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Information Services Group (III)
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Information Services Group (III) AI Stock Analysis

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III

Information Services Group

(NASDAQ:III)

Rating:58Neutral
Price Target:
$4.50
▼(-0.66%Downside)
The stock score of 58.25 reflects a company with strong cash flow and debt management but facing challenges in revenue growth and technical momentum. Positive earnings call guidance and strategic focus on AI provide some optimism, though valuation concerns persist.
Positive Factors
Earnings
Earnings beat forecasts due to adjusted EBITDA margin overage, lower-than-expected interest expenses, and a lower-than-expected non-GAAP tax rate.
Financial Performance
Adjusted EBITDA exceeded forecasts, coming in 7% higher than the FactSet consensus forecast.
Market Strategy
The company's acquisition strategy is focused on accelerating revenue penetration and expanding into existing channels.
Negative Factors
Business Activity
Total organic revenue declined 16% on a year-over-year basis, indicating a decrease in overall business activity.
Revenue
Total organic revenue declined 16% on a year-over-year basis, indicating a decrease in overall business activity.

Information Services Group (III) vs. SPDR S&P 500 ETF (SPY)

Information Services Group Business Overview & Revenue Model

Company DescriptionInformation Services Group (III) is a leading global technology research and advisory firm. Specializing in digital transformation services, the company provides a comprehensive range of solutions, including research, consulting, and managed services, tailored to optimize performance and enhance business outcomes for their clients. Operating across multiple sectors, ISG serves a diverse clientele globally, focusing on services such as automation, cloud, data analytics, and sourcing advisory.
How the Company Makes MoneyInformation Services Group generates revenue primarily through its advisory services, which include consulting and managed services. The company provides strategic guidance and actionable insights to organizations undergoing digital transformation, charging fees for its expert analysis and recommendations. Key revenue streams include client engagements for technology research, digital transformation consulting, and managed services contracts. Additionally, ISG hosts events and conferences, which contribute to its earnings by facilitating networking opportunities and knowledge sharing among industry leaders. Strategic partnerships with technology vendors and service providers also enhance its service offerings and drive additional revenue.

Information Services Group Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 14.39%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
The earnings call presented a solid performance in Q1 with strong growth in the Americas and significant improvements in adjusted EBITDA and AI client base. However, there were concerns related to declining revenues in Europe and Asia-Pacific and geopolitical uncertainties impacting future performance.
Q1-2025 Updates
Positive Updates
Strong Q1 Revenue Growth
ISG delivered Q1 revenues of $60 million, up 5% excluding results from the divested automation unit. Growth was led by the Americas, up 17%, marking the largest year-over-year growth quarter in the Americas in the last two years.
Significant Increase in Adjusted EBITDA
Adjusted EBITDA was up 68% to $7.4 million, with an adjusted EBITDA margin increase of more than 550 basis points to 12.4%.
Expansion in AI Client Base
ISG served more than 200 clients with AI-focused research and advisory services in the trailing 12 months, up from 150 clients noted last quarter.
ISG Tango Platform Growth
The ISG Tango platform saw more than $9 billion of contract value flow through it, up more than 30% from the previous quarter.
Key Client Engagements
Successful engagements included a $1 million plus engagement with a leading CPG company and a $2 million plus engagement with a multinational food processing company.
Negative Updates
Decline in European and Asia-Pacific Revenues
Europe revenue was down 13% and Asia-Pacific revenue was down 15% due to factors such as sluggish Australian government spending.
Cash and Debt Concerns
Cash decreased to $20.1 million from $23.1 million at the end of the fourth quarter. Net cash provided by operations was only $1 million, while $2.2 million was paid in dividends and $3.3 million in stock repurchases.
Geopolitical and Economic Uncertainties in Europe
Continued uncertainty in Europe due to geopolitical issues, including the Ukraine war, and economic challenges are impacting buyer behavior.
Company Guidance
During the Information Services Group (ISG) First Quarter 2025 Conference Call, the company provided optimistic guidance for the upcoming quarter, reflecting strong market demand in the Americas and a cautious outlook in Europe. ISG's Q1 2025 revenues reached $60 million, marking a 5% increase, with the Americas region growing by 17%. The company's adjusted EBITDA rose by 68% to $7.4 million, with margins improving over 550 basis points to 12.4%. Recurring revenues contributed $26 million, representing 44% of total revenues. For Q2 2025, ISG projects revenues between $59.5 million and $60.5 million and an adjusted EBITDA between $7 million and $8 million. The company highlighted its strategic focus on AI and digital transformation, noting significant traction with its AI-powered platforms, particularly ISG Tango, which now processes over $9 billion in contract value.

Information Services Group Financial Statement Overview

Summary
Information Services Group exhibits mixed financial performance. While debt management is commendable with a low debt-to-equity ratio, profitability metrics like net profit margin are declining, and revenue growth is negative at -16.4%. Cash flow remains stable, which is a positive aspect.
Income Statement
55
Neutral
The company's gross profit margin for TTM is approximately 41%, indicating efficient cost management. However, the net profit margin has decreased to around 3.2%, reflecting increased operating expenses. Revenue growth is negative compared to the previous year, showing a decline of about 16.4%, which is concerning. The EBIT and EBITDA margins exhibit a slight improvement over the past year, but they remain moderate for the industry.
Balance Sheet
65
Positive
The debt-to-equity ratio has significantly improved to approximately 0.03, showing reduced leverage and enhanced financial stability. Return on equity for TTM stands at around 8.1%, indicating reasonable profitability. The equity ratio is about 46.9%, suggesting a balanced capital structure, but the declining trend in total assets may pose a risk.
Cash Flow
70
Positive
The free cash flow growth rate for TTM is approximately -2.0%, indicating slight contraction but overall stability. The operating cash flow to net income ratio is approximately 2.4, suggesting strong cash generation relative to net income. The free cash flow to net income ratio is about 2.2, further emphasizing robust cash flow management.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue242.90M247.59M291.05M286.27M277.83M249.13M
Gross Profit99.71M97.28M112.14M116.62M109.36M99.25M
EBITDA22.13M16.95M21.21M35.05M30.60M18.57M
Net Income7.72M2.84M6.15M19.73M15.53M2.75M
Balance Sheet
Total Assets202.37M204.51M247.34M243.03M236.79M239.52M
Cash, Cash Equivalents and Short-Term Investments20.12M23.07M22.64M30.59M47.52M43.73M
Total Debt3.19M64.92M87.05M85.97M79.79M84.73M
Total Liabilities107.33M108.23M145.26M142.60M138.40M140.38M
Stockholders Equity95.04M96.29M102.08M100.43M98.39M99.14M
Cash Flow
Free Cash Flow16.70M17.04M8.84M7.72M39.62M42.79M
Operating Cash Flow18.51M19.86M12.27M11.15M41.94M43.97M
Investing Cash Flow19.18M18.99M-4.43M-6.87M-2.32M-3.50M
Financing Cash Flow-31.66M-37.91M-16.20M-18.94M-34.13M-15.70M

Information Services Group Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price4.53
Price Trends
50DMA
4.76
Negative
100DMA
4.21
Positive
200DMA
3.70
Positive
Market Momentum
MACD
-0.04
Positive
RSI
41.81
Neutral
STOCH
19.02
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For III, the sentiment is Neutral. The current price of 4.53 is below the 20-day moving average (MA) of 4.81, below the 50-day MA of 4.76, and above the 200-day MA of 3.70, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 41.81 is Neutral, neither overbought nor oversold. The STOCH value of 19.02 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for III.

Information Services Group Risk Analysis

Information Services Group disclosed 35 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

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$724.34M81.55137.01%262.87%873.76%
58
Neutral
$218.36M29.478.09%3.97%-12.26%
57
Neutral
HK$14.36B5.83-5.77%4.76%9.65%-43.80%
56
Neutral
$815.83M39.11-0.04%3.50%95.90%
55
Neutral
$309.14M192.24%-1.72%82.15%
54
Neutral
$251.60M-73.85%1.14%-9.86%-2426.25%
50
Neutral
$208.70M-38.32%-21.83%-67.07%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
III
Information Services Group
4.53
1.17
34.82%
TTEC
TTEC Holdings
5.26
-2.64
-33.42%
UIS
Unisys
4.35
-0.38
-8.03%
TSSI
TSS
28.95
26.05
898.28%
PSFE
Paysafe
13.75
-7.79
-36.17%
TLS
Telos
2.84
-1.30
-31.40%

Information Services Group Corporate Events

Executive/Board Changes
Information Services Group Extends CEO Contract to 2029
Positive
Jan 3, 2025

Information Services Group, Inc. has extended the employment agreement of its Chairman and CEO, Michael P. Connors, until December 31, 2029. As part of this extension, Connors receives restricted stock units and a potential cash bonus linked to performance targets, which reflects the company’s commitment to retaining leadership and aligning executive incentives with corporate performance goals.

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.Date of analysis: Jul 23, 2025