Good morning, ladies and gentlemen, and welcome to Gartner's Earnings Conference Call for the Third Quarter Twenty 15. A replay of this call will be available through December 5, 2015. A replay can be accessed by dialing 888 2868010 for domestic calls and 617-801-6888 for international calls. By entering the passcode 4,560,2822. This call is being simultaneously webcast and will be archived on Gartner's website at www.gardner.com for approximately 90 days.
On the call today is Gartner's Chief Executive Officer, Gene Hall and Chief Financial Officer, Craig Safian. Before beginning, please be aware 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 2014 annual report on Form 10 K quarterly report on Form Ten Q as well as in other filings with the SEC. I would encourage all of you to review the risk factors listed in these documents. The company undertakes no obligation to update any of its forward looking statements.
I will now turn the conference over to Gene Hall, Please go ahead, sir.
Thank you, and good morning, everyone. Welcome to our Q3 2015 earnings call. While our business continues to deliver robust results with demand for our services being driven by the digital industrial economy, having completed the third quarter of the year, our underlying metrics are strong. We continue to capture the opportunity ahead of us with the successful execution of our proven strategy for growth. As I've done in the past, I'll review our key operating metrics on an FX neutral basis since that's the best way to understand the overall health of our business.
For the third quarter of 2015, we delivered double digit growth in contract value, revenues and earnings per share. The company revenues were up 13% and EBITDA was 17% higher than this time last year. Research, our largest and most profitable segment delivered our 23rd consecutive quarter of double digit CV growth. For Q3 2015, we drove double digit contract value growth in every region across every client size and in every industry segment. During the quarter we achieved another new milestone in research with more than 10,000 enterprises as our clients.
We continue to invest in improved recruiting capabilities, training and tools, which in turn allow us to drive sales productivity improvements over time. Growing sales capability and capacity is a mission critical priority for us. For Q3 2015, we grew sales headcount by 16% and sales productivity improved compared to this time last One of our core strategies is to increase the number of managing partners. We ended the quarter with 105 managing partners, up 22% over last year. We maintain a healthy 4 months of backlog.
Our Vince business continues to deliver robust double digit growth. On a same events basis, we drove a revenue increase of 22% year over year. We continue to deploy our capital strategically with acquisitions and share repurchases as our priority is a capital. We announced 2 acquisitions last quarter, Nuvera and Kapterra, Both businesses strengthen our offerings in the small business space. Year to date, we purchased $453,000,000 of our shares.
Greg will give you more detail on all our business results in a moment. We're currently in the middle in the middle of our flagship conference series Symposium IT Expo. Gartner Symposium is the world's most important gathering of CIOs and senior IT executives. We hosted a series in eight locations around the world, including South Africa, Brazil, Dubai, India, Japan, Australia, Spain and Orlando, Florida. This event series convenes thousands of CIOs who share experiences and gain valuable insight help them achieve their mission critical priorities.
In addition to being the most important gathering of CIOs, it's also the largest gathering technology leaders in the world. There's truly nothing else like it on the planet. I just returned from the event we held in the events we held in Florida and Australia. While on-site at both events, I met with a number of CIOs and enterprise leaders from a diverse array of industries. These leaders are experiencing firsthand the effects of digital business.
They're looking to Gartner for answers to tough challenges: cyber security disruption, business transformation In Gartner delivers, the CIOs I met with said they felt inspired and better equipped to succeed in digital business as a result of our insights. Supposing IT Expo is one of the best ways clients and prospects alike can experience the breadth and depth of what Gartner has to offer. The wildest events will also have the opportunity to speak with a large number of our sales people from all around the world, whether new or experienced, all of them had incredible One of the primary reasons our Dids business and our overall business has been so successful as our people. Gartner is a people business. Over the past several years, we've made significant investments in our people.
We added analysts around the world. We invested in recruiting and in training. We improved our customer service processes. We invested heavily in improving sales productivity and these investments are paying off. The insights we create the advice to deliver and the overall experience for customers has never been better and we're not slowing down.
We'll continue to improve and innovate across every area of our business. We know how to be successful in any economic environment. We're relevant whether institution is growing or facing economic challenges. And we continue to deliver double digit results to the tremendous value we deliver to our clients. I remain confident and excited about Gartner.
Technology continues to change the world and Gartner is the heart of technology. Gartner is the single best source for enterprises to get the insight they need to understand where and how to successfully harness technology to achieve their mission critical priorities. We have more impact on end users and technology providers than any other company in the world. We're getting better, stronger, faster every day. We have a vast market opportunity, a powerful value proposition, a winning strategy and an exceptional business model.
Gartner is a stellar growth company with outstanding prospects for accelerated sustained growth for years to come. And with that, I'll hand the call over to Craig.
Thank you, Jean, and good morning, everyone. Gartner continued its strong operational and financial performance in the third quarter. Delivering double digit growth in contract 18. I will discuss each business segment's performance in-depth shortly, but for the quarter, our year over year performance on an FX neutral basis was as follows. Contract value increased 14% with research revenue growing 16%.
Events revenues increased 22% on a same event basis. Consulting revenues declined by 3%. Normalized EBITDA increased 17%. We continue to see robust demand for our services across all of our business segments. And our business has we are engaged on our clients' most important initiatives and projects.
Our strong retention metrics demonstrate the value our clients receive from our products and services. We are making great progress in capturing our market opportunity, finding new IT supply chain and digital marketing professionals to sell to every day. We are further penetrating existing accounts and winning new enterprise accounts. We remain confident that we will continue to deliver consistent revenue growth and strong financial performance over the near and long term. I will first discuss the performance of each of our 3 business segments for the third quarter, give color around our P and L and balance sheet, discuss our recent acquisitions, and finally share our outlook for the fourth quarter the full year 2015.
Then we will open up the call for Just about every currency we operate in is weaker against the U. S. Dollar when compared to last year. While the decline in euro has leveled off, a few additional currencies, most notably the Brazilian real Canadian dollar and Australian dollar have recently seen further weakness against the U. S.
Dollar. I will comment on the impact of foreign exchange on each of our business segments as I discuss them. Beginning with research, Research revenue grew 8% on an as reported basis and 16% on an FX neutral basis in the third quarter. Our recently distribution margin for research was 69%, up 70 basis points compared to third quarter 2014. On a year to date basis, the gross contribution margin remained at 70%, matching our target for this segment.
All of our other research business metrics remain very strong. Contract value grew to $1,643,000,000, a growth rate of 11% year over year on a reported basis and 14% on an FX neutral basis. As Gene previously mentioned, our growth in contract value was broad based with every region, every client size and every industry segment growing at double digit rates. We continue to drive contract value growth through strong retention rates and consistent growth in new business. Client retention was 84%.
Roughly the same as third quarter 2014, while retention ended at 106% for the quarter, maintaining its historical high, and representing a one point improvement over the third quarter of last year. While retention is higher than client retention due to a combination of increased spending by retained clients, and the fact that we retain a higher percentage of our larger clients. As we have discussed in the past, our retention metrics are reported on a 4 quarter rolling basis in order consistent with prior quarters and remains balanced between sales to new clients and sales of additional services and upgrades to existing guidance. Percent every year since 2 1005. We recently implemented a price increase on October 1st that averaged just north of 3%.
Our new business growth reflects our success in penetrating As a result, for the first time, we crossed the 10,000 enterprise mark, ending the quarter with 10,093 client enterprises up 9% over last year's third quarter. And the average spend for enterprise continues to grow on an FX neutral basis. Again, reflecting our ability Sales productivity improved once again. We were up 5% on an FX neutral basis as compared to last year. As we have detailed in the past, we calculate sales productivity as the net contract value increase, what we call NCVI per account executive.
We look at it on a rolling 4 quarter basis to eliminate seasonality and we use opening sales headcount as the period denominator. Over the last 12 months, we grew our contract value by $205,000,000 in FX neutral terms. Using our Q3 2014 ending sales headcount of 1820 as the beginning of period denominator yields NCVI per AE of $113,000 on a rolling 4 quarter basis. Again, that's a 5 percent improvement over third quarter last year and the comparable figure was $107,000 for account executives at constant currency rates. To sum up value growth of Looking forward, our pipeline is very strong and our headcount growth has accelerated.
To drive productivity around recruiting, training and tools are working. We anticipate ongoing improvements to sales productivity, which positively impacts CV growth and subsequently research revenue growth over the long term. Moving to events. For the quarter, our events segment delivered exceptional results. On an FX neutral basis, events revenues increased 38% year over year.
We held 3 more events in this quarter than the same quarter last year. As I noted earlier, on a same event basis, revenues were up 22% year over year. During the quarter, with 5600 and 6 attendees in the third quarter of 2014. Q3 is a seasonally light quarter for events as Symposium season begins early in Q4. On the same event and FX neutral basis, events revenues grew 22% with 6400 and 51 attendees, a 9% increase compared to third quarter last year.
On a year to date basis, events revenues Event's revenue was up 19% over the prior year with 49 events versus 47 events in the same period last year. The gross contribution margin for events increased roughly 9 percentage points from the third quarter a year ago to 39%. On a year to date basis, we improved Turning now to consulting. On an 3rd quarter and decreased 3% FX neutral. In the quarter on an FX neutral basis, our labor based business was up slightly over last year.
Consulting was largely impacted contract optimization practice has a higher degree of variability than the other parts of our consulting business, which can significantly impact the results of this segment either positively or negatively. Across the entire consulting business, we continue to see strong demand for our services and our ongoing investment in managing partners is allowing us to capture that demand. We now have 105 Managing partners, a 22% increase over third quarter 2014. The underlying operating metrics of our consulting business also remain strong. On the labor based side, billable headcount 5.88 was up 10% from this point in 2014.
3rd quarter annualized revenue per billable headcount ended at $371,000. The decline in revenue per billable head was driven mostly by FX, with the balance split between modestly lower utilization and a richer mix of less senior consultants who bill at lower rates. Backlog, the key leading indicator of future revenue growth for our consulting business, ended the quarter at $110,000,000, up 5% over this time last year on an FX neutral basis. With the current backlog and visibility we have into the pipeline, we believe the consulting business will finish 2015 with solid results. Moving down the income statement.
SG and A increased by $19,000,000 year over year As of September 30th, we had 2111 direct quota bearing sales associates, an increase of 291 or 16% from a year ago. For the full year, we expect to grow the sales force by 15% to 16%. In the third quarter, SG and A was higher as a percentage of revenues due to continued investments in our sales capacity and recruiting and training capabilities. Moving on to EBITDA and earnings. We delivered another solid quarter of earnings growth.
Normalized EBITDA was $80,000,000 in the 3rd quarter, up 7% year over year on a reported Our Q3 EPS results include a favorable state tax audit settlement. This result meant we had tax credits that would have been unutilized So we were able to sell the credits and record the benefit to our P and L on the other income line. We do not expect this to be a recurring event. Our effective tax rate net. These rates are trending higher than our guidance for 2 primary reasons.
First, a significant amount of the expenses we are incurring related higher tax jurisdictions primarily due or the tax rate that corresponds with our EPS excluding acquisition and integration charges, we see that the rate for Q3 and Q3 year to date was 38.2 percent 36.5 percent, respectively. These are the tax rates to apply to our pretax income excluding acquisition and integration charges to model out earnings per share. These rates are modestly higher than our initial guidance due to mix of earnings. On a year over year basis, the increase in our tax rate is driven by foreign tax credit benefits occurred in 2014 that are not repeating in 2015. As I said earlier, the year over year rate is also impacted by the non deductibility of acquisition charges and mix GAAP diluted earnings per share was $0.36 in third quarter of 2015.
GAAP EPS includes the $0.04 benefit from the sales tax credits I just mentioned. Our GAAP EPS also includes roughly $0.09 worth of acquisition and integration charges. $5 of which relates to 2 acquisitions we closed in the third quarter. And integration charges was $0.45 per share in Q3. This figure also includes the $0.04 benefit related to the sale of expiring tax If you recall, our third quarter EPS guidance, excluding acquisition and integration charges, was to be between $40.42 per share.
If we exclude the $0.04 benefit from the sale of credits, our EPS including acquisition and integration charges was $0.41 per share for the 3rd quarter. Turning now to cash. Year to date operating cash flow decreased by 4 percent to $266,000,000 compared to this point last year, largely due to a stronger U. S. Dollar higher acquisition related incentive payments and higher cash taxes.
We still expect to deliver free cash flow well in excess of net income yet again in 2015. Share repurchases and strategic acquisitions are our primary uses of our free cash flow and available capital. First, let's cover acquisitions. In the 3rd quarter, we spent $196,000,000 net of cash acquired on 2 strategic acquisitions. U.
S.-based Captera and Barcelona based Nuvera whose primary asset is GetApp. While the companies acquired are both small relative to core business, they serve an important market need and are right in our sweet spot in terms of their value propositions, helping users of IT make better technology decisions. The 2 acquisition.
These two deals were structured
payable related to the ongoing employment of certain key executives and company bonus programs that will potentially be paid over the next 3 years. We'll recognize these additional cash payments as acquisition expense and they will be amortized over the next 2 to 3 years. As with prior deals, these expenses will be excluded from our normalized EPS. During the third quarter, we also utilized our cash to return value back to our shareholders through share purchases. In the quarter, we had share repurchases of $12,000,000.
Year to date, we have repurchased $453,000,000 of our shares. We ended the quarter with a $40,000,000. We have $700,000,000 of interest rate swaps in place, which effectively lock in our interest rates through September 2019 on this portion of our debt. Our cash balance as of September 30th was $371,000,000. With 94% of our cash balance located outside of the U.
S. The combination of our debt and cash positions represents a net debt position $469,000,000. Our current credit facility runs through 2019 gives us ample liquidity $646,000,000 of revolver capacity. We continue to look for other attractive acquisition opportunities a potential use of cash. We also believe that repurchasing As of June 30, we had $1,180,000,000 available under our share repurchase authorization.
Turning now to guidance. Based upon our year to date results, the impact of recent acquisitions, our outlook for Q4 and current foreign exchange rates we are adjusting our outlook and also tightening the ranges of our previously issued guidance. As you know, our normal business trends do show seasonality Our fourth quarter is typically our largest events quarter, a large consulting quarter, and our largest contract value growth quarter. All the figures that I'm going to go through are contained in our press release, but I wanted to provide color around the guidance ranges. First, from a revenue perspective, we now expect the following annual revenue figures and corresponding FX neutral growth rates.
Research revenues of 1.580 to $1,595,000,000. 15% to 16% annual growth. We modestly tightened the top end of guidance due to the stronger U. S. Dollar against our major currencies.
The impact of the stronger dollar was partially offset by Consulting revenues of $325,000,000 to $340,000,000 negative 1 to positive 3% year over year growth. We've reduced the bottom end of guidance by $5,000,000 and the top end by $10,000,000. Consulting guidance was impacted by foreign exchange and modestly by operational performance. Events revenues of $245,000,000 to $255,000,000. 14% to 18% year over year growth.
We are raising the bottom end of guidance by $5,000,000 due to over performance in this segment, which is offsetting the drag for success rate. On total revenues, there was no change to the bottom end and a $15,000,000 tightening to the top end of prior guidance. Again,
to $2,190,000,000
or 12% to 14% annual growth on an FX neutral basis. For EBITDA, we now expect to deliver between $405,000,000 $420,000,000 for 2015, 11% to 15% growth on an FX neutral basis. This reflects a $10,000,000 tightening of the top end of our guidance. The stronger U. S.
Dollar was offset partially by the inclusion of our newly acquired businesses. Continued strengthening of U. S. Dollar continues to negatively impact the results and outlook on a reported basis. However, FX neutral growth rates are in line with our original guidance.
We are updating our GAAP EPS guidance to reflect the impacts from our Q3 acquisition. We now expect GAAP EPS of between $1.97 GAAP EPS now includes $0.32 per share of acquisition and integration charges, representing an increase of per share for our 2 $2.29 9% to 13% FX neutral growth. We have raised the bottom end of tax credit sale and the inclusion of the acquired businesses offset by the stronger U. S. Dollar.
For cash flow, we are updating our guidance to reflect the impact of the stronger U. S. Dollar, higher acquisition charges and higher levels of capital spending to support our growth. We now expect cash flow from operations of $337,000,000 to $352,000,000. Cash acquisition related charges of $16,000,000 and gross capital expenditures of roughly $48,000,000.
That yields a new free cash flow range of 305 to $320,000,000 or $3.60 to $3.78 of free cash flow per share. Again, the updates to our guidance are predominantly to reflect the impact of the strength in U. S. Dollar. Additionally, we've updated to account for the impacts from our 2 recent acquisitions.
The FX neutral growth rates for our business are in line with our previous guidance ranges. In summary, we delivered another track value grew 14% and total revenue grew 13% at constant currency rates. Our key business metrics remained strong our at or near all time highs. And return capital to shareholders through our share repurchase program going forward. We move into Q4 with significant momentum and remain well positioned to deliver another solid year of revenue and earnings growth for the full year of 2015.
Now I'll turn the call back over to
And your first question comes
from the line of Jeff Mueller of Baird. Please go ahead.
Thank you. On the research contract value growth, obviously continues to be broad based growth, but there was a little bit of deceleration. Any pockets of weakness to call out?
Yes. Hey, Jeff, it's Jean. The, I wouldn't say it's pockets of weakness. I'd put it more in the category of noise. We had 2 we had one country that I'll give you an example of that drove it.
One of our countries was growing in the mid-thirty percent year over year CD growth and it slowed to 20. Another one another region, Larson and both of these are large for us. Was growing 40% and it slowed to 23%. And again, I took those more as noise as opposed to there's some, dramatic slowing.
Got it. That's helpful. And then on consulting, is the weakness relative to plan all concentrated in CO or was labor based also below plan? Hey, Jeff, it's Craig. So in the quarter, it was predominantly contract optimization.
That said, we were a little bit below our forecast on labor based. And essentially, our strategy around adding managing partners is to drive deep, long lasting, large consulting relationships with our clients. In the third quarter, we actually had 2 very large programs come to an end. And normally, we're at we're able to reassign all those consultants that are working those long, dense engagements we had a little bit of a disruption here, which impacted the labor based revenue in the third quarter. That said, rolling forward, we had a really strong book quarter and our backlog looks very strong for the labor based business as well.
So broadly speaking, contract optimization was the primary culprit a little bit of softness on labor base, but labor base was more of a timing thing and we feel good looking forward.
Thank you guys.
Thank you. Our next question comes from the line
of Tim McHugh of William Blair and Co. Please proceed.
Thanks. I guess first just on the margins, I guess you talked about productivity continuing to be strong on the research side. I guess but the updated guidance for this year just at a midpoint, we're basically looking at margins down 10 basis points. And so I guess one is when do you when should we start to see the productivity flow through to the margin line, I guess? And then secondarily, I guess, can you I know you said it's seasonally stronger in the 4th quarter for margins, but the year over year improvement required is much better than you saw early in the year.
So any timing factors, I guess, that are give us a reason to expect better margin improvement in the fourth quarter?
Sure, Tim. Good morning. On the first part of the question, the way that we look at it and the way to kind of think about it and model it through, we've seen nice year over year improvements in productivity consistently for the last few quarters. That said, we're still growing headcount at a faster rate then the productivity is turning into contract value growth. The reason we're doing that is because of that $58,000,000,000 market opportunity that we're going after.
So, we're continuing to add headcount to go after that market opportunity. That said, when we bring on lots of new people, and more people in their 1st year, etcetera. And we've had discussions around 1st year productivity is significantly lower than 2nd year productivity, which lower than what it looks like once they're fully tenured, that's essentially what's causing, that drag if you will, on the margins. That said, if you look at our guidance, again, the midpoint maybe 10 basis points down, the message from us is the guidance outlook calls for roughly flat margins, maybe 10 basis points down, maybe flat, maybe 10 basis points up depending on how the quarter transpires from a reporting perspective, which has been consistent with what we've delivered over the last 3 or 4 years.
Okay. And then, I guess, the comment on Q4 versus what we've seen so far this year? There would be
Yes, it's a great question. So as you'll recall, the first two quarters were really impacted by the grow over related to our contract optimization business. Which, because of the size of the grower, actually caused a fairly big drag on the margins in the first half of the year, and subsequently on the year to date numbers for the third quarter as well. In the fourth quarter, we don't have that grow over problem. And we typically have a very strong events quarter, really strong contract value growth quarter, etcetera.
That's why we're confident with the levels of growth the margin expansion required for the fourth quarter.
Okay. And then just one for the model of the acquisitions you made. I know you said less than a point of distribution this quarter, but I guess I think that was probably a partial quarter. How should we think about the revenue and margin impact of those?
It'll have a less than 2 point impact on the 4th quarter total revenue. So again, these are small acquisitions. And even less impact on the EBITDA margins. Again, when we baked in the guidance, baked it into the guidance. It's baked in there.
It was offset by the stronger dollar, both on the revenue lines and on the EBITDA lines. But the way to think about it is less than 2% impact on
Thank you for your question. Your next question comes from the line
of Anj Singh of Credit Suisse. Please go ahead.
Hi, this is actually Mark Wallachin for Anj Thanks for taking my question. So diving a little deeper into an earlier question. So on the sales force productivity growth decelerating slightly, though off a tougher comp. So just looking at year ago, headcount growth was slower a little slower than usual. So I think that that would be a tailwind productivity growth this quarter.
So just wondering if you could give us some of the puts and takes there. And I guess along those lines have we think about the potential headwind on productivity going forward from accelerating headcount growth?
Hey, Mark. On the productivity trend, again, down a little bit sequentially but up nicely, up 5% on a year over year basis. And again, we look at it both ways. We actually think the year over year is a a good way to look at it because it does take out some of the noise of movement and headcount growth from quarter to quarter. So we're pleased with the continued and consistent year over year improvements in sales productivity the way we measure it.
In terms of private, the way to kind of think about it is, as we tick up or tick down, and again, we're within, two points. So we're talking about 14% growth and 16% growth on a two thousand person basis. You're talking about the difference of roughly forty people one way or the other. So not a huge swing even though it looks that way from a percentage basis. But as we tick up, we do have a slightly richer mix of new hires, which are inherently less productive.
And so we're delivering 5% year over year productivity growth, while having a richer mix of 1st year AEs. And again, the way it works with us is the 1st year AEs, it really is an investment, because they are lower productivity. But then as they rise in 10 year, they really start to drive significant growth. And as it rolls through the system. So that's the way we think out the productivity and the growth.
The second question was around future headwinds.
I don't
know if Jean, if you want to tackle that one. I mean, so it's yes,
I mean, basically the, Mark, the we're committed to improving continually improving our recruiting, continually improving our training, giving our sales force new tools as we've talked about. Again, we think over time those things will enhance sales productivity, which is why we're doing it. And so we're a strong drive to improve our sales productivity over time. So instead of headwinds, I see kind of the opposite, which is that because of the changes we're making, we expect that sales productivity will improve over time.
Got it. That's helpful. And then just another quick one on the Consulting, we saw the decline in average annualized revenue per billable headcount accelerate slightly. So can you just help us understand what's happening there and how think about that going forward? Is that just a function of additional MPs versus the RAM time, etcetera?
Or is there something more there?
So the way to look at that one, Mark, is, more than half of the decline is actually foreign exchange. We do have a very healthy business, particularly over in Europe with our consulting. And so with the euro and the pound doing what it's done. That's obviously having the most significant impact. Beyond that, there are really 2 primary factors.
1 is a slight downtick in the utilization. We were at 63% in the quarter, down about two points from last year. That obviously impacts the realized revenue per billable. And again, that's more related to what I described earlier around some of those larger projects coming to an end and us not getting those consultants reassigned on new projects right away, which they are now. The second biggest factor, which is actually been a strategic focus for us as well is while we're accelerating the growth of our Managing partners, the top of the pyramid.
We've actually but actually are on the ground delivering the hunk of the value. If you look at roughly 60% of the decline from foreign exchange another 20% from the lower utilization rate. The balance is actually from a shift in mix. So we've got significantly more lower level consultants. We actually make great margins on out there billing, which drags down the bill rate a little bit, but is actually very healthy for margins.
Got it. That's helpful. Thank you.
Thank you. Next question comes
from the line of Manav Patnaik of Barclays. Please proceed.
Good morning guys. I just wanted to touch on the acquisitions a bit. I mean, it sounds like minimal impact to revenue and EBITDA, but the 196,000,000 net of cash acquired price seems a little high. So I was just wondering if you could give us some color on the size of those assets individually? And also, I think you mentioned that the incentive payments to the management of those guys over the years would be recognized as and acquisition expense and excluded amortization.
Just wondering why if that's just paying the team?
Hey, Benav. So the as you know, we've traditionally targeted companies that had at least $10,000,000 in IT spending. And there's we've estimated 100 and 10,000 of those companies There are tens of 1,000,000 of smaller businesses and these 3 businesses, too, which we acquired this quarter in addition to software advice, Those three businesses provide the same kind of services that we provided larger companies to these tens of values of smaller companies. And the reason we did these acquisitions obviously wasn't for this quarter or even next year, but we think over the next 5 years, this has been a great growth business for us. And that fits very well with what we do as a business, which is we've always our specialty is advising clients and how to get what products and services to buy and how to get the most out of their technology investments.
And if Craig, you want to answer that?
Yes. And, Bob, just on the accounting side of it, we had the same accounting treatment related to the software advice deal where there were what we'll call holdbacks for the management team that they have to earn by being on board and contributing to the business, over a couple of year period. When we structure the deals, they are akin to consideration. However, from a GAAP account perspective, we treat them as operating expense. And because it is really, in our mind, more like consideration for the acquisition.
That's why we normalize it out from an expense perspective on a go forward basis.
Okay. And then just to touch on, since most of your cash is now overseas, like, is there any inherent limitation there in terms either buying domestic companies or I guess you just have to use your revolver to do buybacks. Just wondering if you should think of that as a limitation by any means?
Yes. The overseas cash balance obviously, cannot be utilized for every business initiative or shareholder enhancing initiative we want to undertake. That said, with the Nuvera acquisition, as an example, we were actually able to use that foreign cash to do the acquisition. On a go forward basis the combination of that cash overseas the great free cash flow generation we have both here and overseas plus the $646,000,000 available on our current revolver. And on top of that, we actually have a $500,000,000 expansion feature in our credit facility.
We feel like the combination of those 3 or 4 things allow us to be well positioned to pursue whatever shareholder enhancing initiatives we want to.
Got it. Thank you guys.
Thank you. Your next question comes from the
line of Toni Kaplan of Morgan Stanley. Please Steve.
Hi, good morning. How are your discussions going with clients as they plan their 20 16 budgets and have you seen any change in tone as the year has gone on?
Hey, it's Jean. No, I'd say basically as clients are planning their 2016 budgets, they've been focused on the same issues. They've been focused on what we're calling Bimodal IT, which is building up things for the digital economy at the same time keeping their existing business running. They're worried about cybersecurity and deal with cybersecurity. So those are the kinds of things that they're focused on and it hasn't changed through the year.
Okay, great. And just given the 2 new acquisitions in the small and medium sized space, Just wondering if you could talk about sort of the initial receptivity among clients in that area. Especially, you know, you've had software advice for a little while now. So, just wanted to get your sense of how big the opportunity could be and just how the reaction is going to sort of your bulking up in that area? Thanks.
Good morning. So the small companies have the same kind of problems with IT that big companies do. And these companies that we're targeting actually in general do not have an IT department. Things like think about a small funeral home or an electric set up an electrician that has 4 or 5 electricians that work for them or someone like that there's huge opportunities for them to use IT in their business. And the changes in technology have made it so that there's more and more opportunities every day, things like Amazon Web Services and all the, all of the software tools that are available now, particularly open source tools.
So there's an explosion of innovation in software particularly, hosted software that applies to these small businesses These small businesses, they're not experts in IT and they need help figuring out what's best for their particular business and their particular situation. And so the receptivity to mess with these three business we bought do. And the clients love them because they need the help to kind of figure out these tough IT decisions. And they just like large companies, if they don't have an IT department.
Okay. And just lastly, is this more of are these businesses more transactional than like a typical research subscription model that you have in the rest of in the larger business?
Yes, they are more transactional as opposed to subscription model.
Thank you.
Thank you for your question. Your next question comes from the
line of Peter Appert of Piper Jaffray. Please go ahead.
Hi, good morning. This is actually Steven filling in filling in for Peter Appert. I have a question in regards the event segment. The event business has been a very strong performer in Q3 and for the past quarter. How big is the operating opportunity here and what drives the continuing growth?
Hey, it's Jean. So our events business has the same opportunities on 2 dimensions with our Vince business. The first is to grow the existing event portfolio we have has lots of room for growth. There's no we don't see any any of our any of the event types that we have today having any growth restrictions. In addition to that, there will be new events we can add as well.
For example, over time, I expect we're going to add more symposium events around the world. So we've got both growth from our existing events, which we think is unconstrained for the foreseeable future and then adding a whole new events, for tinkering geographies where we don't have all the events today.
I see. And in terms of the macroeconomic in Europe, it remains challenging. Can you elaborate what are you seeing in major markets?
As I mentioned before, in every geography and every industry, we've had double digit growth again. And so even when the economic situation is tough. People have IT problems. IT is often one of the solutions to those problems and we're the best source to go to. And so we see robust growth in every geography and every industry around the world.
Thank you.
Thank you very much. Your next question comes from
the line of Gary Bisbee of RBC Capital Markets. Please go ahead.
Hey guys, good morning. A couple of questions. Craig, I'll start with something you said. I think I heard you say new business was up 8%. Is that a bookings number?
I don't remember and if so, I don't remember you consistently providing that in the past. What's the context we should put around that? That's quite a bit below contract value growth. Is there something that that's indicative of?
Hey Gary, no, it's actually it's something that we do provide generally each quarter. It's not the bookings number. It's actually exclusive of the renewal activity. So it's essentially the growth bookings that we have each quarter. And again, can vary from quarter to quarter a little bit in terms of how much we're actually renewing and how much we're actually selling in terms of growth.
As you'd imagine, Q4 tends to be by far our largest growth quarter. And we feel good where we are from a new business perspective, both for the quarter and on a year to date basis.
So the way to think about that is 8% is the new bookings, then you've got on the renewal base, some pricing and likely some people buying more than they did a year ago, you had that all up. You get the 4th 18? Is that is
that the right way to think about it? The 8% is actually it's a year over year growth measure. So it's not a it's not a proportion of the current year bookings. It's the year over year growth.
Okay, all right. And then just on events, having recently been at your event and Florida and it seems to be bigger and grander every year. Is there a risk with events like that that they just get too big for their own good. And I guess I asked from the perspective of if you had 9% growth in same event attendees, but 22% revenue. I realize there's some pricing, but it seems like you're also getting outsized growth from the exhibitors, is there some point at which the benefit to them declines as you jam more of them in there or raise the price or do you think we're not anywhere near that given the value you're providing to them?
So there's another factor going on, Gary, which is that we're shifting the mix to to more senior people. And so if you look at like the event you went to, the proportion of people that are CIOs there has been growing at a very high rate that's purposeful. That's by design. Symposium is targeted at CIOs and that level of leaders. And so we're increasing the mix of the very of senior people.
And as we target more senior people, the pricing is higher as well. We changed the events we targeted at senior people. We invite more of them and the pricing goes along with it. And so the, it's not just sort of the exhibitor piece. There's actually a mix shift going on where we've been targeting the more senior people who frankly is part of a broader strategy, which is they have decision making more decision making authority in their organizations.
And so they come to our event to understand Gartner, it's good for our entire business.
Got you. Thanks.
And then just a clean up one on the FX. I know you've talked about 40% or 50% of revenue being overseas, but can you just give us an update? What's the general mix of your own town, which after next quarter are a lot less of a drag, but versus the Canadian dollar EM and in Aussie Dollar, which really weakened quite a bit and probably remain a drag for several quarters into next year.
Yes. So, Gary, we haven't gotten into real great detail there. What I'll tell you is euro and pound are by far the 2 largest exposures we have globally. But that said, we've got a great business in Canada, a great business in Australia and a great business in Brazil that have been growing consistently and rapidly over the last several years. And so while they're not nearly as big as the euro or pound, They are in that top top 5 or 6 currency exposures for us.
So they do have an impact as you mentioned, I mean, the euro and the pound, and maybe this is a little bit of a hopeful comment, have mostly stabilized for the most part. I mean, the euro is still down 3 ish percent from when we gave our initial guidance, but the Brazilian real is down 50% since we gave our initial guidance. So the good news is the 2 larger currencies have mostly stabilized, but these other currencies are big enough businesses for us that they do move the needle a little bit. We'll continue to focus in on how we're doing from an FX neutral perspective. And provide all the transparency possible so that you can see what's actually happening underneath the covers, but you're it should look a little bit better on a reported basis rolling forward.
But the right assumption probably at this point given given what you've told us is that there's likely to be a noticeable, if not material drag in the first half of twenty sixteen, based on these ones that have really started weakening recently?
On a reported basis, that is true. On an FX neutral basis, we'd expect to continue where we are.
Thank you for your question. Your next question comes from the line of
Jeff Silba of BMO. Please go ahead.
Hey, good morning. It's Henry Chien calling in for Jeff. I just had a question on the planned sales force increase. I don't know if you'd be able to quantify this at all. But I was curious to know, how long given the trends in Salesforce productivity and and the gains that you're seeing in enterprise contract value.
I was just wondering if you might be able to give us a sense of when sales force trends we should see an impact on revenue growth?
Henry, the way we think about it, again, the contract value growth feeds the revenue growth. And so with our sales productivity gains, we're in that 14% to 15% revenue growth range. If you recall, go back several quarters, we had lower productivity and we were delivering 12%, thirteen percent contract value growth that the gains we had last year and into this year have allowed us to be delivering 15, 14% to 15% CV growth and 14% to 15% research revenue growth. On a go forward basis, as we stated, we are very focused on continuing to improve productivity and continuing to grow the sales force. Combination of those 2 things will convert into higher levels of contract value growth.
And then subsequently higher levels of research revenue growth.
Okay. Got it. I mean, is there a lag time and that is different from that we seen in prior quarters or is that the
historical lag, if you will, between contract value conversion to revenue conversion is consistent with what we've always seen.
Got it. Okay. That's helpful. And how much of your sales growth growth is related to growing the small to medium size opportunity that you're seeing?
So Henry, the, the businesses that we just acquired and software advice we wouldn't include in that group. And so we handled those separately because they handled it in a different way. And so the Salesforce increase is, that we talk about is in our traditional business where we're targeting those 110,000 companies. And the there are within that, there are large, medium and smaller businesses, but they're all above the size of the acquisition And it's directionally it's kind of the same split. We have we're still investing in large companies.
We're still investing in small companies and medium sized companies in that original 110,000 base.
Got it. Okay, great. Thank you.
I would now like to turn the call over to Mr. Gene Hall for the closing remarks.
Well, I
thank all of you for joining us today. To summarize the key points for today's call, we are doing great as a and our underlying metrics are strong. We continue to invest in improved recruiting capability, training tools that drive sales productivity over time. We once again delivered double digit growth in every region across every client GGI positions and share repurchases. And we're getting better, stronger, faster all the time.
I expect to see robust growth for years to come. We look forward
Thank you for joining in today's conference, ladies and gentlemen. This concludes the presentation. You may now disconnect. Good day.