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- **Revenue Surge**: 8% YoY growth to $62 million, driven by Americas (+11%) and AI-related revenue quadrupling to $20 million.
- **Profit Expansion**: Adjusted EBITDA up 19% to $8.4 million, margin +200bps to 13.5%, fueled by AI and recurring revenue growth.
- **Cash Power**: $11 million Q3 cash flow, $23 million over two quarters, supporting dividend ($2.4M) and buyback ($2.8M).
- **AI Leadership**: ISG Tango manages $15B contracts, enabling mid-market expansion and 40% cost savings for clients.
- **Global Momentum**: Europe returns to growth (+7%), U.S. public sector up 30%, with APAC public sector recovery expected Q2 2026.
- **Guidance Confidence**: Q4 2025 targets 15%-20% EBITDA growth, reflecting AI-driven margin expansion and operational excellence.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 2025 revenue of $62 million, up 8% year-over-year (excluding divested automation unit). Americas led with 11% growth, Europe returned to 7% growth, and recurring revenues rose 9% to $28 million.
- **AI Momentum**: AI-related revenue reached $20 million, quadrupling from Q3 2024, supporting 350 clients (200% increase YoY). ISG Tango platform now manages $15 billion in contracts, driving mid-market expansion.
- **Profitability**: Adjusted EBITDA of $8.4 million (+19% YoY), margin up 200bps to 13.5%. Cash flow from operations was $11 million, contributing to $23 million over two quarters.
- **Regional Highlights**: Americas ($42 million, +11%), Europe ($16 million, +7%), and key engagements with Lockheed Martin, Carnival, and a U.S. healthcare client.
- **Guidance**: Q4 2025 revenue target $60.5-$61.5 million, adjusted EBITDA growth 15%-20% YoY.

**【CFO Financial Commentary】**
- **Financial Performance**: GAAP net income $3.1 million ($0.06 EPS), up from $1.1 million ($0.02 EPS). Adjusted net income $4.7 million ($0.09 EPS), up 88% YoY. Headcount stable at 1,316, utilization 72%.
- **Cash & Liquidity**: $28.7 million cash, +$3.5 million QoQ. Operating cash flow $11.1 million. Dividends $2.4 million, buybacks $2.8 million. Debt-to-EBITDA ratio 1.95x, down from 2.4x.
- **Balance Sheet**: Average borrowing rate 6.2%, down 110bps YoY. $8.2 million remaining on share repurchase authorization.

**【Q&A Highlights】**
- **Margin Expansion**: AI-driven efficiency (e.g., ISG Tango) and premium pricing for AI services support margin growth. Europe pipeline strong, with focus on cost optimization.
- **Interest Rates & Spending**: Easing rates may boost tech spending, particularly for scalable AI projects. U.S. public sector up 30% QoQ due to AI adoption.
- **Mid-Market Growth**: ISG Tango enables mid-market (>$1B revenue) clients to access AI tools, contributing 25% of platform usage.
- **APAC Recovery**: Public sector in Australia expected to resume spending Q2 2026, aligning with pipeline visibility.
- **Competition**: No direct competition from IT consultants/hyperscalers; clients view ISG as complementary partner.
- **Labor Strategy**: Automation reduces hiring needs, with surgical additions planned for 2026.


Information Services Group, Inc. (III) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

III

III fundamentals

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