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Information Services Group Announces Third-Quarter 2024 Results

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Information Services Group (ISG) reported Q3 2024 results with revenues of $61.3 million, down 15% year-over-year. The company posted net income of $1.1 million, with GAAP EPS of $0.02 and adjusted EPS of $0.05. Adjusted EBITDA was $7.1 million, representing an 11.6% margin. Notable events include the sale of its automation unit to UST for $27 million and strong cash flow from operations of $8.8 million. For Q4 2024, ISG guides revenues between $57-58 million and adjusted EBITDA of $6-7 million. The company declared a quarterly dividend of $0.045 per share.

Information Services Group (ISG) ha riportato i risultati del terzo trimestre 2024 con ricavi di 61,3 milioni di dollari, in calo del 15% rispetto all'anno precedente. L'azienda ha registrato un utile netto di 1,1 milioni di dollari, con un EPS GAAP di 0,02 dollari e un EPS rettificato di 0,05 dollari. EBITDA rettificato è stato di 7,1 milioni di dollari, rappresentando un margine dell'11,6%. Eventi significativi includono la vendita della sua unità di automazione a UST per 27 milioni di dollari e un forte flusso di cassa dalle operazioni di 8,8 milioni di dollari. Per il quarto trimestre 2024, ISG prevede ricavi tra 57 e 58 milioni di dollari e un EBITDA rettificato di 6-7 milioni di dollari. L'azienda ha dichiarato un dividendo trimestrale di 0,045 dollari per azione.

Information Services Group (ISG) reportó resultados del tercer trimestre de 2024 con ingresos de 61,3 millones de dólares, una caída del 15% interanual. La compañía registró un ingreso neto de 1,1 millones de dólares, con un EPS GAAP de 0,02 y un EPS ajustado de 0,05. EBITDA ajustado fue de 7,1 millones de dólares, lo que representa un margen del 11,6%. Eventos notables incluyen la venta de su unidad de automatización a UST por 27 millones de dólares y un sólido flujo de efectivo de las operaciones de 8,8 millones de dólares. Para el cuarto trimestre de 2024, ISG estima ingresos entre 57 y 58 millones de dólares y un EBITDA ajustado de 6-7 millones de dólares. La empresa declaró un dividendo trimestral de 0,045 dólares por acción.

정보 서비스 그룹 (ISG)은 2024년 3분기 실적을 보고하며, 수익이 6,130만 달러로 지난해 대비 15% 감소했다고 발표했습니다. 이 회사의 순이익은 110만 달러였으며, GAAP EPS는 0.02달러, 조정 EPS는 0.05달러였습니다. 조정된 EBITDA는 710만 달러로, 11.6%의 마진을 나타냅니다. 주요 사건으로는 자동화 부문을 UST에 2,700만 달러에 매각한 것과 880만 달러의 운영에서 강한 현금 흐름을 기록한 것이 있습니다. 2024년 4분기 ISG는 5,700만에서 5,800만 달러의 수익과 600만에서 700만 달러의 조정 EBITDA를 예상하고 있습니다. 회사는 주당 0.045달러의 분기 배당금을 선언했습니다.

Information Services Group (ISG) a annoncé les résultats du troisième trimestre 2024 avec des revenus de 61,3 millions de dollars, en baisse de 15 % par rapport à l'année précédente. L'entreprise a affiché un bénéfice net de 1,1 million de dollars, avec un BPA GAAP de 0,02 dollar et un BPA ajusté de 0,05 dollar. EBITDA ajusté s'élevait à 7,1 millions de dollars, représentant une marge de 11,6 %. Parmi les événements notables, on note la vente de son unité d'automatisation à UST pour 27 millions de dollars et un flux de trésorerie solide provenant des opérations de 8,8 millions de dollars. Pour le quatrième trimestre 2024, ISG anticipe des revenus compris entre 57 et 58 millions de dollars et un EBITDA ajusté de 6 à 7 millions de dollars. L'entreprise a déclaré un dividende trimestriel de 0,045 dollar par action.

Information Services Group (ISG) berichtete über die Ergebnisse des dritten Quartals 2024 mit Einnahmen von 61,3 Millionen Dollar, was einem Rückgang von 15 % im Jahresvergleich entspricht. Das Unternehmen erzielte einen Nettoertrag von 1,1 Millionen Dollar, mit GAAP EPS von 0,02 Dollar und angepasstem EPS von 0,05 Dollar. Bereinigtes EBITDA betrug 7,1 Millionen Dollar, was einer Marge von 11,6 % entspricht. Zu den bemerkenswerten Ereignissen gehören der Verkauf seiner Automatisierungseinheit an UST für 27 Millionen Dollar und ein starker Cashflow aus dem operativen Geschäft von 8,8 Millionen Dollar. Für das vierte Quartal 2024 prognostiziert ISG Einnahmen zwischen 57 und 58 Millionen Dollar sowie ein angepasstes EBITDA von 6-7 Millionen Dollar. Das Unternehmen erklärte eine vierteljährliche Dividende von 0,045 Dollar pro Aktie.

Positive
  • Strong cash flow from operations of $8.8 million, up from $3.2 million year-over-year
  • Sale of automation unit for $27 million in cash
  • Reduced debt to $66.2 million from $79.2 million at year-end
  • Digital sourcing platform contract value up 25% sequentially to $5 billion
Negative
  • Revenue declined 15% year-over-year to $61.3 million
  • Net income decreased to $1.1 million from $3.2 million year-over-year
  • Adjusted EBITDA fell 34% year-over-year with margin declining to 11.6% from 14.8%
  • Q4 guidance suggests continued revenue decline

Insights

The Q3 results paint a challenging picture with significant revenue declines across all regions. Revenue dropped 15% to $61.3M, with particularly steep declines in Europe (27%) and Asia Pacific (32%). Operating income fell to $4.3M from $6.2M, while adjusted EBITDA margin contracted to 11.6% from 14.8%.

The strategic sale of the automation unit for $27M strengthens the balance sheet, though $7M remains in escrow. Positive signs include strong cash flow generation of $8.8M and significant debt reduction of $8M in Q3. However, Q4 guidance suggests continued pressure with projected revenues of $57-58M.

The 25% sequential growth in ISG Tango platform contract value to $5B indicates potential future growth, but near-term challenges persist in the core business.

  • Reports third-quarter GAAP revenues of $61 million
  • Reports third-quarter net income of $1.1 million, GAAP EPS of $0.02 and adjusted EPS of $0.05
  • Reports third-quarter adjusted EBITDA of $7 million
  • Reports strong cash flow from operations of $8.8 million
  • Sells its automation unit on October 1, 2024, for $27 million in cash, with $7 million held in escrow
  • Declares fourth-quarter dividend of $0.045 per share, payable December 20, 2024, to shareholders of record as of December 3, 2024
  • Sets fourth-quarter guidance: revenues between $57 million and $58 million and adjusted EBITDA between $6.0 and $7.0 million

STAMFORD, Conn.--(BUSINESS WIRE)-- Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm, today announced its financial results for the third quarter ended September 30, 2024.

“ISG closed the third quarter strong, achieving the top of our updated guidance, with strong operating cash flow in the quarter,” said Michael P. Connors, chairman and CEO. “As we look ahead to 2025, we see signs that client demand in the U.S. is on the rise, including $5 billion of contract value now flowing through ISG Tango™, our digital sourcing platform, up 25 percent sequentially from the second quarter.”

Divestiture of Automation Unit

On October 1, ISG sold its robotic process automation unit to UST, a leading digital transformation solutions company, for $27 million in an all-cash transaction. ISG received $20 million in cash at closing with the remaining $7 million held in escrow, $4 million of which is subject to meeting certain contractual conditions with clients within 90 days and the remaining amount subject to the divested automation unit meeting certain revenue objectives by the end of the first quarter of 2025.

Third-Quarter 2024 Results

Reported revenues for the third quarter were $61.3 million, down 15 percent from $71.8 million in the prior year’s third quarter. Reported revenues were $40.1 million in the Americas, down 5 percent; $16.2 million in Europe, down 27 percent; and $4.9 million in Asia Pacific, down 32 percent, all versus the prior year.

ISG reported third-quarter operating income of $4.3 million, compared with operating income of $6.2 million in the prior year. The firm’s reported third-quarter net income was $1.1 million, compared with net income of $3.2 million in the prior year. Income per fully diluted share was $0.02, compared with income per fully diluted share of $0.06 in the prior year.

Adjusted net income (a non-GAAP measure defined below under “Non-GAAP Financial Measures”) for the third quarter was $2.5 million, or $0.05 per share on a fully diluted basis, compared with adjusted net income of $5.7 million, or $0.11 per share on a fully diluted basis, in the prior year’s third quarter.

Third-quarter adjusted EBITDA (a non-GAAP measure defined below under “Non-GAAP Financial Measures”) was $7.1 million, down 34 percent from the prior-year third quarter. Adjusted EBITDA margin (a non-GAAP measure calculated by dividing adjusted EBITDA by reported revenues) was 11.6 percent, compared with 14.8 percent in the prior year.

Other Financial and Operating Highlights

ISG generated $8.8 million of cash from operations in the third quarter, compared with generating $3.2 million of cash in the third quarter last year. The firm’s cash balance totaled $9.7 million at September 30, 2024, down from $11.8 million at June 30, 2024. During the third quarter, ISG paid down $8.0 million of debt, paid dividends of $2.3 million and repurchased $0.8 million of shares. As of September 30, 2024, ISG had $66.2 million in debt outstanding, down from $79.2 million at the end of last year.

2024 Fourth-Quarter Revenue and Adjusted EBITDA Guidance

“For the fourth quarter, ISG is targeting revenues of between $57 million and $58 million and adjusted EBITDA of between $6.0 million and $7.0 million. We will continue to monitor the macroeconomic environment, including the impact of FX, inflation and other factors, and adjust our business plans accordingly,” said Connors.

Quarterly Dividend

The ISG Board of Directors declared a fourth-quarter dividend of $0.045 per share, payable on December 20, 2024, to shareholders of record as of December 3, 2024.

“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., U.S. Eastern Time, November 8, 2024, to discuss the firm’s third-quarter results. The call can be accessed by dialing +1 (800) 715-9871, or, for international callers, by dialing +1 (646) 307-1963. The access code is 8229408. A recording of the conference call will be accessible on ISG’s investor relations page for approximately four weeks following the call.

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) the failure to secure new engagements or loss of important clients; (2) the ability to hire and retain enough qualified employees to support operations; (3) the ability to maintain or increase billing and utilization rates; (4) management of growth; (5) the success of expansion internationally; (6) competition; (7) the ability to move the product mix into higher margin businesses; (8) the effect of the divestiture of the automation unit on ISG’s relationships with its customers and suppliers and on its retained business generally; (9) general political and social conditions such as war, political unrest and terrorism; (10) healthcare and benefit cost management; (11) the ability to protect ISG and its subsidiaries’ intellectual property or data and the intellectual property or data of others; (12) currency fluctuations and exchange rate adjustments; (13) the ability to successfully consummate or integrate strategic acquisitions; (14) outbreaks of diseases, including coronavirus, or similar public health threats or fear of such an event; and (15) 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 U.S. Securities and Exchange Commission. ISG undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

Non-GAAP Financial Measures

ISG reports all financial information required in accordance with U.S. generally accepted accounting principles (GAAP). In this release, ISG has presented both GAAP financial results as well as non-GAAP information for the three and nine months ended September 30, 2024 and September 30, 2023. ISG believes that evaluating its ongoing operating results will be enhanced if it discloses certain non-GAAP information. These non-GAAP financial measures exclude non-cash and certain other special charges that many investors believe may obscure the user’s overall understanding of ISG’s current financial performance and the Company’s prospects for the future. ISG believes that these non-GAAP measures provide useful information to investors because they improve the comparability of the financial results between periods and provide for greater transparency of key measures used to evaluate the Company’s performance.

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, change in 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, change in 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, 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 Stamford, Conn., ISG employs 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

Information Services Group, Inc.
Condensed Consolidated Statement of Income and Comprehensive Income
(unaudited)
(in thousands, except per share amounts)
 
 
 
Three Months Ended September 30, Nine Months Ended September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 
Revenues

$

61,277

 

$

71,773

 

$

189,808

 

$

224,868

 

Operating expenses
Direct costs and expenses for advisors

 

36,530

 

43,032

 

 

116,484

 

 

138,048

 

Selling, general and administrative

 

18,855

 

 

20,992

 

 

63,026

 

 

63,992

 

Depreciation and amortization

 

1,598

 

 

1,526

 

 

4,724

 

 

4,692

 

Operating income

 

4,294

 

 

6,223

 

 

5,574

 

 

18,136

 

Interest income

 

222

 

 

104

 

 

701

 

 

285

 

Interest expense

 

(1,604

)

 

(1,533

)

 

(4,672

)

 

(4,676

)

Foreign currency transaction loss

 

(30

)

 

(2

)

 

(24

)

 

(40

)

Income before taxes

 

2,882

 

 

4,792

 

 

1,579

 

 

13,705

 

Income tax provision

 

1,734

 

 

1,591

 

 

1,782

 

 

4,680

 

Net income (loss)

$

1,148

 

$

3,201

 

$

(203

)

$

9,025

 

 
Weighted average shares outstanding:
Basic

 

48,940

 

 

48,711

 

 

48,743

 

 

48,542

 

Diluted

 

50,158

 

 

50,257

 

 

48,743

 

 

50,287

 

 
Earnings (loss) per share:

Basic

$

0.02

 

$

0.07

 

$

(0.00

)

$

0.19

 

Diluted

$

0.02

 

$

0.06

 

$

(0.00

)

$

0.18

 

 
 
Information Services Group, Inc.
Reconciliation from GAAP to Non-GAAP
(unaudited)
(in thousands, except per share amounts)
 
 
 
Three Months Ended September 30, Nine Months Ended September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 
Net income (loss)

$

1,148

 

$

3,201

 

$

(203

)

$

9,025

 

Plus:
Interest expense (net of interest income)

 

1,382

 

 

1,429

 

 

3,971

 

 

4,391

 

Income taxes

 

1,734

 

 

1,591

 

 

1,782

 

 

4,680

 

Depreciation and amortization

 

1,598

 

 

1,526

 

 

4,724

 

 

4,692

 

Interest accretion associated with contingent consideration

 

7

 

 

26

 

 

66

 

 

77

 

Change in contingent consideration

 

(2,390

)

 

-

 

 

(2,390

)

 

-

 

Acquisition-related cost (1)

 

654

 

 

99

 

 

679

 

 

99

 

Severance, integration and other expense

 

586

 

 

674

 

 

4,263

 

 

2,016

 

Foreign currency transaction loss

 

30

 

 

2

 

 

24

 

 

40

 

Non-cash stock compensation

 

2,329

 

 

2,098

 

 

5,690

 

 

6,752

 

Adjusted EBITDA

$

7,078

 

$

10,646

 

$

18,606

 

$

31,772

 

 
Net income (loss)

$

1,148

 

$

3,201

 

$

(203

)

$

9,025

 

Plus:
Non-cash stock compensation

 

2,329

 

 

2,098

 

 

5,690

 

 

6,752

 

Intangible amortization

 

738

 

 

769

 

 

2,230

 

 

2,352

 

Interest accretion associated with contingent consideration

 

7

 

 

26

 

 

66

 

 

77

 

Change in contingent consideration

 

(2,390

)

 

-

 

 

(2,390

)

 

-

 

Acquisition-related cost (1)

 

654

 

 

99

 

 

679

 

 

99

 

Severance, integration and other expense

 

586

 

 

674

 

 

4,263

 

 

2,016

 

Write-off of deferred financing costs

 

-

 

 

-

 

 

-

 

 

379

 

Foreign currency transaction loss

 

30

 

 

2

 

 

24

 

 

40

 

Tax effect (2)

 

(625

)

 

(1,174

)

 

(3,380

)

 

(3,749

)

Adjusted net income

$

2,477

 

$

5,695

 

$

6,979

 

$

16,991

 

 
Weighted average shares outstanding:
Basic

 

48,940

 

 

48,711

 

 

48,743

 

 

48,542

 

Diluted

 

50,158

 

 

50,257

 

 

48,743

 

 

50,287

 

 
Adjusted earnings per share:
Basic

$

0.05

 

$

0.12

 

$

0.14

 

$

0.35

 

Diluted

$

0.05

 

$

0.11

 

$

0.14

 

$

0.34

 

 

(1) Consists of expenses from acquisition-related costs and non-cash fair value adjustments on pre-acquisition contract liabilities.

(2) Marginal tax rate of 32%, reflecting U.S. federal income tax rate of 21% plus 11% attributable to U.S. states and foreign jurisdictions.

Information Services Group, Inc.
Selected Financial Data
Constant Currency Comparison
 
Three Months Three Months
Three Months Constant Ended Three Months Constant Ended
Ended currency September 30, 2024 Ended currency September 30, 2023
September 30, 2024 impact Adjusted September 30, 2023 impact Adjusted
Revenue

$

61,277

$

(326

)

$

60,951

$

71,773

$

(4

)

$

71,769

Operating income

$

4,294

$

(153

)

$

4,141

$

6,223

$

47

 

$

6,270

Adjusted EBITDA

$

7,078

$

(170

)

$

6,908

$

10,646

$

45

 

$

10,691

 
Nine Months Nine Months
Nine Months Constant Ended Nine Months Constant Ended
Ended currency September 30, 2024 Ended currency September 30, 2023
September 30, 2024 impact Adjusted September 30, 2023 impact Adjusted
Revenue

$

189,808

$

(178

)

$

189,630

$

224,868

$

237

 

$

225,105

Operating income

$

5,574

$

(292

)

$

5,282

$

18,136

$

(119

)

$

18,017

Adjusted EBITDA

$

18,606

$

(292

)

$

18,314

$

31,772

$

(106

)

$

31,666

 

 

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 (III) Q3 2024 revenue and earnings?

ISG reported Q3 2024 revenues of $61.3 million with net income of $1.1 million, or $0.02 per share. Adjusted EPS was $0.05.

How much did ISG (III) sell its automation unit for in October 2024?

ISG sold its automation unit to UST for $27 million in cash, with $20 million received at closing and $7 million held in escrow.

What is ISG's (III) Q4 2024 guidance?

ISG guided Q4 2024 revenues between $57-58 million and adjusted EBITDA between $6.0-7.0 million.

What dividend did ISG (III) declare for Q4 2024?

ISG declared a Q4 2024 dividend of $0.045 per share, payable December 20, 2024, to shareholders of record as of December 3, 2024.

Information Services Group, Inc.

NASDAQ:III

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