ITNYSEThe short version
Gartner, Inc.
Gartner sells subscription research and advice to enterprise executives, a capital-light franchise turning $6.5 billion of revenue into heavy cash flow. Its shares are down about 74% from their 2024 peak after growth stalled.
From a late-2024 high near $552, the shares fell to about $126 by mid-2026 and trade near $142 now — roughly a 74% drawdown, most of it in 2025.
$141.61
Share price
$10.0B
Market cap
$6.5B
Revenue (FY2025)
~12%
FCF yield (2026E)
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The statements
Capital-light: growth slowed, but the cash flow stayed heavy
FY2020 → FY2025as reported · $
Revenue$6.5B+4%
Gross margin68.8%+0.5pp
Operating margin15.8%−2.7pp
Net income$729M−42%
EPS$9.65−40%
Open the full statements →As-reported statements, FY2020–FY2025.
- Revenue still grew, then flattened. Sales rose from $4.7B in 2021 to $6.5B in 2025, but the climb has slowed — 2025's 3.7% gain is the weakest of the span.
- GAAP earnings are noisy. Operating margin holds near 16%, but net income swings on one-offs — a $300M insurance gain lifted 2024, a $150M impairment weighed on 2025.
- Cash is the cleaner read. Operating cash flow has stayed between $0.9B and $1.5B for six years and runs above reported net income — $1.29B in 2025, near 20% of revenue.
Franchise and selloff
Down 74% from peak, and cheap only on the adjusted earnings number
Buyback price paid vs $141.61 now
| Year | Avg price paid | vs $142 now |
|---|---|---|
| 2021 | $233 | −39% |
| 2022 | $263 | −46% |
| 2023 | $333 | −58% |
| 2024 | $438 | −68% |
| 2025 | $286 | −50% |
Every repurchase tranche since 2021 is underwater at today's price.
- The cheapness is conditional. Gartner's ~11x forward-earnings cheapness rests on adjusted EPS of $13.17 that sits 36% above GAAP EPS of $9.65 (about 15x GAAP), and the capital returning that yield was deployed above today's price — $2.0 billion of 2025 buybacks at about $286 and 2024's at about $438, versus $141.61 now.
- The adjustments cut both ways. Stock comp of $155.9M stays inside adjusted EPS, 2024's $300M insurance gain was stripped out, and the SEC accepted fuller disclosure rather than barring the exclusions — sharpening the fear-versus-fair question, not settling that the stock is dear.
What it sells
Nearly four-fifths of revenue is subscription research
FY2025 revenue by segment
Insights (subscriptions)$5,073M78%
Conferences$645M10%
Consulting$553M9%
Other / Digital Markets$227M3%
Insights is the subscription engine; the rest monetizes the same analyst content.
- Insights is the engine. It produced $5.07B of 2025's $6.5B — 78% — sold as prepaid annual subscriptions to over 13,000 enterprises across about 90 countries.
- Paid before it is earned. Most contracts bill in advance, leaving $2.8B of deferred revenue — roughly 158 days of sales collected but not yet recognized, funded by customers rather than lenders.
The leading indicator
The subscription engine stopped growing in 2025
Contract value: GTS vs GBS
Contract value is the annualized book of subscriptions in force.
- Total contract value grew 1%. The larger technology book was flat at $3.91B; the business book rose 3% to $1.25B — after a decade compounding at high-single to double digits.
- Two forces drove the stall. A US federal spending freeze cut that book to about $126M, roughly 250 basis points of growth, while wallet retention fell below 100% for the first time in five years.
The moat test
Clients stayed; they simply spent less
GTS retention: clients vs wallet
The lines diverged in 2025: renewals held, spend per client rolled over.
- Client retention barely moved. GTS has renewed 83–86% of enterprise clients every year for six years, ticking up to 85% in 2025 — the stickiness of a product embedded in client workflow.
- Wallet retention broke below 100%. GTS fell to 96% from 102% and GBS to 99% from 106% — retained clients spending less than a year earlier, the shape of a demand pause on a sticky base, or the first edge of erosion.
The peer test
The only identical rival converts a fraction of the cash
Operating cash flow / revenue, FY2025
Gartner leads seven peers on cash conversion; Forrester runs the identical model.
- Scale shows in the cash. Gartner converts 19.9 cents of every revenue dollar to operating cash — the highest of the set — versus 5.3% at Forrester, the only firm running the same subscription-research model.
- Forrester is also the warning. Its revenue has fallen about a fifth since 2021 and its wallet retention crossed below 100% in 2022, two years before Gartner's did — the same model can go into reverse.
Earnings quality
The reported margin is understated by choice
$2,842M
Deferred revenue
$40.5M
Contract assets
$612M/yr
Commissions amortizedvs a $401M balance
+$250–275M
Pre-tax income understatedif spread over the 2.2-yr contract life
FY2025; the SEC reviewed the commission treatment in 2020 and let it stand.
- Conservative by design. Gartner carries $2,841.6 million of deferred revenue against just $40.5 million of contract assets and amortizes $612.3 million of sales commissions a year against a $400.7 million balance, so it collects cash before booking revenue and expenses the cost of winning contracts inside a year — a conservative treatment the SEC examined in 2020 and accepted.
- Not purely superior conversion. Contract assets — the line that would flag revenue booked too early — grew 30% to $40.5M, and part of 2025's cash-over-earnings gap is a $150M non-cash impairment plus about $200M of D&A.
Balance sheet
Modest leverage, funded partly by customer float
$1.26B
Net debt
0.8×
Net debt / EBITDA
$2.8B
Deferred revenue (float)
~12%
FCF yield (2026E)
Net debt essentially unchanged across the 2020–2025 buyback cycle.
- Leverage is contained. Net debt sat near $1.26B at both end-2020 and end-2025 despite $6B of buybacks; gross debt rose about $1B to $3.0B, with the newest notes priced at 4.95% and 5.60%.
- Customers fund the working capital. $2.8B of deferred revenue — collected in advance and owed as service, not cash — is float from clients, not lenders, and underwrites the cash-conversion engine.
Capital returns
All surplus cash buys back stock — now far below cost
Free cash flow vs buybacks
2025's $2.0B buyback ran to ~169% of free cash flow, part debt-funded.
- A quarter of the shares, gone. About $6.0B repurchased over 2021–2025 — roughly equal to free cash flow — cut the diluted count from 90M toward a guided 69M, and $535M more went in Q1 2026 alone.
- The instinct was right, the prices high. Buying rose as the stock fell, yet every tranche since 2021 sits 32–61% underwater at $141.61; the genuinely cheap buying is only now happening.
Pay and alignment
Incentives key off the operating metrics, not the flattered ones
What management is paid on
| Incentive metric | In the plan? |
|---|---|
| Contract value | Yes |
| Revenue | Yes |
| EBITDA | Yes |
| Share price / buyback EPS | No |
2026 proxy; incentives sit on the leading indicators, not the metrics buybacks flatter.
- Pay tracks the leading indicators. The 2026 proxy keys incentives to contract value, revenue and EBITDA — the same lines a skeptic watches — rather than the buyback-driven adjusted EPS.
- Managers felt the drawdown. Executives' equity marks fell with the stock; the cash bonus did not, but the alignment on the metrics that matter here is real.
Valuation
Today's price already discounts permanent decline
Value per share by free-cash-flow path
Bear — FCF −3%/yr
$125–145
Base — FCF flat to +2%
$165–190
Bull — FCF +4–5%
$240–290
Single-stage models on ~$1.15B free cash flow; street mean target $165.
- The price embeds terminal decline. At $141.61 the ~12% free-cash-flow yield implies free cash flow shrinking about 3% a year forever — demanding for a book that still grew 1% and has never had a down FCF decade.
- Flat is enough. If free cash flow merely holds, the same model returns roughly $165–205; the buyer's burden is only to disbelieve permanent decline. The live risk is that 2026's guided step-down is the start of erosion.
Price and cash
Market value fell about $33B; the cash barely moved
Peak to now
| Nov 2024 peak | Jul 2026 | |
|---|---|---|
| Share price | $552 | $142 |
| Equity value | ~$43B | ~$10B |
| Free cash flow | $1.38B | $1.18B |
| FCF yield | 3.2% | 11.8% |
| Implied FCF growth | +6% | −3% |
Growth embedded at a 9% discount rate; free cash flow fell ~15%, not 74%.
- A re-rating of belief, not cash. The shares fell about 74% while free cash flow moved only from $1.38B to a guided ~$1.16B; the embedded growth assumption swung nine points, from healthy growth to permanent decline.
- What settles it reports quarterly. The market-cap hit outran the cash-flow hit — a fear-driven repricing, provided the contract-value line holds. The first post-stall print showed it re-accelerating, ex-federal, to 3.5%.
What to watch
A fear-driven repricing if the cash holds; a value trap if the base is eroding
- 01Wallet retention: back above 100% confirms the cyclical read; a second year below 96% points to structural erosion.
- 02Ex-federal contract-value growth: accelerating past 3.5% through 2026 validates the guide; stalling there undercuts it.
- 03Free cash flow: holding at or above the guided $1.16B keeps the ~12% yield intact; a miss reopens the durability question.
- 04Client enterprise count: stabilizing near 13,000 is a pause; continued decline with sub-100% wallet retention is the erosion signature.
This distills a guided study built chapter by chapter — the statements, the moat, the cash, the capital returns, and the valuation.
Compiled from the full report · 2026-07-11 · For information, not investment advice.