Gartner (IT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $1.6 billion, up 6.1% year-over-year (6.9% FX neutral), with net income rising 15.9% to $230 million and adjusted EPS up 13% to $3.22.

• Global contract value grew 7.4% year-over-year FX neutral to $4.9 billion, with enterprise function leader CV up 10%.

• Research remains the largest and most profitable segment, with tech vendor clients returning to growth and all segments showing year-over-year increases.

• Free cash flow for Q2 was $341 million, with operating cash flow at $370 million; free cash flow conversion from GAAP net income was 121%.

• Board increased share repurchase authorization by $600 million, with over $1 billion repurchase capacity remaining and $564.7 million repurchased year-to-date.

Financial highlights

• Research revenue was $1.27 billion, up 4.8% year-over-year (5.5% FX neutral), with a 73.7% contribution margin.

• Conferences revenue was $186 million, up 10.2% year-over-year (10.8% FX neutral), with a 58.1% contribution margin.

• Consulting revenue was $143 million, up 13.1% year-over-year (14.9% FX neutral), with a 37.6% contribution margin.

• Net income for Q2 2024 was $229.5 million, up 16% year-over-year; diluted EPS was $2.93, up 18.1%.

• LTM free cash flow was $1,006 million.

Outlook and guidance

• 2024 consolidated revenue guidance is at least $6.2 billion, with adjusted EBITDA of at least $1.46 billion and adjusted EPS of at least $11.05.

• Research revenue guidance of at least $5.105 billion (5% FX neutral growth), Conferences at least $565 million (12% FX neutral), Consulting at least $530 million (4% FX neutral).

• Free cash flow guidance of at least $1.08 billion, with conversion from GAAP net income of 138%.

• Management expects quota-bearing headcount to increase mid-single digits by year-end 2024.

• $300 million event cancellation insurance settlement expected in Q3 2024 will further strengthen liquidity.