- Reports first-quarter GAAP revenues of $64 million
- Reports first-quarter net loss of $3.4 million, GAAP loss per
share of $0.07 and adjusted net income per share of $0.01
- Reports first-quarter adjusted EBITDA of $4 million
- Generates $2.3 million of cash from operations
- Declares second-quarter dividend of $0.045 per share, payable
July 5, 2024, to shareholders of record as of June 14, 2024
- Sets second-quarter guidance: revenues between $65 million and
$67 million and adjusted EBITDA between $7.0 million and $8.0
million
Information Services Group (ISG) (Nasdaq: III), a leading global
technology research and advisory firm, today announced its
financial results for the first quarter ended March 31, 2024.
“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 $2.6 billion of contract value already running on the
platform.”
Connors noted that recurring revenues represented about half of
the firm’s revenues in the first quarter and totaled $126 million
for the trailing 12 months, up 10 percent from the previous
12-month period.
First-Quarter 2024 Results
Reported revenues for the first quarter were $64.3 million, down
18 percent from $78.5 million in the prior year’s first quarter.
Reported revenues were $40.8 million in the Americas, down 16
percent; $17.8 million in Europe, down 23 percent; and $5.6 million
in Asia Pacific, down 20 percent, all versus the prior year.
ISG reported a first-quarter operating loss of $2.4 million,
compared with operating income of $7.1 million in the prior year.
The firm’s reported first-quarter net loss was $3.4 million,
compared with net income of $3.5 million in the prior year. Loss
per fully diluted share was $0.07, compared with income per fully
diluted share of $0.07 in the prior year.
Adjusted net income (a non-GAAP measure defined below under
“Non-GAAP Financial Measures”) for the first quarter was $0.7
million, or $0.01 per share on a fully diluted basis, compared with
adjusted net income of $6.0 million, or $0.12 per share on a fully
diluted basis, in the prior year’s first quarter.
First-quarter adjusted EBITDA (a non-GAAP measure defined below
under “Non-GAAP Financial Measures”) was $4.4 million, down 60
percent from the prior-year first quarter. Adjusted EBITDA margin
(a non-GAAP measure calculated by dividing adjusted EBITDA by
reported revenues) was 6.9 percent, compared with 14.0 percent in
the prior year.
Other Financial and Operating Highlights
ISG generated $2.3 million of cash from operations in the first
quarter, compared with using $3.4 million of cash in the first
quarter last year. The firm’s cash balance totaled $14.0 million at
March 31, 2024, down from $22.6 million at December 31, 2023.
During the first quarter, ISG paid dividends of $2.4 million,
repurchased $2.5 million of shares and paid down debt of $5.0
million. As of March 31, 2024, ISG had $74.2 million in debt
outstanding, down from $79.2 million at the end of last year.
2024 Second-Quarter Revenue and Adjusted EBITDA
Guidance
“For the second quarter, ISG is targeting revenues of between
$65 million and $67 million and adjusted EBITDA of between $7.0
million and $8.0 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 second-quarter dividend of
$0.045 per share, payable on July 5, 2024, to shareholders of
record as of June 14, 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, Friday,
May 10, 2024, to discuss the firm’s first-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 7294332. A recording of the conference call
will be accessible on ISG’s website (www.isg-one.com) 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) 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 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 months ended March 31, 2024, and
March 31, 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,
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 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 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 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 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
Information Services (NASDAQ:III)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Information Services (NASDAQ:III)
Historical Stock Chart
Von Jun 2023 bis Jun 2024