Gartner Inc. (NYSE:IT) announced third-quarter 2018 results on Thursday morning, showcasing better-than-expected growth, strong demand for the company's compelling research and advisory services, and the continued divestment of certain non-core assets. But the company also offered a seemingly conservative view for its expected performance in the months ahead.

Shares were down around 3.8% today. Let's take a closer look at how Gartner started the second half.

Three people surrounding a desk and pointing to papers with market research charts.

IMAGE SOURCE: GETTY IMAGES

Gartner results: The raw numbers

Metric

Q3 2018

Q3 2017

Year-Over-Year Change

GAAP revenue

$922 million

$828 million

11.4%

GAAP net income (loss)

$12 million

($48 million)

N/A

GAAP earnings (loss) per diluted share

$0.13

($0.53)

N/A

DATA SOURCE: GARTNER. GAAP = generally accepted accounting principles.

What happened with Gartner this quarter?

  • On an adjusted (non-GAAP) basis -- which excludes items like acquisition and divestment costs -- earnings per share increased 31%, to $0.85.
  • While we don't usually pay close attention to Wall Street's demands, both the top and bottom lines exceeded estimates for adjusted earnings of $0.62 per share on revenue of $920.2 million.
  • Adjusted revenue, excluding divested operations, climbed 11% (13% at constant currencies), to $910 million.
  • Gartner divested another one of its non-core assets this quarter for $116 million in net cash.
  • Gartner paid down $262 million of debt during the quarter.
  • By segment:
    • Adjusted research revenue climbed 11% year over year, to $771 million. 
    • Adjusted events revenue climbed 27%, to $57 million.
    • Adjusted consulting revenue grew 9%, to $79 million.
    • Adjusted "other" segment revenue was roughly $3 million, comprised of a small non-core business that was divested at the end of October and will be reported in Gartner's Q4 results.

What management had to say

Gartner CEO Gene Hall stated:

Third quarter 2018 continued our trend of double-digit growth in contract value, revenue, and profits, combined with strong cash flow. The compelling insights we create, combined with our operational effectiveness, deliver incredible value to more than 15,000 enterprise clients around the world. Our prospects for future growth remain strong.

Looking forward 

For the fourth quarter, Gartner expects revenue in the range of $1.07 billion to $1.115 billion, with adjusted net income per share of $1.18 to $1.34. That means the company now expects full-year 2018 revenue of $3.859 billion to $3.904 billion -- down from $3.93 billion to $4.035 billion previously -- and adjusted earnings per share of $3.61 to $3.77 -- compared to $3.51 to $3.91 before. 

Investors should keep in mind, however, that the new ranges account for roughly $307 million in lost revenue and $0.41 per share in lost earnings from divested operations. Given its relative outperformance this quarter, Gartner's seemingly light revenue and earnings outlook actually represent an increase from its prior expectations.

All things considered, this was as strong a quarter as Gartner investors could have hoped for. And with its non-core businesses finally removed, the company should be nicely poised to continue driving superior results going forward.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.