Gartner’s second quarter saw a negative market reaction despite meeting Wall Street’s revenue expectations and surpassing consensus on adjusted EPS. Management attributed the challenging performance to pronounced headwinds from U.S. federal government procurement changes and widespread cost-saving initiatives driven by anticipated tariff increases. CEO Gene Hall explained, “Measures of CEO confidence fell to recessionary levels, among the fastest drops ever recorded,” and noted that 78% of CEOs surveyed reported implementing cost-cutting measures. These pressures led to extended sales cycles and escalated purchasing decisions to higher executive levels, particularly in tariff-impacted industries.

Is now the time to buy IT? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Gartner’s Q2 Earnings Call

• Andrew Owen Nicholas (William Blair) asked about the size of tariff-affected industries and their impact on contract value. CFO Craig Safian estimated that 35-40% of contract value is exposed to these industries, influencing growth rates.
• Toni Michele Kaplan (Morgan Stanley) questioned how Gartner differentiates its value from generic AI research tools. Management emphasized their focus on supporting clients through complex, multi-year projects and leveraging proprietary data not available in public AI models.
• George Tong (Goldman Sachs) inquired about new business trends with federal government clients. Safian noted that while new business is still being written, the process is more complex, and retention rates are below 50% due to procurement hurdles.
• Joshua K. Chan (UBS) challenged whether the slowdown outside the federal sector was solely tariff-driven. CEO Gene Hall reiterated their detailed client tracking indicated tariffs and cost-cutting were primary drivers, with extended sales cycles reflecting recession-like behavior.
• Jason Daniel Haas (Wells Fargo) asked about client adoption of the full suite of Gartner services. Hall acknowledged not all clients use every offering and described efforts to train sales staff to better communicate the full value of subscriptions.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the pace and effectiveness of AskGartner’s rollout and resulting client engagement, (2) signs of stabilization or improvement in contract value growth among tariff-impacted and public sector clients, and (3) progress on restoring sales productivity through operational adaptations. Execution in these areas will be critical for Gartner’s return to higher growth rates.

Gartner currently trades at $229.63, down from $337.08 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

Our Favorite Stocks Right Now

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.