Gartner

Gartner's adjusted year-over-year revenue growth of 2% was in line with expectations. Agile cost savings lifted operating margin by 170 basis points sequentially to 22.6%, surpassing the 21% high-water mark Gartner recorded in 2023. Client engagement also improved meaningfully.

Why it matters: We attribute the 20% intraday rally to better-than-expected bookings and client retention. Year-over-year contract value growth for global technology sales and global business sales both accelerated. Wallet retention saw a sequential improvement of 50 basis points to 98.2%. Better client metrics gave investors relief around concerns that Gartner may lose its relevance in AI-related IT decision-making. Efforts in boosting both digital and human interactions improved Gartner's client engagement by 140 basis points year over year. Conferences and Consulting segments also had positive results. Conferences revenue grew 16% year over year, supported by both higher revenue per conference and revenue per attendee. Consulting backlog of $214 million was nearly 20% higher than the trough two quarters ago.

The bottom line: We raise our fair value estimate for no-moat Gartner to $184, from $164, as solid cost management lifts our long-term margin outlooks. Shares currently look fairly valued after the post-earnings jump. It is worth noting that the enterprise IT environment remains fragile with extended decision delays. While management expects continued acceleration in contract value growth, it is difficult to provide a specific timeline for improving from low single digits to midsingle digits. Client and wallet retention should stabilize at current levels and support our low-single-digit annual growth forecast for Gartner's Insights business.

Coming up: While foreign exchange headwinds led to a haircut to the full-year revenue outlook, adjusted EBITDA guidance rose $25 million to $1.57 billion, and adjusted EPS guidance increased by $0.90 to $14.00.

In the first half of 2026, Gartner spent nearly $1.1 billion on share repurchases. The aggressive share repurchase approach has reduced the company's weighted average diluted shares outstanding by 11 million to 67 million over the past 12 months. Gartner's share repurchases have clearly boosted its earnings per share results over the past quarters. To lift the company's top-line growth into the mid-single-digit territory, we would like to see Gartner spend more time sourcing suitable acquisition targets when the valuation for information services companies remains at a reasonable level.

Our fair value estimate for Gartner is $184 per share, which implies an adjusted price/earnings ratio of 13 times and an enterprise value/adjusted EBITDA ratio of 8 times. We model a 2% cumulative annual growth rate for Gartner over the next five years, mainly driven by a steady upsell motion to existing customers and moderate expansion among new customers. Incremental revenue from existing customers should play a bigger role than new customer acquisition for Gartner’s revenue growth, given its outsize contribution to the wallet retention rate that offsets customer churn.

We foresee low-single-digit growth for Gartner’s Insights segment over the next five years. Given the company’s established reputation in enterprise IT, we think Gartner should enjoy a stable growth trend. However, the threat of AI, an uncertain macroeconomic environment, and delayed enterprise IT purchases pose significant challenges to Gartner's ability to grow its Insights revenue faster. We estimate that reaccelerating the revenue growth rate to management’s guided double-digit rate would require client retention to stay at 85% or higher and wallet retention to stay at 100% or higher. We think it will take some time for retention to improve to these levels based on current contract value growth trends. The enterprise IT spending environment remains volatile, and decision delays can weigh on Gartner's results.

We forecast high-single-digit growth for Gartner’s Conferences segment, making it the fastest-growing segment during our five-year forecast period. Gartner’s IT Syposium/Xpo conference is the industry’s flagship event that gathers IT leaders with different specializations. Its scale provides a one-of-a-kind in-person networking opportunity for business leaders. Clients should continue to benefit from the unique value of Gartner’s conference series, supporting our optimistic revenue outlook.

We think Gartner Consulting should grow in low single digits organically each year, similar to its Insights segment. Gartner’s consulting offerings focus on niche areas like overall IT strategy design and contract negotiations. These services, which sit at the higher end of the IT consulting value chain, may be subject to higher volatility as enterprises constantly scrutinize their IT spending throughout the economic cycle.

We model a stable margin trend for Gartner over the next five years since we do not see any material business model shifts on the horizon. Gross margin should stabilize around 69%, and adjusted operating margin should stabilize around 22%.

We do not believe Gartner possesses an economic moat. Although its research organization has built a leading insights library serving over 13,000 clients, Gartner’s specialized industry knowledge, or intangible assets, no longer appear capable of supporting excess returns on invested capital. Cloud and AI technologies have fundamentally changed how enterprise IT decision-makers access and consume information, shifting the value they derive from Gartner’s traditional research model. Evidence of switching costs is also limited, given the nature of Gartner’s offerings and the ease with which customers can transition to alternative providers. In our view, Gartner’s product portfolio and go‑to‑market approach require a meaningful overhaul for the AI era, if the company wants to carve out a moat in the IT consulting market.

Gartner’s business model differs from that of many IT consulting firms. Approximately 80% of revenue comes from the Insights segment, which provides research, briefings, and expert consultations across a broad set of enterprise technology topics. The company also generates revenue from conferences and strategic IT consulting work. The lines of service Gartner provides position the company closer to the model of management consulting firms, such as McKinsey, that rely on expert-driven intangible assets. Because Gartner lacks managed services offerings like system integration or business process outsourcing, it does not benefit from long-term service contracts that typically create switching costs.

Historically, Gartner’s research acted as a key input to enterprise IT procurement. Inclusion in Gartner’s Magic Quadrant has long been a prerequisite for software vendors to receive requests for proposals from large enterprise customers. This model thrived when on‑premises systems required large, upfront investments of millions of dollars, and CIOs paid for third‑party expertise to avoid costly errors.

The shift toward cloud-based software‑as‑a‑service has reduced the strategic importance of Gartner’s research. SaaS solutions are purchased through recurring seat-based subscriptions, lowering the upfront financial impact of procurement mistakes and reducing the immediate value Gartner used to provide. In addition, bottom‑up software adoption means employees—not IT executives—often drive purchasing decisions, diminishing the relevance of Gartner’s reports. Many modern vendors can scale to substantial valuations, sometimes in the billions, before being featured in the Magic Quadrant.

Gartner’s high pricing amplifies these challenges. The average subscription costs approximately $45,000 per seat annually, and a modest team of five enterprise tech leaders and a dozen business leaders can increase a company’s annual Gartner spending to nearly $1 million. In an uncertain macroenvironment where business leaders are conscious of any cost-optimization opportunities, this level of spending is increasingly difficult for organizations to justify, especially as AI tools continue to broaden information access. While AI outputs lack the depth of Gartner’s human‑curated research, they can sometimes win on a cost‑benefit basis.

Customer retention trends further weaken the case for a moat from a switching costs perspective. Gartner’s most recent client retention rate of approximately 84% implies a six‑year average customer tenure, below the decade‑plus tenure typical of moaty IT services firms. Considering that many Gartner customers sign two-year-long service contracts, an improvement of the client retention rate toward 90% means that Gartner needs to nail one or two more contract renewals during the client lifecycle, which can be challenging, especially when enterprise IT spending is muted.

A wallet retention rate near 100% indicates that growth relies heavily on new client acquisition, which is sensitive to macroeconomic conditions. The unfavorable pattern of customer churn suggests that strong sales execution, instead of durable intangible assets, is driving results. For current Gartner clients, switching to alternative providers is feasible, as competing research and market data sources offer similar formats and require minimal onboarding. During the contract period, very little proprietary data is transferred between Gartner and the client, making the switch less painful compared with other enterprise IT components. To maintain long-term relevance and strengthen competitive positioning, it is necessary for Gartner to introduce more differentiated offerings that clearly demonstrate value in an AI-driven market.

Gartner’s industry-leading research library provides top-of-class insights on enterprise IT, giving it strong pricing power that ensures maintainable top-line expansion.

Enterprises need Gartner’s strategic guidance when deploying artificial intelligence at scale, which should provide meaningful growth tailwinds.

Gartner hosts some of the most high-profile conferences for CIOs and senior IT executives, and the company’s conferences segment can benefit from a strong network effect.

AI has dramatically reduced the time and effort needed to gather information that supports enterprise IT decision-making, threatening the long-term demand for Gartner’s research.

Upfront payment of multiyear subscriptions provides very limited flexibility, which can put Gartner-related budget under pressure during contract renewal.

Gartner does not offer managed IT services that have high switching costs, which means retention performance can experience higher volatility compared with full-service IT consulting providers.