Gartner Q4 Revenue Up 2% to $1.753 B, Adjusted EPS down 28%
Gartner reported Q4 revenue of $1.753 billion, a 2% increase, while adjusted EPS fell 28% to $3.94 and net income declined 39% to $242 million. The firm repurchased $2 billion in shares, completed its first investment-grade bond issuance, agreed to sell its Digital Markets unit and forecast accelerated contract value growth in 2026.
1. Q4 Results Top Estimates Despite Year-Over-Year EPS Decline
Gartner delivered fourth-quarter revenue of $1.753 billion, up 2% from a year earlier on a reported basis and flat on an FX-neutral basis, slightly ahead of consensus. Adjusted EBITDA rose 5% to $436 million, translating to an adjusted margin expansion of 90 basis points. The company reported GAAP diluted EPS of $3.36, down 34% year-over-year, reflecting higher depreciation, amortization and non-recurring items, while adjusted EPS of $3.94 exceeded the Zacks consensus estimate of $3.50. Solid growth in Insights (3% reported, 1% FX-neutral) and Conferences (14% reported, 11% FX-neutral) offset a 13% decline in Consulting revenues as clients pared back discretionary project work.
2. Consulting Business Faces Demand Headwinds
Within Q4 segment results, Consulting revenue fell 13% to $134 million, driving a 33% drop in gross contribution for that unit. Gartner attributed the weakness to enterprises scaling back large transformation engagements. In contrast, Global Technology Sales contract value remained flat at $3.9 billion, while Global Business Sales contract value grew 3% to $1.2 billion on an FX-neutral basis. Management noted that backlog in its consulting pipeline has become more selective, with negotiations extending into later quarters.
3. 2026 Guidance Disappoints Wall Street
Despite the fourth-quarter beat, Gartner’s outlook for full-year 2026 came in well below analyst projections. The company guided revenue growth of 4–6% to a range of $7.14–7.21 billion, versus street estimates closer to $7.5 billion, and adjusted EPS of $15.00–15.40 against forecasts near $17.00. Management cited an expected slowdown in consulting bookings and timing of conferences as primary headwinds. Free cash flow for 2026 is projected at $1.1 billion, representing mid-single-digit growth versus 2025 levels.
4. Stock Plummets After Guidance Revision
Following the guidance miss, Gartner’s shares tumbled 31% in early trading, marking the largest intraday percentage decline in five years. Investors reacted to the lower-than-expected revenue outlook for both core subscription services and high-margin consulting engagements. The sell-off wiped out more than $8 billion in market capitalization, as portfolio managers cited a need to re-underwrite growth assumptions and margin trajectories for the year ahead.