credit Agreement that replaced the interest rate benchmark from LIBOR to Secured Overnight Financing Rate (“SOFR”).

After the amendment, interest is accrued on outstanding balances under the credit facility and payable monthly at a rate of the one month Term SOFR plus 10 basis points and the applicable margin.

Prior to the amendment, interest was accrued at a rate of the one month LIBOR plus the applicable margin.

Interest Rate Swaps

As of March 31, 2023, the Company had one fixed-for-floating interest rate swap contract with a notional value of $ 350.0 million that matures in 2025.

The Company pays a base fixed rate of 3.04 % and in return receives a floating Eurodollar base rate on 30 -day notional borrowings.

As of June 30, 2023, the Company had one fixed-for-floating interest rate swap contract with a notional value of $ 350.0 million that matures in 2025.

In May 2023, in conjunction with the amendment of the 2020 credit agreement, the Company entered into an amendment of its interest rate swap contract.

Under the amended agreement, the Company pays a base fixed rate of 2.98 % and in return receives a floating Term SOFR base rate on 30-day notional borrowings.

Prior to the amendment, the Company paid a base fixed rate of 3.04 % and in return received a floating Eurodollar base rate on 30 -day notional borrowings.

Effective June 30, 2020, the Company de-designated all of its interest rate swaps and discontinued hedge accounting.

Accordingly, subsequent changes to the fair value of the interest rate swaps are recorded in Other (expense) income, net.

Accordingly, subsequent changes to the fair value of the interest rate swaps are recorded in Other income, net.

The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments.

As of March 31, 2023, $ 47.2 million is remaining in Accumulated other comprehensive loss, net.

See Note 11 — Derivatives and Hedging for the amounts remaining in Accumulated other comprehensive loss, net of tax effect, at March 31, 2023 and December 31, 2022.

As of June 30, 2023, $ 42.1 million is remaining in Accumulated other comprehensive loss, net.

See Note 11 — Derivatives and Hedging for the amounts remaining in Accumulated other comprehensive loss, net of

tax effect, at June 30, 2023 and December 31, 2022.

See Note 12 — Fair Value Disclosures for a discussion of the fair values of Company’s interest rate swaps.

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The Board authorized incremental share repurchases of up to an additional $ 1.6 billion, $ 1.0 billion and $ 0.4 billion of the Company’s common stock during 2021, 2022, and February 2023, respectively.

As of March 31, 2023, $ 954.5 million remained available under the share repurchase program.

As of June 30, 2023, $ 827.9 million remained available under the share repurchase program.

The Company may repurchase its common stock from time-to-time in amounts, at prices and in the manner that the Company deems appropriate, subject to the availability of stock, prevailing market conditions, the trading price of the stock, the Company’s financial performance and other conditions.

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The Company’s share repurchase activity is presented in the table below for the periods indicated.

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Number of shares repurchased (1) 423,833 1,781,137 751,513 3,408,846

Cash paid for repurchased shares (in thousands) (2) $ 131,522 $ 478,810 $ 238,372 $ 929,880

(1) The average purchase price for repurchased shares was $ 332.18 and $ 284.53 for the three months ended March 31, 2023 and 2022, respectively.

The repurchased shares during the three months ended March 31, 2023 and 2022 included purchases for both open market purchases and stock-based compensation award settlements.

(2) The cash paid for repurchased shares during the three months ended March 31, 2023 excluded $ 2.0 million of open market purchases with trade dates in March 2023 that settled in April 2023.

The cash paid for repurchased shares during the three months ended March 31, 2022 excluded $ 12.1 million of open market purchases with trade dates in March 2022 that settled in April 2022.

(1) The average purchase price for repurchased shares was $ 312.95 and $ 265.98 for the three months ended June 30, 2023 and 2022, respectively, and $ 321.34 and $ 274.84 for the six months ended June 30, 2023 and 2022, respectively.

The repurchased shares during the three and six months ended June 30, 2023 and 2022 included purchases for both open market purchases and stock-based compensation award settlements.

(2) The cash paid for repurchased shares during the six months ended June 30, 2023 excluded $ 3.1 million of open market purchases with trade dates in June 2023 that settled in July 2023 and $ 0.7 million of excise tax accrued.

The cash paid for repurchased shares during the six months ended June 30, 2022 excluded $ 7.0 million of open market purchases with trade dates in June 2022 that settled in July 2022.

The cash paid for repurchased shares during the three months ended June 30, 2023 included $ 2.0 million of open market purchases with trade dates in March 2023 that settled in April 2023, and excluded $ 3.1 million of open market purchases with trade dates in June 2023 that settled in July 2023.

The cash paid for repurchased shares during the three months ended June 30, 2022 included $ 12.1 million of open market purchases with trade dates in March 2022 that settled in April 2022, and excluded $ 7.0 million of open market purchases with trade dates in June 2022 that settled in July 2022.

Accumulated Other Comprehensive Loss, net (“AOCL”)

The tables below provide information about the changes in AOCL by component and the related amounts reclassified out of AOCL to income during the periods indicated (net of tax, in thousands) (1).

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Interest Rate

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Adjustments Total

Balance - Balance at December 31, 2022 $ ( 39,248 ) $ ( 4,247 ) $ ( 58,115 ) $ ( 101,610 )

Balance – March 31, 2023 $ ( 35,414 ) $ ( 4,213 ) $ ( 56,283 ) $ ( 95,910 )

Other comprehensive income (loss) activity during the period:

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Other comprehensive income (loss), net 3,818 33 6,932 10,783

Balance – June 30, 2023 $ ( 31,596 ) $ ( 4,180 ) $ ( 49,351 ) $ ( 85,127 )

Three Months Ended June 30, 2022

Interest Rate

Swaps Defined

Pension Plans Foreign

Adjustments Total

Balance – March 31, 2022 $ ( 50,953 ) $ ( 6,624 ) $ ( 25,234 ) $ ( 82,811 )

Three Months Ended March 31, 2022

Other comprehensive income (loss) activity during the period:

Change in AOCL before reclassifications to income — ( 189 ) ( 25,431 ) ( 25,620 )

Reclassifications from AOCL to income (2), (3) 3,869 46 — 3,915

Other comprehensive income (loss), net 3,869 ( 143 ) ( 25,431 ) ( 21,705 )

Balance – June 30, 2022 $ ( 47,084 ) $ ( 6,767 ) $ ( 50,665 ) $ ( 104,516 )

Six Months Ended June 30, 2023

Interest Rate

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Other comprehensive income (loss), net 7,652 67 8,764 16,483

Balance – March 31, 2022 $ ( 50,953 ) $ ( 6,624 ) $ ( 25,234 ) $ ( 82,811 )

Balance – June 30, 2023 $ ( 31,596 ) $ ( 4,180 ) $ ( 49,351 ) $ ( 85,127 )

Six Months Ended June 30, 2022

Interest Rate

Swaps Defined

Pension Plans Foreign

Adjustments Total

Balance – December 31, 2021 $ ( 56,323 ) $ ( 6,672 ) $ ( 18,436 ) $ ( 81,431 )

Other comprehensive income (loss) activity during the period:

Change in AOCL before reclassifications to income — ( 189 ) ( 32,229 ) ( 32,418 )

Reclassifications from AOCL to income (2), (3) 9,239 94 — 9,333

Other comprehensive income (loss), net 9,239 ( 95 ) ( 32,229 ) ( 23,085 )

Balance – June 30, 2022 $ ( 47,084 ) $ ( 6,767 ) $ ( 50,665 ) $ ( 104,516 )

(1) Amounts in parentheses represent debits (deferred losses).

(2) $ 5.1 million and $ 7.2 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the three months ended March 31, 2023 and 2022, respectively.

See Note 8 — Debt and Note 11 — Derivatives and Hedging for information regarding the cash flow hedges.

(3) The reclassifications related to defined benefit pension plans were recorded in Other (expense) income, net.

The estimated net amount of the existing losses on the Company’s interest rate swaps that are reported in Accumulated other comprehensive loss, net at March 31, 2023 that is expected to be reclassified into earnings within the next 12 months is $ 19.8 million.

(2) $ 5.1 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for both the three months ended June 30, 2023 and 2022, respectively.

$ 10.2 million and $ 12.3 million of the reclassifications related to interest rate swaps (cash flow hedges) were recorded in Interest expense, net, for the six months ended June 30, 2023 and 2022, respectively See Note 8 — Debt and Note 11 — Derivatives and Hedging for information regarding the cash flow hedges.

(3) The reclassifications related to defined benefit pension plans were recorded in Other income, net.

The estimated net amount of the existing losses on the Company’s interest rate swaps that are reported in Accumulated other comprehensive loss, net at June 30, 2023 that is expected to be reclassified into earnings within the next 12 months is $ 19.5 million.

Note 10 — Income Taxes

The provision for income taxes was $ 85.5 million and $ 42.5 million for the three months ended March 31, 2023 and 2022, respectively.

The effective income tax rate was 22.4 % and 19.8 % for the three months ended March 31, 2023 and 2022, respectively.

The year-over-year increase in the effective income tax rate was primarily due to the sale of the TalentNeuron business.

The Company had gross unrecognized tax benefits of $ 141.0 million on March 31, 2023 and $ 137.2 million on December 31, 2022.

The provision for income taxes was $ 66.1 million and $ 71.0 million for the three months ended June 30, 2023 and 2022, respectively.

The effective income tax rate was 25.0 % and 25.7 % for the three months ended June 30, 2023 and 2022, respectively.

The decrease in the effective income tax rate was primarily due to higher tax benefits from stock-based compensation in the three months ended June 30, 2023 as compared to the same period in 2022.

The provision for income taxes was $ 151.6 million and $ 113.6 million for the six months ended June 30, 2023 and 2022, respectively.

The effective income tax rate was 23.5 % and 23.1 % for the six months ended June 30, 2023 and 2022, respectively.

The increase in the year to date effective income tax rate in 2023 was primarily due to the sale of the TalentNeuron business.

The Company had gross unrecognized tax benefits of $ 145.2 million on June 30, 2023 and $ 137.2 million on December 31, 2022.

It is reasonably possible that gross unrecognized tax benefits will decrease by approximately $ 12.4 million within the next twelve months due to the anticipated closure of audits and the expiration of certain statutes of limitation.

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The tables below provide information regarding the Company’s outstanding derivative contracts as of the dates indicated (in thousands, except for number of contracts).

March 31, 2023

June 30, 2023

Derivative Contract Type Number of

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(1) Effective June 30, 2020, the Company de-designated all of its interest rate swaps and discontinued hedge accounting.

Accordingly, subsequent changes to fair value of the interest rate swaps are recorded in Other (expense) income, net.

Accordingly, subsequent changes to fair value of the interest rate swaps are recorded in Other income, net.

The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments.

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The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions.

These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other (expense) income, net because the Company does not designate these contracts as hedges for accounting purposes.

All of the outstanding foreign currency forward exchange contracts at March 31, 2023 matured before April 30, 2023.

These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income, net because the Company does not designate these contracts as hedges for accounting purposes.

All of the outstanding foreign currency forward exchange contracts at June 30, 2023 matured before July 31, 2023.

(3) See Note 12 — Fair Value Disclosures for the determination of the fair values of these instruments.

At March 31, 2023, all of the Company’s derivative counterparties were investment grade financial institutions.

At June 30, 2023, all of the Company’s derivative counterparties were investment grade financial institutions.

The Company did not have any collateral arrangements with its derivative counterparties and none of the derivative contracts contained credit-risk related contingent features.

The table below provides information regarding amounts recognized in the accompanying Condensed Consolidated Statements of Operations for derivative contracts for the periods indicated (in thousands).

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

Amount recorded in:

2023 2022 2023 2022

Interest expense, net (1) $ 5,094 $ 5,164 $ 10,211 $ 12,330

Other expense (income), net (2) 1,904 ( 26,900 )

Total expense (income), net $ 7,021 $ ( 19,734 )

Other (income) expense, net (2) ( 7,704 ) 8,149 ( 5,800 ) ( 18,751 )

Total (income) expense, net $ ( 2,610 ) $ 13,313 $ 4,411 $ ( 6,421 )

(1) Consists of interest expense from interest rate swap contracts.

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The Company’s financial instruments include cash equivalents, fees receivable from customers, accounts payable and accrued liabilities, all of which are normally short-term in nature.

The Company believes that the carrying amounts of these financial

instruments reasonably approximate their fair values due to their short-term nature.

The Company believes that the carrying amounts of these financial instruments reasonably approximate their fair values due to their short-term nature.

The Company’s financial instruments also include its outstanding variable-rate borrowings under the 2020 Credit Agreement.

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The table below presents the fair values of certain financial assets and liabilities that are measured at fair value on a recurring basis in the Company's financial statements (in thousands).

Description March 31,

Description June 30,

2023 December 31,

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Carrying Amount Fair Value

March 31, December 31, March 31, December 31,

June 30, December 31, June 30, December 31,

Description 2023 2022 2023 2022

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The Company’s certain long-lived assets, including identifiable intangible assets, goodwill, right-of-use assets and other long-lived assets, are measured at fair value on a nonrecurring basis when there are indicators of impairment.

During the three months ended March 31, 2023 and 2022, the Company recorded impairment charges of $ 8.7 million and $ 23.9 million, respectively, on right-of-use assets and other long-lived assets primarily related to certain office leases that the Company determined will no longer be used.

During the three and six months ended June 30, 2023, the Company recorded impairment charges of $ 10.0 million and $ 18.7 million, respectively,

on right-of-use assets and other long-lived assets primarily related to certain office leases that the Company determined will no longer be used.

The impairments were derived by comparing the fair value of the impacted assets to the carrying value of those assets as of the impairment measurement date, as required under ASC Topic 360 using Level 3 inputs.

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Historically, payments made by the Company under these agreements have not been material.

As of March 31, 2023, the Company did not have any material payment obligations under any such indemnification agreements.

As of June 30, 2023, the Company did not have any material payment obligations under any such indemnification agreements.

Note 14 — Leases

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The table below presents the Company’s net lease cost and certain other information related to the Company’s leasing activities as of and for the periods indicated (dollars in thousands).

Three Months Ended

Three Months Ended Six Months Ended

2023 2022 2023 2022

Operating lease cost (1) $ 28,567 $ 29,532 $ 57,366 $ 59,896

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Right-of-use assets obtained in exchange for new operating lease liabilities $ 6,344 $ 4,752 $ 7,991 $ 11,682

(1) Included in operating lease cost was $ 10.6 million and $ 10.5 million for the three months ended March 31, 2023 and 2022, respectively, for costs related to subleasing activities.

(1) Included in operating lease cost was $ 10.8 million and $ 10.4 million for the three months ended June 30, 2023 and 2022, respectively, and $ 21.4 million and $ 20.9 million for the six months ended June 30, 2023 and 2022, respectively for costs related to subleasing activities.

(2) These amounts are primarily variable lease and nonlease costs that are not fixed at the lease commencement date or are dependent on something other than an index or a rate.

(3) The Company did not capitalize any operating lease costs during any of the periods presented.

(4) Amount excludes impairment charges on lease related assets totaling $ 8.7 million and $ 23.9 million, for the three months ended March 31, 2023 and 2022, respectively, as discussed below.

(4) Amount excludes impairment charges on lease related assets, as discussed below.

The table below indicates where the discounted operating lease payments from the above table are classified in the accompanying Condensed Consolidated Balance Sheets (in thousands).

March 31, December 31,

June 30, December 31,

Accounts payable and accrued liabilities $ 105,026 $ 99,717

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Total operating lease liabilities included in the Condensed Consolidated Balance Sheets $ 660,111 $ 696,984

As a result and in consideration of the changing nature of the Company’s use of office space for its workforce and the transitioning to a virtual-first hybrid work environment, the Company has been evaluating its existing real estate lease portfolio.

As a result and in consideration of the changing nature of the Company’s use of office space, the Company continues to evaluate its existing real estate lease portfolio.

In connection with this evaluation, the Company reviewed certain of its right-of-use assets and related other long-lived assets for impairment under ASC 360.

As a result of the evaluation, the Company recognized impairment losses during the three months ended March 31, 2023 and 2022 of $ 8.7 million and $ 23.9 million, respectively, which are included as a component of Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

The impairment losses recorded include $ 6.3 million and $ 17.7 million related to right-of-use assets and $ 2.4 million and $ 6.2 million related to other long-lived assets, primarily leasehold improvements, for the three months ended March 31, 2023 and 2022, respectively.

As a result of the evaluation, the Company recognized impairment losses during the three months ended June 30, 2023 and 2022 of $ 10.0 million and $ 11.6 million, respectively, and $ 18.7 million and $ 35.5 million for the six months ended June 30, 2023 and 2022, respectively, which are included as a component of Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

The impairment losses recorded include $ 7.1 million and $ 7.6 million related to right-of-use assets and $ 2.9 million and $ 4.0 million related to other long-lived assets, primarily leasehold improvements, for the three months ended June 30, 2023 and 2022, respectively.

The impairment losses recorded include $ 13.4 million and $ 25.3 million related to right-of-use assets and $ 5.3 million and $ 10.2 million related to other long-lived assets, primarily leasehold improvements, for the six months ended June 30, 2023 and 2022, respectively.

The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements