Education
About Us
Working with TipRanks
Follow Us
Information Services Group (III)
NASDAQ:III
Top Page
Information Services Group
(NASDAQ:III)
Select Model
Select Model
Rating:66Neutral
Price Target:
$4.50
▲(13.07% Upside)
Action:ReiteratedDate:03/07/26
The score is driven mainly by improved fundamentals (deleveraging, stronger cash generation, and profitability rebound) and a constructive earnings outlook with clear AI/recurring revenue momentum. These strengths are tempered by bearish technicals (price below key moving averages with negative MACD) and a relatively high P/E despite a supportive ~4% dividend yield.
Positive Factors
Deleveraging / Balance Sheet
A materially lower debt load and debt-to-equity near 0.10 meaningfully reduces refinancing and interest-rate sensitivity, giving management durable financial flexibility to fund AI investments, sustain dividends/repurchases, or absorb cyclical revenue swings without compromising operations.
Cash Generation
Sustained operating and free cash flow near $29M strengthens the company’s ability to self-fund strategic initiatives, pay dividends, and pursue targeted M&A. Strong cash generation improves resilience versus past cash volatility and supports multi-quarter execution of recurring-revenue expansion.
Recurring Revenue + AI/Platform Momentum
Nearly half revenue is recurring and AI-related sales rose to ~30% while ISG Tango TCV scaled >$25B. This mix increases revenue stickiness, raises cross-sell opportunity, and positions ISG structurally for higher-margin platform and subscription growth over coming quarters versus pure project-driven peers.
Negative Factors
Uneven Revenue Trend
Top-line inconsistency—decline in 2024 and only partial recovery in 2025—signals the business remains vulnerable to lumpy large-sourcing deals and cyclical IT spending. Persistent uneven revenue reduces visibility and complicates sustainable margin and staffing plans over the medium term.
APAC Weakness / Geographic Dependency
Weak APAC performance and explicit reliance on public-sector spending to reignite growth highlight a regional vulnerability. If public budgets remain constrained, APAC may underperform long-term potential, limiting overall company growth and diversification across major geographies.
Utilization & Margin Volatility
Below-target utilization and historical margin/cash-conversion swings indicate operational leverage risk: utilization shortfalls depress margins, and volatile cash conversion undermines predictability of free cash flow. This complicates multi-quarter budgeting and consistency of returns to shareholders.
Information Services Group (III) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$189.74M
Dividend Yield3.03%
Average Volume (3M)339.11K
Price to Earnings (P/E)26.4
Beta (1Y)0.85
Revenue Growth-5.74%
EPS GrowthN/A
CountryUS
Employees1,300
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.05
Shares Outstanding47,674,340
10 Day Avg. Volume311,102
30 Day Avg. Volume339,107
Financial Highlights & Ratios
PEG Ratio0.14
Price to Book (P/B)2.94
Price to Sales (P/S)1.14
P/FCF Ratio11.14
Enterprise Value/Market Cap1.24
Enterprise Value/Revenue0.96
Enterprise Value/Gross Profit2.33
Enterprise Value/Ebitda10.53
Forecast
1Y Price Target
$6.00Price Target Upside50.75% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)0.22
Revenue Forecast (FY)$251.59M
Information Services Group Business Overview & Revenue Model
Company DescriptionInformation Services Group, Inc., together with its subsidiaries, operates as a technology research and advisory company in the Americas, Europe, and the Asia Pacific. The company offers digital transformation services, including automation, cloud, and data analytics; sourcing advisory; managed governance and risk; network carrier; technology strategy and operations design; change management; and market intelligence and technology research and analysis services. It supports private and public sector organizations to transform and optimize their operational environments. The company also provides ISG Digital, a client solution platform that helps clients developing technology, transformation, sourcing, and digital solutions; and ISG Enterprise, a client solution platform that helps clients manage change and optimize operations in areas comprising finance, human resource, and Procure2Pay. In addition, it offers ISG GovernX, a software platform, which provides insights from market and performance data, and automates the management of third-party supplier relationships that comprise contract and project lifecycles, and risk management. The company serves private sector clients operating in the manufacturing, banking and financial services, insurance, health sciences, energy and utilities, and consumer services industries; and public sector clients, including state and local governments, airport and transit authorities, and national and provincial government units. Information Services Group, Inc. was founded in 2006 and is based in Stamford, Connecticut.
How the Company Makes MoneyISG primarily makes money by selling professional services and subscription-style research products to enterprise and public-sector clients seeking support with IT and business-process sourcing and transformation. Key revenue streams generally include: (1) Advisory and consulting fees for projects such as sourcing strategy, vendor selection support (e.g., RFP development and evaluation), contract and commercial assistance, and transformation roadmap work; these are typically billed as time-and-materials or fixed-fee engagements depending on scope. (2) Ongoing managed services / governance revenue where ISG supports clients after sourcing decisions (e.g., vendor management, performance and SLA governance, financial/chargeback management, and continuous optimization); these arrangements are commonly recurring in nature (retainer or subscription-like). (3) Research and benchmarking revenue from access to ISG’s market intelligence and provider evaluations (including recurring access to research reports, benchmarking databases, and related tools), sold via subscriptions or licensing. (4) Provider ecosystem-related revenue where service providers may pay for research-related products and visibility tied to ISG’s research programs; specific structure and materiality can vary by program and period. Significant factors influencing earnings include enterprise IT spending cycles (outsourcing, cloud migrations, and cost-optimization initiatives), the volume of large sourcing events, and renewal/expansion of recurring governance and research subscriptions. Specific named partnerships and their direct revenue contribution: null.
Information Services Group Key Performance Indicators (KPIs)
Information Services Group Earnings Call Summary
Earnings Call Date:Jan 15, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 16, 2026
Earnings Call Sentiment Positive
The call emphasized multiple clear positives: solid top-line growth, meaningful margin expansion, strong cash generation, improved leverage, and rapid adoption of AI services (AI revenue rising to ~30% of full-year revenue and ~35% in Q4). Platform momentum (ISG Tango) and targeted AI investments/acquisitions underpin a credible growth strategy. The primary negatives were concentrated regionally (Asia Pacific weakness), some GAAP EPS comparability noise due to prior-year divestiture gains, and short-term pipeline timing risk driven by macro uncertainty. On balance, operational and strategic positives—particularly around AI and recurring revenue—outweigh the contained challenges, supporting a positive outlook for 2026 execution.Q4-2025 Updates
Positive Updates
Top-line Growth and Guidance
Q4 revenue of $61.2 million, up 6% year-over-year and at the top end of guidance; full-year revenue $245 million, up 7% YoY. Management provided Q1 guidance of $60.5M–$61.5M revenue and adjusted EBITDA of $7.5M–$8.5M, signaling expected continued YoY growth.
Strong Profitability Expansion
Q4 adjusted EBITDA of $8.1 million, up 24% YoY (from $6.5M) with EBITDA margin of 13.2% (+189 basis points YoY). Full-year adjusted EBITDA exceeded $32 million, up 28% YoY, with full-year margin of 13.2% (+300 basis points YoY).
Robust Cash Generation and Improved Leverage
Full-year operating cash flow of $29 million, up 46% YoY. Year-end cash of $28.7 million (up $5.6M YoY). Gross debt-to-EBITDA fell to just under 1.9x from 2.4x a year earlier and average borrowing rate declined to 5.8% (down 125 bps YoY).
Recurring Revenue Mix Strength
Full-year recurring revenues of $112 million, representing 46% of total revenue. Q4 recurring revenues grew 13% YoY, led by research and platform businesses (notably government services).
Rapid AI Revenue Adoption
AI-related services accounted for nearly 35% of Q4 revenues and ~30% for the full year — reported as a 3x increase from 2024 — demonstrating meaningful momentum in AI-centered transformation services.
Platform and Product Momentum (ISG Tango)
ISG Tango platform now runs more than $25 billion of total contract value (TCV), up from $7 billion the prior year (roughly a 3.6x increase). Platform adoption includes meaningful mid-market penetration (management noted ~25–30% mid-market share of flow).
Strategic AI Investments and M&A
Acquisition of the AI Maturity Index platform and formation of a dedicated AI acceleration unit led by the Chief AI Officer. Management remains active in M&A conversations, prioritizing assets that increase recurring revenue and AI capabilities.
Regional Wins and Large Client Engagements
Europe Q4 revenue up 28% to $19.1M; Americas delivered $38.3M in Q4 and full-year Americas up 11% (best since 2021). Notable client wins include multimillion-dollar transformation and sourcing engagements (examples: consumer products client targeting 40% operating cost reduction, a U.S. hospital network engagement delivering >$130M savings).
Negative Updates
Asia Pacific Revenue Weakness
Asia Pacific Q4 revenue was $3.9 million, down $1.1 million YoY. Management expects APAC to be back-half weighted and cited the need for public-sector spending to reignite growth.
Reported GAAP Net Income Compression
Reported Q4 net income was $2.6M ($0.05 per diluted share) versus $3.0M ($0.06) in the prior-year quarter. Although adjusted net income increased to $4.0M ($0.08) from $3.0M ($0.06), the GAAP comparability was impacted by a $2.3M gain on sale in Q4 2024.
Seasonal/Quarterly Utilization Pressure
Consulting utilization in Q4 was 69%, below the full-year 73% (which is in-line with the company's mid-70s target). Q4 utilization was described as in line with an average fourth-quarter pattern but remains a near-term operational headwind versus target utilization.
Macro Uncertainty and Pipeline Choppiness
Management noted clients remain cautious amid macro uncertainty; some U.S. deals shifted from Q1 into Q2. Demand is strong but pacing is mixed and could create short-term volatility in revenue timing.
Dependency on Public Sector for APAC Recovery
Management explicitly cited that APAC will need improved public-sector spending to return to historical growth patterns, indicating a geographic growth dependency that could delay recovery if public budgets remain constrained.
Company Guidance
ISG guided next-quarter revenues of $60.5–$61.5 million and adjusted EBITDA of $7.5–$8.5 million, calling for continued year‑over‑year growth; for context, Q4 revenue was $61.2M (+6% YoY) with adjusted EBITDA $8.1M (+24%) and an EBITDA margin of 13.2% (≈+190 bps). For the full year ISG reported $245M revenue (+7%), adjusted EBITDA >$32M (+28%) with a 13.2% margin (+300 bps), operating cash flow $29M (+46%), recurring revenues $112M (46% of total), AI‑related revenue ~35% of Q4 (~30% for the year, 3x 2024), ISG Tango TCV >$25B (up from $7B), headcount 1,290, Q4 consulting utilization 69% (FY 73%), cash $28.7M, gross debt/EBITDA ~1.9x, average borrowing rate 5.8%, and recent capital actions including $2.2M of dividends paid and $2.3M of share repurchases.Information Services Group Financial Statement Overview
Summary
Financials improved notably in 2025 with higher profitability, much lower leverage (debt down sharply and debt-to-equity ~0.10), and stronger operating/free cash flow (~$29M). Offsetting factors include an uneven revenue trend (2024 decline, only modest 2025 recovery vs. 2023) and historically volatile margins/cash conversion.Income Statement
Profitability rebounded meaningfully in 2025 (annual), with net margin improving to ~3.8% from ~1.1% in 2024 and higher EBIT dollars. However, growth has been inconsistent: revenue declined in 2024 and is only slightly higher in 2025, remaining below the 2023 level. Margins also appear volatile versus the stronger 2021–2022 period, and 2025 gross profit/margin are reported as zero (likely missing), limiting full margin-quality assessment.61
Positive
Balance Sheet
Leverage improved sharply in 2025 (annual): debt fell to ~$9.0M from ~$64.9M in 2024, driving debt-to-equity down to ~0.10 (from ~0.67). Equity remains solid (~$94.7M) and return on equity improved to ~9.9% from ~2.9% in 2024. The main weakness is that prior years carried much higher leverage (debt-to-equity ~0.81–0.86 in 2020–2023), suggesting the balance sheet profile has historically been more risk-exposed even though it has recently strengthened.73
Positive
Cash Flow
Cash generation strengthened in 2025 (annual), with operating cash flow and free cash flow both at ~$29.0M and free cash flow growth accelerating. Cash conversion looks healthier versus 2022–2023 when operating cash flow was relatively low. That said, cash flows have been choppy over time (very strong in 2020–2021, weaker in 2022–2023), and the provided cash-flow-to-earnings linkage metrics are mixed across years, pointing to variability in cash conversion consistency.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 244.72M | 247.59M | 291.05M | 286.27M | 277.83M |
| Gross Profit | 100.87M | 97.28M | 112.14M | 116.62M | 109.36M |
| EBITDA | 22.33M | 16.95M | 21.21M | 35.21M | 30.78M |
| Net Income | 9.34M | 2.84M | 6.15M | 19.73M | 15.53M |
Balance Sheet | |||||
| Total Assets | 211.00M | 204.51M | 247.34M | 243.03M | 236.79M |
| Cash, Cash Equivalents and Short-Term Investments | 28.66M | 23.07M | 22.64M | 30.59M | 47.52M |
| Total Debt | 70.53M | 64.92M | 87.05M | 85.97M | 79.79M |
| Total Liabilities | 116.33M | 108.23M | 145.26M | 142.60M | 138.40M |
| Stockholders Equity | 94.68M | 96.29M | 102.08M | 100.43M | 98.39M |
Cash Flow | |||||
| Free Cash Flow | 24.99M | 17.03M | 8.84M | 7.72M | 39.62M |
| Operating Cash Flow | 29.01M | 19.86M | 12.27M | 11.15M | 41.94M |
| Investing Cash Flow | -4.94M | 18.99M | -4.43M | -6.87M | -2.32M |
| Financing Cash Flow | -19.55M | -37.91M | -16.20M | -18.94M | -34.13M |
Information Services Group Technical Analysis
Negative
3.98
Price Trends
5.15
Negative
5.38
Negative
5.15
Negative
Market Momentum
-0.30
Positive
26.18
Positive
7.23
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For III, the sentiment is Negative. The current price of 3.98 is below the 20-day moving average (MA) of 4.52, below the 50-day MA of 5.15, and below the 200-day MA of 5.15, indicating a bearish trend. The MACD of -0.30 indicates Positive momentum. The RSI at 26.18 is Positive, neither overbought nor oversold. The STOCH value of 7.23 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for III.
Information Services Group Risk Analysis
Information Services Group disclosed 37 risk factors in its most recent earnings report. Information Services Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Information Services Group Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $189.74M | 26.44 | 9.87% | 3.03% | -5.74% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
55 Neutral | $303.87M | -58.90 | -31.77% | ― | 17.44% | 41.97% | |
52 Neutral | $345.94M | 42.13 | 10.27% | 2.41% | 0.68% | -67.84% | |
50 Neutral | $158.32M | -0.25 | -85.51% | ― | -5.70% | 94.70% | |
45 Neutral | $167.07M | 2.63 | 126.78% | ― | -4.93% | 18.65% | |
43 Neutral | $191.84M | -1.68 | -20.84% | ― | -12.45% | -142.77% |
* Technology Sector Average
III
Information Services Group
3.98
0.46
12.97%
TTEC
TTEC Holdings
3.26
-0.03
-0.91%
HCKT
The Hackett Group
13.63
-14.14
-50.91%
UIS
Unisys
2.31
-1.87
-44.74%
CNDT
Conduent
1.24
-1.75
-58.53%
TLS
Telos
4.12
1.40
51.47%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.