FORM 10-Q Cover Page Filing Information This report is Information Services Group, Inc.'s Form 10-Q for the quarter ended June 30, 2025, with 48,195,469 common shares outstanding as of July 31, 2025 - Report Type: Quarterly Report Form 10-Q for the quarter ended June 30, 20251 - Registrant Name: INFORMATION SERVICES GROUP, INC1 Company Filing Status | Status | Description | | :--- | :--- | | Accelerated Filer | ☒ | | Smaller Reporting Company | ☒ | - As of July 31, 2025, there were 48,195,469 shares of common stock outstanding, with a par value of $0.001 per share3 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Forward-Looking Statements This report contains forward-looking statements whose actual results may differ materially due to known and unknown risks, uncertainties, and assumptions - Forward-looking statements are based on current expectations and projections, but actual results may differ materially due to known and unknown risks, uncertainties, and assumptions4 - Investors should not view past performance as an indicator of future results and should carefully review the risk factors described in this report and other SEC filings4 PART I—FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents Information Services Group, Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, income statements, statements of stockholders' equity, and cash flow statements, with detailed notes CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2025, the company's total assets were $200.7 million, a slight decrease from $204.5 million as of December 31, 2024, with total liabilities and stockholders' equity also showing minor reductions Total Assets Change (in thousands of dollars) | Date | Amount | | :--- | :--- | | June 30, 2025 | $200,674 | | December 31, 2024 | $204,515 | | Change | $(3,841) | | Percentage Change | (1.88%) | Total Liabilities Change (in thousands of dollars) | Date | Amount | | :--- | :--- | | June 30, 2025 | $106,575 | | December 31, 2024 | $108,229 | | Change | $(1,654) | | Percentage Change | (1.53%) | Total Stockholders' Equity Change (in thousands of dollars) | Date | Amount | | :--- | :--- | | June 30, 2025 | $94,099 | | December 31, 2024 | $96,286 | | Change | $(2,187) | | Percentage Change | (2.27%) | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the three months ended June 30, 2025, revenue decreased by 4% year-over-year, but net income increased by 7%, while for the six months, revenue decreased by 6%, but net income turned profitable at $3.67 million from a loss in the prior year, significantly improving diluted EPS Key Financial Data for the Three Months Ended June 30, 2025 (in thousands of dollars) | Metric | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $61,565 | $64,263 | $(2,698) | (4.20%) | | Operating Income | $4,665 | $3,650 | $1,015 | 27.81% | | Net Income | $2,183 | $2,038 | $145 | 7.11% | | Diluted Earnings Per Share | $0.04 | $0.04 | $0.00 | 0.00% | Key Financial Data for the Six Months Ended June 30, 2025 (in thousands of dollars) | Metric | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $121,148 | $128,532 | $(7,384) | (5.74%) | | Operating Income | $8,061 | $1,280 | $6,781 | 529.77% | | Net Income (Loss) | $3,671 | $(1,351) | $5,022 | Not Applicable | | Diluted Earnings Per Share | $0.07 | $(0.03) | $0.10 | Not Applicable | CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY As of June 30, 2025, total stockholders' equity was $94.1 million, a decrease from $96.3 million as of December 31, 2024, primarily influenced by net income, other comprehensive income, treasury stock repurchases, and cash dividends, partially offset by share-based compensation Total Stockholders' Equity Change (in thousands of dollars) | Date | Amount | | :--- | :--- | | June 30, 2025 | $94,099 | | December 31, 2024 | $96,286 | | Change | $(2,187) | | Percentage Change | (2.27%) | - For the six months ended June 30, 2025, key activities affecting stockholders' equity included: net income of $3,671 thousand, other comprehensive income of $1,429 thousand, treasury stock repurchases of $(7,313) thousand, cash dividends paid of $(4,608) thousand, and share-based compensation of $4,424 thousand10 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $12.9 million, leading to a net increase of $2.2 million in cash, cash equivalents, and restricted cash, reversing the net decrease trend from the prior year Cash Flow from Operating Activities (in thousands of dollars) | Period | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Six Months Ended June 30 | $12,896 | $4,516 | $8,380 | 185.57% | Cash Flow from Investing Activities (in thousands of dollars) | Period | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Six Months Ended June 30 | $(1,679) | $(1,914) | $235 | (12.28%) | Cash Flow from Financing Activities (in thousands of dollars) | Period | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Six Months Ended June 30 | $(10,207) | $(13,224) | $3,017 | (22.81%) | Net Change in Cash, Cash Equivalents, and Restricted Cash (in thousands of dollars) | Period | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Six Months Ended June 30 | $2,157 | $(10,923) | $13,080 | Not Applicable | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed disclosures and explanations for the condensed consolidated financial statements, covering business description, accounting policies, revenue recognition, earnings per share, income taxes, commitments and contingencies, segment and geographical information, financing arrangements, leases, and subsequent events NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Information Services Group, Inc. (ISG) is a global AI-centric technology research and advisory firm, founded in 2006, assisting over 900 clients, including 75 of the world's top 100 enterprises, achieve operational excellence and faster growth through proprietary market data, vendor ecosystem knowledge, and global expertise - ISG is a global AI-centric technology research and advisory firm13 - The company serves over 900 clients, including 75 of the world's top 100 enterprises13 - The company is known for its proprietary market data, deep understanding of the vendor ecosystem, and the expertise of its 1,300 global professionals13 - The company's strategic vision is to become a high-growth, leading information-based advisory services provider through the acquisition, integration, and successful operation of market-leading brands within the data, analytics, and advisory industries14 NOTE 2—BASIS OF PRESENTATION The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and Form 10-Q requirements, with management believing all necessary adjustments have been made, and should be read in conjunction with the company's 2024 Form 10-K, noting additional proceeds from an automation business line sale and a non-material out-of-period revenue adjustment - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and the requirements of Form 10-Q15 - This report should be read in conjunction with the company's annual report on Form 10-K for the year ended December 31, 202416 - In the first quarter of 2025, the company received an additional $2.0 million in cash proceeds from the sale of its automation business line17 - In the second quarter of 2024, the company recorded a $0.5 million out-of-period adjustment to reduce revenue incorrectly recognized in the third quarter of 2022, which was not material to previously issued financial statements1819 NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the company's significant accounting policies, including the use of estimates, the definition of restricted cash, and fair value measurements categorized into Level 1, Level 2, and Level 3, also mentioning recent accounting standard updates on income tax disclosures and income statement disaggregation not expected to materially impact the consolidated financial statements - The preparation of financial statements requires management to make estimates and assumptions affecting assets, liabilities, revenue, and expenses20 - Restricted cash includes cash and cash equivalents committed by the company for rent deposits, not available for general corporate purposes21 - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable market data adjusted quotes), and Level 3 (unobservable and highly subjective measurements)24 Contingent Consideration Liability Change (in thousands of dollars) | Date | Amount | | :--- | :--- | | June 30, 2025 | $695 | | December 31, 2024 | $1,225 | | Change | $(530) | | Percentage Change | (43.27%) | - Recently issued accounting standard updates (income tax disclosures and income statement disaggregation) are not expected to have a material impact on the company's consolidated financial statements2728 NOTE 4—REVENUE Company revenue primarily derives from service contracts, typically containing a single performance obligation, recognized over time as services are provided, with contract balances including billed and unbilled receivables (contract assets) and customer prepayments (contract liabilities); as of June 30, 2025, remaining performance obligations totaled $112.1 million, mostly expected to be completed within the next twelve months, and the company is pursuing legal recourse for a $1.3 million receivable reserve and litigating a $4.7 million disputed receivable - Most of the company's revenue is derived from service contracts, typically with a single performance obligation, recognized over time as services are performed on a time-and-materials or fixed-fee basis2931 Contract Balances (in thousands of dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contract Assets | $17,323 | $18,335 | | Contract Liabilities | $9,745 | $10,058 | - As of June 30, 2025, the company had $112.1 million in remaining performance obligations, with most expected to be completed within the next twelve months33 - The company has written off $3.6 million in receivables and is pursuing legal recourse for another $1.3 million receivable reserve, additionally, the company is litigating a disputed receivable of approximately $4.7 million with a client, for which no reserve has been recorded at present3435 NOTE 5—NET INCOME PER COMMON SHARE Basic and diluted earnings per share are calculated based on net income and weighted-average common shares outstanding, with diluted EPS for the six months ended June 30, 2025, significantly improving to $0.07 from a loss of $0.03 in the prior year, reflecting a recovery in profitability Basic Earnings Per Share | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $0.05 | $0.04 | | Six Months Ended June 30 | $0.08 | $(0.03) | Diluted Earnings Per Share | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $0.04 | $0.04 | | Six Months Ended June 30 | $0.07 | $(0.03) | - For the three and six months ended June 30, 2025, 0.8 million and 1.9 million restricted stock units, respectively, were excluded from diluted EPS calculations as their effect was anti-dilutive36 NOTE 6—INCOME TAXES For the three and six months ended June 30, 2025, the company's effective tax rates were 38.7% and 38.4% respectively, a significant increase from the prior year, primarily due to higher income before taxes, non-deductible expenses, and the impact of profits and losses in certain foreign jurisdictions, with the company currently evaluating the impact of the "One Big Beautiful Bill Act" signed on July 4, 2025 Effective Tax Rate (Three Months Ended June 30) | Year | Tax Rate | Income Before Taxes (in thousands of dollars) | | :--- | :--- | :--- | | 2025 | 38.7% | $3,600 | | 2024 | 12.0% | $2,300 | Effective Tax Rate (Six Months Ended June 30) | Year | Tax Rate | Income (Loss) Before Taxes (in thousands of dollars) | | :--- | :--- | :--- | | 2025 | 38.4% | $6,000 | | 2024 | (3.7%) | $(1,300) | - The company is evaluating the impact of the "One Big Beautiful Bill Act," signed on July 4, 2025, on its consolidated financial statements39 NOTE 7—COMMITMENTS AND CONTINGENCIES The company faces various contingencies in its ordinary course of business, with a contingent consideration liability of $0.7 million related to the Ventana Research acquisition as of June 30, 2025, while the Change 4 Growth acquisition's contingent consideration was paid in April 2025, and the company records legal reserves when losses are probable and estimable, actively defending its legal positions - As of June 30, 2025, the company has recorded a liability of $0.7 million, representing the estimated fair value of contingent consideration related to the Ventana Research acquisition42 - The company paid $0.5 million in cash consideration related to the Change 4 Growth acquisition in April 2025, and no related liability exists as of June 30, 202544 - The company records contingent liabilities when losses are probable and reasonably estimable and intends to vigorously defend its legal position in all claims45 NOTE 8—SEGMENT AND GEOGRAPHICAL INFORMATION The company operates as a single reportable segment, primarily providing fact-based sourcing advisory services across the Americas, Europe, and Asia Pacific, with the CEO using net income to assess overall performance and resource allocation, and all regions experiencing revenue declines for the three and six months ended June 30, 2025, compared to the prior year, with Europe showing the largest decrease - The company operates as a single reportable segment, primarily providing fact-based sourcing advisory services46 - The company primarily conducts business in the Americas, Europe, and Asia Pacific regions46 - The Chief Operating Decision Maker (CODM) uses net income to assess performance and allocate resources47 Revenue by Geographical Region (Three Months Ended June 30, in thousands of dollars) | Geographical Region | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Americas | $39,480 | $39,981 | $(501) | (1%) | | Europe | $16,637 | $18,801 | $(2,164) | (12%) | | Asia Pacific | $5,448 | $5,481 | $(33) | (1%) | | Total | $61,565 | $64,263 | $(2,698) | (4%) | Revenue by Geographical Region (Six Months Ended June 30, in thousands of dollars) | Geographical Region | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Americas | $80,482 | $80,821 | $(339) | (0%) | | Europe | $30,432 | $36,598 | $(6,166) | (17%) | | Asia Pacific | $10,234 | $11,113 | $(879) | (8%) | | Total | $121,148 | $128,532 | $(7,384) | (6%) | NOTE 9—FINANCING ARRANGEMENTS AND LONG-TERM DEBT The company amended its Senior Secured Credit Agreement in February 2023, increasing the revolving credit facility to $140.0 million, maturing on February 22, 2028, with outstanding borrowings of $59.2 million as of June 30, 2025, and December 31, 2024, and a fair value of approximately $59.6 million, and the company is currently in compliance with its financial covenants - The company amended its Senior Secured Credit Agreement in February 2023, increasing the revolving credit facility to $140.0 million, maturing on February 22, 202850 - The credit facility is secured by all equity interests and tangible and intangible assets of the company and its domestic subsidiaries50 - As of June 30, 2025, and December 31, 2024, outstanding borrowings were $59.2 million, presented at amortized cost51 - The fair value of the debt is approximately $59.6 million, classified as Level 3 in the fair value hierarchy51 - The company is currently in compliance with its financial covenants51 NOTE 10—LEASES The company leases office space and equipment through long-term operating lease agreements extending until October 2033, and in April 2025, it entered into a new ten-year operating lease for office space in Stamford, Connecticut, with an annual base rent of $0.9 million starting November 2026, the financial impact of which is still being evaluated - The company leases office space and equipment through long-term operating lease agreements extending until October 203353 - In April 2025, the company entered into a new ten-year operating lease for office space in Stamford, Connecticut, with an annual base rent of $0.9 million and a 2% annual escalation, including a termination option in the seventh year of the lease term54 - The company is still evaluating the financial impact of the new lease54 NOTE 11—SUBSEQUENT EVENTS On August 5, 2025, the Board of Directors approved a third-quarter dividend of $0.045 per share, payable on September 26, 2025, and additionally, a company subsidiary entered into an agreement on August 1, 2025, to acquire Martino & Partners s.r.l (M&P) for a total purchase price including cash, common stock, and contingent consideration, with the acquisition expected to close on September 1, 2025 - On August 5, 2025, the Board of Directors approved a third-quarter dividend of $0.045 per share, payable on September 26, 2025, to shareholders of record as of September 5, 202555 - On August 1, 2025, a company subsidiary entered into an agreement to acquire Martino & Partners s.r.l (M&P), with the acquisition expected to close on September 1, 202556 - The purchase price for M&P includes €1.5 million in cash, $250,000 in ISG common stock, €350,000 in cash (payable no later than April 30, 2028), and potential earn-out payments56 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides a detailed discussion and analysis of the company's financial condition, results of operations, and liquidity, including a business overview, comparison of financial performance for the three and six months ended June 30, 2025, and 2024, and reconciliation of non-GAAP financial measures, while also highlighting key factors affecting the business and future growth plans BUSINESS OVERVIEW Information Services Group, Inc. (ISG) is a global AI-centric technology research and advisory firm focused on consolidating market position and developing new services, with strategies including evolving existing service models, geographical expansion, new industry sector development, productizing market data, expanding managed services, and growth through acquisitions, with revenue primarily from project-based fees and recurring annuity-based services - ISG is a global AI-centric technology research and advisory firm58 - The company's strategic focus is on strengthening its existing market position, developing new services and products, growing through existing service models, geographical expansion, developing new industry sectors, productizing market data assets, expanding managed services offerings, and growing through acquisitions59 - Revenue primarily derives from project-based fees (time-and-materials or fixed-fee) and recurring annuity-based services such as ISG GovernX, ISG Research Lens, ISG Inform, and multi-year public sector contracts6062 - Company performance is primarily influenced by the utilization of full-time consultants, the number of billable days per quarter, and the number of revenue-generating professionals available to provide services63 RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND JUNE 30, 2024 For the three months ended June 30, 2025, company revenue decreased by 4% year-over-year to $61.6 million, primarily due to declines in automation and Network and Software Advisory (NaSa) services across all regions, partially offset by growth in Americas advisory services, while total operating expenses decreased by 6%, leading to a 28% increase in operating income and a 7% increase in net income Revenue by Geographical Region (Three Months Ended June 30, in thousands of dollars) | Geographical Region | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Americas | $39,480 | $39,981 | $(501) | (1%) | | Europe | $16,637 | $18,801 | $(2,164) | (12%) | | Asia Pacific | $5,448 | $5,481 | $(33) | (1%) | | Total | $61,565 | $64,263 | $(2,698) | (4%) | - The revenue decrease was primarily due to reductions in automation and Network and Software Advisory (NaSa) services, partially offset by growth in Americas advisory services, with foreign currency translation having a $0.9 million positive impact on Europe and Asia Pacific results64 Operating Expenses (Three Months Ended June 30, in thousands of dollars) | Operating Expense Category | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Consultant Direct Costs and Expenses | $35,591 | $38,908 | $(3,317) | (9%) | | Selling, General and Administrative Expenses | $20,144 | $20,083 | $61 | 0% | | Depreciation and Amortization | $1,165 | $1,622 | $(457) | (28%) | | Total Operating Expenses | $56,900 | $60,613 | $(3,713) | (6%) | - The decrease in operating expenses was primarily due to a $3.4 million reduction in automation license fees, a $1.9 million reversal of subcontractor payments, a $0.5 million decrease in compensation expense, a $0.4 million decrease in restructuring costs, a $0.4 million decrease in conference expenses, a $0.3 million decrease in bad debt expense, and a $0.2 million decrease in contract labor expenses, partially offset by a $1.8 million increase in legal reserves, a $0.9 million increase in share-based compensation, and a $0.8 million increase in travel and entertainment expenses65 Other Income (Expense) Net (Three Months Ended June 30, in thousands of dollars) | Category | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Interest Income | $37 | $222 | $(185) | (83%) | | Interest Expense | $(1,046) | $(1,568) | $522 | 33% | | Foreign Currency Transaction (Loss) Gain | $(96) | $13 | $(109) | (838%) | | Net Other Expenses | $(1,105) | $(1,333) | $228 | 17% | - The effective tax rate for the second quarter of 2025 increased to 38.7% from 12.0% in the second quarter of 2024, primarily due to higher income before taxes74 RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND JUNE 30, 2024 For the six months ended June 30, 2025, company revenue decreased by 6% year-over-year to $121.1 million, primarily due to declines in automation, Network and Software Advisory (NaSa), and GovernX service lines, especially in Europe and Asia Pacific, while total operating expenses decreased by 11%, leading to a significant increase in operating income and a shift from net loss to net profit Revenue by Geographical Region (Six Months Ended June 30, in thousands of dollars) | Geographical Region | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Americas | $80,482 | $80,821 | $(339) | (0%) | | Europe | $30,432 | $36,598 | $(6,166) | (17%) | | Asia Pacific | $10,234 | $11,113 | $(879) | (8%) | | Total | $121,148 | $128,532 | $(7,384) | (6%) | - The revenue decrease was primarily due to reductions in automation, Network and Software Advisory (NaSa), and GovernX service lines, especially in Europe and Asia Pacific, with foreign currency translation having a $0.4 million positive impact on Europe and Asia Pacific results75 Operating Expenses (Six Months Ended June 30, in thousands of dollars) | Operating Expense Category | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Consultant Direct Costs and Expenses | $69,518 | $79,954 | $(10,436) | (13%) | | Selling, General and Administrative Expenses | $41,299 | $44,171 | $(2,872) | (7%) | | Depreciation and Amortization | $2,270 | $3,127 | $(857) | (27%) | | Total Operating Expenses | $113,087 | $127,252 | $(14,165) | (11%) | - The decrease in operating expenses was primarily due to a $7.1 million reduction in automation license fees, a $3.0 million decrease in restructuring costs, a $2.9 million decrease in compensation expense, a $1.9 million reversal of subcontractor payments, a $0.9 million decrease in contract labor expenses, a $0.5 million decrease in bad debt expense, a $0.4 million decrease in conference expenses, and a $0.3 million decrease in computer expenses, partially offset by a $1.8 million increase in legal reserves, a $1.1 million increase in share-based compensation, and a $0.4 million increase in professional services fees77 Other Income (Expense) Net (Six Months Ended June 30, in thousands of dollars) | Category | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Interest Income | $92 | $479 | $(387) | (81%) | | Interest Expense | $(2,102) | $(3,068) | $966 | 31% | | Foreign Currency Transaction (Loss) Gain | $(93) | $6 | $(99) | Not Applicable | | Net Other Income (Expense) | $(2,103) | $(2,583) | $480 | 19% | - The effective tax rate for the first half of 2025 increased to 38.4% from (3.7%) in the first half of 2024, primarily due to higher income before taxes85 NON-GAAP FINANCIAL PRESENTATION This section introduces non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Net Income Per Share, which supplement GAAP financial information by excluding certain non-cash and special expenses to provide a clearer view of the company's core operations and enhance period-over-period comparability - The company uses non-GAAP financial measures such as Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Net Income Per Share to supplement GAAP financial information87 - These non-GAAP metrics aim to provide useful information about the company's core operations and enhance comparability of financial results by excluding interest, taxes, depreciation and amortization, foreign currency transaction gains and losses, non-cash share-based compensation, interest accretion on contingent consideration, acquisition and disposition-related costs, and severance, integration, and other expenses8789 NON-GAAP FINANCIAL MEASURES The company provides reconciliation tables for Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Net Income Per Share, showing Adjusted EBITDA grew by 36% to $15.7 million and Adjusted Diluted Net Income Per Share increased by 78% to $0.16 for the six months ended June 30, 2025, indicating significant operational improvement after excluding specific items Adjusted EBITDA (Six Months Ended June 30, in thousands of dollars) | Metric | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $3,671 | $(1,351) | $5,022 | Not Applicable | | Adjusted EBITDA | $15,693 | $11,527 | $4,166 | 36.14% | Adjusted Net Income (Six Months Ended June 30, in thousands of dollars) | Metric | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $3,671 | $(1,351) | $5,022 | Not Applicable | | Adjusted Net Income | $7,814 | $4,501 | $3,313 | 73.60% | Adjusted Diluted Net Income Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Diluted Net Income (Loss) Per Share | $0.07 | $(0.03) | $0.10 | Not Applicable | | Adjusted Diluted Net Income Per Share | $0.16 | $0.09 | $0.07 | 77.78% | LIQUIDITY AND CAPITAL RESOURCES The company's primary liquidity sources are cash flow from operations, existing cash and cash equivalents, and its revolving credit facility, with total cash, cash equivalents, and restricted cash increasing to $25.3 million as of June 30, 2025, a net increase of $2.1 million from December 31, 2024, driven by strong operating cash flow, and the company anticipates sufficient liquidity for the next twelve months but may seek additional financing to support growth or maintain liquidity - The company's primary liquidity sources are cash flow from operating activities, existing cash and cash equivalents, and its revolving credit facility92 Cash, Cash Equivalents, and Restricted Cash (in thousands of dollars) | Date | Amount | | :--- | :--- | | June 30, 2025 | $25,315 | | December 31, 2024 | $23,158 | | Net Increase | $2,157 | - For the six months ended June 30, 2025, key cash flow activities included: net cash provided by operating activities of $12.9 million, repayment of outstanding debt of $5.0 million, borrowings under the revolving credit facility of $5.0 million, cash dividends paid to shareholders of $4.6 million, and treasury stock repurchases of $4.7 million94 - The company expects existing cash and ongoing cash flow from operations to be sufficient to meet working capital, capital expenditure, and debt service requirements for the next twelve months98 - On August 5, 2025, the Board of Directors approved a third-quarter dividend of $0.045 per share, payable on September 26, 202599 - The company has no off-balance sheet financing arrangements or liabilities100 Critical Accounting Policies and Accounting Estimates The company's financial statements are prepared in accordance with GAAP, requiring management to make estimates and judgments, and there have been no significant changes in the assessment of critical accounting policies and estimates since the Form 10-K annual report for December 31, 2024 - The company's financial statements are prepared in accordance with GAAP, requiring management to make estimates, judgments, and assumptions103 - There have been no significant changes in the assessment of critical accounting policies and estimates since the annual report on Form 10-K for December 31, 2024103 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section discloses the market risks faced by the company, including interest rate risk, foreign currency risk, and credit risk, noting that all debt is floating rate, posing interest rate increase risk with limited expected impact, foreign currency fluctuations affect revenue and expenses with translation adjustments in stockholders' equity, and credit risk is limited due to a diversified customer base and cash held in investment-grade banks - As of June 30, 2025, the company's total outstanding debt was $59.2 million, all based on floating benchmark rates (SOFR), posing interest rate increase risk, but the overall risk is expected to be limited104105 - The company faces foreign currency translation risk (conversion of foreign currency assets and liabilities into U.S. dollars) and transaction risk (transactions denominated in non-functional currencies)106108 - For the six months ended June 30, 2025, foreign currency translation had a $1.4 million positive impact on the statement of stockholders' equity (compared to a negative $1.1 million in fiscal year 2024), and the impact of foreign currency transactions on the consolidated financial statements was not material107108 - The company's concentration of credit risk is limited due to a diversified customer base and geographical locations, and cash and cash equivalents primarily held in large, investment-grade commercial banks109 ITEM 4. CONTROLS AND PROCEDURES As of June 30, 2025, the company's management, including the Chief Executive Officer and Chief Financial Officer, assessed and determined its disclosure controls and procedures to be effective, with no significant changes in internal control over financial reporting during the quarter - As of June 30, 2025, the company's disclosure controls and procedures were assessed and determined to be effective110 - No significant changes in internal control over financial reporting occurred during the quarter111 PART II—OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company and its consolidated subsidiaries are not currently facing any material legal proceedings requiring disclosure under Item 103 of Regulation S-K, nor have they received any such threats, though the company may be involved in certain legal proceedings in the ordinary course of business from time to time - The company and its consolidated subsidiaries are not currently facing any material legal proceedings requiring disclosure113 - The company may be involved in certain legal proceedings in the ordinary course of business from time to time113 ITEM 1A. RISK FACTORS This section advises readers to carefully review the risks discussed in the "Risk Factors" section of the company's Form 10-K annual report for December 31, 2024, specifically highlighting that changes in trade policy, including tariffs and import/export regulations, and potential employment-related and commercial indemnity claims, could adversely affect the company's business, financial condition, and results of operations - Readers should carefully review the risks discussed in the "Risk Factors" section of the company's annual report on Form 10-K for December 31, 2024114 - Changes in trade policy, including new or increased tariffs and evolving import and export regulations, could have a material adverse effect on the company's business, financial condition, and results of operations115116 - The company may face employment-related claims, commercial indemnity claims, and other legal proceedings, which could materially harm its business117118 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS On August 5, 2025, the Board of Directors approved a third-quarter dividend of $0.045 per share, and the company also has a stock repurchase program, approved on August 1, 2023, authorizing the repurchase of up to $25 million of common stock, with approximately $11.0 million remaining available under the plan as of June 30, 2025 - On August 5, 2025, the Board of Directors approved a third-quarter dividend of $0.045 per share, payable on September 26, 2025119 - The company approved a new stock repurchase program on August 1, 2023, authorizing the repurchase of up to $25 million of common stock120 - As of June 30, 2025, approximately $11.0 million remained available under the company's existing stock repurchase program120 Repurchase Details for the Three Months Ended June 30, 2025 (in thousands of shares/dollars) | Period | Total Shares Repurchased (thousands of shares) | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1 - April 30 | 300 | $3.78 | | May 1 - May 31 | 198 | $4.64 | | June 1 - June 30 | 390 | $4.73 | ITEM 5. OTHER INFORMATION For the three months ended June 30, 2025, no directors or officers of the company adopted, modified, or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - For the three months ended June 30, 2025, no directors or officers of the company adopted, modified, or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements123 ITEM 6. EXHIBITS This section lists the exhibits filed or furnished as part of this report, including certifications from the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and financial statements in Inline XBRL format (Exhibits 101, 104) - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)125 - Condensed consolidated financial statements are presented in Inline XBRL format (Exhibit 101), and the cover page interactive data file (Exhibit 104)125 SIGNATURES This report was signed by Michael P. Connors, Chairman of the Board and Chief Executive Officer, and Michael A. Sherrick, Executive Vice President and Chief Financial Officer, on August 7, 2025, certifying its compliance with the requirements of the Exchange Act - This report was signed by Michael P. Connors, Chairman of the Board and Chief Executive Officer, and Michael A. Sherrick, Executive Vice President and Chief Financial Officer131 - The signing date is August 7, 2025131
Information Services Group(III) - 2025 Q2 - Quarterly Report