Good morning, ladies and gentlemen, and welcome to the Gartner's earnings conference call for second quarter 2017. A replay of this call will be available through September 7 2017. The replay can be assessed by dialing 888 286-8010 for domestic calls and 617-801 6888 for international calls by entering the passcode 50953420. This call is being simultaneously webcast and will be archived on Gartner's website at www.gardner.com for approximately 30 days. I will now turn the conference over to Sherif Bakra Gartner's Group Vice President of Investor Relations for opening remarks and introductions.
Please go ahead, sir.
Thank you, Jasmine, and good morning, everyone. Welcome to Gartner's 2nd quarter 2017 earnings call. I'm Sharif Bakra, Head of Investor Relations at Gartner. With me today in Stanford is our Chief Executive Officer, Gene Hall and our Chief Financial Officer, Craig Safian. This call will include a discussion of Q2 2017 financial results as disclosed in today's press release as well as our updated outlook for 2017.
After our prepared remarks, you will have an opportunity to ask questions. In addition to today's press release, we have provided an accompanying presentation as a reference point for investors and analysts. Both the press release and the presentation are available on our website, investor dotcartner.com. Now before we begin, I'd like to remind you that 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 2016 annual report on Form Ten K and quarterly reports on Form 10 Q as well as other filings with the SEC.
Would encourage all of you to review these risk factors listed in these documents. With that, I'd like to hand the call over to Gartner's Chief Executive Officer, Gene Hall. Jean?
Good morning, and welcome to our Q2 earnings call. We delivered another great quarter of double digit growth in the second quarter of 2017. I continue to be Let me begin by reiterating environment. There's slow macroeconomic growth, volatile commodity prices and exchange rates, political uncertainties such as Brexit. Enterprises around the world address these critical issues with cross functional teams.
The combination of CEB and Gartner lets us help clients address these issues with every function in the business. In addition, virtually every company in the world is facing technology based disruption. No CEO can be competent by understanding how this impacts their company and their industry. The combination of Gartner's technology expertise plus CV's business expertise gives us an unprecedented ability to help clients navigate these Beyond the impact on whole industries, technology is becoming critical in every function of the business. HCR can't hire the best people if they don't use analytics.
Customer service is negatively impacted if a company doesn't use artificial intelligence and so on for every function of the business. And the pace of technology driven changes only accelerating. The combination of Gartner plus CEP allows us to help clients fully use technology in every business function. Finally, Krogner and CP both had best practices in running their businesses. By combining the best of both operational we will be better than either company was alone.
The combination of Gartner plus CEV will provide a quantum leap in our own ability to help clients and in our operational effectiveness. The combination of CB and Gartner's other benefits as well. CB's Evanta events business provides clients with high value local events that are highly complementary to traditional partnered destination events, such as Symposium. The combination of CEP and Gartner also brings CEV's talent assessment business. Over the next decade and beyond, we expect analytic become a critical factor in virtually all hiring situations and CB is the market leader in this critical space.
Let's now turn to how the business is performed in Q2. Consistent with our previous earnings calls and because of ongoing currency fluctuations globally, want to talk about our results in FX neutral terms. During Q2, the Traditional Gartner business accelerated. In the second quarter of 2017, total company revenues increased by 15%. Traditional Gartner contract value growth was also 15%.
We achieved double digit contract value growth in every region across every size company and in virtually every industry. Traditional Gartner client retention was at 83%, which is consistent with the second quarter of 2016. Wallet retention was 105%, is appointed by the same quarter last year. Both retention metrics are near all time highs. Increasing sales productivity has been and remains a top priority for us.
Over the past few years, we've put in a number of programs to improve sales productivity. In Q2, we saw the impact of those programs with sales productivity improving by 11% organically over the prior year. In traditional Gartner Consulting, we continue to deepen our research relationships with our largest clients and deliver great value. For Q2 2017, our consulting business grew 8%. We continue to grow our managing partner strategy and maintain 4 months of backlog.
Is in line with our operational targets. Our traditional Gartner events revenues grew 13% in the second quarter of 2017. We hosted 25 events with more than 18,000 attendees compared to roughly 15,000 attendees across the same number of events last year. So, Q2 was a strong quarter operationally for the traditional Gartner business, and we're committed to maintain this momentum as we integrate with CEB. Performance of the traditional CEB business was slightly improved during Q2.
Contract value in the traditional CEB research business grew 1% is an improvement over the past several quarters. Wall retention also improved from 93% to 94%. Revenues for the Talent Assessment segment fell 6%. We believe the decline in revenues was due primarily to a Salesforce reorganization CEV made earlier this year, which integrated channel assessment sales with CEV research sales. Channel assessment bookings were up modestly year over year we've quickly identified improvement opportunities.
The Gartner CEB post merger integration is going great. We've taken an aggressive approach to integrating the 2 companies to concentrate the changes that are likely to be the most disruptive in 2017. This will allow us the Gartner and CED research and advisory teams are integrated. The staff functions such as HR And Finance are integrated. Refractionalized and integrated the Gartner and CD sales teams.
1 of our biggest growth opportunities is introducing new products. We've already introduced several new products to offer substantially more value to functional business leaders in HR, finance, sales, legal and IT, and additional products will follow in the coming months. Retention is critical in any subscription business, So we've begun building service teams to ensure high retention of the new products as well as existing CEB clients. We're committed to achieving double digit contract value growth in the traditional CB functional areas, such as HR And Finance. We've grown our sales recruiting teams and have already hired a significant number of new entry level sales people.
With a group's aggressive recruiting plans in place, we plan to enter 2018 with a double digit growth in the traditional CEB sales force. We've also changed Ceb's traditional commercial terms. Ceb's traditional research offerings were generally enterprise agreements, which offered unrestricted access to everyone within the organization Enterprise agreements offer less valued clients than seat based offerings. As a result, all of our new offerings are seat based. Over time, all the traditional CV products will be replaced by seat based products.
In the interim, existing CV products will be sold as limitations rather than as enterprise agreements. CV often give clients discounts as an incentive to close business. At Gartner, we found that offering discounts doesn't offer much value to clients and is distraction from discussing value with them. So we're phasing out discounting for new clients. We've integrated the company's event businesses.
The CV destination events have been integrated with the Carter events business, we are building exhibitor and ticket sales forces to fully monetize these great events. We've brought in an experienced events leader for the Evanta business. CEB has integrated many aspects of the talent assessment business with the CEB Research Business. We believe the talent assessment business will be much more flow as a standalone business analogous to the way we run Gartner Events And Gartner Consulting businesses. As a result, We have unintecrated talent assessment business and established it as a standalone business.
We've hired a strong general manager for the business who's a senior leader in the SHL talent assessment business before it was acquired by CEB. While we're combining Gartner and CEB to accelerate growth, there are significant synergies. We've achieved approximately $40,000,000 in projected run rate savings within the 1st 120 days. As I said previously,
we plan to fund some
of the investments I described earlier using a portion of these synergies. Now of course, there's more work to be done. Specifically, the systems that support the business need to be harmonized and or integrated. And will capture significant additional run rate savings over the next couple of years. We've built a very aggressive integration plan, and progress to date has been great.
For example, turnover in the traditional CB Salesforce has dropped by about 10 percentage points. A significant and important improvement. This sales force is extremely enthusiastic for the exciting new products. We found the quality of research insights produced by traditional CEB to be even more exceptional than we'd initially assessed. We've also found people throughout the organization are extraordinarily talented, capable and committed to providing great service to clients.
The leadership changes in the Avanta and talent assessment businesses have been well received by associates in those business segments. As I mentioned earlier, we've purposely chosen to move rapidly with integrating CB and Gartner. We've done this to get the full benefits from integration sooner, to get disruptions we may face completed during 2017. We've also designed the integration program to minimize the impact traditional Gartner business. The strong Q2 results in our traditional Gartner business reflect this approach.
The changes I discussed earlier disproportionately impact the traditional CB organization. For example, the traditional CB sales force will need to develop new skills as they begin selling Seapace products rather than enterprise agreements. Appliances often expect discounts in any product they buy. Traditional CV sales team will need to develop their skills selling without discounting. And we have plans in place to address these risks.
Given the Magic Food And PACE of Change, we could hit some speed bumps with the traditional CB segments during the second half of twenty seventeen. Those of the changes are based on well proven Gartner operational practices. Over the long term, we are confident these changes result in strong, sustained double digit growth in the traditional CD business areas, just as they have for the traditional Gartner business. Summarizing, the combination of CB and Gartner will create a quantum leap in capability and sustained extraordinary growth over the long term. We'll be able to address the mission critical priorities with leading insights from the best of the 2 organizations.
During Q2, the performance of the traditional Gartner business continued to accelerate. CD growth accelerated, retention strengthened, and sales productivity improved at double digit rates. In addition, the traditional CP business saw modest improvements. We developed a very aggressive integration plan and it's going great. We've already integrated our organizations.
Launch new products, introduce new commercial terms, accelerated sales force hiring, and set up talent assessment as a standalone business. That's just in the 1st 120 days. And we're just getting started. With that, I'll turn to Craig Safian, our Chief Financial Officer.
Thank you, Jean and good morning everyone. In addition to discussing our quarterly performance and updated annual outlook, I will spend some time this morning walking you through our new reportable segments and other disclosure highlights as a result of the CEB acquisition. Starting with our reporting segments. As you will see from today's press release, we now have 4 reportable segments. Research, consulting, events, as well as talent assessment and other.
Starting with research. Research continues to be our company revenues and approximately 80% of total gross contribution. Research comprises the previously disclosed Gartner Research segment with 2 additions. First, approximately 80% of the revenues of what was reported as the CEB segment. These revenues relate to 4 CEB subscription based research products and services, which were referred to primarily as BPDs.
The other and significantly smaller or SaaS. These revenues make up about 1% of research revenues, but were previously included in our Consulting segment. SaaS revenues are principally generated from 1 or 2 day research analyst engagements requested by our largest clients, for which they pay which represents slightly more than 9% of our full year 2016 combined company revenues and 4% of total gross contribution now no longer includes the SaaS revenues that I just Gartner Events business. CED's events revenues were predominantly comprised of the Avanta asset that was acquired in May 2016. On a full year 2016 basis, events represented approximately 9% of our combined revenues and 8% of total gross contribution.
Finally, we have added This segment is made up of CEB's talent assessment business plus the remaining 20 percent of CEB segment revenues that are not included in our core research segment. These revenues are related to ancillary CEB research products and services, such as training, workforce surveys and leadership academies. PA and Other represented approximately 9% of our combined 2016 revenues and 8% of total gross contribution. For modeling and comparability purposes, we are also providing historical revenues, adjusted revenues and contribution margin for the combined company in our 4 reportable segments for the 4 quarters of 2016 as well as Q1 2017. This information, along with an in-depth overview of our Q2 performance, is available in the two documents we have furnished to accompany this call.
Both located on our Investor Relations website. While we have folded CED into our reportable segments and added a new one, We are committed to providing the financial community with the appropriate level of transparency to be able to track the performance of the core CEB research business. In addition, we want to provide transparency to be able to continue to track the performance of the traditional Gartner business. On last quarter's call, I mentioned that we were in the process of harmonizing calculation methodologies to make key CEB metrics comparable and aligned with Gartner Metrics. As an example, for the traditional Gartner business, our total contract value metric represents the annualized value of all our subscription based contracts.
While CEB did report contract value, we have now recast that measure to be aligned with how we've traditionally done it with the Gartner business. In doing so, we have excluded certain CEB products and services that do not meet the criteria of our CV definition. You'll find the historical details of the recast contract value on Slide 19 in our earnings presentation. Similarly, we have harmonized how we calculate wallet retention to also be consistent with how we calculate retention at Gartner. I will come back and top line results using both GAAP revenue and adjusted revenue.
The only difference is that adjusted revenue excludes the deferred revenue fair value adjustment that is required as a part of purchase accounting. Financial performance for the quarter included total combined company adjusted revenue growth of 9%, driven by 13% growth for the traditional Gartner business, and a 3% decline for the acquired CEB business. Combined adjusted EBITDA of $185,000,000 and combined adjusted diluted EPS of $0.88 per share above the top end of our guidance range for the quarter Please note that our second quarter 2017 GAAP revenues of $844,000,000 includes an approximately $91,000,000 deferred revenue adjustment. Therefore, on an adjusted basis, our Our exceptional business model continues to create a consistently high level of free cash flow conversion. On a rolling 4 quarter basis, with 3 quarters of standalone Gartner and 1 quarter of Gartner plus CED, our reported free cash flow conversion was 118% of adjusted net income.
However, if we calculate free cash flow conversion on a rolling 4 quarter basis for the combined company, our free cash flow conversion would have been 126%. Through Q2. I'll now discuss our second quarter combined business segment and T and L in-depth, highlighting the performance traditional Gartner and acquired CED business where appropriate before turning to our balance sheet and cash flow dynamics. Will then close with remarks on our updated 2017 guidance, which incorporates our new reportable segments. We will then be happy to take your questions.
Please note that my segment discussion will focus on the adjusted revenue therefore adding back the deferred revenue fair value adjustment I just mentioned. Please also note that we've included a lot of this information in the presentations on our IR website. Beginning with research. On a combined basis, adjusted research revenue grew 11% in the 2nd quarter. The adjusted gross contribution margin for second quarter of 2016 on a comparable basis.
This modest decline is primarily due to our as Capterra, SCM World and L2 having lower gross contribution margins than our traditional business. Adjusted revenues for the traditional Gartner research business increased by 15% in the 2nd quarter. Acquisitions primarily L2 and SCM world had a slightly less than 2 point impact on the traditional Gartner research adjusted revenue growth for the quarter. Our other traditional Gartner research business metrics also remain very strong with accelerating contract value growth, accelerating sales productivity, and improvements in our retention metrics. Total contract value was almost $2,000,000,000 as of the end of Q2.
FX neutral growth of 15% versus the prior For reference in comparison, our Q2 2016 total contract value at current year FX rates was $1,730,000,000. On an organic basis, excluding the contribution Total contract value growth for traditional Gartner research would have been 14% on an FX neutral basis. Also an acceleration from the growth we growth in new business. From a traditional Gartner research perspective, client retention was 83%, up 40 basis points from the second quarter of 2016 and up slightly on a sequential basis. While retention ended at 105% for the quarter, up by almost a point year on year and 50 basis points on a sequential basis.
Both of our retention figures are close to our all time highs. New business growth for traditional Gartner research remains strong, up 14% year on year in Q2. The new business mix is consistent with prior quarters and remains balanced between new clients and sales of additional services and upgrades to existing clients. And as always, we also benefit from our consistent price increases. Our new business growth reflects our success in penetrating our vast market opportunity with both new and existing client enterprises.
We ended the first quarter with 11,164 enterprise clients, up 7% compared to It now stands at $179,000 per enterprise, up 8% versus prior year on an FX neutral basis. This increase in average spend reflects our ability to drive CV growth through both new and existing enterprises. Turning to sales productivity for the traditional Gartner research sales force. Over the last rolling four quarters, we delivered $265,000,000 FX neutral net contract value increase or NCVI. When divided by our beginning of period head count, which was 2297 quota bearing heads, our rolling 4 quarter productivity per account executive $116,000.
Excluding the impact of the L2 acquisition, sales productivity was up 11% year on year and As always, that the initiatives we have implemented to drive productivity will positively impact the results over both the short and long term. Turning to the performance of CEB Research in the quarter. CEB adjusted research revenues declined by 1% year on year in Q2. An improvement from the 4 Contract value converted to Gartner's methodology was $578,000,000, a 1% year on year increase on an FX neutral basis compared to a 1% decline also using Gartner's methodology ended the quarter at 94%, an increase of 80 basis points compared to the year ago quarter. Moving to events.
As I mentioned at the start of my comments, our events segment now includes the former CEB events business. Which is essentially the Avanta asset that CEB acquired in 2016, as well as CEB's destination events. Which include destination events, such as our Symposium series for CIOs. Avanta holds approximately 200 smaller community led events that don't require the attendee to travel. On a combined basis, adjusted events revenues increased by 10% year on year in Q2.
Vent's 2nd quarter adjusted gross contribution margin was 56%, down by approximately 200 basis points compared to the year ago quarter. While CEB events revenue was approximately flat on a year on year basis, the traditional Gartner events business had a very strong quarter in Q2. With a 13% year on year increase in same event revenue, a more than 100 basis point year on year improvement in contribution margin and an 18% increase in same event attendees. Turning to consulting. Percent on a reported basis and 8% FX neutral, driven by strong performance in our contract optimization business.
On the labor based side, billable headcount of 667 was up 7% and we had 128 managing partners at the end of Q2. A 14% increase over the year ago quarter. Backlog, the key leading indicator of future revenue growth for our consulting business ended the quarter at $91,000,000, down 1% year on year on an FX neutral basis. Consistent with our new segment presentation, Please note that our consulting backlog no longer includes the backlog associated with SAS. Consulting gross contribution margin increased by 160 basis points year on year, primarily due to the strong performance of the contract optimization business.
Turning to TA and other. Adjusted revenue in the TA and other segment declined by 6% compared to the year ago quarter. This was primarily due to We move quickly to address some of TA's legacy organizational issues, which we believe will drive improved performance going forward. Encouragingly, we did see some improved momentum towards the end of the quarter and ended Q2 with higher year on year bookings for the quarter. Moving down the income statement.
On a combined basis, SG and A increased by 10% year over year in the 2nd quarter. Our Salesforce continues to be our largest investment and as of the end of the second quarter, the traditional Gartner business had 2574 quota bearing sales associates. This is an increase of $277,000,000 or 12% from a year ago and we continue to plan for approximately 13% sales headcount growth for the traditional Gartner business in 2017. The acquisition of CED adds more than 500 quota bearing research sales associates. While this is essentially flat, on a year on year basis.
As Gene mentioned, we have already started to grow sales headcount and will leverage our proven best practices around recruiting, training and tools to drive accelerated CV growth and improve productivity. As a growth company and now as a much larger growth company, we also continue to invest in areas such as recruiting, technology, facilities and other areas to support our strategy At the same time, we were making good progress on cost synergies related to the CEB acquisition, specifically in G And A functions. Given the investments we have already made and plan to make through the balance of the year to drive accelerated growth in CEB's contract value, we continue to expect very modest net synergy flow through in 2017. We remain on track to deliver on our 2018 cost synergy target and are working very diligently Moving down the income statement. Depreciation charges increased year over year in the quarter, predominantly reflecting the addition of CEB, while amortization and integration charges were up significantly, again, related to the transaction.
Our GAAP tax rate for the quarter was 35.4%. Adjusting for acquisition and non recurring charges, our adjusted tax rate for the quarter was 30.9%. The lower than expected adjusted tax rate positively impacted our Q2 adjusted EPS by approximately 0.04 dollars. This was primarily due to to be approximately 33% to 34% and approximately 32% to 33% on an adjusted basis. GAAP diluted earnings per share was negative figure also includes $1.91 of non GAAP adjustments.
Therefore, on an adjusted basis, our EPS in Q2 was $0.88. Or $0.03 above the high end of our guidance range, helped by the lower adjusted tax rate I just referenced. Normalizing for this, our adjusted EPS would have been approximately $0.84 in the quarter. Turning now to cash. In Q2, operating cash flow was $112,000,000 compared to the standalone Gartner business in the year ago quarter.
As I commented last quarter, CEB has historically had different cash flow seasonality to Gartner. Where CEB's strongest cash flow quarter has been Q1, followed by its weakest quarter in Q2. On a combined basis, operating cash flow increased by significant acquisition and integration payments, which we adjust out for our free cash flow calculation. Pivoting the free cash flow q22 2017 CapEx was $31,000,000 and Q2 cash acquisition and integration payments were $48,000,000 compared to less than $1,000,000 in Q2 2016. This yields Q2 free cash flow of $129,000,000, approximately 50% higher when compared to combined company free cash flow The timing of our contract value growth is a key driver of our quarterly free cash flow performance and our strong research results from March and across Q2 have begun converting to We had a busy quarter related to the CEB acquisition, which closed in early April.
Balance sheet rather than the end of March snapshot. Relative to the approximately $3,600,000,000 of gross we've repaid more than $160,000,000 by the end of Q2, with a quarter ending gross debt level of approximately $3,500,000,000. From a net to approximately 4.1 times leverage on a pro form a combined last 12 months of adjusted EBITDA. Given the favorable cash flow characteristics of the combined company, we remain firmly on schedule to de lever to approximately 3 times gross leverage within the 1st 2 to 3 years of closing the acquisition. Slide 13 of the presentation provides you with our updated outlook for 2017.
As is our practice, our EPS guidance is on both a GAAP and adjusted basis. At a high level, our combined adjusted revenue outlook is unchanged, while we have tightened our full year adjusted EBITDA cash flow and EPS outlook ranges. In addition, we have also updated our segment guidance to reflect our new reporting structure. Which incorporates the CEB acquisition. And I'll also remind you that our full year guidance includes 12 months of Gartner plus 9 months of CEB results.
Starting with revenue. For 2017, we continue to expect combined company adjusted revenue of between 3.4 $3,500,000,000. This is comprised of the following. For research, we expect combined adjusted revenues between $2,570,000,000 $2,620,000,000. For the traditional Gartner research business, we expect to continue our end of mid teen revenue growth in 2017.
This is obviously supported by the very strong contract value growth we just reported. For consulting, we expect revenues of between $319,000,000 $334,000,000, which essentially reflects the shift in SaaS revenue from the Consulting segment to the Research segment. For events, we expect adjusted revenues of between 3 $28,000,000 $347,000,000. For the traditional Gartner events business, we continue to expect double digit adjusted revenue growth in 2017. And for TA and other, we expect adjusted revenue of between $214,000,000 $226,000,000.
Again, these are adjusted revenue ranges. You will find the reconciliation of our adjusted revenue guidance ranges to GAAP revenue on Slide 14 of the presentation. Turning to adjusted EBITDA.
As mentioned,
we have narrowed our expected adjusted EBITDA range for 2017 trimming the high end of our previous guidance range by $15,000,000. This modest reduction to the midpoint of our adjusted EBITDA changes due to our decision to accelerate certain frontline investments in areas that will fuel CEB's growth for the future. Given the rapid progress we have made so The other and smaller change is to our outlook for the Avanta And Talent Assessment Businesses where we have had to focus on fortifying the structures we have acquired to set them acquisition and integration charges, of which the vast majority are non cash in nature. Slide 15 of the presentation reconciles the per share difference between our GAAP and adjusted EPS guidance ranges. We now expect the after tax impact of these adjustments to total approximately $4.26 at the midpoint of our guidance.
Putting this all together, we now expect full year 2017 adjusted EPS of between $3.32 $3.49
per share.
Slide 17 details the key assumptions below EBITDA that we have used to calculate our updated adjusted EPS outlook. Given that our below the line assumptions are essentially unchanged, of rate for GAAP of approximately 33% to 34% and for adjusted earnings of approximately 32% to 33%. In addition, our tax rate may also of ASU 20sixteen-nine related to stock based awards as well as the timing of certain items. Finally, our EPS guidance is based on a weighted average fully diluted share count of approximately 89,500,000 to 90,500,000 shares for the full year 2017. Turning to our Q3 guidance for the third quarter of 2017, we expect GAAP EPS of between negative $0.67 and negative $0.72.
This includes approximately $1.20 per share of non GAAP adjusted dollars of between $0.48 $0.52 per share for the third quarter of 2017. To provide some additional color on expected seasonal trends, 3rd quarter is typically a seasonally light events quarter from both a traditional Gartner and CEB events perspective, followed by a seasonally strong Q4, where we typically generate half of our annual events revenue. In closing, we had a strong start to the year and we expect this performance to continue throughout the balance of 2017. Our Research business delivered another quarter of mid teens growth and contract value growth was 15%. We also saw business is on track to deliver double digit growth in 2017 and Consulting delivered another quarter of growth following a very strong year ago quarter.
A standalone Gartner perspective, our 2017 revenue and adjusted EBITDA outlook is largely unchanged and we expect to continue our trend of double digit growth. The addition of CEB further strengthens our ability to capture leap all functional business leaders across every industry and size of enterprise worldwide. And the deal was immediately accretive to our bottom line. As Gene mentioned, the integration is doing exceptionally well. We set aggressive timelines and we are achieving or beating them.
This has given us the confidence to accelerate a number of investments such as growing the CEB sales force to accelerate our ability to capture the vast market opportunity that And it's important to note, we've done all that while driving acceleration of performance in the traditional Gartner business. Now I'll turn the call back over to the operator and we'll be happy to take your questions.
And our first question comes from the line of Jeff Meuler with Baird. Please proceed.
Yes, thank you. Sounds like a lot of good things going on and a lot of positives from the CEB. So I guess the the one negative surprise was the Avanta and talent assessment business, but it's nothing to do with, the value prop of the business relative to expectations. It's just like some other things at Ceb, how it was operated in execution, and you've identified that and are making the changes?
Hi, Jeff, it's Jean. Yes, so that's a very fair characterization. Both businesses are terrific. I'll take Avonzo first. Vonzo is a business that we do very well in fact, with CB bought it, we would have liked to have bought it.
And so it's a terrific business. Very complimentary. Seabee did not have we have probably the world's leading events business. Seabee was not really in the events business and didn't run it as effectively as it could have, we think. And so any event, we've got a great leader for the business.
We've made a bunch of operational changes and we think that's going to be a great source of future growth. Again, it's a business we do very well anyway. So we're very excited about that. Talent Assessment's a similar story, which is, as I said in my remarks, talent assessment is an area that we think look out over the next decade beyond, it's a huge growth area because every company is going to be using analytics to hire. And the our talent assessment business is the market leader in that space.
And, the there are some businesses that should be integrated with research and some that will be separate we had made the decision to try and integrate it and we don't think it worked that great. We've set up a standalone business, got a great leader for it. And in fact, as I mentioned, the bookings actually is on a good track. So the revenues were a little disappointing, but that's obviously for bookings in the past. The bookings actually were on a good track and we're quite optimistic about the business.
Just another example there is there are a lot of open sales territories, which obviously you don't sell as much in open sales territories. We'll fix those kinds of problems.
Okay, great. And then on the, I guess, you're ahead of plan for the integration. So you have the footing in place to start to accelerate the investments and especially the sales force growth sooner than expected at at CEB. So that's the other, I guess, change if I'm characterizing that correctly. And can you give us any sense?
I think you said exit with 10% growth at the CEB Salesforce headcount. Was there any prior expectation just in terms of sizing up how much you're accelerating things?
So, the overall integrations TV is going extraordinarily well. It's going you, when you plan these things before the deal, you plan a certain way. Things have gone very well. So as I mentioned, organizationally, we're essentially 100% integrated the most important, the biggest opportunity is we've already introduced new integrated products, which we're quite excited about, and the sales force is quite excited about, We've gotten sales force turnover in the CV sales force down already because they're excited about being part of a sales driven company and also new offerings, etcetera. And in addition to that, we've started ramping up hiring of salespeople at a faster rate than we might have thought beforehand just because things have gone quite well.
And so what I said in my remarks is that we expect to enter 2018 with double digit growth in the CEB traditional Salesforce area.
And Jeff, it's Craig. The additional color I'd add is we always contemplated in our longer term mid term and longer term business case. Absolutely growing the CEB Salesforce over time given the size of the market opportunity. I think given everything we've seen in the 1st 120 days, it gave us the confidence to actually pull that forward because as Gene mentioned, the integration was going exceptionally well. We're able to actually get new products out market.
Sooner than we thought. And so given all of that, we decided to pull forward essentially the investment in growing that CEB sales force.
Okay. That all makes a lot of sense. And then are you willing to start providing any sense of how you're thinking about the TAM for the CEB business at this point?
So we're not going to put any quantification yet. We'll do we'll probably do that at an Investor Day, early next year. But the way one way to think about it is we believe that, so if you look at the functions in a typical enterprise, things like IT, HR, sales, etcetera. There are some functions that are comparable sized with in terms of number of people budgeting the organization as IT or maybe even bigger. So like in a lot of companies, the sales force and the sales spend could be as bigger or bigger than the IT budget.
HR is often comparable to the IT budget. And so as we look at it, a lot of the new functions that we're getting with CEB have the potential to be as big or even bigger than the IT market Other functions are smaller. So like legal, for example, typically wouldn't have as many people as big a budget. So it would definitely be smaller. And so I think there are a number of functions which we think have very huge opportunity actually all of them have huge opportunities.
Some are typical of IT or even bigger and some will be a little and then we'll size that more precisely, next year at Investor Day is kind of our attention.
Okay. Thank you.
And our next question comes from the line of Gary Bisbee with RBC. Please proceed.
Hey guys, Good morning. Craig, I guess the first question, so the Q3 guidance is quite a bit below what we were expecting. Can you give us any incremental color on the cadence spending or other factors that would be impacting the level of profitability next quarter?
Yes, good morning, Gary. I think it's actually, really a seasonality thing in terms of the calendar of the event schedule. So you think about our business, spending is pretty consistent on a quarter over quarter basis, given the bulk of our our spending relates to people on board. We've always had a skew that showed Q1 and Q3 as our lightest profit quarters. And that's really driven by, our events calendar with Q2 and Q4 being bigger event revenue quarters.
We've only compounded that with the CEV acquisition where the Avanta business is predominantly a Q2 and Q4 revenue generator. And in Q1 and Q3, there's essentially no revenues, but we are carrying costs related to the team that delivers those events. And so I think, essentially, it's just We are now just a little bit more heavily weighted in Q4 given the event of business. And the other thing I mentioned is last year's Q4 we did not perform as we wanted to on the events business. As I mentioned in my prepared remarks, we're actually back on track on our events business.
So we actually expect to deliver a nice growth in events contribution, in Q4 as well. So it's really those 2 factors.
Okay, great. And then, Gene, you acknowledge the potential for some, I think you call them speed bumps within the CEB segment as you push through all these positive changes. Is that can you give us a sense as to is that largely sales related and would that impact research or could where would that come and how any way to size what that would be, I guess, is what I'm getting at? Thanks.
As you mentioned, we're making a lot of operational changes, which are really proven practices that we've done at Gartner and have really been key to the great double digit growth we've had over such a long period of time. So we want to implement those things at CEB. And we expect that it's going to have the same results at CEB get us that kind of double digit growth rate. As we mentioned, I said, there might be, so far, we've not hit speed bumps, but it's certainly prudent to believe that as you make these changes that there could be some speed bumps that you hit along the way. It could be anywhere in the business, but I think the one that would be most likely would be in sales, where again, the sales people have to develop new skills on along the lines in particular in two areas.
1 is Gartner still seat based products. Lifrisco and Gartner, it was enterprise agreements. And we so we noticed transition from enterprise to seed based, but it does require different skills in terms of how you talk to clients and explain the value. And then secondly, the whole array of discounting where we've established a policy. Our clients we don't just count, let's focus on the value that you're getting from the product.
But that's not how most companies operate, including the way CP did. So I think those 2 areas could impact sales. Haven't seen anything yet, but we think it certainly could happen.
And Gary, specifically it would be an impact, probably most acutely on new business. From a retention perspective, we're We're working with our clients. We're making sure they're engaged in getting value and we'll continue to renew them. And as you saw, we actually saw a modest uptick in the wallet retention rate for CAB. So the speed bump potential, again, these aren't huge speed bumps.
These are probably smaller
speed bumps.
But is really on the new business side.
The other thing I'd say, Gary, in terms of the risk is the Salesforce, the CV Salesforce, we've taken these changes, they totally understand why we want to make these changes, why gives them more better market opportunity and are think quite enthusiastic about the changes. And so, but we do think despite all the things sort of looking very positive, we do think it's prudent that something that we could have some tea bumps. And as you also on retention, we're quite optimistic.
That makes sense. And then just one last quick one. On that retention point, I think you've highlighted this from the beginning as one of the biggest opportunities. Have you put in your model and or is that something that we should think takes longer to really begin? I realize it'll take a while to show up in the but is that one of the things you've been able to do quickly?
Thank you.
We've started putting that model in fact and we've also discovered some great news with it, which is When CEP clients have the same level of engagement as Gartner clients, they have the same retention rates. And so, we have a lot of confidence that as we put these programs in place, that there's no reason CV retention shouldn't be as good as Gartner retention. We've already started doing those. And again, as you can tell, we've started seeing those results. We're not done.
There's still a lot of work to be done, but we're well on the path.
And our next question comes from the line of Tim McHugh with William Blair. Please proceed.
Yes, thanks. I was wondering if you mentioned some of the change to the outlook for guidance. It was kind of two dimensions, a little bit of it was Evanta and SHL and some of the I forget how you phrased it, but changes you made there. I guess, can you quantify that aspect of it versus the other part, how much of the change in outlook is from each?
Yes, sure. Hey, good morning, Tim. The way to think about it is, I think the majority of the change relates to us accelerating investments that we believe will drive great long term value So thinking that 60%, 70% of the change, balance related to some softness on TA and Evanta revenues and also quite frankly investing with the right leadership and filling out the teams so that we can actually deliver the long term in those 2 businesses as well. But I think roughly 60%, 70% on the acceleration investment, balance on for defying the TA and Avanta businesses.
And the accelerated investment, I know you, it's early to think about, 2018 at this point, I guess, but is this a pull forward in spending from 2017 from 2018 to 2017? Or is this a pull forward, I guess, in the contact of a kind of a medium term increased investment outlook. Just trying to think of, do we get back some of the spending we're looking at and at here in 2018? Or is this a couple of years now before we kind of recoup and get back to maybe the margin levels that that you otherwise would have expected?
So, Tim, I think that, the way to think about it is the acceleration on the investment are some of the things that Jean mentioned in his prepared remarks. So probably the biggest one related to actually starting to grow the sales force, again, where CED research sales had been flattish the number of headcount over the last several years. And so again, we always contemplated as a part of our business case that because of that market opportunity we talked about a little bit earlier that we would be consistently growing the CEB sales force over time. The reason why we've pulled forward the investment or actually the better way to articulate it is we've started the investment a little bit earlier than we had originally contemplated is that number 1, integration was going really, really well. And we saw the opportunity to do that.
Number 2, if we get them on board, and trained over the course of 2017, while there'll still be new salespeople who inherently have lower productivity, they will actually yield some benefit in 2018. But again, you know the cycle of how when we hire new salespeople, year 1, they're less productive in year 2, they're a little bit more productive. And then by the year 3, they typically look like a fully tenured salesperson. So in essence, we pulled forward the training and the higher recruiting and training so that we can start the journey a little bit sooner than we had originally contemplated.
Okay. And then just one last one if I could from an operating metric standpoint, I just want to, I guess, understand what you're saying, Craig, are you going to give us at least for a little while here the CEB versus the Gartner legacy Gartner contributions to these new segments? Or is this kind of the last quarter where we see that. And then what should we expect from the kind of the operating metrics standpoint? Are we going to get sales headcount and so forth separately, for Gartner versus CV and same thing with a lot of retention and so forth.
Yes, it's a great question, Tim. The what I can tell you is through the end of 2017, we will break out contract value growth and wallet retention for the traditional Gartner business and the traditional CEB business. It's harder to do the breakout on revenues, segment expense and contribution margin. So we'll try and focus on on the key operating measures so that we can show you progress both on the traditional Gartner side and on the traditional CEV side. As Jean mentioned, we are fully integrating across the board and that makes pulling and parsing some of it a little bit more difficult.
As we head into 2018, there are some shifts in terms of CEB, had a technology business selling to CIOs and technology professionals, we've already integrated that into the Gartner Technology Salesforce. And we had a supply chain and marketing sales organization and we're integrating that into the what was the traditional CEB sales force. So the fidelity gets a little, hard to track. That said, we'll figure out the right way to provide transparency and progress on what was the traditional Gartner business maybe with a few tweaks. Based on those integration adjustments I mentioned and on the traditional CEB business.
Again, with a couple tweaks to reflect, how we've actually integrated and are running the business.
Okay. Thank you.
And our next question comes from the line of Manav Patak with Barclays. Please proceed.
Yes, thank you. Good morning, gentlemen. Jean, the first question I had, you've always been positive and bullish about this deal, but I guess, some of the choice of words today were pretty forceful in terms of tremendous value, quantum leap aggressive approach, etcetera, etcetera. I was just wondering this early into the integration, was it just that you found a lot of the easy loopholes that you didn't think you would find the fixed fee be or broadly, maybe you can just help, understand that those choice of words
Yes, great question. So, you know, Ceb before we bought them was a public company, And as such, didn't give us a lot of access to their people or their internal information. We essentially had no access until after we closed, which was again, 4 months ago. So it wasn't that long ago. And we did a lot of work beforehand actually over, or as you know, over a decade, with customer research and research you can get on the outside.
But having done that, you don't know until after the acquisition, how enthusiastic associates are going to be. You don't know kind of the internal data like we talked about how we calculate client retention versus how they thought it was a little bit different. And so, while beforehand, we were quite enthusiastic and obviously believed tremendous amount of value. What we found after, as we've closed the deal and gotten access to the inside information, and actually talked to the associates, we found that it's actually even better than we thought it was going to be. And so that's why you and the second thing because of that is, that were going faster than we had laid out, originally before we had all the inside information that we have now.
The combination of things like the sales forces enthusiasm for the new products and for being a part of Gartner, and the operational improvements from combining the research and advisory organizations between Gartner and CEB. And the fact that things like I mentioned a moment ago, that all the facts, the internal facts that we now have that we didn't have overran to say, if we do the same retention programs, with CEB clients, we should get, the same results in retention, same high great results of retention, as we've gotten with Gartner. And so we didn't have all that data beforehand. And while the indicators were very positive, we found this particular case that things were even better than we thought. We've also developed specific operational plans.
I'll give you an example. We want to grow the sales force. One of the things you're going to sell first is we had to make sure there was capacity in order to actually have higher growth. We didn't know that before we bought CEB. Now we actually understood where there's manager capacity and I've identified, as I mentioned earlier, that we believe we can get double digit growth in the sales force into 2018 with double digit growth in sales first.
We know we're going to put the sales people, who's going to manage them, where we're going to get the hiring from. That's stuff that we just couldn't know ahead of time. And so we had to be more, take a more cautious approach before we actually had the internal facts.
Okay, fine. That sense. And then just on the talent assessment or TA side of the stuff, I think since we acquired it, it's sort of been disappointing for us to see that performance not get any better. I mean, you talked about HR analytics being something over the next decade, but you have a lot of other stuff going on in there. So may in your company rather, so I mean, maybe what can you do with TA?
Is that going to be a focus area or maybe just some more color there?
So, again, where we start from is the TA business,
maybe just some more color there?
So, yeah, where we start from is, the TA business the market itself is a great place to be because again, in fact, we use analytics extensively internally, garbage. We do this really well. And we believe, as I said over the next decade, every company will be using analytics to hire. And, CEB, our channel assessment business is that market leader. And so the sort of forensics there really well.
There were a number of internal operational problems that they had. So for example, open sales territories, when they that was one problem. She don't sell much. She opened sales territories. The other one is significantly delayed, I think, years of new product introductions that now have been introduced.
Plant retention programs, really the same kind of retention programs. You can do the same thing in talent assessment as we have our research And so there are a number of operational improvements that we see that we believe this business over time will be a great business. And in fact, I'm encouraged by the fact that, that our bookings actually, I wouldn't call 1% growth in book good, but it's better than what they'd had previously. And I'm quite optimistic as we felt territories as we introduced new products, as we put retention programs in place, this business has great potential.
Okay. And then just last question, maybe these new products and stuff that you mentioned around CAB, I mean, are those being marketed just to the traditional CB customers? Or could we see some of these products being highlighted symposiums or whatever in terms of cross sell?
So it's both. So, we've already introduced these. These are in the market today. So, I'll use IT, for example. So, CEP had a set of had research and a research and advisory team that folks of silly CIOs.
And obviously, Gartner did as well. When we look at it, the specific outreach, right, this is another area that we've been very pleased is that the specific offerings, even in areas like IT are highly complimentary, where CEP had many more things like case studies that and user generated benchmarks that actually Gartner has been asking us for for years, so we've actually put all of the CED resources and advisory resources together with the Gartner and create a new product that has a separate brand. And in fact, we'll be offered to all of our we're going to go back and try to upgrade all our existing Gartner clients. And of course, it'll be for sale to all the new Gartner clients. That's on the IT side.
If you then go to places like HR, we've taken, see these great research which they would in HR, which is it's the world they're the just like we are in IQ, they are in HR, but they weren't as good as technology. Well, Gardner had a bunch of technology research that relates to HR people. It's things like should you use Workday? How do you implement it? Things like Workday is a an HR tool for companies to use that's typically chosen and run by the HR department.
So in any event, so Obviously, Gartner had a lot more expertise in the technology side in HR. C. V. Had all the world's best business expertise in HR, We've actually put all that together in a combined offering that's better than either company had before. That's in the market today.
So the IT product I mentioned before is today. So is the HR product, and we're doing the same thing for finance and other areas of the business, the areas that I mentioned earlier. And so these products are actually their seat based and they actually have research, all of them have researched from both companies. So it's better than anything that was available previously.
Got it. Thanks a lot guys. Appreciate the time and details.
And our next question comes from the line of Anj Sane with Credit Suisse. Please proceed. Hi,
good morning. Thanks for taking my questions. First off, I was hoping you could share some thoughts on the improvement you guys have on in the early days on CV, CV growth and wallet retention. It seems like there's some stabilization that's going on maybe the retooling of contract structures, even Salesforce is driving this. But is there any noise that we should be aware of around this improvement in the early days?
Just trying to get a sense of whether this trajectory is somewhat permanent in your view? Or could the speed bumps reference cause them to worse again in the early days?
So, I guess, Anshas, Jean, the way I would characterize it is that, the changes we're making on things like the best the products, the best of both products I just mentioned, improve retention programs, how the way we manage the sales force Those are all things that are like proven practices that they're going to work over time. They're going to drive double digit growth in, in CTB's business. And it's going to have great margins just like Carton does. Getting from here to there, all I'm saying is the, it's possible that, it'll take like, As an example, maybe we'll have to we'll train the CV sales teams on, certain aspects let's go back and retrain them again or something like that. So to me, there's no doubt that you will get to a great place.
But having not done it yet, having a lot of change simultaneously, we're certainly prudent in thinking that there could be some things that we have to that we'll figure out by the way, we do this all the time. We find problems. We go address them, fix it, and get on with it.
And Anj, it's Craig. I think the way to think about the potential trajectory around wallet retention. There are really 2 primary drivers there. Number 1 is what you typically think about around retention, which is making sure the clients are getting consistent value over the life of the contract and renewing year after year after year after year. And again, we have best practices around how to do that.
And we're already, as we mentioned earlier, rolling out, portions or all of those test practices across the way we service the CEB research clients. The other way we drive wallet retention at Gartner is by penetrating, existing buying centers, and existing enterprises. And with a enterprise type licensing model, that's difficult to do. And that's also one of the reasons why it's so important that we're shifting to seat based because over the long term, that will allow us to actually further penetrate organizations as well. And that will flow through into the WALT retention metric over again, that's not going to happen overnight.
But if you think about those 2 levers are the way that we can get wallet retention looking and feeling like the Gartner wallet retention over time.
Okay, got it. That's helpful. And then for the question. I was wondering if you can speak to the Salesforce Productivity X L2. It's really strong improvement year over year.
So any further elaboration on which training programs are driving this, is there any benefit from lapping some of the energy and utilities related drag you guys had referenced last year? And perhaps any thoughts on how you see Salesforce productivity being bid as you integrate CEB? Thanks.
So, the Salesforce productivity is being driven by the things you mentioned, which is and we track the quality of the 3 categories broadly, as you know, are recruiting, training and tools. We track the quality of people we're hiring. And if we look at metrics like time for sale, how much people sell in their 1st year, things like that, as well as the the metrics when we're in the hiring process that are predictive, all those things, tell us that we are actually hiring better people now than we were a year ago. And a year ago, we're hiring better people than we were 2 years ago. And so that the fact that we're hiring people that are a better fit with what we do is actually one of the things driving it.
On top of that, we continue to enhance our training program as we learn more about, how to help new people become productive very quickly. Enhanced training focused on those things with training and coaching. And then as I mentioned, we have these quite advanced artificial intelligence based tools that, help sales people prioritize what they should be doing every single day. All three of those are actually working the way that we have designed them and them to work. And that's the primary thing that is driving our proven sales productivity.
Having said that, to your point, we are lapping some from last year in terms of certain segments weren't doing as well. But I can assure you that today's environment, not every segment is doing great. We have we what I care for us as normal environment is you have some things that are doing great, some things are okay, and some things you got to work on, we're in that environment today. And so the, while I sort of say 80% of it is probably just qualitatively 80% is kind of due to all the changes. And then 20% is some of the industries that were in bad shape a year ago are not quite as bad now, although there's still some bad industries.
And the other thing I mentioned on, and I think you know this from conversations with us over the years is there's no finish line for us in terms of productivity. We're pleased that we've seen some improvement. We're not done. We're going to keep trying to hire better people and improve that year over year and get them trained up better and improve the tools and improve products and improve the research that impact retention as well. And so, we're moving in the right direction and we're going to keep driving it.
Because we know that ultimately improving our sales productivity will accelerate our contract value and research revenue
we have initiatives underway today in all four of those areas recruiting training tools and retention, to take the next leap over the next year.
Super helpful. Thanks a lot.
And our final question comes from the line of Jeff Siver with BMO. Please proceed.
Hey, good morning. It's Andrew Chen for Jeff. Thanks for taking the question. I was wondering if you guys would be able to share any updated thoughts on in terms of the margin structure of the combined company, now that you've had a few months to integrate the company, whether it's a timeline or any potential synergies that you're seeing there or is it more of a focus on growth and product development at this point?
Good morning, Andrew. It's Craig. On the margin side, if you think about, from a business perspective, If you go segment by segment, our view is that the CEB Research products will run at roughly the same gross margin and incremental gross margin targets that we run, the traditional Gartner business at. And so think in the 70% range. I think same thing on the event side.
We haven't really changed the margin profile all that much. And again, we're trying to drive significant growth in both of those businesses. And so I'd expect margins maybe on research to improve a little bit as we're tracking a little bit behind the 70% over time, but essentially kind of tracking where we are. The one thing I would say though on the gross margin is as we continue to shift the mix. So as research continues to be our largest by far and fastest growing segment.
We do get some gross margin leverage from continuing to have a bigger and bigger piece of the research being a bigger and bigger piece of the pie over time. On SG and A, obviously on the G and A side, we're focused on harvesting cost synergies from the deal And as Jean and I both mentioned, we are aggressively going after those. And some of them will be able to flow through in 2018 of them will take a little bit longer just given timing of systems integrations and platform integrations and things like that. But on the sales side and given the size of the market opportunity, we expect to continue to invest in growing the CEB sales force to drive accelerated contract value growth on the traditional CEB business. And as we've seen on the traditional Gartner business, that is an investment upfront as year productivity is low as we talked about earlier.
2nd year productivity a little bit better. 3rd year productivity starting to look like a fully tenured salesperson. So we're going to utilize the gross margin leverage we talked about earlier to continue to fund growth in both the Gartner sales force. Again, given the size of the market opportunity and the traditional CEB sales force to go capture that market opportunity over the long term.
Got it. Okay. That's helpful. And just in terms of the timeline for the shift over to the seat based pricing model and in general the release of the new products. So I was wondering if you had a timeline there for the CAB side.
So, it's Gene. So basically, in the areas that I mentioned, we've already introduced new seat based products And, other than things that deals that were already in the pipeline, all new sales will be on those seat based products. You can think about, so new sales in the areas that I mentioned before, HR, finance, etcetera, are going to be C based. Existing clients, we will let renew whatever the agreements they have, enterprise agreements discounted, whatever it is, So long as they keep paying us, we're going to be take, keep taking their money. And, and so we'll keep renewing those.
And so you think about it as that there's two pieces of our business, the legacy business where for happy clients that want to renew, we're going to keep letting them do that. We're happy to do that with that has great that business has great margins and we're really happy with that. The clients are happy. New products will be for new sales, could be to an upgrade. So clients may choose to upgrade as well, but we're not going to force anybody to upgrade.
And so we'll have I expect we'll actually have some of the legacy products for a long period of time, just because some clients like that and we'll be happy with it and we're not going to force them away. The other hand, you can expect very quickly all the new sales will be on the seed based products.
The one other thing I'd add to that is the, as Jean mentioned, the new seed based products, include the best of both. So in his example on HR, it's the great core CEV research in deliverables and assets combined with the relevant Gartner Technology research, that's really valuable HR professionals, the legacy products won't have that. They'll be the legacy products. And so as we continue to innovate improve those seed based products. I think over time, and this is what we saw on the Gartner journey from over a decade ago, clients will over time migrate over, upgrade over to the new products because they're better.
And they have, more value and they'll get more value out of them. That said, we still have clients who are on legacy stuff. And again, as Jean mentioned, if they're happy, they want to keep renewing and keep paying us, we're happy to let them keep doing that.
And I'll now turn the call over to Jane Hall for closing remarks.
To summarize the key points from today's call, first, The combination of CEB and Gartner creates a quantum leap in capability and sustained extraordinary growth over the long term. We'll be able to address the mission critical priorities for every function across the enterprise with leading insights from the best of both of the two organizations. During Q2, the performance of traditional Gartner business continued to accelerate. Seabee growth accelerated, retention strengthened, sales productivity improved at double digit rates. In addition, the traditional CEP business saw modest improvements.
We developed a very aggressive integration plan and it's going great. We've already integrated our organizations, launched new products, introduce new commercial terms, accelerate Salesforce hiring, and set up a talent assessment as a standalone business. And that's just in the 1st 120 days. We're doing great as a combined company, and our long term outlook remains equally strong. Thanks for joining us today, and we look forward to updating you again next quarter.
Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. See you all have a great day.