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[00:00:01] Ladies and gentlemen, thank you for standing by and welcome to the Gartner’s third quarter 2020 earnings results conference call. At this time, all parties that the lines are on a listen only mode. After the speakers presentation, there will be a question and answer session to ask a question during the session. You want me to press star one on your telephone? Please be advised that today's conference is being recorded. If you require any further assistance, please. Press Star zero. I would not like to hand the conference over to your speaker today. David Cohen, Gardner's VP of Investor Relations. Thank you. Please go ahead, sir.

[00:00:42] Good morning, everyone. We appreciate your joining us today for Gardner's third quarter Twenty twenty earnings call and I hope you are well, with me on the call today are Eugene Hall, Chief Executive Officer and Craig Safian, Chief Financial Officer is called included discussion of third quarter twenty twenty financial results and our updated outlook for twenty twenty as disclosed in today's earnings release. In addition to today's earnings release, they provided a detailed review of our financials and business metrics and earnings supplement for investors and analysts and posted the press release and the earnings supplement on our website. Investor Dot Dotcom following comments by. And we will open up the call for your questions. We ask that you limit your questions to one and a follow up on the call. Unless stated otherwise, all references to EBITDA are for adjusted EBITDA. But the gentleman, as described in our earnings release, our growth rates in Gene's comments are neutral unless stated otherwise. Reconciliations for all non gap numbers we use are available in the investor relations section of the Gartner dot com website. Finally, while contract values and associated growth rates we discuss are based on twenty twenty foreign exchange rates unless stated otherwise, as set forth in more detail in today's earnings release, certain statements made on this call may constitute forward looking statements. Forward looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the company's twenty 19 annual report. Information contained quarterly reports on Form Tinku, as well as in other filings with the SEC. Encourage all of you to review the risk factors listed in these documents. Now I will turn the call over to Gardner's Chief Executive Officer, Gene Hall.

[00:02:16] Good morning. Welcome to a quarterly earnings call. Thanks for joining us. Business leaders need help in all times, but turn highly uncertain times like today. They need help more than ever. Those they know Gartner know we are the best source for how to survive and thrive in these difficult times. [00:02:34] Beginning in Q1, we made significant changes in response to the pandemic and economic downturn. Our strategy is to ensure our research content addresses the most critical priorities of our clients at any point in time. With the pandemic hit, the rate of change in the world increased dramatically. We responded with the agility. We accelerated the creation of new, highly relevant content for our clients across every function. Topics included adapting to covid-19, shifting to remote work, accelerating the transition to digital business, strengthening diversity, equity and inclusion across the enterprise, and more clients of highly valued this content. Addressing their mission critical priorities. Client engagement with our experts rose significantly. During Q3, client interactions increased more than 20 percent year over year to over one hundred and twenty thousand interactions. Gartner conferences deliver the same unparalleled insights and advice to those who want an immersive experience. So you told her to attend our conferences for free. Great value, which results in higher retention? Nancy toters equally received great value and are a great source of highly qualified leads for research. Salesforce. Once the pandemic hit, we pivoted to virtual conferences to replace our traditional in-person destination conferences. So far, we've delivered seven virtual conferences through October and the performance of these conferences has exceeded our expectations. IT Symposium Expo is our flagship conference series for senior executives. We recently held our IT symposium, America's Virtually. It was a resounding success. More than fifteen thousand…

[00:07:33] Thank you, Gene, and good morning. I hope everyone remains safe and well. Third quarter results were ahead of our expectations, and we raised our full year guidance to reflect the modestly better demand environment and strong cost management. We had another successful bond offering during the quarter and amended and extended our credit facility through two thousand twenty five as of September 30th. We have a stronger balance sheet than we did at the start of the year. We have significant liquidity, which gives us financial flexibility. We reduced our maturity risk and our annual interest expense will be lower starting in twenty twenty one. As we've gotten more clarity on the economy engaged our business performance over the past several months, we resumed targeted spending. While we continue to manage our costs carefully, we remain focused on positioning ourselves to rebound strongly as the economy recovers. Third quarter revenue was nine hundred ninety five million dollars, down one percent as reported and neutral. Excluding conferences, our revenues were up five percent year over year. Ethics neutral. In addition, contribution margin was sixty seven percent, up more than 300 basis points versus the prior year. EBITDA was one hundred and sixty eight dollars million of twenty percent year over year and nineteen percent effective neutral adjusted EPS was ninety one cents and free cash flow in the quarter was a very strong two hundred and twenty nine million dollars. [00:08:50] Research revenue in the third quarter grew six percent year over year on a reported and neutral basis. Third quarter research contribution margin was seventy two percent, benefiting in part from the temporary cost avoidance initiatives we put in place starting in the first quarter. As we have seen improvements in the macro environment, we have resumed growth…

[00:24:00] As a reminder, ladies and gentlemen, to ask a question, you want me to press star one on your telephone to withdraw your question, press the banking system by which we compile the Q&A roster. Our first question comes from the line of Jeff Miller from Baird. Your line is now open.

[00:24:19] Yeah, thank you. Good morning. So I always find your sales productivity metric Nixey per beginning a little bit challenging during periods of a lot of acceleration or deceleration. One of the things that jumped out to me today was the year over year trends in new business. So relative to the year over year, trends in sales headcount for each of the segments, curious if you use that as an internal metric and then just what you kind of say above that trend and anything in how you're managing sales headcount between the zero CV folks and the people that have a book of existing business. Better understand that. Thanks.

[00:25:01] Asia-pac Jean, first, we definitely look at new business for salesperson as one of our key metrics, you know, of the day, the reason we look at MiFi for salesperson is because that would that would net result in growth. But we manage the pieces of it, which are retention of our clients. And the new business is we absolutely manage the business per salesperson. [00:25:22] And the trend there has been has improved significantly between Q2 and Q3 as the numbers you saw from Craig and anything you'd say in terms of how you're managing headcount, in terms of the zero contract value associates and those that have a book of business, like, are there any big shifts occurring among those? [00:25:44] So it varies depending on the specific market and we tailor to the market. And so in markets where we have not that much contract volume because it's relatively immature market, we have more business developers, people that have zero contract value accounts than in a much more mature market like the United States for, you know, especially for GTS, for jobs across the board. We have a lot more business developers because those markets are so relatively under penetrated. So you don't need as many people that are what we call account managers that have existing clients just because the business is so much smaller in each of the disciplines.

[00:26:23] And then anything else you can say about what avoided costs are still left to be brought back? And in the past, you made some comments about expecting twenty one margins to be down year over year. Do you still expect them to be down relative to the implied margins from the prior guidance, or are we now using the baseline of this eighteen point one percent or three percent margin this year to be down from a similar question on free cash flow? Obviously, as you said, outstanding this year. Should that step back next year? Thanks.

[00:26:59] So let me just started again. Correct. And fill in. So, you know, prior to 20, we were going through an investment period. We were investing really to position GBS to have a great future growth. And we entered that investment period in twenty nineteen. We came into twenty twenty before the pandemic even hit, focused on improving our margins over time. And part of the reason margins are better in twenty twenty to twenty nineteen are is that we were already focusing on how do we get the return on the investments that we put in place over the previous three years. We're still going to focus on that going to the future. Having said that, there are some expenses in Twenty twenty that are lower than they might be in a normal year. And obvious example, my minus travel expenses, where we basically have very low travel expenses compared to a normal year. And I can imagine in once the pandemic is over, we can probably see in our travel expenses will be, I wouldn't say go back to where it was before I thing. We've learned how to work more efficiently, but it would be larger than it would be in a year like Twenty twenty and going on if you want to fill in.

[00:28:06] Yeah. Good morning, Jeff. You know, the only two things I would add are that, you know, in terms of the cost avoidance, you know, we were very aggressive in the early days of the pandemic when we really didn't know what the outcome was going to look like. As we stabilized, we obviously started turning certain expenses back on, particularly related to compensation and benefits expenses for our associates, as well as backfilling ogen roles and actually shrinking, sparkling in a little bit of headcount growth in GTS and GBS sales forces. And so, you know, we were first focused on just making sure that we could preserve profitability. And then once we we had aligned to that or I said to that, we we started selectively turning certain expenses back on to Jean's point, Twenty twenty is hardly a normal year by any definition. And so, you know, the way we've been managing the business and again, we have been restoring a lot of costs in the back half of the year and we were able to get virtual conferences launched and monetized. That's obviously playing a large role in in the margin profile for for for Twenty twenty. You know, as we look forward, the way we sort of think about it from a medium term perspective is that we can absolutely drive double digit top line growth and modestly expand margins over at least the medium term. [00:29:46] We will expand margins from the twenty nineteen levels, which is our last normal year benchmark, if you will. And to the point he made, we are very committed to maintaining tight cost. Trolls like you've seen from us this year, we will have to turn certain things back on, but things like travel, we will have to travel more. We will have more expense there, but it will probably not run all the way back up to what we did in twenty nineteen. Similarly with facilities, you know, we've obviously had a lot of operational benefits this year from not having to heat and cool and run facilities as we've been working from home. Hopefully we will be back into service at some point and those expenses will come back. Although I will say that as we go forward, we probably won't need to expand our facilities footprint at the same pace that we did in the past. And so there's a lot of moving parts there. [00:30:45] But I think the key point is that over the medium term, we believe that we can drive double digit top line growth and modestly expand our margins.

[00:30:56] Thank you, Bob.

[00:31:00] Thank you. Our next question comes from the line of Toni Kaplan from Morgan Stanley. Your line is now open.

[00:31:07] That's great. Thank you, Jeanne, you mentioned that a higher demand that you're seeing from clients who just dove a little bit more into that within research which regions have been strong, and basically when regions have either somewhat recovered from covid and start to open up, I'm thinking maybe China or even in the U.S. over the summer when when things were a little bit better, you know, how quickly can the business rebound or should we be viewing this more as a slow recovery? I just want to get some color on the strengthening demand that you mentioned. Thanks.

[00:31:47] Hi, Tony. I don't know I don't know how fast the pace of recovery will be, but we certainly saw meaningful improvements between, you know, Q2 and Q3 in terms of demand as the numbers that went through in terms of like new business and so forth. If you look at China, China is interesting because they have recovered relatively quickly, like the you know, the new business growth in most of Japan and China in China has been quite good in Japan. Same thing, actually. And so if the rest of the world kind of goes the way of China and Japan, then we'll have a relatively quick recovery for us.

[00:32:26] That's great. And I wanted to ask also about the hiring strategy that Fred mentioned, the 30 100 expected by year end. In general, I guess, are you thinking about hiring a head of CV growth, turning around or in a little bit more of a wait and see kind of pattern? Just trying to understand on this strategy of hiring through the rest of the year and maybe through next year in terms of how you're thinking about it.

[00:33:00] Yeah, Gruner, Salesforce is an important part of our growth strategy. And so over time, we expect to grow our sales force in kind of in line with our contract volume growth. And so that's kind of the long term strategy we came into this year. So at the end of last year, we added a substantial amount of headcount as we came into this year for to allow our growth during Twenty twenty. Now, obviously, the pandemic is that we haven't realized that gross. We actually have a lot of sales capacity that we think as the market improves, will give us a good uplift and then we're going to use that leverage that will also then grow our sales headcount. Do you think about in line with KB as we go forward to support future growth?

[00:33:40] One of the things I tell you is if you just think about the capacity we've invested in building over the last several years in both GTS and GBS is pretty substantial. And so with that selling capacity, again, if we can approach 2019 productivity levels or core back half the gap between where we are today and 2019 productivity levels, we could actually drive really nice CV growth just from that capacity. And as Jim mentioned, our strategy because of the market opportunity we have is to continue to grow the sales force, which we will do to grow, capture that opportunity. But again, we always look at the two levers to drive massive growth over the medium term or long term. It's growing sales headcount to capture the market opportunity and driving productivity improvements at the same time.

[00:34:35] Thanks so much.

[00:34:39] Thank you. Our next question comes from the line of Gary Bisbee from Bank of America Securities. Your line is now open.

[00:34:47] Hey, guys. Good morning. I guess I want to start by asking about the GB's contract value growth and, you know, new bookings, really no deceleration sequentially in the bookings were strong. Can you give us any more any more color on sort of what the key drivers are of where you really succeeding? And I know you didn't give the GSL breakout anymore, as you said you wouldn't. But, you know, if you when you look at those metrics, are you sort of past that inflection point where the vehicle is meaningfully enough, bigger that that's really, you know, the key driver for their growth that you're seeing.

[00:35:29] The Jekyll's clearly the key driver in DBS going forward. We think we cross the threshold of 10000 seats in GBS, which initially was a major, major milestone. The Geeveston business is being driven by the fact that, you know, what we talked about all along, basically in each of the functions around the business, the executives have mission-critical priorities they need help with and they see Gartner's people to help them in. Our sales were extremely effective at reaching out to prospects, explained how we can help and the prospects of responding. And that's fundamentally what's driving the new business growth. And in fact, the it's really we're seeing the benefit of it now, even with the pandemic. But we talked with earlier the investments we made over the last two or three years before Twenty twenty, it's really starting to get the power from all those investments in GBS.

[00:36:20] And Gary, good morning. I would just add, you know, as I mentioned in my remarks just now, GSL now represents more than 50 percent of the contract value within GBS. So it really is a story going forward that is the predominant amount of contract value within the portfolio. And then the other nice thing I would add is that we're seeing really good contribution across the across the GBS practice portfolio. So it's not just a supply chain or it's not just the HRR. We're seeing a really good contribution in finance, in HRR, in supply chain and sales, et cetera. And so that it's not just one story, that it's across the portfolio.

[00:37:06] And just as a follow up, if I can dig into a tiny bit more, you know, do you have is there any way to tell how much of the improvement there in the in the TV holding up quite well is sort of easy comps because you pushed so much change in over the last couple of years. So it's sort of the maturity of the sales force and and improved productivity. Is there more used to selling to yourself versus in market dynamics? And really what I'm trying to get at is that are those two factors strong enough to continue to, you know, continue to drive outperformance if if the economic environment does remain, you know, weak and choppy in the near term? Thank you.

[00:37:49] Yeah, I'll start again if I if I may say. Can you fill in the blanks? No, I think that if you look back at the GBS performance, we really started to see a nice acceleration in the business in Q3 of last year. And so it's not the easiest compare we've had for sure. Know, I think there's definitely a benefit to having a more tenured sales force and having them have significant experience with selling the standard set of products we have. And so that is absolutely a benefit. But I really do believe and I echo what you said earlier, it's really about the value we're providing to the end users in each of these markets as opposed to an easy comp or more experience. And so those things help. But I think ultimately it's because we we provide a great value and help business leaders across each of those enterprise functions really solve and win on their mission critical priorities.

[00:38:53] And the idea is that the we also it took a while to roll out all the jerko products and then the sales teams had to learn how to sell those products. And so I think they're now getting to the good part of that curve.

[00:39:12] Thank you. Our next question comes from the line of Andrew Nicholas from William Blair. Your line is now open.

[00:39:18] Hi, good morning. With a few more months under your belt and what I thought was a solid third quarter result, do you feel like you have a better sense for perhaps TV might trend over the next couple of quarters? And is there any change to how you're thinking about the potential trough in TV growth across both GTS and GBS, both in terms of timing and in magnitude?

[00:39:44] Good morning, Andrew. You know, with KVI being a rolling four quarter metric, we do still expect some deceleration in the contract value growth rate probably over the next quarter or two, predominantly because it's going up against a tough compare quarter and fourth quarter of last year. So if you look back at the fourth quarter of last year, you know, we've got significant growth and KVI in both teams and gas. And given the environment, our current estimate and extrapolating what we've seen in Q3 and March through the end of Q2 as well, we do not expect as much new business or similar renewal rates. And so we do expect some continued deceleration in the trough. As you think about it, just based on on on looking at it that way is probably Q1 of of next year. Again, we could outrun that if the economy improves significantly or if there is a vaccine and people go back to the office and everything like that. But we still remain cautious and are using really our last three months performance as a guide as we think about what Steve can do and and how we're building operational plans for the end of this year and for next year.

[00:41:14] Great. That's helpful. Thank you. And then just wanted to switch over to conferences. If I look at guidance or implied guidance for Q4, looks like you're going to about 80, 85 million of conference revenue versus about 218 or somewhere around there last year. If I do the math there, it looks like about 40 percent or so. I know there's two conferences versus last year, but I guess I'm just wondering, is that 40 percent number a reasonable ratio for us to use? And we're thinking about revenue for Twenty twenty one in the instance that that in-person conferences haven't returned? Or are there other factors that I'm not not thinking about that that I should.

[00:42:00] Yeah, it's hard it's hard to say, Andrew, predominantly because, you know, we have moved a number of conferences that we would have produced in person earlier in the year into the fourth quarter. And so we've obviously trimmed the portfolio and we've gone with a series of very important, very impactful conferences globally. And in addition, if you look at the Q4 implied guide, you have to also keep in mind that there's a hunk of event virtual meetings in there as well, which are pretty nice contributor to the to the overall number. You know, I think that as we roll into we're in the process of building out twenty, twenty one plans under a number of scenarios for four for next year. As Jean mentioned and I mentioned as well, we're getting better and smarter with each virtual conference that we actually deliver. And the next one gets better and better and better. And we're we're still really working on that exhibiter value proposition as well. [00:43:12] As I mentioned, you know, we expect exhibitor contribution in the fourth quarter to be significantly lower than what you would see historically. And obviously, we want to work really hard to improve that and deliver value to both our attendees from being exposed to the exhibitors and the exhibitors who get the corresponding value. So I wouldn't plug in a formula of 40 percent yet. We're still working through all those scenarios. And again, there are a number of different scenarios where we could be in person later in year, virtual beginning. There could be virtual all year long. You know, when we when we guide for for Twenty twenty one in February, we'll be very clear about what our assumptions include and will really be driven by what the environment allows us to do.

[00:44:02] Makes sense. Thank you.

[00:44:06] Thank you. Our next question comes from the line of Jess Silber from BMO Capital Markets. Your line is now open.

[00:44:14] Thanks so much. In your prepared remarks, you talked about some of the portion of the growth in both the PBS and GTZ was pricing related. I'm just curious what kind of price increases have been able to put through in terms of renewals and if there's been pressure or pushback from clients on that. Thanks.

[00:44:35] Hey, good morning, Jeff. So we for most of our most of the world we do are price increase in November. Actually, yesterday, the first day of November, as we went through the renewal cycle leading up to this November, obviously we were dealing with our our standard price increase. You know, in this environment, there was probably there's definitely a little bit more pushback than we historically say are our price increase. As you know, Ranges has ranged in the three to four percent range historically, and it's typically not big dollars for the client. And we are always improving our products and our experience this year, given the environment, we were a little more modest on the price increase going around, you know, between two and a half to three percent price increase again, which just went into effect. Now, you know, we generally our clients understand that we are improving the product each and every year. The people that deliver the service, their costs go up every year. And so, generally speaking, we haven't seen a ton of pushback on the pricing. But definitely in this environment, it's a little more challenging than what we normally see. But generally speaking, it's modest dollars that we're pushing through look great.

[00:46:04] That's helpful. If I could shift over to conferences in terms of the shift to hurtful, I'm just also wondering from a price perspective, what do you charge attendees relative to the in-person conference? I know there's some entitlements there and the same thing on the exhibiter side. I'm just curious on a relative basis what the delta. Thanks.

[00:46:25] If if you if you take a look at the you can see list pricing online, the pricing is about 40 percent of what we would get from an in-person conference ticket. So think about it in roughly that range in terms of the you know, if you're buying a cash ticket as a standalone item, again, either online or through one of our sales teams on the exhibiter side, as we've mentioned, it's still really early days and we're working through all that. And so there's really not an apples to apples comparison from an exhibitor perspective.

[00:47:07] Ok, thanks for the call.

[00:47:12] Thank you. Our next question comes from the line of Manav Patnaik from Berkeley. Your line is now open.

[00:47:20] Thank you. Good morning. I was just hoping you could call it a maybe sticking to the plan, all in reaction to the Wal-Mart detention and the phone call about how much of that is in a number of seats being culpable for this to be a crime. And I knew we were going to see if you anticipate any problems, though.

[00:47:52] I just started with it. So first, the biggest change in the world, children, was the our existing clients are buying fewer additional seats. And so it's actually less that people are reducing seats than it is in normal times. A substantial portion of growth comes from existing clients adding more seats. We see existing clients and particularly adding fewer seats, and they are still in seats with fewer seats than they would do in a normal year. And that's the biggest piece of the water retention rate. What do you think of that?

[00:48:29] No, I think that's right again. And it's a combination and go into detail of this last quarter in Q2 and actually, you know, we rolled into Q3. Each of these measures actually improved. And so, you know, the point on fewer clients increasing or increasing at a lower rate, that trend continued into Q3, but it was definitely better than what we experienced in Q2. And the same could be said around clients that were reducing their spend. So we still saw that same happen in Q3, but it was much less pronounced than what we experienced in Q2.

[00:49:13] And just on the events side, would you be willing to share what the advance to the Ground Zero expectation when we call that a big chunk of fourth quarter?

[00:49:27] Yeah, I mean, historically, if you go back to the last normal year, we had eventa revenues were in the roughly 15 percent of total revenue range this year. Given what's happening, they're running closer to around a quarter of the conference revenue, just to put it in in rough perspective.

[00:49:55] Thank you. Our next question comes from the line of George Tom from Goldman Sachs. Your line is now open.

[00:50:02] Hi, thanks. Good morning. I wanted to drill into the demand environment, which you noted is stronger than you previously expected. Can you elaborate on which specific client segments you're seeing, the upside in gas and jobs and what specific macro or shutdown assumptions are embedded in your full year guidance?

[00:50:21] So you've started on it, mentioned in his remarks that in GTA seed grew and nearly all of our 10 largest countries was up double digits in Brazil, Japan, France and the Netherlands. And KVI grew across all sectors except for transportation and media, and it grew across every size enterprise. And so that kind of gives you a flavor for for GTA in GBS, we found we had growth, basically contributions from all the practice areas, meaning like H.R., Supply-Chain, sales, et cetera, except marketing. [00:50:55] As Craig mentioned his remarks, the marketing piece, we have some products that were just continuing which pulled that piece down, but the rest is quite strong.

[00:51:04] And George, you know, in terms of the outlook, you know, it's been choppy all along. It varies by region and geography in terms of lockdown's and relock downs and and things of that nature. [00:51:22] And so, you know, we've the good news for for a business like ours is the hunk of the revenue on the research line is is baked based on where we finished Q3. [00:51:37] And so, you know, the guy doesn't really doesn't get impacted all that significantly from whether, you know, there are new lockdown's or otherwise. Obviously, you know, it could have an impact on next year. But I think our sales teams are really focused on working through this. They've proven they can work through it in a lockdown or non lockdown environment. And we'll just continue working through the the selling cycles and renewal cycles as we close the year to the book as much and KVI and as much contract value growth is as possible.

[00:52:11] With regard to Lockdown's, we've you know, with our sales teams, we've had a discussion on what impact does it have, like in certain European countries. Now they're going back to Stronger Lockdown's. At least our sales team's perspective on it is that both we and our clients have learned to work in a lockdown environment and they don't anticipate the increased lockdowns you're seeing like in Europe having an impact on our bookings. So time will tell. But that's the sales change perspective.

[00:52:38] That's helpful. You're going to have full year EBITDA margins of slightly over 18 percent. That's up from 16 percent last year. Can you discuss how incremental margins may trend over the next two to four quarters as some of your costs, like TTN sales force hiring, come back?

[00:52:57] Yeah, it's a lot of it will be dependent on where we finish this year from a contract value growth perspective. And that has a pretty material or very material impact on the revenue run out for four for next year. You know, we have started to restore a lot of expenses related to compensation and benefits which continue to run consistently. And so there won't be a hurt or should be significant one time hurt when we put those those back on know, I think, you know, we'll obviously provide full color on on Twenty twenty one guidance in February when when when we get there. But for now, you know, we're just really focused on making sure that we we finish the year strong. You know, obviously, we have been able to take up our guidance on just about every count, you know, pretty, pretty nicely. And teams are just focused on making sure we finish the year strong and we'll we'll address what the internal margins look like and what the overall outlook looks like in February in Georgia.

[00:54:12] I'd add that, you know, we made a bunch of investments coming into twenty twenty and, you know, sort of the 17, 18, 19 period and 19 margins reflected that we came into at Twenty twenty focused on getting a return on those investments and having tight cost controls. And we expect to keep getting return on those investments over the next few years, as I mentioned earlier. And we intend to keep a tight cost controls as well. And so we're very focused on managing our margins in future years as well.

[00:54:43] Very helpful. Thank you.

[00:54:47] Thank you. Our next question comes from the line of Hans Mazari from Jefferies. Your line is now open.

[00:54:54] Hey, good morning. My my first question is just on sales force productivity. Maybe if you could just talk about, you know, getting back to 2019 levels on productivity, what what sort of under your control, what's what's not under your control and what kind of timeframe is realistic to get there? I know you're talked about KVI crossing in Q1, so maybe you could just give you best guess. And, you know, one sales force productivity across.

[00:55:26] So it's hard to forecast exactly when sales first person is going to drop as we come to to the call. We've certainly seen this year between Q2 and Q3 and improving all the kind of underlying all the underlying operational metrics that drive sales productivity. I talked about one of them, one client engagement, which ultimately drives retention and new business performed better than in Q3 than in Q2. And so those are things that are going to kind of drive it over time. I think we are learning how to sell in the pandemic has a factor. And so that will continue to get better. They also obviously, the more companies that go out of business and can't buy our products because of business, that has an impact on our productivity as well. So it's those kinds of factors.

[00:56:11] And as I would just add that, you know, it's going to really correlate very, very tightly to CV growth. And so, you know, again, it's sort of an output of CV growth or, you know, if you're running back the other way and input into the overall CV growth. But given that we have gotten disciplined, much more disciplined around the headcount growth and headcount vestments and Jean's point, getting yield on those investments and that we'll start having quote unquote easier compares in Q2, you know, the CV growth trough and the productivity growth trough should be on guard at very helpful.

[00:56:54] And just my follow up question is just two quick ones. One is the territory optimization kind of kind of behind you was sort of an ongoing process. And then just on the research side, anything to call out on the non subscription piece, how that trended? I know it's small at 10 percent or so of research, but just on those two points, anything to Asia-Pac. Thanks so much.

[00:57:21] Yeah, the church randomization is really important to us because different territories have different structural characteristics that make them better or worse, a kind of simple and it varies over time. A simple example is a territory selling to restaurants in this state today doesn't have as much upside potential as a territory selling to tech companies. And so we real time shift our territories around to the territories that are away from the ones that are potentially the ones that have a lot of more potential. So it's not a one time thing if we just implemented kind of the most sophisticated versions of our church we're planning this year. And it's something we're going into an ongoing basis as the economy around us changes. And it's an important driver of sales productivity.

[00:58:06] And then on the non subspecialties, the it's actually holding up pretty well. It was down three percent year over year in the quarter, which is better than we had initially forecasted. So the answer to your point, relatively small things, but it's holding up better than we had initially thought, down three percent year over year.

[00:58:28] Great. Thank you.

[00:58:32] Thank you. Our next question comes from the line of Frank Williams from Wells Fargo. Your line is now open.

[00:58:38] Thank you and good morning, everyone. Can you share some of the lessons that you've learned from hosting virtual conferences so far? And if you think there are any opportunities to expand the reach or the breadth of future conferences through a hybrid, in-person virtual model.

[00:59:01] Hey, Jeanne, so we've heard a lot of lessons, personal conferences, as Craig mentioned, we started with some pilots in Q2 and then have held our our virtual equivalents that were large of our larger conferences this year. Same thing is true, actually, of the events of conferences in the past, were in person, in person, and now are all virtual. And we've learned things about like what technologies to use. Some technologies work better than others. And each time we have, you know, things didn't work as well as we planned, we fix those technology problems. We've been experiment with things like how long each session should be, you know, because in a virtual environment, people on different session lengths. We experimented with how long the conference itself should be. Should it be two days, four days for the for the longer conferences and getting customer feedback or tweaking the length of the conferences. The content is pretty much the same and production values are very similar if you go to any of our conferences. And that has worked pretty well. So those are kind of the key learnings, I'd say. And in terms of opportunity, expand. You know, the way we're looking at it is if there's demand going forward, when in person conferences return, if there's still demand for personal promises, we're going to be really well positioned to do that. And we will certainly do it if demand is there. And my what I believe is demand will be there, but we're going to be flexible based on what the market says.

[01:00:22] Thank you very much.

[01:00:26] Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Mr. Paul for closing remarks.

[01:00:35] So summarize what you heard in today's call. We accelerated the creation of new, highly relevant content for our clients. Across every function, we successfully pivoted to virtual conferences which were well attended and delivered high value to our clients. Our clients are more engaged than ever. The client engagement. We adapted our operations to work remotely, just effectively, as we did from our offices, and we combined this early, decisive actions to optimize our cost structure. The combination of these factors has resulted in improvements across most of our operational metrics compared to the improvement in our operational metrics. In turn, has resulted improvement in our Q3 financial metrics and guidance compared to Q2 revenue and even performed better than we expected in free cash flow generation is very strong. Thanks for joining us and I look forward to updating you again later in the New Year. [01:01:24] Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now just.