Information Services Group (III) Q2 2025 Earnings Call August 07, 2025 09:00 AM ET Speaker0Good morning, and welcome everyone to the Information Services Group second quarter twenty twenty five conference call. This call is being recorded, and a replay will be available on ISG's website within twenty four hours. Now I'd like to turn the call over to Mr. Barry for his opening remarks and introductions. Mr.Holt, please go ahead.Speaker1Thank you, operator. Hello, and good morning. My name is Barry Holt. I'm a ...

Financial Data and Key Metrics Changes - The company reported Q1 revenues of $60 million, up 5% year-over-year, excluding results from the divested automation unit [7][24] - Adjusted EBITDA increased by 68% to $7.4 million, with an adjusted EBITDA margin of 12.4%, up more than 554 basis points year-over-year [8][25] - Net income for the quarter was $1.5 million, or $0.03 per fully diluted share, compared to a net loss of $3.4 million, or $0.07 per fully diluted share in the prior year [25] Business Line Data and Key Metrics Changes - Recurring revenues reached $26 million, representing 44% of overall revenue, showing slight growth from Q4 [9] - The Americas region saw a revenue increase of 17% to $41 million, driven by growth in technology advisory and various industry verticals [12][24] - Europe revenue decreased by 13% to $13.8 million, while Asia Pacific revenue fell by 15% to $4.8 million [24] Market Data and Key Metrics Changes - The Americas experienced the largest year-over-year growth in two years, while Europe is expected to show improvement later in the year [8][15] - Asia Pacific revenues were impacted by sluggish government spending, but growth is anticipated post-elections [17] Company Strategy and Development Direction - The company is focusing on AI integration across all services, with over 200 clients served with AI-focused research and advisory services [9][60] - The company aims to leverage technology for cost optimization and competitive advantage, particularly in the context of market disruptions [11][30] - The company is actively looking for M&A opportunities to enhance recurring revenue streams and digital capabilities [50][51] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand in the U.S. for technology services, particularly in cloud, AI, and data analytics [22] - There is cautious optimism regarding the macroeconomic environment, with expectations for continued demand despite uncertainties [21][30] - Management anticipates a rebound in Europe in the latter half of the year, contingent on resolving tariff uncertainties [39][66] Other Important Information - The company ended the quarter with cash of $20.1 million and a gross debt to EBITDA ratio of 2.1 times, indicating a solid balance sheet [26][28] - The company has a share repurchase authorization of approximately $15 million remaining [28] Q&A Session Summary Question: How would you characterize the growth in The Americas? - Management expects double-digit growth in Q2 for The Americas, driven by strong demand for transformation and optimization services [34] Question: Are there any end markets in Europe showing signs of recovery? - Management indicated that uncertainty remains in Europe, but there is an increase in the pipeline for advisory services, particularly around cost optimization and AI [39] Question: What is the outlook for utilization and hiring? - Utilization is at a high level, and while hiring will be prudent, it will align with demand in the pipeline [46] Question: How is the company addressing the rapid interest in AI? - The company is focusing on training and hiring for AI-related roles, with a significant portion of client work now incorporating AI components [60] Question: What is the strategy regarding share repurchases and M&A? - The company is evaluating cash allocation opportunities, including share buybacks and potential acquisitions to enhance growth [49][50]

Financial Data and Key Metrics Changes - Q1 2025 revenues reached $60 million, a 5% increase year-over-year, excluding the divested automation unit [6][22] - Adjusted EBITDA rose 68% to $7.4 million, with an adjusted EBITDA margin of 12.4%, up 554 basis points year-over-year [7][23] - Net income for Q1 was $1.5 million, or $0.03 per fully diluted share, compared to a net loss of $3.4 million, or $0.07 per share, in the prior year [23] Business Line Data and Key Metrics Changes - Recurring revenues in Q1 were $26 million, representing 44% of overall revenue, showing slight growth from Q4 [8] - The Americas region saw a 17% revenue increase to $41 million, driven by growth in technology advisory and various industry verticals [11][22] - Europe revenue decreased by 13% to $13.8 million, while Asia Pacific revenue fell 15% to $4.8 million [22] Market Data and Key Metrics Changes - The Americas experienced the largest year-over-year growth in two years, indicating strong demand for technology services [7] - Europe is expected to show signs of recovery later in the year, with increased demand for technology advisory services [14] - Asia Pacific revenues were impacted by sluggish government spending, but growth is anticipated post-elections [15] Company Strategy and Development Direction - The company is focusing on AI integration across all services, with over 200 clients receiving AI-focused research and advisory services [8][53] - The ISG Tango platform is enhancing service delivery and opening up mid-market opportunities, contributing to margin acceleration [9][66] - The company aims to leverage technology for cost optimization and competitive advantage, particularly in the context of market disruptions [10][27] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand in the U.S. for both transformation and optimization services, expecting double-digit growth in Q2 [30] - There is uncertainty in Europe due to geopolitical factors and tariffs, but an increase in the pipeline is anticipated [31][33] - The company remains optimistic about its portfolio mix to meet client needs despite macroeconomic uncertainties [19][27] Other Important Information - The company ended Q1 with cash of $20.1 million and a gross debt to EBITDA ratio of 2.1 times, indicating a solid balance sheet [24][25] - The company paid dividends of $2.2 million and repurchased $3.3 million of stock during the quarter [24] Q&A Session Summary Question: How would you characterize growth in The Americas? - Management expects double-digit growth to continue in Q2, driven by strong demand [30] Question: What are the expectations for Europe? - There is uncertainty in Europe, but an increase in the pipeline is noted, with expectations for growth in Q3 and Q4 [31][33] Question: How is utilization impacting hiring needs? - Utilization is at a high level, and hiring will be aligned with demand in the pipeline [36][39] Question: What is the strategy for cash allocation? - The company is evaluating opportunities for buybacks, dividends, M&A, and business investments [40][42] Question: How is the company addressing AI demand? - The company is focusing on training and hiring for AI-related roles, with no significant wage pressure observed [50][60] Question: What is the outlook for the mid-market with ISG Tango? - The platform is expected to enhance margins and open new market opportunities, particularly in the mid-market [66]

Information Services Group, Inc. (NASDAQ:III) Q4 2024 Results Conference Call March 7, 2025 9:00 AM ET Company Participants Will Thoretz - Senior Communications Executive, ISG Michael Connors - Chairman and Chief Executive Officer Michael Sherrick - Executive Vice President and Chief Financial Officer Conference Call Participants Joe Gomes - Noble Capital Markets Vincent Colicchio - Barrington Research Marc Riddick - Sidoti Dave Storms - Stonegate Gowshi Sriharan - Singular Research Operator Good morning an ...