Gartner Stock Sinks 17% Despite Earnings Beat and Raised Guidance as Investors Question Growth Quality

Shares of Gartner fell about 17% Tuesday even though the research and advisory company beat Wall Street's profit expectations and raised its full-year forecast. Investors focused on slow underlying growth and how much of the earnings gain came from share buybacks.

The New York Stock Exchange-listed stock, which trades under the ticker IT, fell $40.38, or 17.16%, to $194.88 in morning trading. Its market value dropped to about $12.3 billion.

The decline erased much of a strong recent rally. The shares had gained about 25% over the previous month before the report.

Profit beat

Gartner, based in Stamford, Connecticut, reported adjusted earnings of $3.59 per share for the third quarter, well above the analyst consensus of $2.84.

Revenue was about $1.5 billion, roughly in line with estimates, though analyst forecasts varied. Reported revenue fell 1.3% from a year earlier because the prior-year quarter included $55 million from Gartner's Digital Markets business, which it has since sold.

Excluding that business, adjusted revenue rose 2.4%.

Adjusted EBITDA rose about 8% to $364 million. Free cash flow was $275 million, up 2%.

Guidance raised

Gartner raised its full-year 2026 guidance for revenue, EBITDA, adjusted earnings per share and free cash flow. It now expects free cash flow of at least $1.235 billion.

Contract value, a key measure of future subscription revenue, accelerated for the third straight quarter. "Contract Value growth accelerated again," Chairman and CEO Gene Hall said.

Why the shares fell

Analysts pointed to several reasons for the selloff despite the beat.

Much of the earnings-per-share gain came from a smaller share count. Adjusted earnings per share were calculated on 63.9 million diluted shares in the third quarter, down from 75.0 million a year earlier. As a result, the per-share improvement was driven heavily by buybacks rather than by growth in total earnings.

Gartner bought back $138 million of stock in the quarter and has reduced its share count by about 15% over the past year.

Some analysts also noted that modest revenue and contract value growth raise questions about new business at a time when artificial intelligence tools are changing how companies buy research and advisory services.

The stock's strong run before the report also left less room for disappointment.

A difficult backdrop

Tuesday's U.S. midterm elections added uncertainty to markets, with technology stocks trading cautiously.

Gartner provides research, advice and conferences to business and technology executives. Its main revenue comes from subscriptions to its research services.

What to watch

Investors will watch whether contract value growth keeps accelerating and whether Gartner can return to faster growth in its core research business. They will also watch how the company responds to competition from AI-powered research tools.