Research and advisory firm Gartner (NYSE: IT) met Wall Streets revenue expectations in Q4 CY2025, with sales up 2.2% year on year to $1.75 billion. Its non-GAAP profit of $3.94 per share was 12.2% above analysts’ consensus estimates.
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Gartner (IT) Q4 CY2025 Highlights:
- Revenue: $1.75 billion vs analyst estimates of $1.75 billion (2.2% year-on-year growth, in line)
- Adjusted EPS: $3.94 vs analyst estimates of $3.51 (12.2% beat)
- Adjusted EBITDA: $436 million vs analyst estimates of $415.1 million (24.9% margin, 5% beat)
- Operating Margin: 19.1%, in line with the same quarter last year
- Constant Currency Revenue was flat year on year (8.3% in the same quarter last year)
- Market Capitalization: $11.54 billion
StockStory’s Take
Gartner’s fourth quarter results were marked by a negative market reaction, despite meeting Wall Street’s revenue expectations and posting better-than-expected non-GAAP profit. Management cited a more challenging selling environment, shaped by external pressures such as government spending constraints, evolving trade policies, and budget uncertainty among tech clients not focused on artificial intelligence. CEO Eugene Hall acknowledged, “The value bar is higher, but it's also a huge opportunity for us,” highlighting that clients are scrutinizing purchases more closely and extending decision cycles, especially in sectors affected by government efficiency pushes and tariffs.
Looking ahead, Gartner’s guidance hinges on accelerating contract value growth, driven by ongoing transformation initiatives in its core insights business. Management outlined plans to strengthen client engagement, expand AI-driven content, and improve the speed and relevance of its research delivery. Hall emphasized, “We began transforming business and technology insights along four dimensions: impact, volume, timeliness, and user experience.” However, the company remains cautious, noting that the benefits from these changes will take time to materialize, as subscription renewal cycles typically span 12 to 24 months.
Key Insights from Management’s Remarks
Management attributed Q4 performance to internal transformation efforts and external headwinds, while emphasizing advances in client engagement and product delivery.
- AI-driven research expansion: Gartner expanded its AI-related insights, amassing over 6,000 documents and answering more than 500,000 client questions on artificial intelligence in 2025, meeting heightened demand across industry sectors.
- Transformation in research delivery: The company reduced research publication turnaround times by 75% for key products like Magic Quadrants, leveraging automation and new processes to keep pace with rapid market changes.
- User experience overhaul: The rollout of AskGartner—an AI-powered search and recommendation tool—resulted in notably higher renewal rates among users, addressing client feedback that valuable insights were previously difficult to access.
- Divestiture and focus on core: Gartner signed an agreement to divest its digital markets business, part of a broader effort to concentrate on its subscription-based insights segment and streamline operations for long-term growth.
- Selective salesforce expansion: Despite a challenging environment, management increased business developer headcount, prioritizing new business opportunities while maintaining discipline in broader sales investments.
Drivers of Future Performance
Gartner expects contract value growth to accelerate in the coming quarters, underpinned by internal transformation, enhanced client engagement, and a continued focus on AI and process efficiency.
- Client engagement initiatives: Management believes that increasing client interactions through tools like AskGartner and personalized research delivery will drive higher renewal rates and long-term revenue growth, though the full impact will lag due to renewal cycles.
- AI and content automation: Investments in AI-driven research creation and topic identification are expected to boost the relevance and timeliness of Gartner's insights, supporting both retention and new business wins, particularly as client interest in AI continues to rise.
- External headwinds and cautious planning: While some industry pressures—such as tariffs—have stabilized, management is planning for ongoing budget scrutiny and uneven demand, especially in sectors like government and oil and gas, which may limit near-term growth.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will look for (1) clear evidence of contract value acceleration outside the U.S. federal sector, (2) improved client retention and higher renewal rates driven by AskGartner and new research delivery models, and (3) stabilization or improvement in external sectors affected by tariffs and budget pressures. Execution of the digital markets divestiture and visible progress in salesforce productivity will also be key indicators.
Gartner currently trades at $159.97, down from $202.40 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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