[Operator Instructions] Our first question comes from Faiza Alwy with Deutsche Bank.

I wanted to ask about how your thoughts have evolved around the role of macro and AI kind of impacting your business? Because I feel like this is the first time that you've mentioned sort of AI as a factor. Historically, we've been talking more about the macro factors like tariffs. So just curious kind of what's kind of driven the change in messaging around there?

Yes, Faiza. What I'd say is that during Q2, the selling environment improved. And I'd say many of the factors that we've talked about were modestly better. The most notable one obviously being part of the public sector, but other sectors as well. AI actually for us is something we get a lot of demand for. It's the single biggest demand from our clients. And so it's actually quite valuable to our clients. And again, we see the single biggest driver of demand from helping clients with AI.

Our next question comes from Andrew Nicholas with William Blair.

This is Tom Roesch on for Andrew Nicholas. I wanted to ask about the AskGartner solution. And I was wondering if you could provide some color on how renewal rates for users of AskGartner compared to those who don't? And also any type of benefits you're seeing like in revenue renewals, retention, any type of those numbers at this point?

So I think the way to think about AskGartner, and Gene referenced this in the BTI transformation, it's just a piece of all the things we're doing to enhance the user experience, both from a digital user experience perspective and also the experience when people do interact with our analysts and our experts. And AskGartner for us is table stakes, because that's the way a lot of people are now, when they're behind the firewall or working through information, they are leveraging a large language model. Our core value is really driving people there to our site proactively, because we know what their mission-critical priorities are. We know what their interests are, and we know what they should be thinking about many times before they even know what they should be thinking about. And they really put a huge premium on that proactivity. And then when they do come, they are proactively brought in behind the firewall, then AskGartner is one of our many digital tools that they can utilize to further enhance their experience, their insights, their intelligence moving forward on their MCPs. It's all positive. But again, I would highlight the broader digital experience as being the more important thing, and actually the broader overall engagement experience across all of the elements that Gartner delivers value is really what we're focused on. AskGartner is obviously a piece of that, but not the biggest piece of it. It's an important piece, but more broadly, we're enhancing the overall experience, making it more effective and more efficient for our clients to connect with the insights they need to accomplish their mission-critical priorities.

Our next question comes from Jason Haas with Wells Fargo.

I'm curious if you're still expecting the ex-federal government CV growth to accelerate to 4% plus by the end of this year?

Yes. So along with overall CV growth continuing to accelerate this year, it is our expectation that the ex-Fed CV growth will be a part of that. So short answer is yes. We do expect the entire business to continue to accelerate, ex-Fed being a piece of that reacceleration as well.

Our next question comes from Jeff Meuler with Baird.

Could you go into more detail, I guess, on your takeaway from the midsized client base growing mid-single and what's different relative to large enterprise? One thing that would come to my mind that I'd be curious on your thoughts on is like if large enterprise just has more downselling of number of seats, but I don't know if there's any other takeaways from you because I would think the initiatives that you've been implementing would benefit both client sizes generally.

Jeff, it's Gene. Great question. I think what's going on with midsized enterprises is, these are enterprises that are -- again, there are typically revenues of $100 million or more. So these are not small enterprises, but they're smaller than the very large enterprises. And so the level of complexity in their environment is lower. And so when they're tackling things like AI, it's easier for them to actually get to what are the big areas that they can get a good return on, how they track the costs. All that stuff is much easier to control with the midsized enterprise. I think large enterprises, these very large enterprises, they're extremely complicated. And I think it's very hard for leaders to sort out all of the puts and takes in terms of both where the value is and in terms of how you manage cost. I think that's the big difference is, in the smaller enterprises, actually, it's easier to manage all the stuff they're making more progress. In the larger enterprises, it's a much more complex problem that they're still wrestling with how you actually get that ROI and control cost and risk and things like that.

And I think, Jeff, the other thing I would add is, in the larger enterprises, they tend to be more global in nature and so more impacted by all of the uncertainty that exists out there. The one thing I would say is, and again, I would echo your point, all the things we're doing from BTI transformation and across the board will benefit all clients of all sizes, across GTS, the end user piece, the tech vendor piece, and across GBS. We did note that we are seeing downsell stabilize in the second quarter, which, again, is largely a larger company phenomenon. So we're actually seeing some improvement there. We noted also that we are seeing in-quarter retention rates improve. That's a phenomenon across the entire portfolio as well. And so back to Jason's question a little bit, with ex-Fed accelerating, we need the entire portfolio to accelerate, and that would be inclusive of midsized enterprises, large enterprises and our largest clients across the board as well.

Our next question comes from Josh Chan with UBS.

I guess on Gene's comment about the selling environment improving, I was wondering if you could make a comment about the ex-Fed selling environment. Do you see that improving as well through the quarter? And for you to get to the target of acceleration for the year, what kind of needs to happen on an ex-Fed environment basis, I suppose?

So I'd say on the ex-Fed selling environment, there are areas where it's gotten better and there's areas where it's gotten worse. And so I'd sort of say there's a mix of that. And so the areas where the macro has gotten better, I think that's performed very well. And the areas where it's gotten worse has been a little bit more challenging. And so I sort of say that's what's going on kind of under the covers. And again, as Craig said, we expect that to accelerate over time.

And again, Josh, I think what it comes down to is, our belief, and I think a lot of people believe this, that this kind of environment is sort of the new normal to some extent. And so all of the transformations we're doing and all the ways we are improving the business and focusing on execution and all of those things are meant to be able to accelerate the business in the current environment. And so again, we don't need a radical shift in the environment for the CV to continue to accelerate. We don't need a radical shift in the environment for the ex-Fed CV to accelerate. We just need to execute better, and we've got all the things in line. And again, as I mentioned and Gene mentioned in our prepared remarks, as we look under the covers at a lot of our KPIs, they are definitely trending positively. And when we see those things trend positively, generally results in improved performance over time.

Our next question comes from Manav Patnaik with Barclays.

I was just hoping you could help understand the new business number. I think you said it was plus 2% in GTS and down 5% in GBS, and kind of square that off with your commentary around increased engagement in new sales and so forth. And I guess, within that, and maybe overall, just how is price tracking?

Manav, I'll start off, and Gene can fill in any blanks. So I think there's a few things I'd highlight on the new business. So one is, as you know, and many of those who follow us for a while, we generally see new business dollars build from Q1 to Q2 to Q3 to Q4. So each quarter, we generally generate more new business dollars than the previous quarter. And as I noted in my prepared remarks and highlighted for both GTS and GBS, we did see a nice progression from Q1 to Q2 in new business dollars, which we view as very positive. When we look under the covers at sales pipelines and new business pipelines, they are also trending positively. And as you know, having new business pipelines doesn't immediately translate into growing new business, but certainly it gives us a much better shot of continuing to drive that build from Q2 to Q3 and then Q3 to Q4 from a new business perspective and drive gains in new business as well. When we look under the covers at things like engagement and things of that nature, that's really about future retention rates. But what I would say is, obviously, future retention is also a good predictor of future new business. If you're not driving strong retention rates, it's really hard to grow those clients. And so the more that we can drive higher retention rates within our existing clients, the more new business opportunities we have as well. And again, you saw wallet retention increased sequentially, that you should see build as well over time as we both drive stronger retention rates with our existing clients. And then with more clients retaining, we have more at bats, if you will, to drive new business with existing clients as well. And so I think it's a combination of all those things. And so primarily, the engagement gives us confidence about the retention rates. The retention rates give us confidence about being able to drive new business from existing clients and then you flip over to the new business pipelines, which remain very strong and positive, that gives us confidence around the new logo contribution moving forward as well.

Our next question comes from Surinder Thind with Jefferies.

I was hoping maybe you can provide a bit more color on the wallet retention. Obviously, things got a little bit better quarter-over-quarter. But I think there was also commentary around continued downsell pressure within the large enterprises. Maybe just how you think about where downsell pressure is versus maybe where you would like it to be? And just some of the things that are the factors that you think are driving it in the near term versus structurally where we think we are longer term on that, that would be helpful.

Surinder, so I think the commentary is really that we're seeing downsell stabilize. And so it didn't get worse Q1 to Q2. It is stabilizing. And if you think about when a contract comes up for renewal, there are 1 of 3 or 4 things that could happen. And so when there is downsell, it means we lose the upsell opportunity. And while our retention is really a function of the combination of renewing the base, obviously, there are a small amount of clients that will cancel, but you see client retention rates are improving and are at or near sort of historical highs. And so that's really not a challenge for us. But when a client decides to either hold spend or reduce spend, that is a missed opportunity for us to increase the spend, which generally translates into those higher wallet retention rates. We believe that over time, with better engagement levels, all the improvements we're making that Gene highlighted on BTI that, that will lead to stronger retention rates. That stabilizes the wallet retention and gives us more opportunities to grow that going forward. It could be just growth through price. It could be growth through upgrading people to higher-level services, or it could be growth from finding new license users or finding new buying centers within those existing enterprises. But we view wallet getting more back to normal over time as we drive all these improvements in BTI and engagement, which stabilizes the retention base and then just gives us more opportunity to grow that existing client base.

Our next question comes from Jasper Bibb with Truist Securities.

I just wanted to ask how you're thinking about managing quota-bearing head count in the context of this reacceleration in the second half and then into '27. Like do you expect to add more salespeople in the second half to support that CV reacceleration? Or do you think you get there on productivity gains?

Jasper, so we basically want to add sales headcount when we have great productivity. And right now, we look at it as we have a lot of capacity that is underutilized, and that with the changes we're making like the BTI transformation I talked about, the increased engagement that Craig talked about, we think that will actually drive our productivity up. We'll get a nice lift there. As that comes up, we will expect to accelerate our headcount growth. And so it really depends on kind of how we see this improvement in productivity developing over time.

And Jasper, I would just add, we're actively managing our operating expense base, so that we can remain agile and ensure we can deliver on our profit expectations, free cash flow expectations, et cetera. And then just I would reiterate what Gene said, which is we have plenty of capacity to significantly reaccelerate CV, even getting to half or 3/4 of our historical productivity levels, that would provide a significant uplift to the CV growth. And again, that return to productivity would give us the confidence that Gene highlighted to reignite investment in QBH. But again, it's all about balanced managing of our OpEx base, making sure we're getting productivity out of our existing cost base. And then when we see that, that's the signal to go faster on the QBH side.

Our next question comes from George Tong with Goldman Sachs.

You talked about CV growth continuing to accelerate from current levels and highlighted several drivers. Can you rank order the key drivers you expect to fuel CV growth acceleration and what you see as a reasonable medium-term target for CV growth?

So what I'd say, George, is the thing that's going to drive CV growth the most are 2 factors. The first is as engagement with our clients increases, that strengthens retention. And then as our client retention increases, obviously, if we retain a client, just as Craig explained earlier, our opportunity to grow on that client increases. And so I think the first thing we'll see is increased engagement leads to higher retention. Now high retention actually leads to more new business with our existing clients. Then on top of that, as we make the changes and get higher engagement, that also makes it easier to sell new clients, too. It makes the value proposition more transparent to new opportunities as well. And so then that will kick as well. So I think those are the 3 key factors that impact it.

And George, I would just add, obviously, in the near term, the biggest impact is a combo of lapping the U.S. Fed and that business actually getting back to growth as well. And so again, I know that's baked into a lot of the way people are thinking already. And so that's fine. But mathematically, that will provide a nice lift this year. And then again, we believe that, that business -- and again, both Gene and I noted in our prepared remarks that we actually drove NCVI in that space in the second quarter. So that's another piece of it as well that sort of gets rolled into the total and will behave exactly the way Gene highlighted. But obviously, we won't have the same challenges we had in 2025 from the U.S. Fed business going forward.

And a reasonable medium-term target for CV growth?

George, you should know us better than that, that we do not provide CV guidance or medium-term growth. I think the short answer is we expect CV growth to continue to reaccelerate. We've got to go through -- continue through the low single digits to get to mid-single digits and then get through mid-single digits and beyond. And we look forward to updating everyone each quarter, but we're not going to provide a medium-term target on the CV growth as is our normal practice.

Our next question comes from Toni Kaplan with Morgan Stanley.

You mentioned in the prepared remarks, clients are reprioritizing their tech budgets. I imagine a lot of them are putting sort of more expense dollars towards utilizing large LLMs and related expenses. Is that largely what you were referring to? And are you seeing any impact in the amount that they're willing to spend with you as a result of the reprioritization?

Toni, so you're correct in that clients are reprioritizing their IT spending to shift more towards AI. LLM is one piece of it, but more towards AI. What I'd say is that doesn't impact us in a negative way directly, because if you look at the amount they spend with us relative to their IT budgets, we're very, very small. I think 0.1% or less for typical clients. And so as they reprioritize -- actually, as I mentioned before, the biggest single driver of demand for us for our clients, including IT, is help with AI. So we're actually helping them figure out how do they reprioritize. And so in that sense, it's actually driving demand for our products as we help them reprioritize. And again, across both within IT and across the business, typically, companies are trying to reprioritize to free up more money for AI, and we're helping them with that.

Our next question comes from Scott Wurtzel with Wolfe Research.

Craig, just wondering if you can talk a little bit more about some of the OpEx efficiencies that you're recognizing in the context of you're excluding FX, you're raising your revenue outlook by $5 million, EBITDA by $40 million. So just wondering if you could talk a little bit more about the OpEx efficiencies.

Yes, Scott, thanks for the question. I think it's ongoing best practice around making sure that our in-quarter OpEx rates align with the revenue, but more importantly, that our run rates align with our revenue CV expectations rolling forward. So we continue to manage the business to ensure that we are delivering on our profit targets and also delivering on our free cash flow targets. What I would say is a lot of the reprioritization is to make sure that we are investing in key areas that we know will drive short-term, medium-term and long-term growth. And so there's a lot of reprioritization happening on a quarterly basis. It's not always in the name of driving profitability. It is often in the name of making sure that we're able to double and triple down in the places that we think are most important for delivering value for our clients and that we think are most important for delivering long-term value for the company and our stakeholders as well.

Our next question comes from Daniel Zako with BMO Capital Markets.

This is actually Jeff Silber with BMO. Other companies in the space have talked about potentially changing economics, maybe a faster move to enterprise pricing or a consumption-based model. Is that something you're contemplating? And if not, why not?

So we talk to our clients and do market research on a pretty much continual basis to understand how they want to work with us and how they feel about our pricing. And what I'd say is if you look at who we're targeting with our research, it's typically the C-level, like the CIO, CFO, their direct reports and maybe one level down. And so an organization that might have 1,000 people or 10,000 people or 50,000 people, we're targeting a handful of those people. And when we go back to talk to clients about how they want to pay for it, how they want to structure their contracts, they like the way we do it today as seat-based because they don't see a need to have it with all 10,000 of their associates. And if I can contrast that, there's some like software purchases where they sort of say, like if you buy a lot of packaged software sort of say, well, I need it for each of my associates. We're not in that kind of a business. It's really focused on the top really 3 levels in the organization are our core clients. And when we ask them how they want to pay, they don't say we want enterprise licenses. They actually like the way that we're working today.

And Jeff, just to add to that. I mean, again, if you look at the average spend on the GTS side, it's probably about 6 licenses per enterprise. On the GBS side, it's a little bit lower than that. And so again, we are really targeting, to echo Gene's point, the top of the org chart, that person's direct reports, and in large organizations, a level or 2 down from that. We are not targeting the enterprise. We are targeting the C-level, because those are the people that have significant enterprise-wide mission-critical priorities that we can drive the most value for, and that's where we're going to continue to focus and drive a lot of our growth and value.

Our next question comes from Ashish Sabadra with RBC Capital Markets.

Maybe a quick clarifying question. Can we know what the ex-Fed NCVI was in the quarter? We get around $11 million from Fed and $3 million from ex-Fed NCVI. Just wanted to confirm that. And then just a follow-up on prior responses. I was just wondering, can you talk about which areas are you seeing continued pressure? Are there certain industries or -- for example, tariff impacted industries were impacted last year? Do you see easy comps going into this year?

Ashish, I'll start with the computational stuff, and then we can dive into the more macro question. So ex-Fed NCVI in the quarter was about positive $4 million. So that's the math on that. In terms of -- do you want to cover the tariff impact?

Yes. In terms of industries, again, companies that have tariffs imposed have much tighter cost constraints for that company than ones that don't. And so that's clearly a macro factor that continues to impact us for those companies, that tariffs. As I mentioned before, and Craig mentioned this as well, we're assuming that the world is going to be like that for the go-forward basis. And so we're restructuring our business, especially with the BTI transformation, so that our value goes up, so that even in industries where there's a big macro dislocation, that actually they see the value in our products and are going to want to buy and grow with us.

And Ashish, just the one thing I'd also just highlight is, it's really the uncertainty. There are lots of different macro factors that are popping up on a daily, weekly, monthly basis. They ebb and flow, but it's causing just lots of uncertainty around the enterprises that we serve globally, and we're adapting and transforming, so that we can perform better given all that uncertainty.

Our next question comes from Curtis Nagle with Bank of America.

Just switching gears a little bit just on consulting. I think you said the backlog is $214 million or so, first increase in about a year or so. I guess where are you seeing incremental demand? What's driving that improvement?

Yes. Curtis, I think it's a little bit better execution across the board, a little bit of just driving better focus with our core anchor clients. There's no like one thematic around we sold a lot of this kind of project or this kind of engagement. I think the team has just been laser-focused on, one, delivering on the backlog that we have; and two, generating the pipeline and turning that into bookings so that we've got more backlog to burn in the future. Obviously, in Q2, we had a very strong bookings quarter. Again, no uber trend among the type of business that we did end up selling, but it's just a matter of staying close to our clients, understanding where they have needs, and then our consulting team diving in to meet those demands and meet those needs. And so we feel good now about the full year outlook, particularly on the labor-based side, given the strong bookings quarter, and we need to follow it up with another strong bookings quarter, so that we can keep the backlog growing, so that we can return that business to growth over the medium term.

I'm showing no further questions at this time. I'd like to turn the call back over to Gene Hall for closing remarks.

So in closing, with the strong demand we're seeing for help on mission-critical priorities such as AI, our vast and growing library of high-impact timely insights and the transformational improvements we're making in our ability to deliver unparalleled client value, we remain optimistic about our future. We expect contract value growth to continue to accelerate. We will continue to drive strong free cash flow that we put to use to drive incremental shareholder value, and we expect to deliver adjusted EPS on a compound annual basis above 12% over the next 3 years. Thanks for joining us today, and I look forward to updating you again next quarter.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.