Information Services Group(III) - 2023 Q4 - Annual Report

Revenue Performance - Record revenues of $291 million in 2023, representing a 2$125 million, up 16% from the previous year, now accounting for 43% of total revenue[171] - Americas revenue increased by 6% to $177.1 million, while Europe and Asia Pacific revenues decreased by 3$150 million in recurring revenues by the end of 2025[171] Expenses and Costs - Total operating expenses rose by 8% to $276.4 million, driven by higher bad debt expense, license fees, and contract labor costs[183] - Interest expense increased from$3.2 million in 2022 to $6.2 million in 2023 due to rising interest rates[169] - Total other expense, net increased by$3.1 million to $(5.851) million in 2023, primarily due to higher interest expense and the write-off of deferred financing costs[191] - The company's effective tax rate for 2023 was 29.8$38 million, a decrease from the prior year[172] - Adjusted EBITDA for 2023 was $37.677 million, compared to$43.256 million in 2022 and $38.812 million in 2021[197] - Adjusted net income for 2023 was$20.076 million, down from $26.908 million in 2022 and$22.882 million in 2021[197] Cash Flow and Liquidity - Net cash provided by operating activities in 2023 was $12.272 million, compared to$11.146 million in 2022 and $41.942 million in 2011[201] - The company's cash, cash equivalents, and restricted cash decreased by$7.9 million to $22.8 million as of December 31, 2023[201] - The company repaid$84.2 million of outstanding debt and paid $8.7 million in cash dividends to shareholders in 2023[202] - The company anticipates that its current cash and ongoing cash flows from operations will be adequate to meet its working capital, capital expenditure, and debt financing needs for at least the next twelve months[206] Debt and Financing - The company amended its senior secured credit facility in 2023, increasing the revolving commitments from$54.0 million to $140.0 million[205] - The company's outstanding borrowings as of December 31, 2023, were$79.2 million, with a fair value of $79.8 million[205] - The company's debt to adjusted EBITDA ratio was 3.25, and it was in compliance with financial covenants under the 2023 Credit Agreement as of December 31, 2023[210] - The company had$79.2 million in total debt principal outstanding as of December 31, 2023, with all debt based on a floating base rate (SOFR)[227] - A 100 basis point change in interest rates would result in an annual change in the company's pre-tax results of operations by $0.8 million[226] - The company's debt to EBITDA ratio was 2.4 times as of December 31, 2023[228] Investments and Acquisitions - The company invested in training over 1,200 employees in AI technology during Q4 2023[172] - Acquisition of Ventana Research added over 40 new clients and nearly two dozen research professionals, enhancing ISG's recurring revenue streams[174] - ISG Tango™ platform launched to capture unadvised transaction activity and target the middle market, which spends$130 billion annually on technology and business services[179] Employee Benefits and Contributions - The company contributed $0.0 million to its 401(k) plan in 2023, compared to$2.1 million in 2022[211] Revenue Recognition Policies - The company's revenue recognition policy involves five steps: identifying the contract, performance obligations, transaction price, allocation, and recognition[214] - Revenue for fixed-fee contracts is recognized proportionally over the term of the contract based on labor hours incurred[217] - Revenue for managed service implementation contracts is recognized over time as a percentage of hours incurred[219] Foreign Currency and Risk Exposure - The impact of foreign currency translation on the company's Statement of Stockholders' Equity was $0.7 million in 2023[231] - The company's exposure to foreign currency risk includes the Euro, British Pound, and Australian dollar, with significant revenues derived from sales outside the United States[229]