IT

Financial & Client Engagement Performance

• Q2 2026 revenue, EBITDA, adjusted EPS, and free cash flow all exceeded analyst/management expectations. Rolling four-quarter return on invested capital was 31%.
• Client engagement improved 140 basis points YoY, with overall client interactions up more than 150 basis points YoY, driven by higher analyst consultation usage.
• Contract value (CV) growth accelerated for the second consecutive quarter. Wallet retention improved sequentially, with downsell activity stabilizing and overall retention rates increasing quarter-over-quarter.
• Mid-sized enterprise clients grew mid-single digits YoY across both segments, and U.S. government clients returned to positive net new contract value (NICV) in the quarter.

Strategic Value Proposition & AI Demand

• Gartner's core value proposition delivers independent, expert insights for enterprise leadership on four key priorities: identifying blind spots, anticipating future risks/opportunities, filling comparative information gaps, and preparing for industry shifts.
• AI is the single most requested client topic, with growing demand for guidance across AI strategy, multimodal models, cybersecurity, physical AI/robotics, cloud-to-edge processing, and adoption best practices. Gartner connects 80,000+ business leaders, 10,000+ CIOs/IT teams, and 5,000+ technology providers around AI strategy and implementation.
• Strong demand also exists for support on other high-priority areas including cybersecurity, cost optimization, and data & analytics.

Business Transformation Progress

• Management continues to execute on the Business and Technology Insights (BTI) transformation, focused on improving four core areas: volume, impact, timeliness, and user experience.
• The company's insights library has grown 18% YoY, with double-digit growth in the number of high-impact documents. The volume of timely insights released immediately after major industry events has increased significantly.
• Gartner is continuously enhancing its digital client experience, and upgrading sales, services, and analyst capabilities to improve value delivery.
• Above-average growth was recorded in multiple end markets, with software and services tech vendors remaining the strongest-performing tech vendor subsector.

• Full-year 2026 total revenue guidance is set at or above $6.375 billion, representing 1% FX neutral YoY growth. Guidance was updated to reflect the impact of a stronger U.S. dollar, while operational insights revenue guidance remains unchanged from prior outlook.
• Full-year 2026 adjusted EBITDA guidance is increased to at or above $1.57 billion, a $40 million operational increase and $25 million net increase after accounting for FX impacts. Full-year margin is expected to be at or above 24.6%, up from prior guidance.
• Full-year 2026 adjusted EPS guidance is increased to at or above $14, driven by the higher EBITDA outlook and a lower fully diluted share count from aggressive share repurchases.
• Full-year 2026 free cash flow guidance is increased to at or above $1.185 billion, representing a 136% conversion from GAAP net income.
• Q3 2026 EBITDA is expected to be at or above $315 million. Insights revenue is expected to increase sequentially on an FX neutral basis, with reported results reflecting the stronger U.S. dollar.
• Management reaffirms expectations that total and ex-federal CV growth will continue to accelerate through 2026, with ex-federal CV growth expected to reach 4%+ by the end of the year. Management also reaffirms a target of 12%+ compound annual adjusted EPS growth over the next three years.
• Consulting full-year guidance is maintained, and 55 in-person destination conferences are still planned for 2026, with majority of 2026 conference revenue already under contract.

Gartner reports the following Q2 2026 segment performance:

1. Gartner Insights (Overall): Revenue grew 2% year-over-year (YoY) as reported, 1% YoY FX neutral. Total ending contract value (CV) was $5.3 billion, up 2% YoY (a 70 basis point acceleration from Q1 2026), with a 30 basis point sequential increase from Q1. Excluding U.S. federal government business, CV grew 3.3% YoY. Contribution margin was 77%, up 140 basis points YoY.
2. Global Technology Sales (GTS): Ending CV was $4 billion, flat sequentially and up 1% YoY (70 basis point acceleration from Q1). Excluding U.S. federal business, CV grew 3% YoY. Overall retention was 97% (up from Q1), while ex-federal retention was 99%. New business was up 2% YoY and up sequentially from Q1. GTS represents ~75.5% of total Gartner ending CV.
3. Global Business Sales (GBS): Ending CV was $1.3 billion, up 1% sequentially and 3% YoY. Excluding U.S. federal business, CV grew 4% YoY. Core GBS subscription products (90% of GBS CV) grew 7% YoY, with C-level offerings growing even faster. Retention was 99% for the quarter. New business was down 5% YoY, but 20% higher sequentially from Q1. GBS represents ~24.5% of total Gartner ending CV.
4. Conferences: Q2 revenue was $244 million, with 12% YoY FX neutral same-conference growth. Contribution margin was 59%. 18 destination conferences were held as planned.
5. Consulting: Q2 revenue was $142 million, down from $156 million YoY. Contribution margin was 38%. Bookings increased 17% YoY, ending backlog was $214 million, up 9% YoY (the first YoY backlog increase since Q1 2025).
6. Contract Optimization: LTM revenue was $148 million, consistent with Q1 2026, with a 9% two-year revenue CAGR. Q2 performance was better than expected.

Total company Q2 2026 adjusted revenue was $1.7 billion, up 3% YoY as reported, 2% YoY FX neutral. Total adjusted EBITDA was $466 million, up 6% YoY as reported, 4% YoY FX neutral. Adjusted EPS was $4.37, up 24% YoY. Free cash flow was $378 million, up 9% YoY.

• Persistent macroeconomic and geopolitical uncertainty continues to create shifting budget pressures for enterprise clients, leading to increased expense scrutiny, longer approval processes, and delayed purchasing decisions. This pressure is disproportionately felt by large, global enterprises, which face higher internal complexity and greater exposure to cross-border volatility.
• Tariff impacts continue to create tighter cost constraints for affected companies, pressuring their discretionary spending on third-party insights.
• Large enterprises continue to experience moderated downsell activity, which has stabilized but not yet returned to pre-downturn levels, limiting near-term wallet growth opportunities in this client segment.
• Forward-looking results are inherently uncertain and may differ materially from guidance, due to ongoing macro and geopolitical volatility, as outlined in Gartner's prior SEC filings.

Q: Why has management begun highlighting AI as a core business driver now, after focusing primarily on macro factors like tariffs in prior quarters? How has the impact of AI and macro evolved?

A: Management notes the Q2 2026 selling environment modestly improved across multiple sectors, most notably U.S. public sector. AI has always generated significant client demand, but it is now clearly the single largest driver of new demand for Gartner's services, making it appropriate to highlight its growing impact on the business.

Q: How does Ask Gartner, the company's LLM-enabled tool, impact client retention and renewal rates, compared to clients who do not use the tool?

A: Ask Gartner is an important incremental digital tool that enhances client experience, but it is not the core of Gartner's value proposition. Gartner's core competitive advantage is proactive delivery of insights aligned with clients' mission-critical priorities, often before clients identify those needs themselves. All improvements to the overall digital and engagement experience, including Ask Gartner, are having a positive impact on retention.

Q: What explains mid-single-digit growth in midsized enterprise clients, and how does this segment differ from large enterprises currently?

A: Midsized enterprises have lower internal complexity, making it easier for them to prioritize AI investments, deliver ROI, and control costs. Large global enterprises face far more internal complexity and greater exposure to macro/geopolitical uncertainty, which slows decision-making and spending. Management notes downsell activity, concentrated in large enterprises, stabilized in Q2, and retention is improving across all client sizes, which will support broader acceleration going forward.

Q: What are the key drivers of future CV growth acceleration, and what medium-term CV growth target does management expect?

A: The top ranked driver is higher client engagement, which leads to improved retention. Higher retention in turn creates more opportunities to grow new business within existing clients, and improves conversion for new client acquisition. Mathematically, the return of U.S. federal government business to positive growth will also provide a material lift to 2026 CV growth. Management does not disclose a formal medium-term CV growth target, but expects growth to continue accelerating from low single digits to mid-single digits and beyond over time.

Q: Are you planning to shift from seat-based pricing to enterprise-wide or consumption-based pricing, as other peer firms have discussed?

A: Gartner's core client base is C-level leadership and their direct teams, not all employees across the enterprise. Clients consistently prefer the current seat-based model, as they do not need enterprise-wide access for the small group of leaders that Gartner serves. There is no client demand for a shift to enterprise licensing, so management will maintain the current pricing model aligned with its targeted client base.