Gartner(US:IT)2025-11-04 14:02Financial Data and Key Metrics Changes - Third-quarter revenue was $1.5 billion, up 3% year-over-year as reported and 1% FX neutral [15] - Adjusted EPS was $2.76, up 10% from Q3 of last year [23] - Free cash flow was $269 million, compared to $265 million in Q3 2024 [24] - EBITDA was $347 million, up 2% as reported, with FX contributing almost 3 percentage points [22] Business Line Data and Key Metrics Changes - Insights revenue grew 5% year-over-year as reported and 4% FX neutral [16] - Global Technology Sales (GTS) contract value was $3.8 billion, up 2% year-over-year [18] - Global Business Sales (GBS) contract value was $1.2 billion, up 7% year-over-year [19] - Consulting revenue was $124 million, compared to $128 million in the year-ago period [20] Market Data and Key Metrics Changes - Contract value grew 3% year-over-year, with a 6% growth excluding the U.S. federal government [13] - Client retention rates improved from Q2 to Q3, indicating a positive trend in client engagement [36] - New business in the quarter was down about 4% year-over-year, excluding U.S. federal contracts [17] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance productivity and effectiveness internally [12] - There is a clear path back to long-term, sustained double-digit growth over the medium term [12] - The company plans to continue repurchasing stock to create value for shareholders [25] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains dynamic, but the company has made operational adaptations that are yielding results [5] - The selling environment has improved modestly, with increased engagement and retention rates [33][36] - The company expects to accelerate contract value growth in 2026, aiming for high single-digit growth rates [60][62] Other Important Information - The company repurchased more than $1 billion of stock in the quarter, reducing share count by 6% year-over-year [5] - The insights segment remains the largest and most profitable operating segment, with almost 100% recurring subscription revenue [15] Q&A Session Summary Question: Can you comment on upselling and downselling trends? - The selling environment has improved modestly, with new sales to new enterprises performing well, but upselling existing enterprises has faced challenges [33] Question: How are tariff-impacted industries performing? - Non-tariff-affected industries continue to perform about 200 basis points faster in contract value growth compared to tariff-affected industries [39] Question: What drove the improvement in renewal rates? - The improvement is attributed to operational adaptations and reduced uncertainty in certain geographies, leading to better client decision-making [45] Question: What are your expectations for sales headcount growth in 2026? - The expectation is to grow headcount three to four points slower than expected contract value growth [54] Question: Can you elaborate on the pricing environment? - The bulk of the price increase globally went into effect on November 1st, with a normal increase of around 3-4% [99]