ISG (III) Q1 2026 Earnings Call Transcript

Motley Fool Transcribing, The Motley Fool Mon, May 11, 2026 at 9:04 PM GMT+7 27 min read III Image source: The Motley Fool. Chairman and Chief Executive Officer — Michael P. Connors Executive Vice President and Chief Financial Officer — Michael Sherrick Head of Corporate Communications — Will Thoretz Need a quote from a Motley Fool analyst? Email pr@fool.com Operator: Good morning, and welcome to the Information Services Group First Quarter 2026 Conference Call. This call is being recorded, and a replay will be available on ISG s website within 24 hours. Now I d like to turn the call over to Mr. Will Thoretz for his opening remarks and introductions. Mr. Thoretz, please go ahead. Will Thoretz: Thank you, operator. Hello, and good morning. My name is Will Thoretz. I am Head of Corporate Communications for ISG. I d like to welcome everyone to ISG s first quarter conference call. I m joined today by Michael Connors, Chairman and Chief Executive Officer; and Michael Sherrick, Executive Vice President and Chief Financial Officer. Before we begin, I would like to read a forward-looking statement. It is important to note that this communication may contain forward-looking statements, which represent the current expectations and beliefs of the management of ISG concerning future events and their potential effects. These 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. For a more detailed listing of the risks and other factors that could affect future results, please refer to the forward-looking statement contained in our Form 8-K that was furnished last night to the SEC and the Risk Factors sections of our most recent Form 10-K and 10-Q filings. You should also read ISG s annual report on Form 10-K and any other relevant documents, including any amendments or supplements to these documents filed with the SEC. You will be able to obtain free copies of any of ISG s SEC filings on either ISG s website at www.isg-one.com or the SEC s website at www.sec.gov. ISG undertakes no obligation to update or revise any forward-looking statement to reflect subsequent events or circumstances. During this call, we will discuss certain non-GAAP financial measures, which ISG believes improves the comparability of the company s financial results between periods and provides for greater transparency of key measures used to evaluate the company s performance. The non-GAAP measures, which we will touch on today include adjusted EBITDA, adjusted net earnings and the presentation of selected financial data on a constant currency basis. Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the reconciliation of all non-GAAP measures presented to the closely applicable GAAP measure, please refer to our current report on Form 8-K, which was filed last night with the SEC. And now I would like to turn the call over to Michael Connors, who will be followed by Michael Sherrick. Mike? Michael P. Connors: Thank you, Will, and good morning, everyone. Today, we will review our strong Q1 results, our compelling AI transformation story, our view of the broader demand environment and our outlook for Q2. ISG had a strong first quarter and an excellent start to the year, continuing our momentum. Our Q1 results, both revenue and EBITDA were at the top end of our guidance. Revenue was $61.2 million, up 3%, led by 25% growth in Europe and 9% growth in recurring revenues, powered by our research, public sector and governance businesses. In terms of profitability, Q1 marks the sixth quarter in a row that our adjusted EBITDA has grown by double digits. Versus the prior year, it was up 12% to $8.3 million, and our adjusted EBITDA margin was up more than 100 basis points to 13.5%, fueled by a more profitable business mix and our strong operating discipline. Now a few comments on our AI transformation story. AI demand continues to accelerate for ISG. In Q1, we delivered $21 million of AI-related revenue, about 1/3 of our firm-wide total. That was up from $12 million a year ago. AI-related revenue includes work where AI is a key part of the client solution, including AI research and insights, AI strategy, sourcing governance, operating model design, business case validation, software, tech provider evaluation and transformation support. AI and the cost optimization initiatives that fund digital transformation, remain leading areas of client investment, and that plays to our strengths. Apart from AI-driven solutions, we are leveraging AI in our own client delivery model to improve speed, quality and efficiency, thereby supporting margin expansion over time. Our recently launched ISG AI Index underscores how the AI market continues to develop. Initial spending is concentrated in infrastructure as hyperscalers

ISG (III) Q1 2026 Earnings Call Transcript

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ISG (III) Q1 2026 Earnings Call Transcript

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