Information Services Group Announces First-Quarter 2024 Results
Information Services Group (ISG) announced first-quarter 2024 results with GAAP revenues of $64 million and a net loss of $3.4 million. The company reported adjusted net income per share of $0.01 and adjusted EBITDA of $4 million. ISG generated $2.3 million cash from operations and declared a second-quarter dividend of $0.045 per share. The firm set second-quarter guidance with revenues between $65 million and $67 million and adjusted EBITDA between $7.0 million and $8.0 million.
ISG's opportunity pipeline is growing, indicating a positive outlook for the future.
ISG noted significant investments in infrastructure and implementation as the market transitions to the execution phase of AI.
The firm experienced continuing growth in recurring revenue business, with about half of revenues coming from recurring sources in the first quarter.
Reported revenues for the first quarter were down 18% from the prior year, posing a challenge for the company.
ISG reported a first-quarter net loss of $3.4 million compared to a net income of $3.5 million in the previous year.
Adjusted EBITDA for the first quarter was down 60% from the prior year, impacting profitability.
Insights
-
Reports first-quarter GAAP revenues of
$64 million -
Reports first-quarter net loss of
$3.4 million $0.07 $0.01 -
Reports first-quarter adjusted EBITDA of
$4 million -
Generates
$2.3 million -
Declares second-quarter dividend of
$0.04 5 -
Sets second-quarter guidance: revenues between
$65 million $67 million $7.0 million $8.0 million
“As anticipated, we saw market uncertainty impact the broader global technology industry during the first quarter,” said Michael P. Connors, chairman and CEO. “With that said, our opportunity pipeline is growing, so we believe the worst is behind us. We see the market turning and gaining momentum over the course of the year.”
Connors said clients slowed their pace of spending and generally have been taking longer to decide on new investments, as they weigh economic conditions and wait to see how AI shapes the technology landscape before committing to major new initiatives.
“As the market transitions from the planning to the execution phase of AI, there will be significant investments in infrastructure and implementation,” Connors said. “Additionally, we see a notable increase in demand for cost and spend transformation, as companies continue to adapt to uncertain macroeconomic conditions. Early indicators, such as a rise in sourcing activity, suggest the demand environment is evolving and will accelerate going forward.”
Connors also said ISG is encouraged by the continuing growth of its recurring revenue business. “Demand for our research, governance and platforms continues, as clients seek market intelligence and governance solutions to shape their future investment decisions,” Connors said. “Our next-gen sourcing platform, ISG Tango™, launched in March, has been well-received, with over
Connors noted that recurring revenues represented about half of the firm’s revenues in the first quarter and totaled
First-Quarter 2024 Results
Reported revenues for the first quarter were
ISG reported a first-quarter operating loss 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”) was
Other Financial and Operating Highlights
ISG generated
During the first quarter, ISG paid dividends of
2024 Second-Quarter Revenue and Adjusted EBITDA Guidance
“For the second quarter, ISG is targeting revenues of between
Quarterly Dividend
The ISG Board of Directors declared a second-quarter dividend of
“ISG remains committed to a disciplined capital allocation strategy that includes reinvesting in our business, managing our debt, returning capital to shareholders in the form of dividends and share repurchases, and supplementing our organic growth with strategic acquisitions to drive long-term shareholder value,” Connors said.
Conference Call
ISG has scheduled a call for 9 a.m.,
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) potential terminations of engagements, delays or reductions 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, write-off of deferred financing cost 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 comparing 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 (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in
| Information Services Group, Inc. | ||||||||
| Condensed Consolidated Statement of Income and Comprehensive Income | ||||||||
| (unaudited) | ||||||||
| (in thousands, except per share amounts) | ||||||||
| Three Months Ended March 31 | ||||||||
|
2024 |
|
|
2023 |
|
|||
| Revenues | $ |
64,269 |
|
$ |
78,486 |
|
||
| Operating expenses | ||||||||
| Direct costs and expenses for advisors |
|
41,047 |
|
|
49,169 |
|
||
| Selling, general and administrative |
|
24,087 |
|
|
20,670 |
|
||
| Depreciation and amortization |
|
1,505 |
|
|
1,597 |
|
||
| Operating (loss) income |
|
(2,370 |
) |
|
7,050 |
|
||
| Interest income |
|
257 |
|
|
84 |
|
||
| Interest expense |
|
(1,500 |
) |
|
(1,736 |
) |
||
| Foreign currency transaction loss |
|
(7 |
) |
|
(194 |
) |
||
| (Loss) Income before taxes |
|
(3,620 |
) |
|
5,204 |
|
||
| Income tax provision |
|
(231 |
) |
|
1,713 |
|
||
| Net (loss) income | $ |
(3,389 |
) |
$ |
3,491 |
|
||
| Weighted average shares outstanding: | ||||||||
| Basic |
|
48,492 |
|
|
48,438 |
|
||
| Diluted |
|
48,492 |
|
|
50,288 |
|
||
| (Loss) Earnings per share: | ||||||||
| Basic | $ |
(0.07 |
) |
$ |
0.07 |
|
||
| Diluted | $ |
(0.07 |
) |
$ |
0.07 |
|
||
| Information Services Group, Inc. | ||||||||
| Reconciliation from GAAP to Non-GAAP | ||||||||
| (unaudited) | ||||||||
| (in thousands, except per share amounts) | ||||||||
| Three Months Ended March 31 | ||||||||
|
2024 |
|
|
2023 |
|
|||
| Net (loss) income | $ |
(3,389 |
) |
$ |
3,491 |
|
||
| Plus: | ||||||||
| Interest expense (net of interest income) |
|
1,243 |
|
|
1,652 |
|
||
| Income taxes |
|
(231 |
) |
|
1,713 |
|
||
| Depreciation and amortization |
|
1,505 |
|
|
1,597 |
|
||
| Interest accretion associated with contingent consideration |
|
26 |
|
|
25 |
|
||
| Acquisition-related cost (1) |
|
25 |
|
|
- |
|
||
| Severance, integration and other expense |
|
2,979 |
|
|
266 |
|
||
| Foreign currency transaction loss |
|
7 |
|
|
194 |
|
||
| Non-cash stock compensation |
|
2,249 |
|
|
2,042 |
|
||
| Adjusted EBITDA | $ |
4,414 |
|
$ |
10,980 |
|
||
| Net (loss) income | $ |
(3,389 |
) |
$ |
3,491 |
|
||
| Plus: | ||||||||
| Non-cash stock compensation |
|
2,249 |
|
|
2,042 |
|
||
| Intangible amortization |
|
755 |
|
|
794 |
|
||
| Interest accretion associated with contingent consideration |
|
26 |
|
|
25 |
|
||
| Acquisition-related cost (1) |
|
25 |
|
|
- |
|
||
| Severance, integration and other expense |
|
2,979 |
|
|
266 |
|
||
| Write-off of deferred financing costs |
|
- |
|
|
379 |
|
||
| Foreign currency transaction loss |
|
7 |
|
|
194 |
|
||
| Tax effect (2) |
|
(1,933 |
) |
|
(1,184 |
) |
||
| Adjusted net income | $ |
719 |
|
$ |
6,007 |
|
||
| Weighted average shares outstanding: | ||||||||
| Basic |
|
48,492 |
|
|
48,438 |
|
||
| Diluted |
|
48,492 |
|
|
50,288 |
|
||
| Adjusted earnings per share: | ||||||||
| Basic | $ |
0.01 |
|
$ |
0.12 |
|
||
| Diluted | $ |
0.01 |
|
$ |
0.12 |
|
||
(1) Consists of expenses from acquisition-related costs and non-cash fair value adjustments on pre-acquisition contract liabilities. |
||||||||
(2) Marginal tax rate of |
||||||||
| Information Services Group, Inc. | |||||||||||||||||||
| Selected Financial Data | |||||||||||||||||||
| Constant Currency Comparison | |||||||||||||||||||
| Three Months | Three Months | ||||||||||||||||||
| Three Months | Constant | Ended | Three Months | Constant | Ended | ||||||||||||||
| Ended | currency | March 31, 2024 | Ended | currency | March 31, 2023 | ||||||||||||||
| March 31, 2024 | impact | Adjusted | March 31, 2023 | impact | Adjusted | ||||||||||||||
| Revenue | $ |
64,269 |
|
$ |
(34 |
) |
$ |
64,235 |
|
$ |
78,486 |
$ |
293 |
|
$ |
78,779 |
|||
| Operating income | $ |
(2,370 |
) |
$ |
(110 |
) |
$ |
(2,480 |
) |
$ |
7,050 |
$ |
(17 |
) |
$ |
7,033 |
|||
| Adjusted EBITDA | $ |
4,414 |
|
$ |
(103 |
) |
$ |
4,311 |
|
$ |
10,980 |
$ |
(14 |
) |
$ |
10,966 |
|||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240509986544/en/
Press Contact:
Will Thoretz
+1 203 517 3119
will.thoretz@isg-one.com
Investor Contact:
Michael Sherrick
+1 203 517 3104
michael.sherrick@isg-one.com
Source: Information Services Group, Inc.
FAQ
What were ISG's first-quarter 2024 GAAP revenues?
What was ISG's net loss for the first quarter?
When is ISG's second-quarter dividend payable?
What is ISG's second-quarter revenue guidance?
