Why Is Gartner (IT) Down 9.4% Since Last Earnings Report?

Core Viewpoint - Gartner reported better-than-expected fourth-quarter 2024 results, with significant increases in both earnings and revenue, despite a recent decline in share price [2][8]. Financial Performance - Adjusted earnings per share reached $5.5, exceeding the Zacks Consensus Estimate by 69.3% and increasing 79.3% year-over-year [2]. - Revenues totaled $1.7 billion, surpassing consensus estimates by 1.8% and improving 8.1% year-over-year [2]. Revenue Breakdown by Segments - Research segment revenues were $1.3 billion, growing 5.4% year-over-year, with a gross contribution margin of 74.1%, resulting in a gross contribution of $972 million [3]. - Conference revenues amounted to $251 million, reflecting a 17.2% year-over-year increase, with a gross contribution margin of 47.6%, leading to a gross contribution of $120 million [4]. - Consulting segment revenues reached $153 million, up 19.3% from the previous year, with a gross contribution margin of 35.1%, resulting in a gross contribution of $54 million [5]. Operating Performance - Adjusted EBITDA was $417 million, an 8% increase year-over-year [6]. Balance Sheet & Cash Flow - Cash and cash equivalents stood at $1.9 billion at the end of the quarter, up from $1.8 billion in the previous quarter [7]. - Long-term debt remained stable at $2.5 billion [7]. - Operating cash flow totaled $335.4 million, with free cash flow utilized at $110.2 million [7]. 2025 Outlook - The company raised its guidance for total revenues to at least $6.55 billion, up from the previous estimate of $6.23 billion [8]. - Adjusted earnings per share guidance was lowered to at least $11.45 from $11.75 [8]. Estimate Trends - There has been a downward trend in fresh estimates, with the consensus estimate shifting down by 8.36% [9]. VGM Scores - Gartner has a Growth Score of B but lags in Momentum Score with a D, and a Value Score of D, placing it in the bottom 40% for this investment strategy [10].