- Reports fourth-quarter GAAP revenues of $66 million
- Reports fourth-quarter net loss of $2.9 million, GAAP loss per
share of $0.06 and adjusted EPS of $0.06; records bad-debt reserve
of $4.8 million in fourth quarter for client collection risk;
excluding the reserve, net income and GAAP EPS would have been $0.8
million and $0.02, respectively
- Reports fourth-quarter adjusted EBITDA of $6 million
- Generates $9.7 million of cash from operations in fourth
quarter
- Achieves record full-year GAAP revenues of $291 million;
operating income of $15 million; net income of $6 million and GAAP
EPS of $0.12; adjusted EBITDA was $38 million, adjusted net income
was $20 million and adjusted EPS was $0.40
- Launches ISG Tango™, a groundbreaking sourcing platform that
improves transaction speed and efficiency, and opens new market
opportunities
- Declares first-quarter dividend of $0.045 per share, payable
March 29, 2024, to shareholders of record as of March 19, 2024
- Sets first-quarter guidance: revenues between $65 million and
$67 million and adjusted EBITDA between $6.0 million and $7.0
million
Information Services Group (ISG) (Nasdaq: III), a leading global
technology research and advisory firm, today announced financial
results for the fourth quarter and full year ended December 31,
2023.
“ISG delivered record revenues of $291 million for the year,
despite a soft fourth quarter due to slower client decision-making
in an uncertain macro environment,” said Michael P. Connors,
chairman and CEO. “We also delivered record recurring revenues of
$125 million, up 16 percent, driven by our research business and
our ISG platforms, including ISG GovernX® and ISG ProBenchmark®.
Recurring revenues now represent 43 percent of our overall revenue,
up 500 basis points from the prior year.
“With the overall IT and business services industry down 6
percent for the full year, we consider our topline growth of 2
percent to be solid.”
Commenting on the firm’s profitability, Connors said: “Our
adjusted EBITDA margin of 13 percent for the year was held back by
a fourth quarter that was negatively impacted by slower client
decision-making and our decision to retain advisory talent in
anticipation of an uplift later this year.”
Speaking to the demand environment for 2024, Connors said: “We
expect client spending to accelerate as the year progresses,
especially if, as expected, inflation continues to cool and central
banks respond with interest rate cuts. Our portfolio of services,
platforms, research and enterprise AI capabilities should position
ISG at the center of a resurgence in technology investments this
year.”
ISG Launches Next-Gen Sourcing Platform
ISG today announced the launch of ISG Tango™, a groundbreaking
sourcing platform that digitizes all elements of ISG’s
market-leading sourcing transactions business to better serve
clients, improve transaction speed and efficiency and allow ISG to
expand into other market segments.
Developed over the past year, the platform solution, available
to enterprise buyers and service providers, draws on ISG’s
unmatched data assets, intellectual property and proprietary tools,
powered by AI to automate contracting and provide real-time
insights that streamline the entire transaction process and
accelerate time to agreement.
“Speed, real-time transaction data, provider evaluations and
other market insights are important to our clients as they navigate
a more complex sourcing environment,” said Connors. “ISG Tango
delivers on all counts and strengthens our position as the
industry’s sourcing advisor of choice.”
Connors said ISG Tango will also allow ISG to penetrate the
underserved midmarket. “We believe this platform-based offering,
combined with our advisory expertise, will allow us to offer a
level of sourcing advisory support that would be attractive and
affordable to the midmarket, thereby expanding our revenue
opportunities.”
The launch of ISG Tango comes two months after ISG announced the
launch of its new Enterprise AI Advisory business, which offers
clients a suite of services to help navigate the complexities and
implications of adopting artificial intelligence at scale. ISG has
already won significant AI engagements with several large clients,
including major companies in the banking, entertainment,
manufacturing and public sectors.
Fourth-Quarter 2023 Results
Reported revenues for the fourth quarter were $66.2 million,
down 11 percent from $74.2 million in the prior year. Currency
translation positively impacted reported revenues by $0.7 million
versus the prior year. Reported revenues were $40.1 million in the
Americas, down 8 percent; $20.2 million in Europe, down 15 percent;
and $5.9 million in Asia Pacific, down 12 percent, all versus the
prior year.
ISG reported a fourth-quarter operating loss of $3.5 million,
compared with operating income of $7.2 million the prior year.
Reported fourth-quarter net loss was $2.9 million, compared with
net income of $4.3 million in the prior year. Fully diluted loss
per share was $0.06, compared with fully diluted earnings per share
of $0.09 in the prior year.
During the fourth quarter, ISG recorded a $4.8 million reserve
for amounts owed by a client. Excluding this reserve, net income
and GAAP EPS would have been $0.8 million and $0.02,
respectively.
Adjusted net income (a non-GAAP measure defined below under
“Non-GAAP Financial Measures”) for the fourth quarter was $3.1
million, or $0.06 per share on a fully diluted basis, compared with
adjusted net income of $6.5 million, or $0.13 per share on a fully
diluted basis, in the prior year’s fourth quarter.
Fourth-quarter adjusted EBITDA (a non-GAAP measure defined below
under “Non-GAAP Financial Measures”) was $5.9 million, down 47
percent from prior-year fourth quarter. Adjusted EBITDA margin (a
non-GAAP measure calculated by dividing adjusted EBITDA by reported
revenues) was 8.9 percent, compared with 15.0 percent in the prior
year.
Full-Year 2023 Results
Reported revenues for the full-year were a record $291.1
million, up 2 percent versus the prior-year. Reported revenues were
$173.2 million in the Americas, up 4 percent; $89.7 million in
Europe, flat; and $28.1 million in Asia Pacific, down 5 percent,
all versus the prior year.
ISG reported full-year operating income of $14.6 million,
compared with $29.5 million in the prior year. The firm also
reported net income and fully diluted earnings per share of $6.2
million and $0.12, respectively, versus net income of $19.7 million
and earnings per share of $0.39 in the prior year. Excluding the
previously mentioned reserve, net income and GAAP EPS would have
been $9.8 million and $0.20, respectively.
Adjusted net income (a non-GAAP measure defined below under
“Non-GAAP Financial Measures”) for the full year was $20.1 million,
or $0.40 per share on a fully diluted basis, compared with adjusted
net income of $26.9 million, or $0.53 per share on a fully diluted
basis, in the prior year.
Full-year adjusted EBITDA (a non-GAAP measure defined below
under “Non-GAAP Financial Measures”) was $37.7 million, down 13
percent from the prior year. Adjusted EBITDA margin (a non-GAAP
measure calculated by dividing adjusted EBITDA by reported
revenues) was 12.9 percent, compared with 15.1 percent in the prior
year.
Other Financial and Operating Highlights
ISG generated $9.7 million of cash from operations in the fourth
quarter, compared with $6.6 million in the prior year, and $12.3
million for the full year. The firm’s cash balance totaled $22.6
million at December 31, 2023, up 21 percent from $18.7 million at
September 30, 2023.
During the fourth quarter, ISG paid dividends of $2.2 million
and repurchased $1.7 million of shares. As of December 31, 2023,
ISG had $79.2 million in debt outstanding, unchanged from the
fourth quarter last year.
2024 First-Quarter Revenue and Adjusted EBITDA
Guidance
“We expect an acceleration in client demand throughout the
course of this year, in anticipation of an improving macro
environment and increasing AI adoption. For the first quarter, ISG
is targeting revenues of between $65 million and $67 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,” Connors said.
Quarterly Dividend
The ISG Board of Directors declared a first-quarter dividend of
$0.045 per share, payable on March 29, 2024, to shareholders of
record as of March 19, 2024.
Conference Call
ISG has scheduled a call for 9 a.m., U.S. Eastern Time, Friday,
March 8, 2024, to discuss the company’s fourth-quarter results. The
call can be accessed by dialing +1 (855) 761-5100; or, for
international callers, by dialing +1 (646) 307-1088. The
access code is 1749973. 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)
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 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 twelve months ended December
31, 2023, and December 31, 2022. 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, tax indemnity
receivables, accounts receivables reserves, 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, accounts receivables
reserves, 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 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 (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 December 31 Twelve Months Ended
December 31,
2023
2022
2023
2022
Revenues
$
66,186
$
74,167
$
291,054
$
286,267
Operating expenses Direct costs and expenses for advisors
40,865
44,539
178,913
169,650
Selling, general and administrative
27,276
20,963
91,271
81,769
Depreciation and amortization
1,567
1,496
6,258
5,368
Operating (loss) income
(3,522
)
7,169
14,612
29,480
Interest income
212
63
497
189
Interest expense
(1,513
)
(1,160
)
(6,190
)
(3,157
)
Foreign currency transaction (loss) gain
(118
)
(78
)
(158
)
170
(Loss) Income before taxes
(4,941
)
5,994
8,761
26,682
Income tax (benefit) provision
(2,072
)
1,711
2,607
6,956
Net (loss) income
$
(2,869
)
$
4,283
$
6,154
$
19,726
Weighted average shares outstanding: Basic
48,810
48,128
48,609
48,175
Diluted
49,838
49,769
50,175
50,420
(Loss) Earnings per share: Basic
$
(0.06
)
$
0.09
$
0.13
$
0.41
Diluted
$
(0.06
)
$
0.09
$
0.12
$
0.39
Information Services Group, Inc. Reconciliation
from GAAP to Non-GAAP (unaudited) (in thousands,
except per share amounts) Three Months
Ended December 31 Twelve Months Ended December 31,
2023
2022
2023
2022
Net (loss) income
$
(2,869
)
$
4,283
$
6,154
$
19,726
Plus: Interest expense (net of interest income)
1,301
1,097
5,693
2,968
Income taxes
(2,072
)
1,711
2,607
6,956
Depreciation and amortization
1,567
1,496
6,258
5,368
Interest accretion associated with contingent consideration
26
25
104
33
Acquisition-related cost (1)
102
241
201
282
Severance, integration and other expense
497
175
2,513
633
Account receivables reserves
4,822
-
4,822
-
Tax indemnity receivable
35
-
35
-
Foreign currency transaction loss (gain)
118
78
158
(170
)
Non-cash stock compensation
2,380
2,028
9,132
7,460
Adjusted EBITDA
$
5,907
$
11,134
$
37,677
$
43,256
Net (loss) income
$
(2,869
)
$
4,283
$
6,154
$
19,726
Plus: Non-cash stock compensation
2,380
2,028
9,132
7,460
Intangible amortization
812
743
3,164
2,323
Interest accretion associated with contingent consideration
26
25
104
33
Acquisition-related cost (1)
102
241
201
282
Account receivables reserves
4,822
-
4,822
-
Severance, integration and other expense
497
175
2,513
633
Write-off of deferred financing costs
-
-
379
-
Foreign currency transaction loss (gain)
118
78
158
(170
)
Tax effect (2)
(2,802
)
(1,052
)
(6,551
)
(3,379
)
Adjusted net income
$
3,086
$
6,521
$
20,076
$
26,908
Weighted average shares outstanding: Basic
48,810
48,128
48,609
48,175
Diluted
49,838
49,769
50,175
50,420
Adjusted earnings per share: Basic
$
0.06
$
0.14
$
0.41
$
0.56
Diluted
$
0.06
$
0.13
$
0.40
$
0.53
(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 Ended December 31,
2023
Constant currency impact
Three MonthsEndedDecember 31, 2023Adjusted Three
MonthsEndedDecember 31, 2022 Constantcurrencyimpact Three
MonthsEndedDecember 31, 2022Adjusted Revenue
$
66,186
$
(1,077
)
$
65,109
$
74,167
$
(330
)
$
73,837
Operating income
$
(3,522
)
$
242
$
(3,280
)
$
7,169
$
189
$
7,358
Adjusted EBITDA
$
5,907
$
201
$
6,108
$
11,134
$
163
$
11,297
Twelve MonthsEndedDecember 31, 2023
Constantcurrencyimpact Twelve MonthsEndedDecember 31, 2023Adjusted
Twelve MonthsEndedDecember 31, 2022 Constantcurrencyimpact Twelve
MonthsEndedDecember 31, 2022Adjusted Revenue
$
291,054
$
(5,483
)
$
285,571
$
286,267
$
(5,539
)
$
280,728
Operating income
$
14,612
$
689
$
15,301
$
29,480
$
570
$
30,050
Adjusted EBITDA
$
37,677
$
474
$
38,151
$
43,256
$
412
$
43,668
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240307213640/en/
Press: Will Thoretz +1 203 517 3119
will.thoretz@isg-one.com
Investor: Michael Sherrick +1 203 517 3104
michael.sherrick@isg-one.com
Information Services (NASDAQ:III)
過去 株価チャート
から 4 2024 まで 5 2024
Information Services (NASDAQ:III)
過去 株価チャート
から 5 2023 まで 5 2024