Information Services Group — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported third-quarter GAAP revenues of $65.1 million, an increase of 4.4% compared to $62.4 million in the prior year.
• Reported third-quarter GAAP net income of $3.4 million, up 10.3% from $3.1 million in the prior year.
• Fully diluted GAAP earnings per share (EPS) were $0.07, up 10.2% from $0.06 in the prior year.
• Adjusted net income was $5.0 million, or $0.10 per share, up 7.5% from $4.7 million, or $0.09 per share, in the prior year.
• Adjusted EBITDA was $10.0 million, up 19% from the prior year.
• Adjusted EBITDA margin was 15.4%, compared to 13.5% in the prior year's third quarter.
• Operating income was $6.5 million, compared to $4.6 million in the prior year.
• Cash from operations was $12.3 million, the highest amount generated in five years.
• Cash balance totaled $28.5 million at September 30, 2026, up 20% from $23.7 million at June 30, 2026.
• The company returned $6.9 million to shareholders during the quarter through share repurchases ($4.5 million) and dividends ($2.4 million).

Guidance and Future Outlook:

• Sets fourth-quarter 2026 revenue guidance between $64 million and $65 million.
• Sets fourth-quarter 2026 adjusted EBITDA guidance between $9 million and $10 million.
• Management targets year-over-year growth for the fourth quarter, noting continuous monitoring of macroeconomic conditions, foreign exchange, and inflation.

Business Segments and Product Lines:

• Americas revenue was $41.9 million, down 1% on a reported basis versus the prior year.
• Europe revenue was $17.0 million, up 6% on a reported basis versus the prior year.
• Asia Pacific revenue was $6.2 million, up 47% on a reported basis versus the prior year.
• AI-related revenues reached over $30 million for the first time.
• Recurring revenues increased 7%.

Market and Competitive Landscape:

• ISG serves more than 900 clients, including 75 of the world's top 100 enterprises.
• The firm leverages AI to help organizations achieve operational excellence and faster growth.
• Management notes that AI is amplifying the value of the portfolio through research, advisory execution, and governance.

Risks and Challenges:

• Risks include failure to secure new engagements or loss of important clients, ability to hire and retain qualified employees, and maintaining billing and utilization rates.
• Potential challenges involve international expansion success, competition, and the ability to shift the product mix into higher-margin businesses.
• External risks include geopolitical conditions (specifically mentioning the conflict in Iran), trade policy changes, inflation, interest rate changes, and currency fluctuations.
• Risks also cover the impact of the divestiture of the automation unit on customer relationships and the success of the focus on AI advisory and platforms.

Management Commentary and Tone:

• Chairman and CEO Michael P. Connors described the quarter as having "robust financial performance," "strong cash generation," "expanding margins," and "solid revenue growth."
• Connors stated the company is "well-positioned to close out an outstanding 2026 and continue our momentum into the new year."
• Management highlighted the margin expansion to 15.4% as the highest quarterly margin in four years.

Other Key Points:

• The Board of Directors declared a fourth-quarter dividend of $0.045 per share, payable December 18, 2026, to shareholders of record as of December 4, 2026.
• A conference call to discuss results is scheduled for November 2, 2026, at 9 a.m. U.S. Eastern Time.
• The company reported a gain on the sale of business of $720,000 in the prior year's third quarter, with no such gain in the current quarter.
• Non-GAAP financial measures used include Adjusted EBITDA and Adjusted Net Income, which exclude non-cash and special charges such as stock compensation, amortization, and acquisition-related costs.