Gartner at 45th Annual William Blair Conference: Strategic Growth Insights

On Tuesday, 03 June 2025, Gartner Inc. (NYSE:IT) presented at the 45th Annual William Blair Growth Stock Conference, offering a comprehensive strategic overview. CFO Craig Safian highlighted the company’s growth strategies and financial performance, emphasizing both opportunities and challenges. The discussion centered on Gartner’s strong revenue growth, strategic acquisitions, and future outlook.

Key Takeaways

• Gartner aims for 12% to 16% research growth, translating to double-digit revenue growth.
• The company reported over $6 billion in revenue last year, with a significant focus on free cash flow.
• Strategic expansion includes acquisitions and organic growth, enhancing service offerings.
• Gartner maintains a diversified client base, targeting C-level executives across industries.

Financial Results

• Revenue Growth: Gartner achieved a 16% compound annual growth rate from 2014 to 2024, driven by strong revenue and free cash flow performance.
• Free Cash Flow: The company reported $1.4 billion in free cash flow last year, expecting this to be 140% to 160% of net income annually, exceeding $1 billion.
• Research Business: Contributes roughly 80% of total revenue, with margins in the mid-70s.
• Contract Value: Subscription contract value exceeds $5 billion, with over 70% written in multiyear contracts.

Operational Updates

• Culture and Team: Emphasis on "Team NCVI" to align teams with sales and client success; 70% to 75% of operating expenses are people-related.
• Service Expansion: Post-2017 acquisition of CEB, Gartner expanded into HR, finance, sales, and legal functions, serving approximately 100,000 licensed users.
• Market Opportunity: With a $200 billion addressable market, Gartner’s current capture is $5 billion.

Future Outlook

• Growth Strategies: Focus on acquiring new accounts and expanding them, targeting C-level executives.
• Margin Expansion: Expected through gross margin leverage, G&A leverage, and controlled sales cost growth.
• Capital Allocation: Plans to use free cash flow for share buybacks and strategic M&A.

For further details, refer to the full conference call transcript.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Andrew Nicholas, Business Services Analyst, William Blair: Alright. Good afternoon, everybody, and welcome to the Gartner presentation. I’m Andrew Nicholas, and I’m the business services analyst here at William Blair. Before we get started, I’m required to inform you that for a complete list of research disclosures or potential conflicts of interest, please visit our website at williamblair.com. With that out of the way, I’m very pleased to welcome Gartner CFO Craig Safian to the forty fifth Annual Growth Stock Conference.

That’s it. That’s my intro, and I’ll let you

Craig Safian, CFO, Gartner: you, Andrew. And just to let this is not my 40 time at the conference, just to sort of lay it out there for everybody. But thank you for joining us today. Thanks for taking the time. I really appreciate it.

So for the next twenty nine ish minutes, I’m gonna take you through the Gartner story. We have a breakout session scheduled right after this for any questions you might have. But let us dive right in. And just before I start, with me on the team today, David, they’ll also be joining us in the breakout session. And again, as always, if you have any questions going forward that you don’t get to ask during the breakout session, David Cohen leads Investor Relations for us and is always available for inquiries, questions, etcetera.

So similar to Andrew, there are some forward looking statements I may be making. I’m not going to ask you to read the slide. But let’s start with who we are and what we do. And I think, you know, fundamentally this is super important, super critical to understand the core value proposition that we offer operating executives. And so what we do is deliver actionable objective insights that help make smarter decisions and drive stronger performance on an organization’s and an individual’s what we call mission critical priorities or MCPs.

And you’re going to hear me talk about MCPs a lot. It is how we go to market, it’s how we serve our clients, understanding what is most important to our clients and then mapping our value proposition to those most important things is what makes us go from both a retention perspective and a new business perspective. In terms of who we serve, it’s actually a fairly unique story because we serve a very diversified set of clients. And it’s diversified from a geographic perspective. So we’re operating in every major region and country you would imagine.

It’s diversified from an industry perspective. So we serve financial services, manufacturing, retail, banking, public sector, private sector, not for profit, etcetera. And again, broadly we do that. And then we’re diversified from a size perspective as well. So we’re serving the largest companies and enterprises in the world down to on our technology business, serving pre revenue technology companies and on our end user our enterprise user focused businesses serving companies roughly with at least $100,000,000 or more with the thinking being we serve clients or we target clients who are large enough, complex enough, and have enough budget to get value and benefit out of multiple Gartner subscriptions.

Why we do it, and we’ll double click on this a little bit later, it’s really about making sure that we are helping our clients achieve their most important mission critical priorities. That’s sort of on the client side. In terms of our investor value proposition, if you will, our story has been the same and consistent for the last several years. So one is our goal is to drive 12% to 16% research growth, which equates to double digit revenue growth. We believe we can modestly expand margins each and every year going forward.

And because of the fundamentals and foundation of our model, we can generate significant amounts of free cash flow, free cash flow well in excess of our net income that we can then put to use on behalf of our shareholders. And you see a snapshot of some numbers about us. So over $6,000,000,000 in revenues last year, 1,400,000,000.0 in free cash flow. We’ve been at this for a number of years. We’ve got over $5,000,000,000 of subscription contract value under contract and the compound annual growth rate over the last decade or so has been about 14% growth consistently year after year after year.

And sort of make that point, we are a growth business and it is people who actually fuel the business for us. And so if you sort of zoom back with us, about 70% to 75% of our operating expense base is our people related costs. And so we are clearly a people business, but we actually productize and monetize it in very efficient and effective ways with about 80% of our business being tied up in our research business, which is an annual subscription model. On the top chart, you can see the CAGR I referred from 2014 through 2024. As important to us and to you hopefully is the free cash flow performance on the bottom of the slide as well, where you can see a 16% compound annual growth rate 2014 to 2024 with a significant step up in our free cash flow generation really starting in 2020 into 2021.

And along the way, we’ve significantly grown our team both in terms of the direct sellers that are going out and selling and retaining our products and services as well as the experts that we have on staff that develop all the insights and actually help our clients achieve those mission critical priorities. So, you know, when we think about Gartner overall and the culture we have and because we are so people dependent, the culture that we’ve built and driven is super important to us. And again, if you look at accolades that we’ve gotten around our associate value proposition or how Gartner, you know, we’ve gotten those accolades year after year after year after year. And here on this slide, you can see several elements of how we define, you know, our culture and our ethos. And again, I think these are reflective of twenty years of developing this culture so that we can sustain double digit top line growth well into the future.

I’ll pull out a couple of them. We talked about the first one, which is impacting clients’ mission critical priorities. We do good in the world. We are supporting the initiatives of our clients across the board. And we can feel really good and our team can feel really good about helping our clients with things that actually positively impact their business and generally positively impact the world as well.

We have a no limits mindset, and so one of our core, you know, operating philosophies is you got a challenge, we’re gonna break it down, figure it out, and then iterate and innovate our way through it. We prioritize in doing that. You can see a bunch of the other things. And I think one of our secret sauces, if you will, and why we’re so hard to compete against is on the bottom row, the middle one is we win as a team. I think we have this concept of team NCVI.

So NCVI or net contract value increase is probably the most important metric we have. What it is, is it’s measuring the dollar value of contract value growth in a period, a year, a month, what have you. And think about NCVI is basically the numerator in calculating contract value growth. And as I mentioned, we have this concept around we’re all members of team NCVI. And so whether you’re on the finance team, the sales team, the research team, kind of doesn’t matter.

We’re all about making sure that whatever we’re doing is in support of sales and our clients in driving and supporting NCVI. And again, I think when we do run into competitive situations, which is definitely in a minority of our deals, our competitors find it really, really, really difficult to compete against us. There’s a lot of reasons why that is, but one of the core reasons is because we bring a team to the solution and we fight and win as a team. And so, we were founded in 1979 to cover the technology industry. The technology industry in 1979, now, you know, I don’t remember.

I was just, you know, in elementary school at that point. Yes? Everyone cool with that? Okay. Good.

No objection. But the technology industry at that point was was really IBM. Right? And so we were created as a resource to study and provide value about IBM. Obviously, technology exploded beyond IBM, and we’ve been serving technology executives since 1979 on all of their most important mission critical priorities.

In 02/2009, going to 2010, we got into the supply chain business through an acquisition of a small company based in Boston called AMR Research. And AMR Research was originally created as a Gartner competitor. They found it too hard to compete against Gartner, and so they veered into supporting supply chain professionals. And so we bought AMR at the very end of 02/2009, and it has been a core to our supply chain business ever since then, which has been a really strong and significant grower for us going forward. That acquisition though proved to us that all of the best practices that we had developed in running our technology business from a go to market perspective, from a creating insights perspective, from a servicing perspective worked just as well in supply chain as it did in IT.

And put a pin in the next, that’s a really important point as we move forward. In 2012, we launched organically a service serving marketing professionals really focused on digital marketing. And again, with understanding that all of the best practices we had developed in serving IT professionals and now supply chain professionals would work in marketing. And marketing had a wonderful growth spurt as well and really contributed to our overall growth. In 2017, we were presented with an opportunity to buy a company called CEB, which used to be known as the Corporate Executive Board.

And what CEB had built was practices serving all the other functional areas outside of the ones we had already either created or stood up. And so while there was a little bit of overlap in marketing and IT, what CEB brought was expertise in creating insights for professionals in the HR function, in the finance function, in the sales function, in the legal function. And so what you can see on the bottom of this page is sort of the result of a combination of really smart and strategic M and A and some organic launches where we now serve leaders across every major function in the enterprise, across every geography and industry, as we talked about earlier, with a similar business model across all of them, similar product architecture, product elements, similar pricing, similar contractual elements, contractual terms, same sales systems, same sales processes, etcetera. And then again, in the middle, you can see that how we do it and what we’re doing. So we’ve got more than 2,500 experts across all these areas who are generating actionable, objective insights for our clients.

If reading the research or the insights is not enough and you want to speak to an expert, we actually, if you subscribe at a certain tier of service, you get access to what we call inquiry, which is you pick up the phone and you get on a a Teams call or a Webex call or whatever it may be with one of our experts. Clients find this incredibly valuable. So imagine, you know, you read a really interesting article in whatever publication you find interesting, and you really wanna learn more and talk to the author of that article, generally, you can’t do that unless you’re very well connected or have, you know, friends in high places. Here, if you subscribe to it, we get you directly connected to the right people at the right time with the right insights, etcetera. And then on top of that, we have tools and templates and graphics and things like that, that actually help you come to the right decision better.

So if you think about sources of value, it’s the insights that our experts are creating, it’s access to those experts through inquiry, and it’s the tools and templates, etcetera, that we have developed over the years that really help those executives achieve and accomplish their most important mission critical priorities. And then, when you think about the value proposition and some of you may be Gartner Invest clients, if so, thank you. That said, you are not our core audience and our value proposition is different than the value proposition for InVEST clients. And if you think about put This present That said, you are not our core audience, and our value proposition is different than the value proposition for InVEST clients. And, you know, if you think about, put yourself in the shoes of an operating executive.

And so in this case, you know, it’s a so on and so forth into what you see on the right of the page, mission critical priorities. So if I’m the Chief Information Officer, my mission critical priorities might be, you know, build out my cybersecurity framework, significantly enhance user experience of all our client facing applications, and build the data and analytics infrastructure that will support and machine learning development into the future. Okay. So those are three big things. How do we help then?

Well, if you think about it, there are dozens, hundreds, or thousands of inputs and data points that go into developing the right cybersecurity strategy. Benchmarking the skill sets of your cybersecurity professionals, selecting applications, developing the right cybersecurity governance structure. We help on all of that. Really hard to find help on that anywhere else, at the price point that we are talking about. And so on average, a license to Gartner costs about $50,000 per user per year.

For that $50,000 you get access to all the relevant insights for your role. For that $50,000, you get the ability to get on the phone as many times as you want with an expert to do inquiry, to further your understanding and experience, you know, in support of those mission critical priorities. For that $50,000 you get the ability to attend one of our industry leading conferences in the geography of your choice. You get to network with peers. You get access to peer reviews of software and other applications.

You get access to all the things you need. And then if you think about the sources of value, goes back to what I talked about a little bit earlier. So it’s the written insights that come from our 2,500 leading industry experts. It’s talking to an expert through inquiry. It’s networking with peers to understand what they’re doing.

It’s going to a conference and really immersing yourself in all things related to your mission critical priorities. It’s leveraging our tools and templates to get to better outcomes and really drive support and success around your specific mission critical priorities. And so, my simple rubric for thinking about the value proposition is are these five elements. And it’s not the most elegant or articulate way to discuss the value prop, but it’s helpful for me. It’s actually, you know, I’ve been working at Gartner for almost twenty three years.

My mom, God bless her, still has no idea what Gartner does. This slide is the closest I’ve gotten to explaining to Judy Safian what Gartner does. So I consider this really gold because my mom now has a basic understanding of of what Gartner does. So if you think about it, it breaks down into really five components. We save time.

We help people get to the right decision more quickly. There’s huge economic value in doing that. We save people money. We actually will look at your proposals from technology vendors, so not only do we help you get to the right decision on picking the right application or provider or integration partner or whatever it may be, we can actually help you get the best pricing and terms on that. Huge, demonstrable, quantifiable economic value.

We help you manage risk. Cybersecurity is the perfect example. It’s hard to put a return on your investment in cybersecurity, but we know that if you are smart and thoughtful about it and do all the right things, you are minimizing and mitigating risk along the way. So we help you manage risk. You can’t afford to have 2,500 experts on your payroll, we can.

And so we have the experts on our staff so that when you need it on demand, you get access to that expertise. And then lastly, you gain confidence. If you think about a CEO or a board wanting to know, okay, you’re going to spend x on a new CRM application or this is a cybersecurity framework and tools you’re going with. They’re going to want to know, okay, what does a third party say about it? And very often, it’s the Gartner stamp of approval that actually gives operating executives, boards and CEOs the confidence to move forward.

So save time, save money, manage risk, gain expertise and gain confidence is my simple rubric for the value we provide. And again, that exists across every function we serve. So it’s the same value proposition for CFOs, same for CMOs, same for CHROs and obviously the same for Chief Information Officers as well. And the value that we offer is significantly differentiated from anything else out in the market. I’ll highlight the first circle there, which is independence and objectivity.

And I think this is actually really, really important. Our whole brand lives and exists and thrives because fundamentally, we are independent and objective. We do not do implementation work. We do not do integration work. We do not have strategic partnerships with technology vendors all over the place.

We are agnostic in terms of what you want to deploy from a technology perspective. Very few people can make that claim. Your systems integrator may say it to you, but it’s not true because they have dozens of partnerships with software providers. And so and their skin in the game is really around driving significant implementation and integration work. And so that independence and objectivity is absolutely paramount to everything we do.

And if you think about other sources where people could go to get information, whether it be large language models, consulting partners, whatever it may be, you have no guarantee that anything is independent or objective. And so we take this very seriously and have rigorous and significant research methodology and research process in place to ensure that we maintain our independence and objectivity. One small anecdote, our experts cannot invest in technology stocks. Right? Simple.

Right? Unfortunately, Congress doesn’t take that same approach, but that’s a story for a different day. But our experts, we don’t allow them to invest in technology stocks because it would be a conflict of interest and potentially tarnish our independence and objectivity. And then obviously, you know, if you think about the rest of the value, we really do benefit from a significant network effect across everything we do. And so, you know, there is no one out there who matches the breadth of what we cover, and there is no one out there who matches the depth of what we cover.

And then on top of that, we have the network benefit of hundred like, roughly a hundred thousand licensed users who are interacting with Gartner on a frequent basis, and we know what they’re thinking. We know what they’re searching on. We know what they’re clicking on. We know what they’re doing once they click on on something. Are they saving it?

Are they printing it? Are they forwarding it? Etcetera. We know when they go to a conference, we know what sessions they’re attending. And so we have our fingers on the pulse of a high level, highly qualified global executive audience that reinforces the insights we actually provide.

And again, you can’t build that, match it or meet it. And again, just one of the many things that we have that significantly differentiates the Gartner value from any potential alternatives out there. Our research business is the bulk of our business. So think around 80% of our total revenue. If you think about it, it’s about 80% of revenue, it’s probably about 85% of contribution margin.

And if you actually broke it apart from a valuation perspective, it’s probably 90 to 95% of our value, right? So this is the center of the universe for us. It is our largest, most profitable segment and we’re in the other businesses essentially to complement and catalyze this business as I’ll talk about in a couple of slides. So research revenue, you can see the trend over the last several years, really strong growth. And you can see the margin improvement of the business as well now nestling in the mid-70s from both an incremental margin perspective and an absolute margin perspective.

And again, the bulk of this revenue is under contract, minimum twelve month contract, but in fact, more than 70% of our contract value is actually written in multiyear contracts, which again, it just further reinforces the stickiness of our offerings. When we talk about growth and the overall growth algorithm, this is the way we think about it. And so basically, this is just bridging from baseline wallet retention all the way up to total target growth. And the point being that we generate significant amount of growth from our existing clients on top of the growth we drive from new clients. As I mentioned, we do it across every major function in the enterprise.

You can see around 75% of the contract value base is actually on the GTS side with the balance on the GBS side. GTS is solely focused on technology professionals. GBS is actually several smaller businesses that we manage as one unit underneath, but they’re actually separate go to market teams. So the supply chain team only calls on supply chain professionals, the finance team only calls on finance professionals, etcetera. Important to know, we have enterprise clients, but essentially we sell and service to individuals.

We call them licensed users and, you know, we target the senior most and then we we we go down from there to direct reports and and direct reports of of of that c level. And the way we sort of think about it is, you know, we serve multiple roles and within those roles there’s there’s a bull’s eye. The center of the bull’s eye for us is the C level. So it’s the CIO, Chief Information Officer. It’s the CHRO.

It’s the CFO, etcetera. That’s really important because it keeps our sellers focused on where all the money is and where all the value is for us, which is really owning the C level. But we don’t just target them, we actually want to land and expand. And so when we think about the opportunity, it’s, yeah, the center of the bull’s eye, but then if you’re the CFO or you’re targeting CFO, you want to call on their Controller, their Head of Financial Planning and Analysis, their Treasurer, their Head of Investor Relations, which reflects these other nodes that you can then sell to and find underneath the C level. And then we have a very large addressable market opportunity.

We estimate it conservatively at around $200,000,000,000 That little teeny sliver that you see on the far right of the page is our current CV. So we’ve got about $5,000,000,000 of that roughly $200,000,000,000 market opportunity. And now you often look at charts like this, I’m sure, and you say, okay, that’s great. Who makes up the other $194,900,000,000? And the short answer is nobody.

Our direct competitors are all significantly smaller than us, probably don’t add up to a billion dollars in contract value in total. And so what this is essentially a greenfield unvended market opportunity for us across all these major functions that we’ve been slowly but surely building and taking advantage of, but we’re still in the really, really, really early innings of this capture. And the way we’re going to get there is a combination of landing new accounts and then growing them over time. Landing new accounts, growing over time, wash, rinse, repeat over and over and over again. Conferences is a complementary business.

It’s a great business. The reason we’re in it is to make research better. So it is for the most part, and we’ve managed to figure out ways to monetize it with technology vendors, exhibitors, sponsors, and also use it as a new business machine for our research business as well. It’s a great business, but the reason we’re in this business is because it complements and catalyzes the research business. And the same thing with consulting.

It’s a great standalone business, not nearly as attractive as the research business. We’re in this business because our larger clients want our help. And so we do this in select geographies for a select number of clients, but we only do it to complement and catalyze the research business. And then lastly, from a margin perspective, we expect over time to modestly expand margins, as I mentioned earlier. The way we do that is gross margin leverage from research becoming a bigger and bigger piece of the pie, modest G and A leverage and sales costs growing about in line with revenue as we continue to invest in ensuring we can capture the market opportunity going forward.

And then last slide, in my mind, a very important one, which is the model is set up to deliver huge amounts of free cash flow. And you can see the reasons why, but on average, we expect free cash flow of around 140% to 160% of net income each and every year. Over $1,000,000,000 of free cash flow each and every year that we want to put to use on behalf of shareholders, primarily through our buyback programs and strategic value enhancing tuck in M and A. That’s our time today. Thank you for taking the time.

We’ll be moving to

Andrew Nicholas, Business Services Analyst, William Blair: Maher for a breakout, so feel free to join us. And again, I’ll echo your comments. Thanks for for being here, and and we’ll we’ll join you in the next room. Thank

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