Gartner Lifts Outlook as Contract Growth Accelerates
Adjusted EBITDA rose 6.4% to $466 million despite a stronger dollar.
Gartner Inc. (IT), the research and advisory company, posted faster underlying revenue and contract-value growth in the second quarter, extending a recovery from the year-end slowdown.
Foreign-exchange-neutral contract-value growth accelerated to 1.7% from 1.0% in the first quarter and about 1% in the fourth quarter of 2024. Contract value increased 0.3% sequentially to $5.3 billion, though annual growth remained below 4.9% a year earlier.
GAAP revenue fell 0.6% to $1.676 billion, reflecting the February sale of the Digital Markets operation. Excluding that business, adjusted revenue rose 2.8%, accelerating from 1.6% in the first quarter, while foreign-exchange-neutral growth improved to 1.8% from a 1.4% decline. Net income increased 14.4% to $275 million, and diluted earnings rose 33.1% to $4.14 a share as the diluted share count declined.
Adjusted earnings climbed 23.8% to $4.37 a share, more than double the first quarter's growth rate. Lower nonrecurring costs contributed to the improvement: workforce-reduction and other items fell to about $1 million from $23 million a year earlier.
The Insights business increased revenue 2.1% to $1.290 billion, while its contribution margin widened 3.6 percentage points to 77.5%. Global Technology Sales contract-value growth improved to 1.1% from 0.4% in the first quarter, and Global Business Sales contract value rose 3.3%, broadly maintaining its first-quarter pace.
Conferences provided the strongest growth, with revenue rising 15.5% and gross contribution increasing 19.6%. Consulting remained a drag as revenue fell 8.8% to $142 million, though the decline narrowed from 14.7% in the first quarter.
Gartner's full-year outlook now calls for higher adjusted EBITDA, adjusted earnings and free cash flow than its previous forecast, marking the second consecutive quarterly increase despite the stronger dollar. Free cash flow rose 8.9% in the quarter to $378 million.
The company repurchased 3.6 million shares for $547 million, compared with $274 million a year earlier. The board added $500 million to the authorization after approving a $600 million increase in April.