GARTNER INC (IT) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 delivered modest top-line growth and strong cash generation: revenue $1.53B (+4.2% reported; +5.7% FX-neutral), adjusted EPS $2.98 (+1.7%), adjusted EBITDA $385M (+0.7%), and free cash flow $288M (+73.3%), ahead of internal expectations .
Consensus comparison: EPS beat (Actual $2.98 vs $2.72 consensus*), revenue essentially in-line/slight miss (Actual $1.534B vs $1.535B consensus*). Management lifted FY25 adjusted EPS to at least $11.70 and EBITDA to at least $1.535B; EBITDA guidance raised by $25M, EPS by $0.25 .
Contract value (CV) reached $5.1B (+6.7% FX-neutral), with GTS CV $3.9B (+5.5%) and GBS CV $1.2B (+10.8%). U.S. federal renewals weighed on CV (dollar retention ~50%), lengthening sales cycles across impacted clients, while tech vendor trends continued to improve .
Stock-relevant narrative: guidance quality (margin uplift despite lower revenue outlook), robust FCF, buyback capacity ($2.1B cash; $870M authorization), and an improving tech vendor backdrop offset uncertainty from U.S. federal renewals and tariff-driven decision delays .

What Went Well and What Went Wrong

What Went Well

Adjusted EPS and FCF outperformed expectations; management emphasized cost agility enabling margin delivery ahead of initial guidance: “we are managing our costs to deliver Adjusted EBITDA Margin ahead of our initial guidance while also investing for future growth” .
Tech vendor CV trends accelerated for the fourth consecutive quarter; GTS retention was 101%, and GBS wallet retention 105% in Q1 .
Conferences delivered solid same-conference growth (+~12% FX-neutral after adjusting for timing), and Contract Optimization revenue grew +36% YoY (+38% FX-neutral), bolstering segment results .

What Went Wrong

U.S. federal renewals were a clear headwind: ~40% of contracts transacted in Q1 with dollar retention “almost 50%”, leading to CV decline vs Q4; ~$30M of term notices remain in CV but will not renew later in the year .
Broader macro uncertainty and tariff impacts lengthened decision cycles, slowing new business velocity and upsell, pressuring wallet retention despite client retention holding up .
Consulting labor-based revenue fell 4% YoY as reported (down 2% FX-neutral) against a tough compare, even as backlog rose +16% FX-neutral .

Financial Results

Consolidated Results vs Prior Periods and YoY

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$1,484.3	$1,715.1	$1,534.1
Diluted EPS ($)	$5.32	$5.11	$2.71
Adjusted EPS ($)	$2.50	$5.45	$2.98
Adjusted EBITDA ($USD Millions)	$340	$417	$385
Operating Cash Flow ($USD Millions)	$591	$335	$314
Free Cash Flow ($USD Millions)	$565	$311	$288
Total Contribution Margin (%)	69% (implied by CFO commentary for Q1; not provided prior)	—	69%

Results vs Wall Street Consensus (S&P Global)

Metric	Q1 2025 Consensus	Q1 2025 Actual	Beat/Miss
Primary EPS ($)	2.716*	2.98	Bold beat
Revenue ($USD Millions)	1,534.8*	1,534.1	In-line/slight miss
EBITDA ($USD Millions)	371.2*	385 (company adjusted)	Above company’s adjusted

Values retrieved from S&P Global.*

Segment Breakdown

Segment	Q3 2024 Revenue ($MM)	Q4 2024 Revenue ($MM)	Q1 2025 Revenue ($MM)	Q3 2024 Contribution Margin	Q4 2024 Contribution Margin	Q1 2025 Contribution Margin
Research	$1,280.9	$1,310.6	$1,321.8	73.7%	74%	74.5%
Conferences	$75.8	$251.3	$72.6	40.2%	48%	37.7%
Consulting	$127.6	$153.2	$139.7	32.5%	35%	38.2%

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Total Contract Value (CV) ($B)	$5.0 (+7.3% FXN)	$5.3 (+8% FXN)	$5.1 (+6.7% FXN)
GTS CV ($B)	$3.9 (+6.1% FXN)	$4.0 (+7% FXN)	$3.9 (+5.5% FXN)
GBS CV ($B)	$1.2 (+11.6% FXN)	$1.2 (+12% FXN)	$1.2 (+10.8% FXN)
U.S. Federal CV ($MM)	—	—	$225
GTS Retention (Wallet/Client)	—	—	101% wallet
GBS Retention (Wallet/Client)	—	—	105% wallet
Consulting Backlog ($MM)	—	—	$214 (+16% FXN)
Contract Optimization Revenue ($MM)	—	—	$36 (+36% YoY; +38% FXN)
Cash & Debt ($B)	—	—	Cash ~$2.1; Debt ~$2.5
Share Repurchases ($MM)	—	—	$163 (authorization ~$870)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($B)	FY 2025	~$1.510 (derived from +$0.025)	≥ $1.535	Bold raised (+$25M)
Adjusted EPS ($)	FY 2025	~$11.45 (derived from +$0.25)	≥ $11.70	Bold raised (+$0.25)
Free Cash Flow ($B)	FY 2025	—	≥ $1.145	Maintained/clarified
Consolidated Revenue ($B)	FY 2025	—	≥ $6.535 (≈+4% FXN)	Updated (prudence, FX benefit)
Research Revenue ($B)	FY 2025	—	≥ $5.34 (~+4% FXN; sub rev ~+5%)	Updated
Conferences Revenue ($MM)	FY 2025	—	≥ $625 (~+6% FXN; 53 in-person events)	Updated
Consulting Revenue ($MM)	FY 2025	—	≥ $575 (~+2% FXN)	Updated
Adjusted EBITDA ($MM)	Q2 2025	—	≥ $400	New period guidance
FX Impact	FY 2025	—	≈ +50 bps to revenue; +130 bps to EBITDA growth	Benefit

Note: Previous guidance values for EBITDA/EPS are inferred from disclosed deltas; prior segment revenue guidance was not disclosed in the documents read .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
AI initiatives & internal tools	General positioning as leading in AI; focus on client value proposition	Continued acceleration path, large addressable market	Rolling out internal AI chat-like navigation; client rollout planned after hardening against hallucinations	Increasing productization of AI for clients
Macro/tariffs & decision cycles	Macro volatility acknowledged; results ahead of expectations	Contract value growth accelerated; confidence in double-digit long-term growth	Tariffs and policy changes lengthened sales cycles; prudent guidance and cost agility	Deteriorated decision velocity; prudence elevated
U.S. Federal	Not highlighted	Not highlighted	~40% renewals in Q1 with ~50% dollar retention; cadence heavier in Q3; ~$30M termination notices	Material headwind; watch Q3
Tech vendor trends	CV high single-digit growth	CV growth accelerated	Tech vendor CV accelerating; larger vendors stronger	Improving
Conferences	Strong YoY growth; timing issues seasonally	Strong Q4 seasonality	Same-conference revenue +~12% FXN adjusting timing; margin seasonally ~38%	Solid activity, timing-adjusted strength
Consulting	Mixed; revenue -3.9% in Q3	Strong Q4 revenue	Labor-based down; backlog +16% FXN; contract optimization +36%	Backlog strength vs revenue mix

Management Commentary

“First quarter financial results were ahead of our expectations. Contract value grew 7%… managing our costs to deliver Adjusted EBITDA Margin ahead of our initial guidance while also investing for future growth” — Gene Hall, CEO .
“We are updating our guidance to reflect Q1 performance, the new macro landscape, the benefit from the move in FX rates and our own expense agility” — Craig Safian, CFO .
“Tech vendor CV growth continued to improve… larger vendors accelerating faster than smaller vendors” — Gene Hall .
“We expect FX to benefit revenue growth by about 50 bps and EBITDA growth by about 130 bps in 2025” — Craig Safian .
“We use AI internally… planning to release to clients, ensuring no hallucinations” — Gene Hall .

Q&A Highlights

U.S. Federal renewals and contract mechanics: ~50% dollar retention in Q1; ~$30M term notices remain in CV until expiration; renewal cadence lighter in Q2, heavier in Q3 aligned to federal fiscal .
Macro/tariffs: Decision cycles lengthened among impacted enterprises; pipeline robust but velocity slower vs Q4’24 .
OpEx and margin: “Slight belt tightening” with continued investment in selling capacity; raised margin outlook despite lower revenue outlook .
Buybacks: Strategy remains price-sensitive, opportunistic, disciplined; $2.1B cash, FCF >$1B annually supports buybacks and tuck-in M&A .
AI productization: Internal AI navigation tool piloted widely; client rollout planned after reliability improvements .

Estimates Context

Q1 2025 EPS beat consensus: Actual adjusted EPS $2.98 vs S&P Global consensus $2.716*, driven by cost agility and contribution margins holding at 69% .
Revenue was in-line/slightly below consensus: Actual $1,534.1M vs $1,534.8M consensus*, reflecting federal renewal pressure and elongated decision cycles .
Note: Company-reported adjusted EBITDA ($385M) exceeded S&P Global EBITDA consensus ($371.2M*), but consensus EBITDA definitions may differ from company’s adjusted EBITDA methodology .
Values retrieved from S&P Global.*

Key Takeaways for Investors

Margin quality and FCF are the near-term anchors: EBITDA and EPS guidance raised despite a more prudent revenue outlook; rolling 4-quarter FCF conversion remains strong .
Monitor U.S. federal cadence (Q3 heavy) and retention: CV headwinds likely persist in 2025 with potential win-backs more likely in 2026–2027; near-term volatility likely around renewal windows .
Tech vendor exposure is a positive lever: accelerating CV with larger vendors provides an offset to macro uncertainty and federal headwinds .
Conferences and Contract Optimization offer variability but upside: timing-adjusted conferences growth (+~12% FXN) and contract optimization (+36% YoY) can bolster results, albeit variable .
Capital allocation remains supportive: $2.1B cash, <$2x gross debt/EBITDA, and $870M authorization create buyback optionality into dislocations .
Watch decision cycle normalization: management expects elongated cycles to normalize over months; potential for a burst of demand in impacted sectors once uncertainty stabilizes .
Guidance-specific catalysts: Q2 adjusted EBITDA ≥$400M, FX tailwinds to revenue/EBITDA, and mid-single-digit sales headcount growth outside federal can drive reacceleration when macro improves .

Additional notes:

We found no Gartner corporate press releases beyond the Q1 2025 8-K that were directly relevant to financials; the 8-K press release and earnings call were the primary sources .