Gartner, Inc.

And Gartner's outlook for 2026 is disclosed in today's earnings release and earnings supplement, both posted to our website, investor.gartner.com. On the call, unless stated otherwise, all references to EBITDA are for adjusted EBITDA, but the adjustments is described in our earnings release and supplement. All contract values and associated growth rates we discussed are based on 2025 foreign exchange rates. All growth rates and jeans comments are FX neutral unless stated otherwise. All references to share count are for fully diluted weighted average share counts unless stated otherwise. Reconciliations for all non-GAAP numbers we use are available in the investor relations section of the Gartner.com website. As set forth in more detail in today's earnings release, certain statements made on this call might constitute forward-looking statements. Forward-looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the company's 2024 annual report on Form 10-K and quarterly reports on Form 10-Q, as well as in other filings with the SEC. I encourage all of you to review the risk factors listed in these documents. Now, I will turn the call over to Gartner's Chairman and Chief Executive Officer, Gene Hall. Good morning.

Thanks for joining us today. Fourth quarter revenue, EBITDA, margins, EPS, and free cash flow were ahead of expectations. We continued to deliver great value to our clients. We were agile in managing expenses. and we repurchased more than $2 billion of Gartner stock in 2025. 2025 was a unique year due to a range of external market forces. Department of Government Efficiency, or DOGE-related initiatives, affected our U.S. federal clients. Evolving trade policies created complexity for tariff-impacted enterprises. Funding changes affected our state and local government and education clients. Tech companies that are not in or adjacent to AI experienced a shifting landscape, and there were country-specific factors in several geographies. These external market forces led to increased scrutiny, elevated deal approval authority, and extended buying cycles. Over the past few years, including 2025, the rate of change and volatility in the external environment has increased significantly. Executives have responded to this by slowing and deferring everything possible. This makes for a much tougher selling environment. The value bar is higher. but it's also a huge opportunity for us. Clients know they need help with these issues. Gartner is an insights business. Our high-value, forward-looking insights help clients on their journeys to achieve their mission-critical priorities. The key to capturing our opportunity while operating under deferred decision-making and higher value standards is to help clients engage more frequently with our insights. Clients who engage frequently with our insights receive greater value and retain at higher rates. This was true in 2025 and every year prior, and it's still true today. Client engagement increased modestly throughout 2025, but in today's world, client engagement levels need to be even higher. Because the rate of change is faster than ever, driving incremental improvements on our standard practices wasn't enough. To achieve step change improvements, we needed to rethink many of our processes and practices. So we've been driving transformation across business and technology insights. We covered just some aspects of this transformation on previous earnings calls. Today, I'll share a comprehensive view of what we're doing. We're transforming business and technology insights along four dimensions, impact, volume, timeliness, and user experience. Beginning with impact, our insights provide tremendous value to clients today, and we know we can get even better. Our objective is to ensure insights are always on the topics our clients care about most right now. The biggest example today is AI. AI is transforming the world. It's our highest demand topic. During 2025, we expanded our AI insights. We have more than 6,000 AI-related documents in our library. We've documented more than 1,000 unique use cases. In 2025, we conducted more than 200,000 in-depth client conversations on AI, and we answered more than 500,000 AI-related questions through Ask Gartner. Based on our analytical measures, the impact of our insights is improving at a rapid pace. By increasing the impact of our insights, we can ensure our clients get even more value on the topics they care most about at any given time. The second dimension is volume. We serve clients of every size, in every industry, in every enterprise function in 90 countries. This diverse set of clients have differing mission-critical priorities. Our objective is to increase the number of insights to accommodate the broadest range of client priorities. To achieve this, we're applying automation, streamlining processes, and upgrading and upskilling our analyst teams. We developed a neural network AI model to quickly and systematically determine the topics our clients care about most As of the end of 2025, our active insights library has grown by approximately 50%. By increasing volume, we can better accommodate the full range of our clients' mission-critical priorities. The third dimension is timeliness. The pace of the world continues to accelerate. Some say the rate of change will never be this slow again. We're ensuring our insights keep pace with the ever-accelerating pace of the world. we've introduced insight types that are produced the same day as important events occur in the world, such as a major security breach where clients need immediate guidance or in the rapidly evolving world of AI where major changes happen every day. To support this, we've made two other innovations. First, we introduced new processes to create insights as quickly as the same day. Second, For insight types that are highly valued by our clients, such as magic quadrants, we reduced our average insight creation time by 75% compared to 2024. So we'll continue to ensure our insights keep pace with the ever-accelerating pace of the world. The fourth element is user experience. If we produce great insights, but our clients can't find them, they won't receive value from them. Historically, the single biggest feedback from our clients was, Gartner produces tremendous insights. but I can't always find them. We're ensuring our clients can easily access the insights that are most relevant to them when they need them the most. Ask Gartner leverages AI to quickly identify and summarize the right high value insights across our vast library. It leverages role, function, mission critical priorities, insight viewership histories, and more to make his responses even more relevant to each licensed user. We began rolling out Ask Gartner in August of last year. We completed the rollout in October. Licensed users who used Ask Gartner had substantially higher renewal rates than those who did not, even with the same levels of engagement. We'll continuously improve and innovate Ask Gartner's capabilities. Separately, we're identifying role-specific insights each week that are particularly valuable and broadly applicable. Our goal is to ensure clients have every opportunity to engage with these uniquely valuable insights. We're also changing how we deliver insights in terms of format and access to meet today's client preferences. Conferences are an important way clients engage with our insights. Destination conferences provide high value to clients. but not all our clients can attend our destination conferences. For these clients, we launched Gartner C-Level Communities. Gartner C-Level Communities are local, peer-driven one-day events where C-Level executives can gain access to our insights. We're continuing to expand both our destination conferences and Gartner C-Level Communities in 2026 and beyond. We'll continue to improve the user experience to ensure our clients can access the insights they need to achieve their mission-critical priorities. So we're driving transformation across business and technology insights along four dimensions, impact, volume, timeliness, and user experience. We began driving these transformational improvements during 2025 and will continue during 2026 and beyond. We believe this transformation will provide a step change in the value to our clients over the next few years. In addition, we'll drive continuous improvement and innovation across the rest of the business. During 2025, we also took several shareholder value enhancing actions, including repurchasing $2 billion of Gartner stock, increasing leverage with a successful inaugural investment-grade bond offering to support even more share repurchase capacity, adding two new directors who bring unique and valuable skills to our board, rotating our board committee chairs, and entering into a definitive agreement to sell our digital markets business. In summary, the world is changing more than ever before. This represents a huge opportunity for us. Gartner is an insights business that guides the leaders who shape the world. The key to capturing our opportunity while operating under a challenging selling environment is to help clients engage more frequently with our insights. In 2025, we began transforming business and technology insights along four dimensions, impact, volume, timeliness, and user experience. These transformations will allow us to thrive in a world with greater change and uncertainty than ever. We expect to see the impact over the next few years, and we continue to keep you updated on our progress. With our unparalleled value proposition, continued transformation in business and technology insights, and responsible reinvestment in our business, contract value will accelerate. As contract value accelerates, our P&L and free cash flow conversion will follow. We will continue to create value for our shareholders by generating free cash flow in excess of net income and returning capital to our Share We Purchase program. With that, I'll hand the call over to our Chief Financial Officer, Craig Safian.

Thank you, Gene, and good morning. Today, I'm going to walk you through fourth quarter and full year 2025 results, and I will introduce our 2026 guidance. Financial results in the fourth quarter were better than expected. For the full year, revenue increased from 2024, and EBITDA margins finished well ahead of our initial guidance from last February. Our return on invested capital continues to be above 20%, highlighting the strength of our business model and our ongoing ability to create long-term value. We increased leverage with a successful bond offering, our first as an investment-grade rated credit. We generated significant free cash flow and bought back about $2 billion of stock. And last week, we entered into a definitive agreement to sell the digital markets business, which allows us to focus even more on delivering insights to help our clients address their mission-critical priorities. Fourth quarter revenue is $1.8 billion, up 2% year-over-year as reported and unchanged FX neutral. For the full year, revenue was $6.5 billion, up 4% as reported and 3% FX neutral. Fourth quarter contract value, or CV, grew 1% year-over-year. Outside the U.S. federal government, CV grew 4%. In the quarter, total contribution margin was 67%, up 85 basis points from last year. EBITDA was $436 million, up 5% as reported and 1% FX neutral. Adjusted EPS was $3.94, and free cash flow was $271 million. For the full year, EBITDA was $1.6 billion. EBITDA margins were 24.8%, well above the initial guidance we gave at the start of the year. Adjusted EPS was $13.17. Free cash flow is $1.2 billion. And ROIC was strong at around 24%. The Insight segment is our largest, most important business. It's subscription-based with strong retention, recurring revenue, and excellent contribution margins. We get paid up front, which allows us to generate strong free cash flow well in excess of net income. Insights revenue in the quarter grew 3% year-over-year as reported and 1% FX neutral. Fourth quarter insights contribution margin was 77%, up 59 basis points versus last year. Full year insights revenue increased 5% as reported and 4% FX neutral. For 2025, insights contribution margin was 77%, up 14 basis points from 2024. Contract value was $5.2 billion at the end of the fourth quarter, up 1% versus the prior year. Outside the U.S. federal government, CV growth was about 330 basis points faster at around 4%. Global NCVI in the quarter outside the U.S. federal government was positive $147 million. The vast majority of our U.S. federal contracts came up for renewal during 2025. At December 31st, we had $126 million of U.S. federal CV. Outside the US Fed, we delivered CV growth across practices, industry sectors, company sizes, and geographic regions. By sector, energy, banking, and technology led the growth. CV grew at high single-digit or mid-single-digit rates across all commercial enterprise sizes. All but two of our top 10 countries grew in 2025, with one growing double digits. And we had more than $400 million of new business in the fourth quarter. Global technology sales contract value was $3.9 billion at the end of the fourth quarter, about flat compared with the prior year. GTS CV outside the U.S. federal business grew 4% in the quarter. Tech vendor CV increased mid-single digits, with services and software growing low double-digit or high single digits. Wallet retention for GTS was 96% for the quarter. GTS new business of more than $300 million was down about 5% outside the U.S. federal government. The change in GTS quarter bearing headcount was consistent with our expectations. We managed our territory changes and investments based on a balance of expense discipline and opportunities to invest for growth. We've optimized territories with growth directed towards business developers and new logo and new business opportunities. BD productivity has remained strong, which is a foundation for our investment in adding BDs. Our regular full set of GTS metrics can be found in our earnings supplement. Global business sales contract value was $1.2 billion at the end of the fourth quarter, up 3% year over year. Outside the U.S. federal government, GBS-CV grew about 200 basis points faster at around 6%. Growth was led by the sales, supply chain, and legal practices. GBS-NCVI was positive $16 million in the fourth quarter. Outside the U.S. federal government, GBS-NCVI was positive $21 million. Wallet retention for GBS was 99% for the quarter. Outside the U.S. federal business, wallet retention was over 100%. GBS' new business of more than $100 million was down 4% compared to last year. The change in GBS' quarter-bearing headcount was consistent with our expectations. Similar to GTS, we managed our territory changes and investments based on a balance of expense discipline and opportunities to invest for growth. BD productivity has remained strong, which is the foundation for our investment in adding BDs. As with GTS, our regular full set of GBS metrics can be found in our earnings supplement. As we do each year at this time, we've also provided quarterly historical contract value data updated to 2026 FX rates on page 21 of the earnings supplement. As you build your 2026 models, please remember to use the updated data as the baseline for your forecasting. The U.S. dollar weakened significantly over the course of 2025, causing this adjustment to be larger than most years. We've also provided several quarters of historical data to reflect the updated financials for the digital markets divestiture on page 22 of the earnings supplement. Conferences revenue for the fourth quarter was $286 million. On a same conference basis, revenue growth was around 8% FX neutral. Contribution margin was 51%. We held 14 destination conferences in the fourth quarter as planned. Full year conferences revenue grew 11% to $645 million. FX neutral growth was 9%. Contribution margin was 50%. Q4 consulting revenue was $134 million compared with $153 million in the year-ago period. FX was a benefit of about 300 basis points in the quarter. Consulting contribution margin was 27% in Q4. Full-year consulting revenue was $552 million compared to $559 million in the prior year. Contribution margin was 34%. Consolidated cost of services on a GAAP basis was $573 million in the quarter or 32.7% of revenue. For the full year, cost of services was $2 billion or 31.6% of revenue. SG&A on a GAAP basis was $798 million in the quarter or 45.5% of revenue. For the full year, SG&A was $3 billion or 47.2% of revenue. We continue to balance discipline cost management while ensuring we can invest in key areas such as expert talent, AI, the customer experience, and frontline sellers. As a percentage of revenue, our costs are well below historical highs. EBITDA for the fourth quarter was $436 million, up 5% from last year's reported and 1% FX neutral. We outperformed in the fourth quarter through modest revenue upside, effective expense management, and a prudent approach to guidance. EBITDA margins were 24.9%, up about 60 basis points from last year's Q4. Full-year EBITDA was $1.6 billion, up 4% as reported and 2% FX neutral. EBITDA margins were 24.8%, consistent with last year. Depreciation in the quarter was $28 million. Full-year depreciation was up 5%. Net interest expense before deferred financing cost in the quarter was $18 million. increasing by $7 million versus the fourth quarter of 2024 due to lower interest income on our cash balances. The full year net interest expense before deferred financing costs was $56 million, favorable by $10 million versus 2024 due to lower interest expense and higher interest income on our cash balances. The Q4 adjusted tax rate, which we used for the calculation of adjusted net income, was 20% for the quarter. This compares to last year's benefit of 25%. The tax rate for the items used to adjust net income was 3% for the quarter. The full-year tax rate for the calculation of adjusted net income was 22%, in line with our expectations. The prior-year tax rate benefited from favorable tax planning. Adjusted EPS in Q4 was $3.94. Full-year adjusted EPS was $13.17. We had 72 million shares outstanding in the fourth quarter. This is an improvement of about 6 million shares or approximately 8% year over year. We exited the fourth quarter with 71 million shares on an unweighted basis. Operating cash flow for the quarter was $295 million. This compares with $335 million in Q4 2024. CapEx was $24 million, flat year-over-year. Fourth quarter free cash flow was $271 million. This compares with $311 million in Q4 2024. For the full year, operating cash flow was $1.3 billion. CapEx was $115 million. And free cash flow was $1.2 billion. Free cash flow on a rolling four-quarter basis was 161% of GAAP net income and 73% of EBITDA. As we previously noted, there were two items that affect rolling four-quarter net income and free cash flow, including a real estate lease termination payment in Q2 2025, and we also had a non-cash goodwill impairment charge related to digital markets business in Q3 2025. Last week, we signed a definitive agreement to divest digital markets. Adjusting for these items, free cash flow on a rolling four-quarter basis was 18% of revenue, 74% of EBITDA, and 136% of gap net income. At the end of the fourth quarter, we had about $1.7 billion of cash. Our December 31st debt balance was $3 billion, up about $500 million from Q3 as a result of our most recent bond offering. Our reported gross debt to trailing 12-month EBITDA was 1.9 times. Our expected free cash flow generation, available revolver, and excess cash remaining on the balance sheet provide ample liquidity to deliver on our capital allocation strategy. Our balance sheet is very strong, with $2.7 billion of liquidity, low levels of leverage, and 100% fixed interest rates. We repurchased about $500 million of stock during the fourth quarter and $2 billion during the full year. Last week, the board refreshed our authorization, bringing the total to about $1.2 billion. We expect the board will continue to refresh the authorization as needed. As we continue to repurchase stock, we create value for shareholders through EPS accretion and increasing returns on invested capital. Before providing the 2026 guidance details, I want to discuss our base level assumptions and planning philosophy for the year. We've not included the digital markets business in the outlook. For insights revenue, our guidance reflects Q4 2025 contract value and our CV growth rate accelerating over the course of 2026. First quarter and first half NCVI are important inputs to calendar 2026 revenue growth. We have taken a prudent view of NCVI phasing because Q1 is a seasonally important quarter for renewals. As always, we have high visibility into our insights revenue based on our ending 2025 contract value. For conferences, we are basing our guidance on the 56 in-person destination conferences we have planned for 2026. We expect similar seasonality to what we saw in 2025, with Q4 the largest quarter, followed by Q2. We expect gross margins in the second quarter to be the highest of the year for the conferences segment. We had a strong advanced bookings quarter in Q4, which provides very good visibility to 2026 revenue. We have a majority of what we've guided already under contract. This is ahead of where we were at the same time last year. For consulting, we have more visibility into the next quarter or two based on the composition of our backlog and pipeline as usual. Contract optimization has had several very strong years and the business remains highly variable. Our base level assumptions for consolidated expenses reflect the run rate from the fourth quarter and merit increases scheduled to go into effect April 1st as usual. We recommend thinking about expenses sequentially with notable seasonality driven by the conference's calendar and annual merit increases. For GTS, we expect low single-digit QBH growth in 2026, with a focus on growth in our business developers. For GBS, we plan to grow QBH mid-single digits this year, with an emphasis on growth in business developers. We have the recruiting capacity to go faster depending on how the year plays out. We continue to prudently manage our expenses, in part to create alignment with recent CV trends. and we are driving efficiencies wherever we can through automation, process improvements, and leveraging technology. We are also prioritizing sensible investments to drive future growth and returns, which include key areas like business and technology insights analysts, artificial intelligence, the customer experience, and sales capabilities, efficiencies, and QBH. These investments are fully reflected in our 2026 guidance. Based on January FX rates, we expect revenue growth to benefit by about 110 basis points and EBITDA growth to benefit by about 170 basis points for the full year. As a reminder, about one-third of our revenue and operating expenses are denominated in currencies other than the U.S. dollar. Our 2026 guidance is as follows. We expect Insights revenue of $5.19 billion or more, which is FX neutral growth of about 1%. We expect conferences revenue of $695 million or more, which is FX neutral growth of about 7%. We expect consulting revenue of $570 million or more, which is growth of about 3% FX neutral. The result is an outlook for consolidated revenue of $6.455 billion or more, which is FX neutral growth of 2%. We expect full-year EBITDA of $1.515 billion or more. This reflects full-year margins of 23.5% or more. As we move through the year, our strong visibility will get even better. For net interest expense, we expect higher interest costs as a result of the increase in leverage. Interest income will be affected by interest rates and the deployment of cash for repurchases made during 2025. In addition, we have not assumed interest income on excess cash that could be deployed on share repurchases. Notably, however, our share count for 2026 only assumes repurchases to offset dilutions. This means in the adjusted EPS guides, we effectively assume both less cash on the balance sheet and more shares outstanding than we are likely to have. We expect 2026 adjusted EPS of $12.30 or more. As I just noted, EPS would see a significant positive impact through a combination of fewer shares and or greater interest income. For 2026, we expect free cash flow of $1.135 billion or more. This reflects a conversion from gap net income of 140%. Our guidance is based on about 71 million shares outstanding. Again, only reflecting share of purchases to offset dilution. For Q1, we expect adjusted EBITDA of $370 million or more. Our financial results in Q4 were ahead of expectations. In particular, margins were strong and better than we guided at the start of 2025. We had another year of very strong free cash flow. ROIC continues to be excellent. We made significant accretive share purchases, reducing our shares outstanding by 8% in the year. Contract value outside the U.S. federal business grew 4% a quarter, and we are positioned to accelerate CV growth throughout 2026. As Gene detailed, in 2025, we began driving transformation across business and technology insights along four dimensions, impact, volume, timeliness, and user experience. The investments to continue the transformation through 2026 are fully reflected in our guidance. Finally, we'll continue to deploy our capital to drive shareholder value and contribute to strong ROIC. Our capital allocation strategy remains focused on share purchases, which will lower the share count over time, and strategic value-enhancing tuck-in M&A. With that, I'll turn the call back over to the operator, and we'll be happy to take your questions. Operator?