Gartner(US:IT)2025-11-04 14:00Financial Data and Key Metrics Changes - Gartner's third-quarter revenue was $1.5 billion, up 3% year over year as reported and 1% FX neutral [12] - Adjusted EPS was $2.76, up 10% from Q3 of last year [20] - Free cash flow was $269 million, compared to $265 million in Q3 2024 [21] - EBITDA was $347 million, up 2% as reported, with FX contributing almost 3 percentage points [19] Business Line Data and Key Metrics Changes - Insights revenue grew 5% year over year as reported and 4% FX neutral, with a contribution margin of 77% [13] - Global Technology Sales (GTS) contract value was $3.8 billion, up 2% year over year, with wallet retention at 98% [16] - Global Business Sales (GBS) contract value was $1.2 billion, up 7% year over year, with wallet retention at 102% [17] - Consulting revenue was $124 million, compared to $128 million in the year-ago period [18] Market Data and Key Metrics Changes - Contract value (CV) grew 3% year over year, with a 6% growth excluding the U.S. federal government [11] - New business in GTS was down 12% compared to last year, while GBS new business was down 10% [16][17] - The amount of content published per analyst increased by 31% year over year [7] Company Strategy and Development Direction - Gartner is focusing on AI as a key growth area, helping clients determine the best AI tools and applications [4][5] - The company is adapting its operational strategies to improve client engagement and retention [10] - There is a clear path back to long-term, sustained double-digit growth over the medium term [10] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains dynamic, but Gartner's Q3 results were ahead of expectations [4] - Management noted improvements in client engagement and retention rates, which are positive indicators for future growth [30] - The company expects to see a re-acceleration in contract value growth in 2026, driven by improved selling conditions and adaptations made [26][58] Other Important Information - Gartner repurchased $1.1 billion of stock during the third quarter, reducing share count by 6% year over year [4][23] - The company has a strong balance sheet with about $1.4 billion in cash and a debt balance of approximately $2.5 billion [22][23] Q&A Session Summary Question: Comments on upselling and downselling trends - Management noted that the selling environment has improved modestly, with upselling existing enterprises being the most affected area [29] Question: Update on tariff-impacted industries - Non-tariff-affected industries continue to perform about 200 basis points faster than tariff-affected industries [31] Question: Improvement in renewal rates - The improvement is attributed to operational adaptations and reduced uncertainty in certain geographies [32] Question: Expectations for sales headcount growth in 2026 - The expectation is to grow headcount three to four points slower than expected contract value growth [36] Question: Pricing environment and increases - A normal price increase of around 3-4% went into effect on November 1, with minimal pushback expected [59]