Information Services 2025 Q3 Earnings Strong Net Income Growth of 166%

Information Services Group (III) reported fiscal 2025 Q3 earnings on Nov 3, 2025, delivering revenue of $62.36 million (up 1.8% YoY) and net income of $3.06 million (up 166.2% YoY). The company exceeded revenue estimates but fell short of EPS expectations at $0.06 (vs. $0.08). Guidance for Q4 2025 was in-line, projecting $60.5–$61.5 million in revenue and 15–20% adjusted EBITDA growth.

Revenue

The company’s total revenue for Q3 2025 rose 1.8% year-over-year to $62.36 million, driven by 8% growth in core operations excluding the divested automation unit. Recurring revenue expanded to 45% of total revenue, up 9% YoY, while AI-related revenue surged to $20 million (up 300% YoY).

Earnings/Net Income

Net income reached $3.06 million in Q3 2025, a 166.2% increase from $1.15 million in the prior-year period. Earnings per share (EPS) rose to $0.06, though this fell below the expected $0.08. Non-GAAP EPS of $0.09 exceeded estimates by $0.01, reflecting operational efficiency gains and margin expansion.

Price Action

Following the earnings release, ISG’s stock price gained 3.06% in a single trading day, 8.78% over the past week, and 7.43% month-to-date.

Post-Earnings Price Action Review

The stock’s post-earnings performance reflects strong investor confidence in ISG’s AI-driven growth strategy and recurring revenue model. Despite the EPS miss, the revenue beat and guidance for Q4 2025, which aligns with the $60.79 million consensus, suggest optimism about the company’s ability to maintain margin expansion. Analysts highlighted ISG’s AI-powered platforms, such as ISG Tango, and its focus on digital transformation as key drivers of long-term value.

CEO Commentary

Michael P. Connors, Chairman & CEO, emphasized AI as a strategic differentiator, with AI-related revenue quadrupling YoY to $20 million and 350 clients engaged in AI initiatives (up 200% YoY). He noted margin expansion via the AI-powered ISG Tango platform, which manages $15 billion in contracts, and recurring revenue growth as core strengths. Challenges included a 15% revenue decline in APAC, but Connors expressed confidence in AI-driven productivity and global expansion.

Guidance

For Q4 2025, ISG targets revenue of $60.5–$61.5 million and adjusted EBITDA growth of 15–20% YoY to $7.5–$8.5 million. The company anticipates continued margin expansion and cash flow strength, driven by AI adoption, operational efficiencies, and recurring revenue growth, while remaining cautiously optimistic about macroeconomic conditions and potential 2026 rate cuts.

Additional News

Information Services Group (III) declared a consistent quarterly dividend of $0.045 per share, yielding 3.27%, payable on Dec 19. The payout marks the 11th consecutive quarter of stability, underscoring financial resilience. Beyond dividends, the company is leveraging AI to drive growth, with AI-related revenue quadrupling YoY. Expansion in Italy further positions ISG to capitalize on European market opportunities.

<img src="https://cdn.ainvest.com/aigc/hxcmp/images/compress-aime_generated_1762237515511.jpg.png" style="max-width:100%;">

The company’s debt-to-equity ratio of 0.66 and current ratio of 2.43 highlight its balanced capital structure and liquidity. With a market cap of $264.64 million, ISG operates in the software industry, focusing on digital transformation and advisory services. Recent strategic moves, including AI platform development and geographic expansion, align with its long-term vision of redefining value delivery in technology services.