Information Services Group Announces First-Quarter 2022 Results and Increases Dividend by 33%
Information Services Group (ISG) reported record revenues of $73 million for Q1 2022, marking a 12% increase in constant currency. Net income reached $5 million with GAAP EPS of $0.10 and adjusted EPS of $0.12. The firm also achieved a record adjusted EBITDA of $11 million, exceeding expectations. In a significant move, ISG raised its quarterly dividend by 33% to $0.04 per share, effective June 17, 2022. The company anticipates Q2 revenues between $73 million and $75 million.
- Revenues reached a record $73 million, a 12% increase in constant currency.
- Net income rose to $5 million, with a GAAP EPS of $0.10.
- Increased quarterly dividend by 33% to $0.04 per share.
- Adjusted EBITDA reached a record $11 million.
- Successful acquisition of Agreemint to enhance GovernX platform.
- Cash from operations decreased to $4.1 million, down from $12.1 million the previous year.
- Cash balance declined to $43.7 million from $47.5 million at the end of last year.
-
Reports GAAP revenues of
, an all-time quarterly high, exceeding guidance$73 million -
Reports net income of
, GAAP EPS of$5 million and adjusted EPS of$0.10 , all first-quarter records$0.12 -
Reports record adjusted EBITDA of
, exceeding guidance$11 million -
Increases quarterly dividend by
33% , to per share, effective with dividend payable$0.04 June 17 to record holders as ofJune 3 -
Sets second-quarter 2022 guidance: revenues between
and$73 million and adjusted EBITDA of between$75 million and$10 million $11 million
“ISG has begun 2022 in record fashion,” said
Connors noted ISG also generated double-digit growth in recurring revenues, especially from its subscription research and platform businesses.
“Our strong performance reflects demand for our data, insights and advice, as clients continue to invest in technology to enable greater efficiency and faster growth. Our solution-centric approach and ISG iFlex delivery model allows us to serve specific client needs with greater delivery flexibility,” Connors said.
Connors said ISG sees market momentum continuing in 2022. “Demand continues to be strong, despite rising enterprise costs related to global inflation, continuing supply chain disruptions, geopolitical concerns, higher energy costs and high demand for tech talent,” he said.
During the first quarter, ISG continued to expand its ISG GovernX® platform business with the acquisition of automated contracting solution Agreemint. The AI-powered contracting platform brings important new capabilities to the market-leading GovernX vendor compliance and risk management solution and will be used by ISG to add value to future platform solutions now in development.
First-Quarter 2022 Results
Reported revenues for the first quarter were a record
ISG reported first-quarter operating income of
Adjusted net income (a non-GAAP measure defined below under “Non-GAAP Financial Measures”) for the first quarter was
First-quarter adjusted EBITDA (a non-GAAP measure defined below under “Non-GAAP Financial Measures”) reached a record
Other Financial and Operating Highlights
ISG generated
2022 Second-Quarter Revenue and Adjusted EBITDA Guidance
“For the second quarter, ISG is targeting revenues of between
Quarterly Dividend
The ISG Board of Directors approved a 33 percent increase in the quarterly dividend, from
Conference Call
ISG has scheduled a call for
Forward-Looking Statements
This communication contains “forward-looking statements” which represent the current expectations and beliefs of management of ISG concerning future events and their potential effects. Statements contained herein including words such as “anticipate,” “believe,” “contemplate,” “plan,” “estimate,” “target,” “expect,” “intend,” “will,” “continue,” “should,” “may,” and other similar expressions, are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future results and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Those risks relate to inherent business, economic and competitive uncertainties and contingencies relating to the businesses of ISG and its subsidiaries including without limitation: (1) failure to secure new engagements or loss of important clients; (2) ability to hire and retain enough qualified employees to support operations; (3) ability to maintain or increase billing and utilization rates; (4) management of growth; (5) success of expansion internationally; (6) competition; (7) ability to move the product mix into higher margin businesses; (8) general political and social conditions such as war, political unrest and terrorism; (9) healthcare and benefit cost management; (10) ability to protect ISG and its subsidiaries’ intellectual property or data and the intellectual property or data of others; (11) currency fluctuations and exchange rate adjustments; (12) ability to successfully consummate or integrate strategic acquisitions; (13) outbreaks of diseases, including coronavirus, or similar public health threats or fear of such an event; and (14) engagements may be terminated, delayed or reduced in scope by clients. Certain of these and other applicable risks, cautionary statements and factors that could cause actual results to differ from ISG’s forward-looking statements are included in ISG’s filings with the
Non-GAAP Financial Measures
ISG reports all financial information required in accordance with
ISG provides adjusted EBITDA (defined as net income plus interest, taxes, depreciation and amortization, foreign currency transaction gains/losses, non-cash stock compensation, interest accretion associated with contingent consideration, acquisition-related costs, and severance, integration and other expense), adjusted net income (defined as net income plus amortization of intangible assets, non-cash stock compensation, foreign currency transaction gains/losses, interest accretion associated with contingent consideration, acquisition-related costs, and severance, integration and other expense, on a tax-adjusted basis), adjusted net income per diluted share, adjusted EBITDA margin, and selected financial data on a constant currency basis which are non-GAAP measures that the Company believes provide useful information to both management and investors by excluding certain expenses and financial implications of foreign currency translations, which management believes are not indicative of ISG’s core operations. These non-GAAP measures are used by ISG to evaluate the Company’s business strategies and management’s performance.
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP financial measure, excludes the impact of year-over-year fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company’s performance. We calculate constant currency percentages by converting our current and prior-periods local currency financial results using the same point in time exchange rates and then compare the adjusted current and prior period results. This calculation may differ from similarly titled measures used by others and, accordingly, the constant currency presentation is not meant to be a substitution for recorded amounts presented in conformity with GAAP, nor should such amounts be considered in isolation.
Management believes this information facilitates comparison of underlying results over time. Non-GAAP financial measures, when presented, are reconciled to the most closely applicable GAAP measure. Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the forward-looking non-GAAP estimates contained herein to the corresponding GAAP measures is not being provided, due to the unreasonable efforts required to prepare it.
About ISG
ISG (
Condensed Consolidated Statement of Income and Comprehensive Income | ||||||||||||||
(unaudited) | ||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||
Three Months Ended |
||||||||||||||
|
2022 |
|
|
|
2021 |
|
||||||||
Revenues | $ |
72,563 |
|
$ |
66,571 |
|
||||||||
Operating expenses | ||||||||||||||
Direct costs and expenses for advisors |
|
|
43,955 |
|
|
|
41,156 |
|
||||||
Selling, general and administrative |
|
19,587 |
|
|
19,040 |
|
||||||||
Depreciation and amortization |
|
1,289 |
|
|
1,360 |
|
||||||||
Operating income |
|
7,732 |
|
|
5,015 |
|
||||||||
Interest income |
|
45 |
|
|
71 |
|
||||||||
Interest expense |
|
(563 |
) |
|
(643 |
) |
||||||||
Foreign currency transaction gain (loss) |
|
24 |
|
|
(11 |
) |
||||||||
Income before taxes |
|
7,238 |
|
|
4,432 |
|
||||||||
Income tax provision |
|
2,308 |
|
|
1,008 |
|
||||||||
Net income | $ |
4,930 |
|
$ |
3,424 |
|
||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic |
|
48,526 |
|
|
48,504 |
|
||||||||
Diluted |
|
51,326 |
|
|
52,313 |
|
||||||||
Earnings per share: | ||||||||||||||
Basic | $ |
0.10 |
|
$ |
0.07 |
|
||||||||
Diluted | $ |
0.10 |
|
$ |
0.07 |
|
|
|||||||||||||||
Reconciliation from GAAP to Non-GAAP | |||||||||||||||
(unaudited) | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Three Months Ended |
|||||||||||||||
|
2022 |
|
|
|
2021 |
|
|||||||||
Net income | $ |
4,930 |
|
$ |
3,424 |
|
|||||||||
Plus: | |||||||||||||||
Interest expense (net of interest income) |
|
518 |
|
|
572 |
|
|||||||||
Income taxes |
|
2,308 |
|
|
1,008 |
|
|||||||||
Depreciation and amortization |
|
1,289 |
|
|
1,360 |
|
|||||||||
Interest accretion associated with contingent consideration |
|
- |
|
|
32 |
|
|||||||||
Acquisition-related costs (1) |
|
10 |
|
|
(45 |
) |
|||||||||
Severance, integration and other expense |
|
110 |
|
|
135 |
|
|||||||||
Foreign currency transaction (gain) loss |
|
(24 |
) |
|
11 |
|
|||||||||
Non-cash stock compensation |
|
1,503 |
|
|
2,148 |
|
|||||||||
Adjusted EBITDA | $ |
10,644 |
|
$ |
8,645 |
|
|||||||||
Net income | $ |
4,930 |
|
$ |
3,424 |
|
|||||||||
Plus: | |||||||||||||||
Non-cash stock compensation |
|
1,503 |
|
|
2,148 |
|
|||||||||
Intangible amortization |
|
528 |
|
|
714 |
|
|||||||||
Interest accretion associated with contingent consideration |
|
- |
|
|
32 |
|
|||||||||
Acquisition-related costs (1) |
|
10 |
|
|
(45 |
) |
|||||||||
Severance, integration and other expense |
|
110 |
|
|
135 |
|
|||||||||
Foreign currency transaction (gain) loss |
|
(24 |
) |
|
11 |
|
|||||||||
Tax effect (2) |
|
(681 |
) |
|
(958 |
) |
|||||||||
Adjusted net income | $ |
6,376 |
|
$ |
5,461 |
|
|||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic |
|
48,526 |
|
|
48,504 |
|
|||||||||
Diluted |
|
51,326 |
|
|
52,313 |
|
|||||||||
Adjusted earnings per share: | |||||||||||||||
Basic | $ |
0.13 |
|
$ |
0.11 |
|
|||||||||
Diluted | $ |
0.12 |
|
$ |
0.10 |
|
|||||||||
(1) |
Consists of expenses from acquisition-related costs and non-cash fair value adjustments on pre-acquisition contract liabilities. |
||||||||||
(2) |
Marginal tax rate of |
Selected Financial Data | |||||||||||||||||
Constant Currency Comparison | |||||||||||||||||
Three Months | Three Months | ||||||||||||||||
Three Months | Constant | Ended | Three Months | Constant | Ended | ||||||||||||
Ended | currency | Ended | currency | ||||||||||||||
impact | Adjusted | impact | Adjusted | ||||||||||||||
Revenue | $ |
72,563 |
$ |
1,237 |
$ |
73,800 |
$ |
66,571 |
$ |
(722) |
$ |
65,849 |
|||||
Operating income | $ |
7,732 |
$ |
234 |
$ |
7,966 |
$ |
5,015 |
$ |
(272) |
$ |
4,743 |
|||||
Adjusted EBITDA | $ |
10,644 |
$ |
242 |
$ |
10,886 |
$ |
8,645 |
$ |
(279) |
$ |
8,366 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220509005726/en/
Press:
+1 203 517 3119
will.thoretz@isg-one.com
Investors:
+1 203 517 3104
bert.alfonso@isg-one.com
Source:
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