Gartner stock jumps 23% after Q2 earnings beat, raised guidance

Gartner posted Q2 adjusted EPS of $4.37, beating consensus by $0.64, as shares surged 22.9 percent this week.

"Gartner's raised earnings and free cash flow outlook, wider margins and lower share count support the profit case," Zacks Investment Research said in a note.

Revenue rose 0.6 percent year over year to $1.68 billion, $50 million ahead of the average analyst estimate. Free cash flow climbed 8.9 percent to $378 million, while adjusted net income increased 6.6 percent to $291 million. The company repurchased 3.6 million shares for $547 million during the quarter, bringing cumulative buybacks to 32.8 million shares for $7.39 billion.

Gartner raised full-year adjusted EPS guidance to at least $14 from $13.25 and lifted free cash flow guidance to at least $1.185 billion from $1.16 billion. The board added $500 million to the buyback authorization. The stock trades at 12.6 times forward earnings, below its five-year median of 33.9 times.

Metric	Actual	Consensus	Beat/Miss
Revenue	$1.68B	~$1.63B	+$50M
Adjusted EPS	$4.37	$3.73	+$0.64

Insights revenue rose 2.1 percent to $1.29 billion, while Conferences revenue jumped 15.5 percent to $244 million with a contribution margin of 59.5 percent. Consulting revenue fell 8.8 percent to $142 million, with contribution declining 12.6 percent to $54 million. Forrester Research, a peer in the research and advisory space, reported Q2 contract value down 3 percent year over year. Accenture, a major consulting competitor, posted fiscal Q2 consulting revenue growth of 3 percent in local currency.

Adjusted EBITDA excluding the divested operation rose 6.4 percent to $466 million, with margin expanding 90 basis points to 27.8 percent. GAAP operating income increased to $378.5 million from $327.1 million, lifting operating margin to 22.6 percent from 19.4 percent.

The company trimmed full-year adjusted revenue guidance to at least $6.375 billion from $6.405 billion, citing foreign exchange impacts. The diluted share count fell to 66.6 million from 77.4 million, boosting per-share growth. Gartner carried about $3 billion of total debt at June 30 with a current ratio of roughly 0.88.

Gartner's valuation has been under pressure over the past year as investors weighed whether AI tools could erode demand for its subscription research services. The company has been investing in AI capabilities, including its AskGartner tool, to counter that threat.

The guidance raise and accelerated buybacks point to management confidence in operating efficiency even as top-line growth stays restrained. Investors will watch the next earnings call for signs of Consulting recovery and sustained margin discipline.

This article is for informational purposes only and does not constitute investment advice.