Brian Shipman - Group VP of IR Eugene A. Hall - CEO Craig Safian - CFO and SVP.

Timothy McHugh - William Blair & Company Jeffrey Meuler - Robert W.

Baird Anjaneya Singh - Credit Suisse Joseph Foresi - Janney Montgomery Scott Manav Patnaik - Barclays Jason Anderson - Stifel Nicolaus John Crowther - Piper Jaffray Andre Benjamin - Goldman Sachs Henry Chien - BMO Capital Markets Gary Bisbee - RBC Capital Markets Bill Warmington - Wells Fargo Securities.

Good morning, ladies and gentlemen and welcome to Gartner's Earning Conference Call for the First Quarter 2015. A replay of this call will be available through May 14, 2015. The replay can be accessed by dialing 888-286-8010 for domestic calls and 617-801-6888 for international calls and by entering the passcode 16886645.

This call is being simultaneously webcast and will be archived on Gartner's website at www.gartner.com for approximately 90 days. On this 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 the 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 and quarterly reports on Form 10-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 these 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 first earnings call for 2015. Well we are doing great as a company. We're where we expected to be at this point in the year and all of our underlying metrics are strong. I will review all of our operating metrics on an FX neutral basis.

For the first quarter of 2015 contract value accelerated to 15% and total company revenues grew 12%. We achieved double-digit contract value growth in every region, every industry and every company size. The continued successful execution of our proven strategy was central to our success.

The momentum we saw in 2014 continued into 2015, and we continue to get bigger, stronger faster every year. Across our three businesses, Research, our largest and most profitable segment, grew both revenues and contract value 15% in the first quarter of 2015, continuing our 19-quarter trend of double digit contract value growth. Retention was strong.

For the first quarter of 2015 enterprise client retention was at 85%, up one point for the same quarter of 2014. Enterprise wallet retention was 106%, which is up two points over Q1 2014. Our retention metrics remain at all-time highs. Sales productivity remained strong. For Q1 sales productivity was up 12%, compared to Q1 2014.

We continue to invest in opportunities that will drive further advancements in this area. Our labor-based Consulting was up 5%, while our contract optimization returned to historic norms as expected, which was down compared to the exceptional year we had in 2014. Our Events business also delivered a strong first quarter.

In Q1, 2015 we drove a revenue increase of 11% year-over-year and attendee growth of 20%. As with other global companies, the strengthening U.S. dollar impacted our reported results which Craig will detail in a moment. We continue to deliver value back to our shareholders through share repurchase.

Year-to-date we repurchased over $400 million in outstanding shares. And with the previous authorization fully exhausted we are excited to announce a new share repurchase authorization of $1.2 billion. Another reason our business is so successful is our people. At the heart of it, Gartner is a people business.

We are attracting the best talent in the industry, in strategic locations around the world and getting them up to speed quickly. I recently spent a few days meeting with our top performing sales associates from around the world, and they have never been more excited about the technology revolution and our opportunity.

Our sales associates consistently report that our clients value our services for whether they are growing or facing budget cuts. We continue to invest in our sales force to further capture our vast market opportunity and we know how to drive improvements in sales productivity.

Our industry-leading analysts coupled with the world-class products and services and strong sales capabilities have driven our consistently strong results. We ended 2014 in a great position, and we carried that momentum into 2015. I couldn't be more excited about Gartner.

The insights we create, the advice we deliver and the overall experience for our customers has never been better. We add tremendous value to our clients, whether they're growing or facing economic challenges, and we know how to be successful in any economic environment. Retention rates remain at all-time highs.

We had double digit growth in every region, every industry and every company size and our operating metrics have never been better and we remain committed to enhancing shareholder value through investing in our business, strategic acquisitions and share repurchases.

We are better, stronger, faster as a company and I expect to see robust growth for years to come. With that I would like to hand the call over to Craig..

Research revenue to be up 14% to 16% versus the prior year; Consulting revenue to be flat to up 6% over 2014. This guidance again assumes that the contract optimization practice within Consulting returns to its historical levels of revenue, which is negatively impacting the Consulting guidance.

We expect the labor based portion of Consulting to grow in the mid-single-digits; and Events revenue to be up 11% to 18% over 2014. We still expect EBITDA growth of 10% to 17% over 2014, on an FX neutral basis. Our GAAP EPS guidance remains $2.11 to $2.30 per share.

While we now anticipate a lower share count from our accelerated repurchase activity in Q1 and Q2, we also expect higher interest and other costs.

While the accelerated pace of repurchases, including incremental interest expense, benefits our 2015 outlook, our projected EPS remained within our original guidance range, which is why we have reiterated our EPS guidance as well. As a reminder, GAAP EPS includes $0.16 to $0.17 per share of acquisition-related charges for the full year of 2015.

Our guidance for EPS excluding acquisition and integration charges is to be between $2.27 and $2.46 per share, FX neutral growth of approximately 7% to 16% over 2014. For the upcoming second quarter we expect GAAP EPS of $0.56 to $0.60, including $0.04 per share of acquisition and integration charges.

Our Q2 guidance is impacted by foreign exchange rates, a higher projected tax rate and the return to trend for our contract optimization business. Since we gave our original guidance in early February, the U.S. dollar has continued to strengthen. Our current guidance takes into account the most recent foreign exchange rates.

So before taking your questions, let me is summarize. We delivered strong results for the seasonally light first quarter of 2015. Demand for our services is robust and as a result, our research contract value growth rate accelerated again, up to the 15%.

Our key business metrics remain strong and in fact many, most notably retention, CV growth and sales productivity continued to improve or are at or near all-time highs, and we continue to actively explore strategic alternatives for deploying our cash.

Going forward, we will continue to invest in our business organically and through acquisitions and return capital to shareholders through our newly authorized $1.2 billion share repurchase program.

Finally with double digit growth in contract value in the first quarter of 2015 we remain well positioned to deliver another strong year of revenue and earnings growth. Now I will turn the call back over to the operator and we'll be happy to take your questions.

Operator?.

[Operator Instructions]. Your first question comes from the line of Tim McHugh from William Blair. Please proceed..

Yes, thank you. I guess, first on sales force productivity. I think your original guidance was - had assumed kind of flat to, I think you said marginally up. You seem to be off obviously to a good start in Q1.

Can you update, I guess, how it's trending relative to your annual expectations and is that still how you're thinking about the year? And maybe dive into I guess, where you saw productivity improve or what the driver was of that?.

Sure, thanks Tim. On the productivity front, we are up 12% on an FX neutral basis versus Q1 of last year. We are essentially flat to where we ended the year, ended 2014 and so it's consistent with what we had laid out at Investor Day in terms of an expectation of roughly flat productivity.

That being said, as you can imagine we are working very, very hard to make sure that we can continue to improve that productivity on a go-forward basis..

Okay, and then the buyback, you have been aggressive the last few years, but you stepped up the pace certainly to a much bigger level, I guess early this year.

Can you talk - what changed --what made you get that much more aggressive on the buyback?.

Tim, we've had had a strategy that we have talked about where acquisitions being first priority, buyback being second priority for us from a capital deployment perspective. We mentioned that our target for 2015 was to extinguish the share repurchase authorization or the remaining share repurchase authorization that we had heading into the year.

Based on everything we were looking at, based on our cash flow generation, based on our balance sheet flexibility, and capacity under the revolver we determined that it would be a good thing to accelerate over the first quarter and the half of the year. So, we have essentially hit our full year target as of earlier this week..

Do you have a - so, I guess how should we think about the rest of the year then? What's a - do you have a new full year target I guess, that we should have in mind?.

So the way we are thinking about it, Tim is, with the new $1.2 billion authorization we believe that will last us between 2.5 years to three years. And as always, we will look at the market in terms of what's out there from an acquisition perspective or other ways for us to deploy capital.

But all other things being equal, we believe that we will use the $1.2 billion over the next 2.5 years to three years..

Okay. Thank you..

Your next question comes from the line of Jeffrey Meuler from R.W. Baird. Please proceed..

Yeah, good morning. So I know sometimes us analysts think that sales force head count growth is just a cell in a model and it is much more complicated than that in terms of a bottom up build. But it sounds like pretty much every KPI is favorable right now and sale force headcount growth, I think it was 14%.

You are expecting 15% for the year which would still be towards the lower end of the targeted long-term range, so I guess Gene, what's the current thought on that to growing it even faster?.

Hi, Jeff. So the - as you pointed out our sales force - the target range for our sales force growth is 15% to 20%. We determine where we are in that range basically by looking bottoms up, which sales managers have the capacity in their particular territories and their experience level to handle that growth.

And we are very confident we're going to be in that range of 15% to 20% this year..

Well, Let me just - so, but you are going to be towards the lower end of the range, and I think your retention among your sales managers is good and I think that you have training programs that you have been working on.

So I guess at what point do you think that maybe you drift towards the midpoint or higher of the range? What's the current bottleneck on the management training or capacity or recruitment or whatever it is?.

So like everything in our business, we aim to have continual improvement in it and acceleration. The things that determine that the level of sales force is obviously recruiting capacity, we think we're in good shape there, the amount of experience and tenure of our management team which as you said, we have very little turnover among our managers.

And it's just doing an assessment individually - the individual territories kind of where that adds up. Again as we look at that and the development of our manager, we see that accelerating over time..

Got it, and then Craig, just for modeling purposes, within consulting on a quarterly basis, which quarters are the tough comps for contract optimization? Is it Q1 and Q3, which were the quarters that you had a stronger overall consulting growth in or any other quarters to call out for a tough CO Comp?.

Yes. It's actually Q1 and Q2 Jeff are the two tough quarters from a comparability perspective. Q3 and Q4 our expectation is, will be roughly in line with what we did last year..

Okay, and then the Q2 EPS guidance that you gave 0.56 to 0.60, just to verify, is that a GAAP number or is that an adjusted EPS number?.

My apologies for not being clear. That is a GAAP number which includes roughly $0.04 of acquisition integration charges..

That's helpful. Thank you, guys..

Thank you..

Thank you. Your next question comes from the line of Anjaneya Singh from Credit Suisse. Please proceed..

Hi. Thanks for taking my questions. I guess first off the growth rate in the consulting billable head count, it seems to be about the highest we have seen in nearly two years.

Could you just help us think about that, are you seeing greater demand for your consulting services and if so, when can we expect this to show up in your consulting revenue growth?.

Hey Anj. How are you? So yeah, the growth in billable head count was a little higher than we’ve typically seen. Some of that is driven by the managing partner growth which we’ve talked about is a strategic imperative for us. That was up 14% year-over-year.

What's allowed us to go a little bit faster on the billable head count growth is the combination of the quality of the backlog and the quality of the forward-looking pipeline.

We generally only hire when we have visibility and we've had better visibility in that business, which largely stems from the benefits we're getting from the managing partner investment.

And so as we get better visibility, higher quality backlog, et cetera, rolling forward that allows us to invest in growing the billable head count with more confidence..

Got it. That's helpful.

Also you guys used to give out a client organizations number, is there a reason why you didn't provide that this quarter? And if you could just help us understand how much of your growth is coming from new clients versus existing client penetration, is it still roughly 50/50? If you could just update us on that?.

Sure. So on your first question, on the client organization number.

As we talked about last year, we believe that number of client enterprises is actually a better way and more transparent way to provide what's actually happening with our client count, where a company equals an enterprise, whereas in client organizations it was buying centers, where a company could have multiple buying centers.

And so, over the last year we’ve provided both metrics, but we said on a go forward basis, we are going to focus just on the enterprise number which again we believe is a better number. And then also our Retention metrics are now tied to that enterprise number as well. Your second question again? I am sorry, Anj..

New business versus existing..

If you could just help us....

Right the new business?.

Yeah..

Yeah. So the way to think about the new business mix is, it is historically been this way and it looked this way in the quarter as well. It comes - it falls about a third, a third, a third. So, a third of it comes from upgrades and new services to existing clients.

A third comes from further penetration within existing clients and a third comes from net new logos..

Okay. Thank you..

Thank you. Your next question comes from the line of Joseph Foresi from Janney Montgomery Scott. Please proceed..

Hi. I was wondering, could you give us some idea of how, I know we went through sort of the sales force training and you set up a facility, but how much has that been extended into other regions.

Do you have a sense of what percentage of new employees are now going through the sales force training program?.

Yeah Joe, its great question. It's Gene. The - that sales force training program that we talked about is important in driving sales force productivity. And to your point, we've now rolled up, to where all of our new sales people globally are getting that new training program. And we're quite optimistic..

Great.

So having said, I mean just on that question, how long do you think it takes, I mean what - how long do you think it takes to reach sort is of having a full turnover on the sales force so everyone has gone through the program at least once? Is that a 12 month to 18 month period?.

So we don't take our experienced sales people back through that program. And our sales force turnover is actually pretty good. We don't lose sales people. We lose sales people really, at a very competitive rate. And so because we are only taking new sales people through it, it will take some time before everybody has that - has gone through that.

And we have separate things we do with our existing sales people to improve their productivity.

So this is the whole point is that this program itself is oriented for towards when we hire new people, making sure they get up to speed as quickly as possible and that they actually wind up with higher average productivity over the course of their career..

All right, okay. And then it sound like new sales is a big contributor to the contract value growth.

Can we get an idea of what those new sales are? What is the consistency of those new sales are? In other words, are those more geared toward some of the newer technologies that are out there and are those clients any different than your standard clients?.

So the new enterprises that we are selling really aren't different than our existing enterprises. As we’ve talked about at Investor Day, we see about 110,000 enterprises that we can target, that we do target actually, and of those only about 10,000 are clients today. And so our mission is every year to add a few hundred more of those enterprises.

And as Craig pointed out, that's a portion of our growth. We also then have another portion of our growth which is selling more toward existing enterprises and we are very successful at that as well..

Okay. And then the last one from me. We're talking about contract optimization again, I think you mentioned in your prepared remarks that it returns to historical norms.

Can you just remind us what those norms are and how long this could - how long this could make - how long it would take for all this to make you its way into the numbers and what we should be expecting there?.

Yeah, so it is really based on last year, it's really a Q1 and Q2 phenomenon. So, we'll feel the impact of the return to historical norms most notably in Q1 and Q2. And again if you think about it, it is most notable in Q1 and then a little bit more in Q2 and then basically Q3 and Q4 look like it's looked the last several years.

And so as we think about what the results look like for this quarter as well as our guidance for Q2, there's an impact related to the return to historical norms Q3/Q4 no impact really..

Thank you..

And your next question comes for the line of Manav Patnaik from Barclays. Please proceed..

Thank you, good morning gentlemen. The first question is around the M&A pipeline, just in terms of can you update us, what are you seeing there? I mean, clearly you've been lot more aggressive with the buybacks which is great.

But is that a sign that there really aren't a lot of deals in the horizon? And can you just remind us what the acquisition contribution for the quarter was as well, please?.

Hey Manav. So, the - we have, at any given time we track a 100 or more companies. We will continue to do that. Our acquisition pipeline looks very robust, and it is very consistent with what we have seen in the past and that's our number one choice for deployment of capital.

And we feel like that the repurchase - if you look at our cash flow, plus our balance sheet that we feel like we can do all the acquisitions we need and still do the repurchases that you have seen and the repurchases that we’ll do going forward.

So you shouldn't take that, that we see a less acquisition pipeline because of our aggressive purchases earlier this year..

And then on your - the second part of your question, Manav. So as we said acquisitions had a two point benefit on the Research line and it would be about a one point benefit on the total revenue line..

Okay. And then just on the back to the productivity, I guess you pointed out that it was flat sequentially, so - but you are still obviously gunning for much better than flat productivity by the end of the year.

Can you just help us understand the sensitivity around, if that improves obviously, better than flat, how margins should be impacted?.

Yeah, sure. As we talked about at Investor Day, flat productivity got us to roughly 14% close to 15% CV growth, modest improvements in overall average productivity, can accelerate our CV growth a little bit more than that. From a margin perspective, you really see the margin flow through in the subsequent year.

And so we wouldn't expect margin benefit in 2015 from continued acceleration in sales productivity. You would expect to see it in 2016 and beyond..

Okay.

And then in 2016, let's say, you have the same initiatives, does that offset that sort of margin improvement with the new sales investment, like I guess will we see it if you continue this pace, is I guess what I was getting at?.

Yeah, no, it’s a good question. The power of our model and the leverage involved in our model, says that if we can get research contract value growing 16%, 17% per year, that being the largest portion of our revenue and our highest margin business.

The power of the economics of the flow through on that will allow margin to flow through and we'll be able to make investments as well to continue to drive the business..

Okay, all right. Thanks a lot, guys..

Thank you. Our next question comes from the line of Peter Appert from Piper Jaffray. Please proceed. We seem to have lost Peter there, I do apologize. The next question comes from the line of Andre Benjamin from Goldman Sachs. Please proceed. There does seem to be a technical problem. I do apologize. The next question comes from Jason Anderson from Stifel.

Please proceed..

Good morning, guys.

Can you hear me okay?.

We can hear you fine, yes..

Okay, just - one thing - and just if I am looking at this correctly, did client enterprises decline sequentially, and if so, is there anything going on there? It wouldn't seem to jive with your retention number, but I am just curious if there's anything there?.

Yeah, so if you look back historically, you will see often there is a modest decline in Q1. Again, it’s generally our lightest new business quarter and decline is not troubling [ph] at all and the thing I would focus in on is the 8% year-over-year enterprise growth..

Great, and then I guess when we think about your client retention and then you talked about it being at all-time highs, but you continue to improve it. Is there a, I guess a theoretical ceiling here? I mean obviously everyone would love 100%, but that's not realistic.

But is there a ceiling you might be approaching from a client enterprise retention standpoint?.

It's Gene. So we think we can get our retention several points higher than it is today. As we look as we analyze kind of why we have turnover, we have programs that are designed to address those. So we think we have plenty of headroom still left on retention and we are working that. We expect retention to continue to improve over time..

Great. Thanks for that..

The next question comes in from Peter Appert from Piper Jaffray. Please proceed..

Yes. You've got John Crowther on for Peter.

Just real quick question you guys outlined the overall impact of FX to EBITDA and margins on an overall basis, wondering if you could highlight maybe the impact that was on the research segment this last quarter?.

Yeah, on research it was a pretty modest impact. I think on a FX neutral basis, our research margins would have been precisely flat and we had a modest down tick for the quarter. So it was less magnified on the research line, more magnified on some other lines..

Okay, great. And then you also highlighted I think, on the guidance that the impact of the lower share count would be offset by higher interest and other expenses.

Just wondering if you could kind of give us your updated thoughts on both of those in terms of where they might end up for the full year?.

Yeah, so on the - on that comment, we are actually obviously buying back shares, is an accretive activity for us. And so with the accelerated pace of repurchases through the first quarter and a half, even including the incremental interest expense, it does benefit our EPS line.

Our view was our forecast still fell within the guidance range, which is why we haven't updated the guidance range. But the pace of share repurchase absolutely benefits EPS in this year and even more so going forward..

Okay, great. Thank you..

Thank you. Our next question comes from the line of Andre Benjamin from Goldman Sachs. Please proceed..

Hi.

Can you hear me?.

Yeah, Andre we can hear you. Yeah..

All right. Great. So I think most of my questions have actually been answered, but I had one small one. On the M&A contribution of 2%, primarily from Software Advice, if I run the math on that, and if I did it right it's about $7 million. So not up that much versus when you bought the asset.

I was wondering if you have any updated thoughts on what the run rate for that business could be, say two years out and if there are any new initiatives to accelerate growth in that channel?.

So Andre, Software Advice is performing just as we expected. We expected it would be a business, that's a high growing business. It's growing quite a bit faster than our traditional IT business. And we expect that to continue for a substantial period of time.

So and again, we expect that growth rate to continue to be high which means the dollar value would grow over time..

And the other thing worth mentioning, Andre is just that on the year-over-year comparisons we owned Software Advice for three weeks in the first quarter of last year, and for the full quarter this year, and so that may be impacting your view on the year-over-year growth a little bit as well..

I think that's it from me. Thanks..

Thank you. Our next question comes from the line of Jeff Silber from BMO. Please proceed..

Hi. Thanks. Good morning, it is Henry Chien. Just I had a question on your sales force growth for the year. I was wondering if you could provide any color on - if there is any change in any particular regions or industries where you are looking to add more sales count..

So, it is Gene. Again we add our - we're planning to grow in every region and every industry in every size client. The rates are little higher, little lower depending on what we think the capability of the individual management teams are to absorb higher, little bit lower growth rates.

In all of them, we expect to grow and grow at very good rates, but some will grow a little bit faster than others. And again it's not driven by any particular industry or geography. It's driven by - when we look at the individual sales manager, what's their capacity to absorb extra growth.

And just as an example you might have a manager that's got - if they have ten direct reports, ten AEs, ten sales people and five of them are new, we would say that's probably as much as they can handle. If you have someone who has got eight sales people and seven of them are experienced, we would add --we'd give them more capability.

And it also depends on the experience of the sales manager how long they have actually been working as a manager in their role. And so it is not driven by geography or industry, it is driven by what's the tenure of the manager and what's the composition of the actual team that they have, so we do it kind of bottoms up..

Okay, all right.

And in light of the share repurchase, any update on how we should think about your target leverage levels?.

So as we've talked about in the past, you know, we recognize - we know what an optimal capital structure should look like. We recognize that leverage is a part of it. As we talked about at Investor Day we recognize that optimal leverage is in the 1.5 to 2 times range. And we are - we are on a path to get there.

On a net-debt basis, we now sit at roughly one times and on a gross debt basis, obviously closer to 1.5 times. And so we are effectively deploying our capital. We are putting leverage on the balance sheet and we will continue to do that when we see thing that can drive shareholder value..

Thanks a lot..

Thank you. Our next question comes from the line of Gary Bisbee from RBC Capital Markets. Please proceed..

Hi, guys. Good morning. At the Investor Day you laid out a helpful model about you how changes in sales productivity flat to up a bit, to up a lot, would impact your financials over the next five years.

But you didn't really provide us what a reasonable expectation for the trend line would be in that five years? And I guess, just when I look at it in the 10 years, you've been doing this model, you’ve never had consistent year-over-year-over-year improvement in sales productivity.

So what is a good expectation? And since you haven't done it in the past, why would one believe that you would be able to do that going forward in the next few years consistently?.

So the - it’s Gene, Gary. Actually, you know our sales productivity, if you look kind of like to like has been improving steadily over time. There has been countervailing forces that we have talked about at various points. So for example, there's U.S. Government sequestration that went on which affected part of our public sector business.

Obviously, there was the downturn in 2008. So there has been some things like that that have affected our business over time. If you look at kind of like-for-like, we have seen kind of a steady improvement in sales force productivity, since we got out of the recession.

And again, as we look to the future, as a company, we are getting better programs in place all the time in terms of the three areas I've talked about. Our recruiting sales people, we get people that are a better fit, are training them, having better training programs and then providing better tools.

Those things, those three areas are all getting better every year. And as we look at the impact on them, yeah we believe those will continue to improve sales force productivity..

The other thing I would mention Gary and again in the Investor Day material it is there, is because of the size of the sales force, even modest improvements in productivity have a pretty significant impact. So a 5K improvement in productivity spread across 2,000 sales people is meaningful. Two years in a row of 5K improvement even more meaningful.

And so based on what Gene described in terms of looking below the covers of what's really going on, plus what we have done over the past 12 months or last five quarters in actuality, we have great confidence that sales productivity can improve into the future..

Okay, great. Thanks. And then the follow-up, I want to go back to buybacks. I appreciate the comment on leverage but you have clearly for two years now been debt financing the buybacks and particularly with the valuation of stock having gone up so much, it is less accretive than it was.

And with the new buyback, and saying 2.5 years to three years, it seems like this pattern of having to debt finance it, because you are using more than your U.S. based free cash flow for buybacks will continue? Also, I think you've only hedged less than a third of the debt on interest rates.

It just feels to me like it ends badly, rates go up or something happens and the pace of this, can't continue without taking more risks and potentially impacting the valuation.

So how do you think about that, are you indeed comfortable continuing to debt finance the buybacks over the next few years and how do you think about rates rising and what that could mean? Thank you..

Yeah, I mean two things, I'd say Gary. One is, the pace of share buyback is roughly in line with our corporate free cash flow on an annual basis and has been for the last several years, has actually been below our free cash flow and just in the last year or so….

But only 6% of that’s in the U.S., right, only 6% of free cash flow is in the U.S.?.

That is the correct. So there are lots of different things we can look at here. As you know with our new credit facility that we put in place had very attractive terms and gives us room to grow into as well.

We are also locking in certain portions of that debt from an interest rate perspective, so that there isn't potential slippage on the interest expense on the upside. And look, and we will continue to monitor both our capital structure, whether or not buybacks, or how much buybacks are accretive to our shareholders et cetera.

And we will not get out other over our [indiscernible] tips on this one for sure. We are watching it very closely, but it is our belief that again optimal capital structure in 1.5 times leverage range and that our two primary uses of our cash flow, both domestically and globally are strategic acquisitions and share repurchases..

And Gary, we have also - we have great confidence that our business is going to grow at attractive double digit rates ongoing in future. So if you say you're going to keep growing at double digit rates for an extended period of time, and this has been true the past, any of the repurchases as we've done [ph] are going be great.

And that's the kind of business we have..

Okay. I appreciate the color. Thank you..

Thank you. Your next question comes from the line of Bill Warmington from Wells Fargo. Please proceed..

Good morning, everyone.

So one question for you on the sales force hiring side, just whether you're seeing improving labor markets as helping or neutral and then if you would have any comments in terms of any geographies that stand out in terms of where the hiring is getting a little bit easier or a little tougher?.

So It's Gene. So the labor markets are clearly improving around the world, we see that. However, Gartner is an incredibly attractive place to work for anybody who wants to be in a technology world.

We are a premier employer, very attractive and so even as the markets around the world have improved, it doesn't affect our ability to hire, we - because of our attraction as a company et cetera, that hasn't really affected us at all.

As you’ll hear that sort of by geography the same thing is true around the world, that the - our ability to recruit is about the same as it has been anytime over the last three years or four years..

So you're perpetually oversubscribed basically?.

Well, we - obviously we work hard to find the right people but the - again the improving level is not the issue because we are such an attractive place to be..

Got it.

And then one question just on acceleration and the contract value on a constant currency basis, now that you've hit the 15% level, is - would it be fair for us to think about that level as being a sustainable level? Is it fair to expect that to continue to be at that level consistently, or should we expect some ups and downs around that? And then if you are going to be able to hit it sustainably what gives you comfort on that?.

It's Gene. So, we believe we can grow our sales force 15% to 20% a year. So even at the low end of that range, we grow sales force at 15% a year over time, that means our CV - our contract value is going to grow 15% a year. Again, we think we can do better than that in the sales force, we think we will.

And then secondly, we also think that we can simultaneously improve sales productivity modestly each year. As Craig pointed on Investor Day, if you grow - even if you had flat growth in the sales force being only 15% a year, and just improved productivity that accelerates our CV growth. We think we can do both.

So we are quite optimistic about that over time our contract value growth could accelerate..

Excellent. Thank you very much..

Thank you. There are no further questions waiting. So I would now like to turn the call over to Gene for closing remarks..

Well, thank you all for joining us today. To summarize the key points of today's call, first, we are doing great as a company. We are where we expected to be at this point of the year and all of our underlying metrics are strong.

Our contract value growth rate accelerated and rolling fourth quarter sales productivity is up 12% for Q1 compared to Q1 2014. We remain committed to enhancing shareholder value through investment in our business, strategic acquisitions 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 to updating you again on our next quarterly earnings call. Thank you for joining us today..

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and good day..