What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-05 compared with 2024-07-30 · 101 added, 99 removed, 213 unchanged (48% of the section changed)

17 unchanged sentences

our ability to carry out our strategic initiatives and manage associated costs;

our ability to recover potential claims under our event cancellation insurance;

the timing of conferences and meetings, in particular our Gartner Symposium/Xpo series that normally occurs during the fourth quarter;

36 unchanged sentences

Through custom analysis and on-the-ground support we enable optimized technology investments and stronger performance on our clients’ mission critical priorities.

As of June 30, 2024 we had 20,495 employees globally, an increase of 1.9% from June 30, 2023.

As of September 30, 2024 we had 20,990 employees globally, an increase of 3.6% from September 30, 2023.

On July 25, 2024 the Company entered into a settlement agreement to resolve litigation concerning the Company's event cancellation insurance for 2020 and 2021.

The settlement resolves all remaining 2020 and 2021 event cancellation insurance claims for $300.0 million.

BUSINESS MEASUREMENTS

22 unchanged sentences

The fundamentals of our strategy include a focus on creating actionable insight for executives and their teams, delivering innovative and highly differentiated product offerings, building a strong sales capability, providing world class client service with a focus on client engagement and retention, and continuously improving our operational effectiveness.

We had total revenues of $1.6 billion during the second quarter of 2024, an increase of 6% compared to the second quarter of 2023.

During the second quarter of 2024, revenues for Research increased by 5%, Conferences revenue increased by 10% and Consulting revenues increased by 13%, compared to the second quarter of 2023.

We had total revenues of $1.5 billion during the third quarter of 2024, an increase of 5% compared to the third quarter of 2023.

During the third quarter of 2024, revenues for Research increased by 5%, Conferences revenue increased by 32% and Consulting revenues decreased by 4%, compared to the third quarter of 2023.

For a more complete discussion of our results by segment, see Segment Results below.

For the second quarter of 2024 and 2023, we had net income of $229.5 million and $198.0 million, respectively, and diluted income per share of $2.93 and $2.48, respectively.

Cash provided by operating activities was $558.8 million and $600.5 million during the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, we had $1.2 billion of cash and cash equivalents and approximately $0.7 billion of available borrowing capacity on our revolving credit facility.

For the third quarter of 2024 and 2023, we had net income of $415.0 million and $180.0 million, respectively, and diluted income per share of $5.32 and $2.26, respectively.

Cash provided by operating activities was $1.1 billion and $0.9 billion during the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had $1.8 billion of cash and cash equivalents and approximately $0.7 billion of available borrowing capacity on our revolving credit facility.

For a more complete discussion of our cash flows and financial position, see the Liquidity and Capital Resources section below.

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The table below presents an analysis of selected line items and period-over-period changes in our interim Condensed Consolidated Statements of Operations for the periods indicated (in thousands).

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Increase (Decrease) Increase

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Increase (Decrease) Increase

Total revenues $ 1,484,306 $ 1,408,784 $ 75,522 5 %

5 unchanged sentences

Acquisition and integration charges 159 4,463 (4,304) (96)

Gain from sale of divested operation

— 3,906 (3,906) nm

Operating income 245,824 244,417 1,407 1

Interest expense, net (17,961) (21,820) (3,859) (18)

Other income, net 504 5,575 (5,071) (91)

Gain on event cancellation insurance claims 300,000 — 300,000 nm

Other (expense) income, net (991) 1,877 (2,868) (153)

Provision for income taxes 111,823 44,465 67,358 151

1 unchanged sentence

nm = not meaningful.

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Increase (Decrease) Increase

Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Increase (Decrease) Increase

Total revenues $ 4,552,292 $ 4,320,838 $ 231,454 5 %

17 unchanged sentences

dollars by applying the same foreign exchange rates to all periods presented.

Total revenues for the three months ended June 30, 2024 were $1.6 billion, an increase of $91.9 million, or 6% compared to the same period in 2023 on a reported basis and 7% excluding the foreign currency impact.

Total revenues for the six months ended June 30, 2024 were $3.1 billion, an increase of $0.2 billion, or 5% compared to the same period in 2023 on a reported basis and 6% excluding the foreign currency impact.

Total revenues for the three months ended September 30, 2024 were $1.5 billion, an increase of $75.5 million, or 5% compared to the same period in 2023 on a reported basis and 6% excluding the foreign currency impact.

Total revenues for the nine months ended September 30, 2024 were $4.6 billion, an increase of $0.2 billion, or 5% compared to the same period in 2023 on a reported basis and 6% excluding the foreign currency impact.

Refer to the section of this MD&A below entitled “Segment Results” for a discussion of revenues and results by segment.

Cost of services and product development was $513.3 million during the three months ended June 30, 2024, an increase of $25.9 million compared to the same period in 2023, or 5% on a reported basis and 6% excluding the foreign currency impact.

Cost of services and product development was $475.3 million during the three months ended September 30, 2024, an increase of $24.5 million compared to the same period in 2023, or 5% on both a reported basis and excluding the foreign currency impact.

The increase in Cost of services and product development was primarily due to increased compensation costs associated with merit increases.

Cost of services and product development as a percent of revenues was 32% for both the three months ended June 30, 2024 and 2023.

Cost of services and product development was $972.8 million during the six months ended June 30, 2024, an increase of $50.2 million compared to the same period in 2023, or 5% on a reported basis and 6% excluding the foreign currency impact.

Cost of services and product development as a percent of revenues was 32% for each of the three months ended September 30, 2024 and 2023.

Cost of services and product development was $1.4 billion during the nine months ended September 30, 2024, an increase of $74.7 million compared to the same period in 2023, or 5% on a reported basis and 6% excluding the foreign currency impact.

The increase was primarily due to the same factor that caused the year-over-year quarterly increase.

Cost of services and product development as a percent of revenues was 32% for both the six months ended June 30, 2024 and 2023.

Selling, general and administrative (“SG&A”) expense was $712.1 million during the three months ended June 30, 2024, an increase of $31.9 million compared to the same period in 2023, or 5% and on both reported basis and excluding the foreign currency impact.

The increase in SG&A expense during the three months ended June 30, 2024 was primarily a result of higher personnel expenses due to increased headcount and merit increases.

This increase was partially offset by lower charges associated with the impairment of right-of-use assets and other long-lived assets.

SG&A expense was $1.4 billion during the six months ended June 30, 2024, an increase of $64.6 million compared to the same period in 2023, or 5% on both reported basis and excluding the foreign currency impact.

Cost of services and product development as a percent of revenues was 32% for both the nine months ended September 30, 2024 and 2023.

Selling, general and administrative (“SG&A”) expense was $711.7 million during the three months ended September 30, 2024, an increase of $51.2 million compared to the same period in 2023, or 8% and on both reported basis and excluding the foreign currency impact.

The increase in SG&A expense during the three months ended September 30, 2024 was primarily a result of higher personnel expenses due to increased headcount and merit increases.

SG&A expense was $2.1 billion during the nine months ended September 30, 2024, an increase of $115.8 million compared to the same period in 2023, or 6% on both reported basis and excluding the foreign currency impact.

The increase was primarily due to the same factors that caused the year-over-year quarterly increase.

The number of quota-bearing sales associates in Global Technology Sales decreased by 2% to 3,575 and in Global Business Sales, increased by 6% to 1,215 compared to June 30, 2023.

On a combined basis, the total number of quota-bearing sales associates was flat when compared to June 30, 2023.

The year over year decrease in Global Technology Sales quota-bearing sales associates was primarily a function of the timing of hiring.

The number of quota-bearing sales associates in Global Technology Sales increased by 1% to 3,666 and in Global Business Sales, increased by 8% to 1,244 compared to September 30, 2023.

On a combined basis, the total number of quota-bearing sales associates increased by 3% when compared to September 30, 2023.

We expect that quota-bearing headcount will increase in the mid single digits from 2023 levels by the end of 2024.

SG&A expense as a percent of revenues was 45% during both the three months ended June 30, 2024 and 2023.

SG&A expense as a percent of revenues was 46% for both the six months ended June 30, 2024 and 2023.

Depreciation increased by 16% and 13% during the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023.

The increase for the three and six months ended June 30, 2024 was primarily due to increased software additions during the last twelve months.

Amortization of intangibles was flat and increased by 1% during the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023.

Acquisition and integration charges decreased by $1.6 million and $2.5 million during the three and six months ended June 30, 2024, compared to the same periods in 2023.

SG&A expense as a percent of revenues was 48% and 47% during the three months ended September 30, 2024 and 2023, respectively.

SG&A expense as a percent of revenues was 46% for both the nine months ended September 30, 2024 and 2023.

Depreciation increased by 18% and 15% during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

The increase for the three and nine months ended September 30, 2024 was primarily due to increased software additions during the last twelve months.

Amortization of intangibles decreased by 8% and 2% during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

Acquisition and integration charges decreased by $4.3 million and $6.8 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

Gain from sale of divested operation was attributable to the sale of the TalentNeuron business in February 2023.

We recognized a pre-tax gain of $135.4 million during 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.

Operating income was $318.8 million and $283.1 million during the three months ended June 30, 2024 and 2023, respectively.

Operating income was $592.7 million and $691.1 million during the six months ended June 30, 2024 and 2023, respectively.

The increase in operating income for the three months ended June 30, 2024 as compared to the prior year period was primarily due to increased revenue, partially offset by increases in cost of services and product development and selling, general and administrative expenses.

The decrease in operating income for the six months ended June 30, 2024 as compared to the prior year period was primarily due to the gain from sale of divested operation recognized during the six months ended June 30, 2023 and increases in cost of services and product development and selling, general and administrative expenses, partially offset by increased revenue.

Interest expense, net decreased by $4.6 million and $12.7 million during the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023.

The decrease for both the three and six months ended June 30, 2024 was due to increased interest income, primarily as a result of higher cash balances than the prior year.

Gain on event cancellation insurance claims of $3.1 million during the six months ended June 30, 2023 reflected proceeds related to 2020 conference cancellation insurance claims.

Other income, net for the periods presented herein included the net impact of foreign currency gains and losses from our hedging activities.

Other income, net for the three and six months ended June 30, 2024 also included gains of $0.6 million and $5.0 million, respectively, on de-designated interest rate swaps.

Other income, net for the three and six months ended June 30, 2023 included gains of $6.5 million and $5.1 million, respectively, on de-designated interest rate swaps.

The provision for income taxes was $69.7 million and $66.1 million for the three months ended June 30, 2024 and 2023, respectively and $118.8 million and $151.6 million for the six months ended June 30, 2024 and 2023, respectively.

The effective income tax rate was 23.3% and 25.0% for the three months ended June 30, 2024 and 2023, respectively, and 21.3% and 23.5% for the six months ended June 30, 2024 and 2023, respectively.

The lower effective income tax rate for the three months ended June 30, 2024 compared to the same period in the prior year was primarily due to larger benefit of research and development tax credits.

The lower effective income tax rate for the six months ended June 30, 2024 was primarily due to the impact of the sale of the TalentNeuron business on the prior year rate.

Net income for the three months ended June 30, 2024 and 2023 was $229.5 million and $198.0 million, respectively, while net income for the six months ended June 30, 2024 and 2023 was $440.1 million and $493.8 million , respectively.

Our diluted net income per share during the three and six months ended June 30, 2024 increased by $0.45 and decreased by $0.57, respectively.

The increase in net income during the three months ended June 30, 2024 was due to an increase in revenue and lower interest expense, net, partially offset by an increase in operating expenses.

The decrease in net income during the six months ended June 30, 2024 was primarily due to the gain from sale of divested operation recognized during the six months ended June 30, 2023 and increased operating expenses, partially offset by an increase in revenue and lower interest expense, net.

We recognized a pre-tax gain of $135.4 million during the nine months ended September 30, 2023.

Operating income was $245.8 million and $244.4 million during the three months ended September 30, 2024 and 2023, respectively.

Operating income was $838.5 million and $935.5 million during the nine months ended September 30, 2024 and 2023, respectively.

The slight increase in operating income for the three months ended September 30, 2024 as compared to the prior year period was primarily due to increased revenue, partially offset by increases in cost of services and product development and selling, general and administrative expenses.

The decrease in operating income for the nine months ended September 30, 2024 as compared to the prior year period was primarily due to the gain from sale of divested operation recognized during the nine months ended September 30, 2023 and increases in cost of services and product development and selling, general and administrative expenses, partially offset by increased revenue.

Interest expense, net decreased by $3.9 million and $16.6 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

The decrease for both the three and nine months ended September 30, 2024 was due to increased interest income, primarily as a result of higher cash balances than the prior year.

Gain on event cancellation insurance claims of $300.0 million during the three and nine months ended September 30, 2024 reflected proceeds from a settlement agreement to resolve litigation concerning the Company's event cancellation insurance for 2020 and 2021.

The settlement resolved all remaining 2020 and 2021 event cancellation insurance claims.

Gain on event

cancellation insurance claims of $3.1 million during the nine months ended September 30, 2023 reflected proceeds related to 2020 conference cancellation insurance claims.

Other (expense) income, net for the periods presented herein included the net impact of foreign currency gains and losses from our hedging activities.

Other (expense) income, net for the three and nine months ended September 30, 2024 also included a loss of $2.9 million and a gain of $2.2 million, respectively, on de-designated interest rate swaps.

Other (expense) income, net for the three and nine months ended September 30, 2023 included gains of $2.5 million and $7.7 million, respectively, on de-designated interest rate swaps.

The provision for income taxes was $111.8 million and $44.5 million for the three months ended September 30, 2024 and 2023, respectively and $230.6 million and $196.0 million for the nine months ended September 30, 2024 and 2023, respectively.

The effective income tax rate was 21.2% and 19.8% for the three months ended September 30, 2024 and 2023, respectively, and 21.2% and 22.5% for the nine months ended September 30, 2024 and 2023, respectively.

The higher effective income tax rate for the three months ended September 30, 2024 compared to the same period in the prior year was primarily due to favorable impact of the expiration of statutes for uncertain tax positions in the three months ended September 30, 2023.

The lower effective income tax rate for the nine months ended September 30, 2024 was primarily due to the impact of the sale of the TalentNeuron business on the prior year rate.

Net income for the three months ended September 30, 2024 and 2023 was $415.0 million and $180.0 million, respectively, while net income for the nine months ended September 30, 2024 and 2023 was $855.1 million and $673.8 million , respectively.

Our diluted net income per share during the three and nine months ended September 30, 2024 increased by $3.06 and $2.46, respectively.

The increase in net income during the three months ended September 30, 2024 was primarily due to the gain on event cancellation insurance claims, as well as an increase in revenue and lower interest expense, net, partially offset by an increase in operating expenses.

The increase in net income during the nine months ended September 30, 2024 was primarily due to the gain on event cancellation insurance claims, as well as an increase in revenue and lower interest expense, net, partially offset by the gain from sale of divested operation recognized during the nine months ended September 30, 2023 and increased operating expenses.

SEGMENT RESULTS

5 unchanged sentences

Research, Conferences and Consulting.

As Of And For The Three Months Ended June 30, 2024 As Of And For The Three Months Ended June 30, 2023 Increase

As Of And For The Three Months Ended September 30, 2024 As Of And For The Three Months Ended September 30, 2023 Increase

(Decrease) Percentage

(Decrease) As Of And For The Six Months Ended June 30, 2024 As Of And For The Six Months Ended June 30, 2023 Increase

(Decrease) As Of And For The Nine Months Ended September 30, 2024 As Of And For The Nine Months Ended September 30, 2023 Increase

(Decrease) Percentage

18 unchanged sentences

(3) Contract values are on a foreign currency neutral basis.

Contract values as of June 30, 2023 have been calculated using the same foreign currency rates as 2024.

Research revenues i ncreased by $58.1 million during the three months ended June 30, 2024 compared to the same period in 2023, or 5% on a reported basis and 6% excluding the foreign currency impact.

For the six months ended June 30, 2024, research revenue increased by $109.1 million compared to the same period in 2023 or 4% on a reported basis and 5% excluding the foreign currency impact.

Contract values as of September 30, 2023 have been calculated using the same foreign currency rates as 2024.

Research revenues i ncreased by $62.2 million during the three months ended September 30, 2024 compared to the same period in 2023, or 5% on both a reported basis and excluding the foreign currency impact.

For the nine months ended September 30, 2024, research revenue increased by $171.3 million compared to the same period in 2023 or 5% on both a reported basis and excluding the foreign currency impact.

The increase in revenues during 2024 was primarily due to Research contract value growth in 2023.

The segment gross contribution margin was 74% and 73% for the three months ended June 30, 2024 and 2023, respectively, and 74% for both the six months ended June 30, 2024 and 2023 .

Contract value increased to $4.9 billion at June 30, 2024, or 7% compared to June 30, 2023 excluding the foreign currency impact.

The segment gross contribution margin was 74% and 73% for the three months ended September 30, 2024 and 2023, respectively, and 74% for both the nine months ended September 30, 2024 and 2023 .

Contract value increased to $5.0 billion at September 30, 2024, or 7% compared to September 30, 2023 excluding the foreign currency impact.

The majority of industry sectors grew high single-digit rates or faster.

The higher growth sectors were the energy, manufacturing and public sectors.

Global Technology Sales (“GTS”) contract value increased by 6% at June 30, 2024 when compared to June 30, 2023.

Growth was led by the energy, manufacturing and healthcare sectors.

Global Technology Sales (“GTS”) contract value increased by 6% at September 30, 2024 when compared to September 30, 2023.

The increase in GTS contract value was primarily due to new business from existing clients.

GTS contract value increased by high single-digit rates or faster for the majority of enterprise sizes and over half of industry sectors.

GTS contract value increased by mid single-digit rates or faster for all enterprise sizes except small enterprises and nearly half of industry sectors.

Global Business Sales (“GBS”) contract value increased by 12% year-over-year, also primarily driven by new business from existing clients.

The majority of our GBS practices achieved double-digit growth rates, with the majority of enterprise sizes and sectors growing double-digits year-over-year.

GTS client retention was 83% and 84% as of June 30, 2024 and 2023, respectively, while wallet retention was 101% and 102%, respectively.

GBS client retention was 87% and 88% for June 30, 2024 and 2023, respectively, while wallet retention was 106% and 109%, respectively.

The majority of our GBS practices achieved double-digit growth rates, with all enterprise sizes and the majority of sectors growing double-digits year-over-year.

GTS client retention was 83% as of both September 30, 2024 and 2023, while wallet retention was 101% and 102%, respectively.

GBS client retention was 87% and 88% as of September 30, 2024 and 2023, respectively, while wallet retention was 106% and 108%, respectively.

The decrease in GBS wallet retention was largely due to lower levels of spending by existing clients compared to the same period in 2023.

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Increase

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Increase

(Decrease) Percentage

(Decrease) Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Increase

(Decrease) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Increase

(Decrease) Percentage

2 unchanged sentences

Gross contribution (1) $ 30,489 $ 20,449 $ 10,040 49 % $ 161,856 $ 145,687 $ 16,169 11 %

Gross contribution margin 58 % 58 % 0 point — 51 % 54 % (3) points —

Gross contribution margin 40 % 36 % 4 points — 49 % 50 % (1) point —

Business Measurements:

3 unchanged sentences

(2) Single day, local meetings are excluded.

Conferences revenues increased by $17.2 million during the three months ended June 30, 2024 compared to the same period in 2023.

Conferences revenues increased by $22.6 million during the six months ended June 30, 2024 compared to the same period in 2023.The increase in revenue for the three months ended June 30, 2024 was primarily due to increased exhibitor revenue and an increase in attendees compared to the second quarter of 2023.

We held 16 and 17 in-person destination conferences during the three months ended June 30, 2024 and 2023, respectively.

We held 28 and 27 in-person destination conferences during the six months ended June 30, 2024 and 2023, respectively.

Gross contribution increased to $108.1 million during the three months ended June 30, 2024 compared to $98.5 million in the same period last year.

Gross contribution increased to $131.4 million during the six months ended June 30, 2024 compared to $125.2 million in the same period last year.

The increase in gross contribution during the three and six months ended June 30, 2024 was primarily the result of the increase in revenue, partially offset by an increase in conference-related expenses and increased headcount.

As Of And For The Three Months Ended June 30, 2024 As Of And For The Three Months Ended June 30, 2023 Increase

Conferences revenues increased by $18.6 million during the three months ended September 30, 2024 compared to the same period in 2023, or 32% on a reported basis and 30% excluding the foreign currency impact.

Conferences revenues increased by $41.2 million during the nine months ended September 30, 2024 compared to the same period in 2023, or 14% on both a reported basis and excluding the foreign currency impact.

The increase in revenue for the three and nine months ended September 30, 2024 was primarily due to increased exhibitor revenue and an increase in attendees compared to the same periods in 2023.

We held 10 and 9 in-person destination conferences during the three months ended September 30, 2024 and 2023, respectively.

We held 38 and 36 in-person destination conferences during the nine months ended September 30, 2024 and 2023, respectively.

Gross contribution increased to $30.5 million during the three months ended September 30, 2024 compared to $20.4 million in the same period last year.

Gross contribution increased to $161.9 million during the nine months ended September 30, 2024 compared to $145.7 million in the same period last year.

The increase in gross contribution during the three and nine months ended September 30, 2024 was primarily the result of the increase in revenue, partially offset by an increase in conference-related expenses and increased headcount.

As Of And For The Three Months Ended September 30, 2024 As Of And For The Three Months Ended September 30, 2023 Increase

(Decrease) Percentage

(Decrease) As Of And For The Six Months Ended June 30, 2024 As Of And For The Six Months Ended June 30, 2023 Increase

(Decrease) As Of And For The Nine Months Ended September 30, 2024 As Of And For The Nine Months Ended September 30, 2023 Increase

(Decrease) Percentage

2 unchanged sentences

Gross contribution (1) $ 41,517 $ 48,551 $ (7,034) (14) % $ 149,523 $ 146,680 $ 2,843 2 %

Gross contribution margin 38 % 37 % 1 point — 39 % 39 % 0 point —

Gross contribution margin 33 % 37 % (4) points — 37 % 38 % (1) point —

Business Measurements:

4 unchanged sentences

(2) Backlog is on a foreign currency neutral basis.

Backlog as of June 30, 2023 has been calculated using the same foreign currency rates as 2024.

Consulting revenues increased by 13% during the three months ended June 30, 2024 compared to the same period in 2023 on a reported basis and 15% excluding the foreign currency impact, with an increase in labor-based consulting revenue of 3% and a increase in contract optimization revenue of 62%, each on a reported basis.

Contract optimization revenue may vary significantly and, as such, revenues for the second quarter of 2024 may not be indicative of results for the remainder of 2024 or beyond.

The segment gross contribution margin was 38% and 37% for the three months ended June 30, 2024 and 2023, respectively.

The increase in gross contribution margin for the three months ended June 30, 2024 was also primarily due to the increase in revenue, partially offset by increased personnel expense related to higher headcount.

For the six months ended June 30, 2024, Consulting revenues increased 10% compared to the same period in 2023 on a reported basis and 11% excluding the foreign currency impact, with an increase in labor-based consulting revenue of 7% and an increase in contract optimization revenue of 19%, each on a reported basis.

The segment gross contribution margin for the six months ended June 30, 2024 was flat compared to the same period in 2023.

Backlog increased by $27.1 million, or 16%, from June 30, 2023 to June 30, 2024, excluding the foreign currency impact.

Backlog as of September 30, 2023 has been calculated using the same foreign currency rates as 2024.

Consulting revenues decreased by 4% during the three months ended September 30, 2024 compared to the same period in 2023 on both a reported basis and excluding the foreign currency impact, with an increase in labor-based consulting revenue of 2% and a decrease in contract optimization revenue of 20%, each on a reported basis.

Contract optimization revenue may vary significantly and, as such, revenues for the third quarter of 2024 may not be indicative of results for the remainder of 2024 or beyond.

The segment gross contribution margin was 33% and 37% for the three months ended September 30, 2024 and 2023, respectively.

The decrease in gross contribution margin for the three months ended September 30, 2024 was primarily due to the decrease in revenue.

For the nine months ended September 30, 2024, Consulting revenues increased 5% compared to the same period in 2023 on a reported basis and 6% excluding the foreign currency impact, with an increase in labor-based consulting revenue of 5% and an increase in contract optimization revenue of 4%, each on a reported basis.

The segment gross contribution margin was 37% and 38% for the nine months ended September 30, 2024 and 2023, respectively.

Backlog increased by $37.4 million, or 21%, from September 30, 2023 to September 30, 2024, excluding the foreign currency impact.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

Note 8 — Debt in the Notes to Condensed Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt obligations.

At June 30, 2024, we had $1.2 billion of cash and cash equivalents and approximately $706.6 million of available borrowing capacity on the revolving credit facility under our 2024 Credit Agreement.

At September 30, 2024, we had $1.8 billion of cash and cash equivalents and approximately $707.0 million of available borrowing capacity on the revolving credit facility under our 2024 Credit Agreement.

We believe that the Company has adequate liquidity to meet its currently anticipated needs for both the next twelve months and the foreseeable future.

2 unchanged sentences

Cash flow generation has also benefited from our ongoing efforts to improve the operating efficiencies of our businesses as well as a focus on the optimal management of our working capital as we increase sales.

On July 25, 2024 we entered into a settlement agreement to resolve litigation concerning our event cancellation insurance for 2020 and 2021.

The settlement resolves all remaining 2020 and 2021 event cancellation insurance claims for $300.0 million.

We expect to receive the settlement payment from the insurer during the third quarter of 2024.

During the fourth quarter of 2024, the Company entered into an amended lease agreement to significantly reduce the square footage and reduce future lease payments at one of its leased locations.

The Company will make two equal installment payments of $24.0 million during the fourth quarter of 2024 and the second quarter of 2025 in consideration for the lease amendment.

Our cash and cash equivalents are held in numerous locations throughout the world with 48% held outside the U.S.

at June 30, 2024.

at September 30, 2024.

We intend to reinvest substantially all of our accumulated undistributed foreign earnings, except in instances where repatriation would result in minimal additional tax.

The table below summarizes the changes in our cash balances for the periods indicated (in thousands).

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Increase

Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Increase

Cash provided by operating activities $ 1,149,567 $ 931,407 $ 218,160

1 unchanged sentence

Cash used in financing activities (615,557) (434,024) (181,533)

Net (decrease) increase in cash and cash equivalents and restricted cash (48,456) 481,092 (529,548)

Net increase in cash and cash equivalents and restricted cash

454,214 574,495 (120,281)

Effects of exchange rates on cash and cash equivalents (5,521) (23,139) 17,618

1 unchanged sentence

Ending cash and cash equivalents and restricted cash $ 1,768,292 $ 1,249,955 $ 518,337

Cash provided by operating activities was $558.8 million and $600.5 million during the six months ended June 30, 2024 and 2023, respectively.

The year-over-year decrease was primarily due to the timing of collections, partially offset by increased operating income, excluding the 2023 gain from sale of divested operation.

Cash (used in) provided by investing activities was $(54.0) million and $109.4 million during the six months ended June 30, 2024 and 2023, respectively.

Cash provided by operating activities was $1.1 billion and $931.4 million during the nine months ended September 30, 2024 and 2023, respectively.

The year-over-year increase was primarily due to the $300.0 million of insurance proceeds received during 2024 as well as increased operating income, excluding the 2023 gain from sale of divested operation, partially offset by the timing of collections.

Cash (used in) provided by investing activities was $(79.8) million and $77.1 million during the nine months ended September 30, 2024 and 2023, respectively.

The decrease from 2023 to 2024 was the result of the proceeds received from the sale of the TalentNeuron business in February 2023.

Cash used in financing activities was $553.2 million and $228.7 million during the six months ended June 30, 2024 and 2023, respectively.

We used $564.7 million and $238.4 million of cash for share repurchases during the six months ended June 30, 2024 and 2023, respectively.

Cash used in financing activities was $615.6 million and $434.0 million during the nine months ended September 30, 2024 and 2023, respectively.

We used $633.4 million and $447.7 million of cash for share repurchases during the nine months ended

September 30, 2024 and 2023, respectively.

In March 2024, the Company borrowed $274.4 million under the 2024 Credit Agreement.

8 unchanged sentences

Additional amounts borrowed under the 2024 Credit Agreement will be used for working capital needs and general corporate purposes of the Company and its subsidiaries, including the funding of acquisitions and investments, payment of capital expenditures and the repurchase of shares.

As of June 30, 2024, the Company had $2.5 billion of principal amount of debt outstanding.

As of September 30, 2024, the Company had $2.5 billion of principal amount of debt outstanding.

Note 8 — Debt in the Notes to Condensed Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt obligations.

2 unchanged sentences

OFF BALANCE SHEET ARRANGEMENTS

From January 1, 2024 through June 30, 2024, the Company has not entered into any material off-balance sheet arrangements or transactions with unconsolidated entities or other persons.

From January 1, 2024 through September 30, 2024, the Company has not entered into any material off-balance sheet arrangements or transactions with unconsolidated entities or other persons.

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 2. Management’s Discussion and Analysis