GARTNER INC (IT) Q3 2025 Earnings Summary

Executive Summary

• Q3 revenue was $1.524B (+2.7% YoY) with adjusted EPS $2.76 (+10.4% YoY); GAAP EPS fell to $0.47 due to a $150M goodwill impairment in Digital Markets and the absence of last year’s $300M insurance gain .
• Contract Value (CV) reached $5.0B (+3% YoY FX-neutral), with CV +6% excluding U.S. Federal; management raised full-year guidance for EBITDA ($≥1.575B, +$60M) and adjusted EPS ($≥12.65), and increased insights and conferences revenue guidance .
• Segment mix: Insights revenue grew 5% YoY to $1.271B with 76.7% contribution margin; Conferences $75M and Consulting $124M; “Other” (including Digital Markets) $55M, down 22.6% YoY .
• Capital allocation: Gartner repurchased $1.1B of stock (4.0M shares) in Q3; balance sheet remained strong with ~$1.4B cash and ~$2.5B debt, ~2.1B liquidity and ~90% fixed-rate debt .
• Key stock catalysts: raised EBITDA/EPS guidance, visible Insight CV re-acceleration path for 2026 (ex-Fed CV +6%), and aggressive buybacks; watch tariff-impacted end markets and U.S. Federal renewal cadence .

What Went Well and What Went Wrong

• What Went Well

  • “Q3 financial results were ahead of expectations… We increased our Adjusted EBITDA and margin guidance for the year” — Gene Hall; CFO raised FY EBITDA and adjusted EPS guidance .
  • Ex-Federal CV +6% with broad-based growth across practices, industries and geographies; NCVI ex-Federal +$62M, sequential improvement larger than last year’s Q2→Q3 step-up .
  • AskGartner beta completed and rolled out to all licensed users; client engagement up; content per analyst +31% YoY and publishing time down 75% YoY, supporting retention .

• What Went Wrong

  • GAAP EPS collapsed YoY ($0.47 vs $5.32) on a non-cash $150M goodwill impairment in Digital Markets and no repeat of prior year’s $300M insurance proceeds .
  • New business down ~4% YoY ex-Federal amid longer sales cycles and higher approval thresholds; tariff-affected industries underperformed non-affected by ~200 bps .
  • “Other” revenue fell 22.6% YoY with recast segment reporting; Consulting revenue slipped YoY to $124M with a large project slipping from Q3, backlog $195M .

Financial Results

Values retrieved from S&P Global.*

Guidance Changes

Note: Management indicated each “Raised” item increased vs last quarter’s guidance; specific prior values were not available in the documents read .

Earnings Call Themes & Trends

Management Commentary

• “Third quarter financial results were ahead of expectations. Contract value grew 3%, or 6% excluding the US Federal business. We increased our Adjusted EBITDA and margin guidance for the year” — Gene Hall .
• “We bought $1.1 billion of stock… This, coupled with accelerating growth in 2026 and beyond, will create significant value for shareholders” — Craig Safian .
• “Ask Gartner has now been rolled out to all of our licensed users… It has increased their overall usage of our content… We think it will help with retention” — Gene Hall .
• “Non-tariff-affected industries… continue to perform about 200 basis points faster… There’s more certainty with regard to tariffs… clients are starting to make decisions” — Management .

Q&A Highlights

• Upsell and retention: Engagement metrics (document reads, one-on-ones, conference attendance/ratings) up; in-quarter renewal rates improved from Q2; easier to upsell when renewing .
• Tariff impacts: Non-tariff industries outperformed by ~200 bps; selling environment improving with more tariff certainty; 40% of CV exposed to tariff-affected intersections; tech vendors software/services improving, hardware/semis muted .
• Pricing: Global price increase ~3.5% effective Nov 1 with limited pushback; value proposition drives renewal decisions .
• Sales headcount: Expect to grow headcount 3–4 points slower than expected CV growth; ongoing territory optimization; ex-Fed recalibration .
• U.S. Federal shutdown: October deals still signed where counterparties “essential”; only ~15% of Fed CV remained for Q4 renewals .
• AskGartner monetization: Included in base license; used to increase content engagement; supports retention .

Estimates Context

• Q3 2025: EPS (Primary) beat (~13.7% vs $2.43); revenue slight beat; EBITDA under consensus on S&P’s EBITDA definition even as adjusted EBITDA was $347M by company convention *.
• With guidance raised for FY EBITDA and adjusted EPS, sell-side models should reflect higher margins, lower share count from buybacks, and slight FX tailwinds (revenue +80 bps; EBITDA +165 bps FY impact based on October rates) .

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Gartner delivered a clean top-line and adjusted EPS beat, raised FY EBITDA/EPS guidance, and demonstrated improving renewal rates and ex-Fed CV momentum — supportive of estimate revisions higher *.
• GAAP EPS volatility was driven by non-cash goodwill impairment and the tough compare to last year’s $300M insurance proceeds; underwriting should focus on adjusted metrics and cash conversion (FCF 76% of EBITDA in Q3) .
• AskGartner rollout and rising client engagement are leading indicators for retention; expect benefits to compound into 2026 CV re-acceleration .
• Tariff-affected end markets remain the primary macro headwind, but management cites better certainty and modest improvement; watch CV mix (software/services vs hardware/semis) .
• Buybacks are a material EPS lever (Q3 $1.1B; shares down ~4% YoY); capital return plus low leverage and strong liquidity support multiple resilience .
• Near-term trading: Positive skew on guidance raise and ex-Fed CV tone; watch Q4 adjusted EBITDA delivery (≥$400M) and conference season conversion to new business .
• Medium-term thesis: Re-acceleration of CV to high single digits in 2026, with operating leverage, stable pricing, and AI-driven productivity/engagement as structural drivers .

Additional Items Read

• Q1 2025 8-K and call: CV +6.7% FXN; adjusted EPS $2.98; strong FCF; macro volatility/tariff commentary and Fed renewal cadence set up year .
• Q2 2025 8-K: Revenue $1.686B; adjusted EPS $3.53; CV +4.9% FXN; AskGartner rollout started; buybacks $274M .
• Other press: Proposed offering of senior notes (Nov 13); proceeds to repay revolver and general corporate purposes; no pricing/size disclosed in the release .