Research and advisory firm Gartner (NYSE: IT) beat Wall Street’s revenue expectations in Q2 CY2026, but sales were flat year on year at $1.68 billion. Its non-GAAP profit of $4.37 per share was 17.1% above analysts’ consensus estimates.

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

StockStory’s Take

Gartner’s second quarter results drew a positive market response, as the company delivered revenue and profit metrics above Wall Street expectations despite flat year-over-year sales. Management pointed to higher client engagement and improved retention rates across both its technology and business segments as key contributors to performance. CEO Eugene Hall highlighted mid-single-digit growth among midsized enterprise clients and noted, “Contract value growth accelerated compared to the first quarter,” emphasizing progress in both government and private sector end markets. The company also benefitted from disciplined expense management, which supported margin expansion.

Looking to the remainder of the year, Gartner’s outlook is built on persistent demand for AI-related research and ongoing enhancements to its client experience and digital platforms. Management expects contract value growth to accelerate, supported by improved engagement metrics and stabilization in client downsell activity. CFO Craig Safian stated, “We are making significant progress on our BTI transformation with a focus on delivering even more value to our clients.” However, the company remains watchful of macroeconomic and geopolitical pressures that could impact client budgets and decision timelines.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strong demand for AI-related insights, improved client engagement, and operational discipline that supported margin gains despite a challenging environment.

• AI research demand surges: Gartner identified AI as the most requested topic among clients across IT, HR, and marketing, with CEO Eugene Hall describing AI as “the single biggest driver of demand.” The company’s expanded coverage of AI topics—including strategy, cybersecurity, and deployment—helped attract new business and maintain relevance with existing clients.

• Client engagement up: Engagement levels improved by 140 basis points year-over-year, with digital and human interactions both increasing. Management stated that heightened engagement supports higher retention rates and creates more opportunities for upselling to existing clients.

• Mid-market and government growth: Midsized enterprise clients delivered mid-single-digit contract value growth, and improvement in government sector clients contributed to a sequential uptick in overall contract value. Management cited the government segment’s return to positive net contract value increase (NCVI) as a leading indicator for the broader business.

• Stabilizing downsell and retention: Large enterprise clients saw downsell activity stabilize, leading to sequential improvements in wallet retention. Management views this as a foundation for future contract value growth as clients adapt to new budget realities.

• Expense management and margin expansion: Gartner maintained operating discipline, reallocating spending to priority areas such as digital experience and research while keeping overall expenses in line. This helped support a 320 basis point increase in operating margin compared to the prior year, even as revenue growth remained muted.

Drivers of Future Performance

Gartner’s guidance for the rest of the year is anchored in continued AI-driven demand, enhanced client engagement, and further improvements from its BTI transformation.

• AI as a growth catalyst: Management expects robust demand for AI insights and advisory services to remain a primary driver for new business and client renewals. As organizations shift IT and business budgets toward AI, Gartner’s research and consulting offerings are positioned to capture incremental spend, even as clients scrutinize broader budgets.

• Improved client retention and upsell: CFO Craig Safian pointed to rising engagement and wallet retention as leading indicators for future contract value growth. Stabilization in downsell activity, especially among large enterprises, is expected to provide a firmer base for upselling and cross-selling efforts in the coming quarters.

• Ongoing macro headwinds: Management acknowledged that persistent uncertainty from tariffs and broader economic conditions continues to impact some customer segments. The company is not relying on a significant macro recovery, instead focusing on executing its BTI transformation and driving productivity improvements to achieve its targets.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) continued growth in AI-driven research demand and its impact on contract value, (2) trends in client engagement and retention as a signal for sustained upsell opportunities, and (3) execution of the BTI transformation to drive productivity and margin improvements. We will also monitor ongoing macroeconomic pressures and the potential for further stabilization in large enterprise spending patterns.

Gartner currently trades at $189.00, up from $151.53 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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