Why Did Gartner (NYSE:IT) Drop 13% Even With Adjusted EPS Up 30%?

Vinay Lochav

05 November 2026 12:48 AM AEDT

Why Did Gartner (NYSE:IT) Drop 13% Even With Adjusted EPS Up 30%?

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Key Highlights

Gartner (NYSE:IT) fell about 13% on November 3, 2026, with published market data showing a decline of 13.2% to 13.9% depending on the timestamp.
Adjusted Earnings of USD 3.59 a share rose 30.1% from USD 2.76, with GAAP diluted earnings of USD 3.35 against a published consensus near USD 2.84.
Contract value reached USD 5.3 billion, up 2.5% year over year and 1.1% from the prior quarter, while total Revenue of USD 1,505 million fell 1.3% as reported.
USD 138 million of shares were repurchased in the quarter and USD 1.7 billion over four quarters, with free Cash Flow of USD 275 million.

What Gartner Reported

Gartner reported third-quarter 2026 results on November 3, 2026. Total revenue was USD 1,505 million, down 1.3% as reported and 1.1% on a currency-neutral basis, while adjusted revenue, which excludes a divested operation, rose 2.4%. Contract value, the annualised value of subscription contracts, reached USD 5.3 billion, up 2.5%, and the release says growth accelerated again. Adjusted earnings were USD 3.59 a share. Published coverage says Gartner raised its 2026 revenue, EBITDA, adjusted earnings and free cash flow guidance, with adjusted earnings at or above USD 14.65 and EBITDA at or above USD 1.615 billion.

Why the Shares Fell Anyway

The shares fell despite the beat, and published coverage points to three concerns. Per-share growth leaned on buybacks, since the share count is down about 15% to roughly 64 million. New Business fell about 4% in the technology sales group and about 3% in the business sales group, according to published coverage. Investors also worry that cheaper AI services could erode Demand for research subscriptions. Management said clients that signed large AI deals without clear returns are asking Gartner (NYSE:IT) for help with business cases and cost control. The Middle East conflict is also pressuring budgets and retention in the Gulf, and management does not expect ex-federal contract value to reach its 4% exit rate by year end. Segment detail adds nuance: global technology sales contract value was USD 4 billion, up about 2%, with wallet retention of 98%, while global business sales contract value was USD 1.3 billion, up 3.7%, with retention of 99%. Conferences revenue was USD 86 million and consulting revenue was USD 126 million, with consulting Backlog of USD 217 million.

Risks and What to Watch Next

Contract value growth of 2.5% is slow, and excluding United States federal business it was 2.8%, still short of the 4% exit rate management wants. Reported revenue is shrinking, and hiring analysts for a transformation programme will add costs over several quarters. Buybacks cannot lift earnings indefinitely, and the repurchase of 0.9 million shares for USD 138 million in the quarter is smaller than the pace of recent quarters. One-day falls of 13% can overshoot or keep going. Investors will watch contract value growth, new business trends, retention, the AI narrative and the pace of repurchases, free cash flow of USD 275 million for the quarter, and whether the guidance of at least USD 14.65 of adjusted earnings holds.

Where Things Stand

Gartner fell about 13% because investors looked past a 30% rise in adjusted earnings to slow contract value growth, falling new business, buyback-driven per-share gains and the risk that AI services reduce demand. The quarter itself was better than feared, with accelerating contract value and raised guidance. For Gartner (NYSE:IT), contract value and new business are the key measures. The reaction may prove an overreaction or a warning sign. Nothing here is Investment advice or a price forecast.

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