Gartner (NYSE:IT) reported second-quarter financial results on Aug. 8.

The global research and advisory company is enjoying strong sales growth as it works to integrate a recent acquisition.

A businessperson drawing a line labeled "sales" that is sloping sharply upwards

Gartner's revenue rocketed higher in the second quarter. Image source: Getty Images.

Gartner results: The raw numbers


Q2 2017

Q2 2016

Year-Over-Year Change


$843.731 million

$609.998 million


Net income

($92.281 million)

$51.626 million


Earnings per share




Data source: Gartner Q2 2017 earnings press release.

What happened with Gartner this quarter?

  • Total revenue surged 38% year over year to $843.7 million, and 40% on a currency-neutral basis. Excluding the impact of Gartner's acquisition of CEB, revenue rose 13% (15% foreign-exchange-neutral).
  • Adjusted EBITDA, which excludes stock-based compensation, acquisition-related charges, and other non-recurring items, soared 57% to $185 million.
  • All told, adjusted net income jumped 26% to $79.4 million, and earnings per share increased 17% to $0.88.

Business segment results

Research revenue leapt 34%, to $613.7 million, and 15% when excluding the impact of the CEB acquisition. Adjusted gross contribution margin was 68%, down from 70% in Q2 2016. Gartner's client retention was flat at 83%, while wallet retention (retention times revenue per customer) improved to 105% from 104% in the year-ago period. And Gartner's contract value was $2 billion at the end of the second quarter, a year-over-year increase of 14%.

Consulting revenue grew 6% to $91.7 million. Consulting segment gross contribution margin was 34%, up from 33% in the prior-year quarter, while utilization fell to 65% from 69%. Gartner's billable headcount for its consultant force at the end of the quarter was 667, compared to 626 in Q2 2016. Gartner's backlog, however, decreased to $91 million as of June 30, 2017, down from $93.3 million a year earlier.

Additionally, events revenue jumped 37% to $91.2 million, with gross contribution margin rising to 55% from 54%. And Gartner's new talent assessment business, which came about due to its CEB deal, delivered revenue of $47.1 million, with a gross contribution margin of 37%.

Looking forward

Gartner updated its financial outlook for 2017, including:

  • Total revenue of $3.225 billion to $3.320 billion, up from a prior forecast of $3.219 billion to $3.314 billion
  • Adjusted EBITDA of $685 million to $720 million, down from $685 million to $735 million
  • Adjusted EPS of $3.32 to $3.49, down from $3.32 to $3.60

CEO Gene Hall explained the revised outlook during a conference call with analysts:

This modest reduction to the midpoint of our adjusted EBITDA guidance is driven by two factors. First, the vast majority of our change is due to our decision to accelerate certain frontline investments in areas that will fuel CEB's growth for the future. Given the rapid progress we have made so far with the CEB integration, we are confident of the incremental benefit this will yield going forward.

Looking out even further, Hall is optimistic as to the combined company's prospects. "The integration of Gartner and CEB is going extraordinarily well and gives us a quantum leap in capability," Hall said in a press release. "Our outlook for long term growth remains incredibly strong."

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