Gartner Q3 Earnings Call Highlights

Key Points

• Q3 results topped expectations: Revenue rose 2% to $1.5 billion, adjusted EBITDA increased 8% to $364 million, and adjusted EPS climbed 30% to $3.59.
• Contract value growth accelerated for a third consecutive quarter to 2.5% year over year, while retention improved. Gartner raised its full-year 2026 outlook, including adjusted EBITDA of at least $1.615 billion and adjusted EPS of at least $14.65.
• Management cited longer sales cycles, technology-sector layoffs, and Middle East uncertainty as headwinds, and no longer expects non-federal contract value growth to reach 4% by the end of 2026. AI remains a major client demand area, though customers are seeking help turning investments into measurable benefits.

Gartner NYSE: IT reported third-quarter results that exceeded its expectations and raised its full-year 2026 outlook, as contract value growth accelerated for a third consecutive quarter and retention improved across its core research businesses.

Chairman and Chief Executive Officer Gene Hall said third-quarter revenue, EBITDA, adjusted earnings per share and free cash flow all came in ahead of expectations. He also pointed to sequential improvement in net contract value increase, or NCVI, and continued normalization in the company’s U.S. federal business.

“Contract value growth accelerated for the third quarter in a row,” Hall said, adding that wallet retention improved in both Global Technology Sales and Global Business Sales.

Quarterly financial performance

Third-quarter revenue was $1.5 billion, up 2% from a year earlier on a reported basis and 3% on an FX-neutral basis, Chief Financial Officer Craig Safian said. Adjusted EBITDA rose 8% year over year to $364 million, while adjusted EPS increased 30% to $3.59.

Free cash flow totaled $275 million in the quarter, up 2% from the prior-year period. On a rolling four-quarter basis, free cash flow was $1.3 billion, an increase of 6% year over year. Gartner’s rolling four-quarter return on invested capital was 34%.

Total contract value ended the quarter at $5.3 billion, representing 2.5% year-over-year growth and an 80-basis-point acceleration from the second quarter. Excluding the U.S. federal government business, contract value increased 2.8%.

• Global Technology Sales contract value was $4 billion, up about 2% year over year, or 2.5% excluding U.S. federal business.
• Global Business Sales contract value was $1.3 billion, up 3.7% from a year earlier.
• GTS wallet retention improved sequentially to 98%, while GBS wallet retention was 99%.
• Gartner generated approximately $240 million in new business during the quarter.

Safian said core GBS subscription products grew about 7% during the quarter, led by high-single-digit growth in sales and finance practices. Software and services offerings within the company’s technology vendor client segment grew in the mid- to high-single-digit range, while mid-sized enterprises posted mid-single-digit contract value growth.

Conferences and consulting trends

Gartner’s Conferences revenue was $86 million in the third quarter. On a same-conference basis, revenue grew about 8% FX-neutral, and contribution margin was 35%. The company held 13 destination conferences during the quarter.

Hall said attendance at Gartner’s IT Symposium/Xpo in Orlando rose by double digits year over year, with more than 7,500 technology leaders attending the four-day event. The company said 325 sessions at the event addressed artificial intelligence.

Consulting revenue was $126 million, up 2% as reported and 3% FX-neutral. Consulting backlog at Sept. 30 was $217 million, up about 9% from a year earlier and marking the second consecutive quarter of year-over-year backlog growth.

AI demand and BTI transformation

Management said AI remained the most requested topic among Gartner’s clients. Hall said the company’s research guides more than 75,000 senior executives on AI, including more than 10,000 chief information officers and their teams and more than 5,000 technology enterprises.

Hall said some clients that initially adopted broad AI tools are returning to Gartner for help establishing business cases, managing costs and obtaining tangible benefits from their investments.

“It is a lot harder than I thought to get any benefits from AI,” Hall said clients have told Gartner, according to his characterization of their feedback.

The company continued its BTI transformation, focused on improving the impact, timeliness, quantity and client experience of its research. Hall said Gartner has expanded higher-impact documents by a mid-single-digit rate and increased the total volume of documents at a double-digit rate. Safian added that engagement with Gartner’s mobile app and AskGartner capabilities increased from a year earlier.

External pressures and outlook

While management described the business as resilient, executives said external conditions continued to affect customer budget and spending decisions. Safian cited the war in the Middle East as a factor that created a more difficult selling and retention environment in the region. He also said layoffs among large technology vendors and longer sales cycles continued to present challenges.

Gartner reported approximately $15 million of NCVI in its U.S. federal business during the quarter. Hall said the result reflected both returning customers and demand from new federal clients.

Management said downsell activity has remained relatively stable for two consecutive quarters, which it views as a positive development for retention. However, Safian said the company no longer expects contract value growth excluding federal operations to reach a 4% rate by the end of 2026, although total contract value growth is still expected to continue accelerating.

The company raised its full-year outlook and now expects:

• Revenue of at least $6.405 billion, representing approximately 1% FX-neutral growth.
• Adjusted EBITDA of at least $1.615 billion, $45 million above prior guidance.
• Adjusted EPS of at least $14.65.
• Free cash flow of at least $1.235 billion.

Gartner repurchased $138 million of stock in the third quarter and $1.7 billion over the trailing 12 months. Safian said the company had about $1.1 billion remaining under its buyback authorization and would continue to pursue price-sensitive, opportunistic and disciplined repurchases, alongside strategic tuck-in acquisitions.

About Gartner (NYSE:IT)

Gartner, Inc is a global research and advisory company that provides information, analysis and guidance to business leaders, technology professionals and public-sector organizations. Its work focuses on helping clients evaluate technology markets, develop business strategies, manage risk and make decisions about digital transformation and other organizational priorities.

The company delivers its services through research and advisory programs, consulting engagements, executive guidance and conferences.

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