GARTNER INC (IT) Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 was ahead of expectations with revenue $1.715B (+8% YoY FX-neutral), adjusted EPS $5.45 (+79% YoY) and adjusted EBITDA $417M (+8% YoY). Free cash flow was $311M (+59% YoY) and operating cash flow $335M (+50% YoY) .
• Contract Value reached $5.3B (+8% YoY FX-neutral); GTS CV $4.0B (+7%) and GBS CV $1.2B (+12%). Management highlighted accelerating CV and broad-based strength across sectors, sizes and regions .
• FY2025 guidance introduced: revenue ≥$6.555B, EBITDA ≥$1.51B (≥23% margin), adjusted EPS ≥$11.45, FCF ≥$1.14B; Q1 2025 EBITDA ≥$345M. Management flagged ~2ppt FX headwind and ~9% OpEx growth as they accelerate hiring (GTS mid-single digit, GBS double digit) .
• Key near-term stock catalysts: continued CV acceleration (tech vendor recovery), clarity on tax-planning impact (Q4 adjusted EPS benefited from a 25% adjusted tax-rate; normalized would be $3.37), and execution through Q1 renewals/NCVI phasing; watch non-subscription Research and public sector dynamics .

What Went Well and What Went Wrong

What Went Well

• Accelerating CV and broad-based growth: “Fourth quarter contract value growth accelerated to almost 8%... CV growth was broad-based across practices, industry sectors, company sizes and geographic regions” .
• Segment strength: Conferences +17% revenue (48% margin) and Consulting +19% revenue (35% margin) in Q4; Research contribution margin steady at 74% .
• Cash generation and capital returns: Free cash flow $311M in Q4 and ~$1.4B FY; repurchased >$735M in 2024; liquidity ~$2.6B, leverage <2x, with continued buyback discipline .

What Went Wrong

• Non-subscription Research caution: Management guided for continuation of second-half traffic trends and a prudent outlook for non-subscription revenue; this remains variable and sensitive to macro and small tech vendor dynamics .
• FX headwind and OpEx growth: FY2025 outlook includes ~2ppt FX headwind to revenue/EBITDA and ~9% implied OpEx growth as hiring accelerates, tempering margin expansion near term .
• Government/public sector uncertainty and China softness: U.S. Federal renewals are spread through the year and management remains “thoughtful” about public sector hiring; China large-client environment remains challenging; Europe steady but no upside surprise .

Financial Results

Segment breakdown and margins:

Key KPIs:

Notes:

• Q3 operating cash flow included ~$300M conference cancellation insurance proceeds; associated taxes paid in Q4 .
• Q4 adjusted EPS benefited from tax planning (adjusted tax rate -25%); if 23%, adjusted EPS would have been $3.37 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Fourth quarter financial results were ahead of expectations. Contract value growth accelerated... In 2025, we will continue to accelerate hiring, keeping us on a path to long-term, sustained, double-digit growth.” — Gene Hall, CEO .
• “Adjusted EPS was $5.45... This includes a benefit in the quarter from our tax planning initiatives.” — Craig Safian, CFO .
• “With 12% to 16% Research CV growth, we will deliver double-digit revenue growth... and expand EBITDA margins modestly over time.” — Craig Safian, CFO .

Q&A Highlights

• NCVI phasing and Q1 prudence: Q1 has slightly higher renewals and lowest new business; guidance builds prudent NCVI phasing; not guiding CV, but execution improving .
• Tech vendor normalization: Management expects continued acceleration over several quarters; small tech remains a drag but new business rebounded .
• Public sector approach: Highly diversified across 74 countries; U.S. trends unchanged versus Q4; thoughtful hiring near term .
• Buybacks discipline: Price-sensitive, opportunistic, disciplined; excess cash and FCF enable both buybacks and tuck-in M&A .
• Pricing: Nov 1 price actions just under 4% on average; tailored by product/geography; typical pushback .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to data access limits at the time of query; therefore, explicit vs-consensus comparisons are not provided. Values would normally be retrieved from S&P Global.*
• Management guidance anchors FY2025 modeling: revenue ≥$6.555B, EBITDA ≥$1.51B (≥23% margin), adjusted EPS ≥$11.45, FCF ≥$1.14B; FX headwind ≈2ppt and OpEx growth ≈9% imply conservative initial margins with hiring ramp .

*Values retrieved from S&P Global.

Key Takeaways for Investors

• CV momentum is improving with tech vendor recovery; watch sequential CV exit rates and Q1 NCVI to gauge trajectory toward double-digit CV growth .
• Q4 adjusted EPS included a sizable tax-rate benefit; normalize for FY2025 (≥$11.45 guided) and focus on operating drivers versus tax effects .
• Segment trends supportive: Conferences scaling (largest Q4 quarter; plan for 53 in-person events in 2025) and Consulting backlog strength; non-subscription Research remains the swing-factor .
• Hiring acceleration is a deliberate investment; expect near-term OpEx growth (~9%) to weigh on margins before productivity gains lift profitability .
• Balance sheet and cash generation support continued buybacks; management will likely act on volatility with opportunistic repurchases .
• Macro/FX watch: ~2ppt FX headwind embedded; Europe steady, China challenging; diversified public sector mitigates U.S. government renewal risk .
• Near-term trading setup: Potential upside from continued CV acceleration and clarity on Q1 EBITDA (≥$345M); risks from non-subscription softness and public sector headline sensitivity .