Gartner (IT) Q2 EPS Beats by 7%

Key Points

• Non-GAAP EPS reached $3.53, beating analyst expectations by 7.0%.

• GAAP revenue was $1,686 million, up 5.7% year over year.

• Contract value growth slowed to 4.9% year-over-year FX neutral, with notable weakness in U.S. federal government renewals.

• These 10 stocks could mint the next wave of millionaires ›

Gartner (NYSE:IT), a global provider of research and advisory services for businesses, reported its second quarter 2025 earnings on August 5, 2025. The standout headline was a clear beat on both GAAP revenue and non-GAAP EPS: non-GAAP earnings per share (EPS) came in at $3.53, ahead of the $3.30 analyst consensus, while GAAP revenue was $1,686 million against an expectation of $1,674.16 million. Overall, the quarter showed positive operating momentum, but also indicated areas of softer demand, especially in the U.S. federal segment.

Source: Analyst estimates for the quarter provided by FactSet.

Business Overview and Success Drivers

Gartner operates as a research and advisory firm, offering in-depth insights, data, and advice to help organizations make informed decisions. Its clients include nearly 14,000 enterprises across 90 countries, from corporations to government agencies. The company’s offerings span three key segments: research (now called Business and Technology Insights), conferences, and consulting services that support strategic business priorities.

The company’s recent focus has been on expanding the breadth of its proprietary research and leveraging technology to enhance the value of client engagements. Gartner’s critical success factors include continually growing its research content, strengthening its brand reputation, maintaining a diversified service model, and protecting its intellectual property. The launch of AskGartner, its new artificial intelligence (AI) solution, reflects this innovation-centric approach.

Quarterly Highlights: Segment Performance and Key Events

The quarter showed continued financial progress across segments, though growth rates varied. GAAP revenue was up year over year, with notable outperformance in Conferences and Consulting, which helped offset a more modest increase in the core Insights business. The new AI-powered AskGartner tool was rolled out, aimed at giving clients quicker access to the company's research content. This move signals Gartner’s drive to embed technology more deeply in its offerings.

The Insights segment, recently renamed “Business and Technology Insights,” generated $1.32 billion in GAAP revenue, which represented 4.2% year-over-year growth. Management attributed slower growth here largely to a subdued U.S. federal government market.

Contribution margin in this division also expanded. Consulting revenue also improved, up 8.8% to $156 million, with margin reaching 39.6%.

Contract value, an important measure of Gartner’s forward revenue pipeline, came in at $5.0 billion, up 4.9% year-over-year FX neutral. However, this was a slowdown from the prior quarter’s 7% contract value growth. The Global Technology Sales (GTS) contract value expanded by 3.6% year-over-year FX neutral, while Global Business Sales (GBS) contract value rose 9.2% year-over-year FX neutral. The U.S. federal government business, accounting for approximately 4% of contract value, renewed only about half of its expiring contracts during the first quarter, leading management to take a cautious approach to future outlook for this segment. Contract value grew 5%. Since the end of the first quarter, we have accelerated our stock buybacks to increase shareholder value," said CEO Gene Hall in the release.

The company did, however, accelerate share repurchases, buying back 0.7 million shares for $274 million. The board increased the share repurchase authorization by $700 million in July, adding further buyback capacity for the coming quarters. Management referenced prudent cost control and “slight belt tightening” on expenses, balancing future investments with operating margin protection.

Looking Forward: Outlook and What to Watch

Management issued updated full-year guidance, projecting consolidated GAAP revenue of at least $6.535 billion, or about 4% FX-neutral (constant currency) growth in research revenue. Segment outlooks call for at least $5.34 billion from research, $625 million from Conferences, and $575 million from Consulting. Adjusted EPS (non-GAAP) guidance was set at $11.70 or higher, with a free cash flow target of at least $1.145 billion (non-GAAP). The revised research revenue target reflects a $135 million reduction after updated views on federal contract renewals.

No dividend was declared. For the remainder of the year, investors should watch the pace of contract value growth, especially in the Technology Sales segment and U.S. federal sector. Management expects share repurchases and cost discipline to play a continued role in shareholder returns.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,039%* — a market-crushing outperformance compared to 181% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of August 4, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.