Gartner, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Transformation Initiatives: Transforming business and technology insights along four dimensions:
  • Impact: Expanded AI insights, with over 6,000 AI-related documents, 1,000+ unique use cases, 200,000+ in-depth client conversations on AI, and over 500,000 AI-related questions via AskGartner.
  • Volume: Used automation and a neural network AI model to increase insights volume; the Active Insights library grew by approximately 50% by the end of 2025.
  • Timeliness: Introduced same-day insight types and reduced average insight creation time for Magic Quadrants by 75% compared to 2024.
  • User Experience: Rolled out AskGartner, launched Gartner C-level communities, and improved access to insights to enhance user experience.
• Shareholder Value Actions: Repurchased over $2 billion of Gartner stock in 2025, completed a successful investment-grade bond offering, added new directors, rotated Board committee chairs, and sold the digital markets business.
• Financial Performance: Fourth quarter revenue was $1.8 billion, up 2% year-over-year (reported) and unchanged FX neutral. Full-year revenue was $6.5 billion, up 4% (reported) and 3% FX neutral. EBITDA was $436 million in the fourth quarter (up 5% reported, 1% FX neutral) and $1.6 billion full year. Adjusted EPS was $3.94 in the fourth quarter and $13.17 full year.

Segment Performance

• Insight segment: Fourth quarter Insights revenue grew 3% year-over-year (reported) and 1% on a foreign exchange (FX) neutral basis. Full-year Insights revenue increased 5% (reported) and 4% FX neutral. Contract value was $5.2 billion at the end of the fourth quarter of 2025, up 1% year-over-year; outside the U.S. federal government, contract value growth was approximately 4%.
• Global Technology Sales (GTS): Contract value was $3.9 billion at the end of the fourth quarter of 2025, flat year-over-year; outside the U.S. federal business, contract value grew 4% in the quarter. Wallet retention for GTS was 96% for the quarter.
• Global Business Sales (GBS): Contract value was $1.2 billion at the end of the fourth quarter of 2025, up 3% year-over-year; outside the U.S. federal government, GBS contract value grew approximately 6%. Wallet retention for GBS was 99% for the quarter.
• Conferences: Fourth quarter revenue was $286 million, with same conference basis growth around 8% FX neutral. Full-year conferences revenue grew 11% to $645 million, with FX-neutral growth of 9%.
• Consulting: Fourth quarter revenue was $134 million, down from the year-ago period. Full-year consulting revenue was $552 million, down from the prior year.

Guidance

• Insights revenue: Reflects Q4 2025 contract value and anticipates contract value growth accelerating in 2026; first quarter and first half net contract value (NCVI) are important inputs for 2026 revenue growth.
• Conferences: Based on 56 in-person destination conferences planned for 2026; expects similar seasonality to 2025, with Q4 as the largest quarter and Q2 having the highest gross margins.
• 2026 Outlook: Expected revenue growth of ~2% FX neutral; EBITDA of $1.515 billion or more (23.5% margins or more); adjusted EPS of $12.30 or more; free cash flow of $1.135 billion or more.

Risks

• External Market Forces: Government efficiency initiatives, evolving trade policies, funding changes, tech industry shifts, and country-specific factors leading to increased scrutiny, elevated deal approval authority, and extended buying cycles.
• Operational Risks: Dependence on client engagement for retention and growth; challenges in maintaining margin targets with changing cost structures and market conditions.

Question and Answer

• Q: On the expected contract value acceleration as '26 unfolds, I guess there's going to be a mathematical benefit from moving past the peaking and lessening federal government headwind. Are you expecting acceleration beyond that on a ex government or federal government basis? And I imagine you expect some benefit from the step function operational changes. But just if you can give us a update on what you're seeing in terms of any leading indicator KPIs. You had talked about a lot of things last quarter like in quarter renewal rates. Just wondering if those have continued to make progress.

A: Eugene Hall responded that they expect contract value (CV) to accelerate throughout 2026 beyond federal headwinds, citing transformation initiatives. Leading indicators include conference scores, client engagement, and uptake of AskGartner, with higher conference orders and increased engagement showing positive trends.

• Q: Just want to follow up on the same kind of line of questioning, a couple of quarters ago, you talked about your hopes to kind of get back to the high single-digit range in terms of CV growth here in 2026. Just wondering, now a couple of quarters past that, how you're thinking about that kind of line of thinking? And the factors that you outlined at that time between the federal government business, tech vendors accelerating, tariff-related industries or tariff-impacted industries normalizing some and your own internal adaptations, is there any changes to kind of the magnitude of those benefits that you would speak to today versus 6 months ago.

A: Craig Safian stated that they expect CV growth to accelerate in 2026, with baked-in assumptions of CV growth acceleration, though the environment remains chaotic, and the impact of internal adaptations will drive further growth.

• Q: So just to follow up on that, Craig, I think you talked about the quarterly phasing of CV growth. I'm curious if you expect sort of that quarterly phasing to be similar to what we have seen historically? Or you could sort of put a finer point on that? I imagine you're expecting that some of the internal initiatives that you're taking will kind of help more towards the back half of the year, but any further perspective would be helpful.

A: Craig Safian responded that CV phasing is generally consistent with historical patterns, with more NCVI typically generated in the second half. The transformation initiatives will have a greater impact on the second half of 2026.