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What changed in Information Services Group Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Information Services Group Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+241 added−254 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-08)

Top changes in Information Services Group Inc.'s 2024 10-K

241 paragraphs added · 254 removed · 201 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeISG Research: In today's digital marketplace, ISG helps large enterprises confront emerging challenges, prepare for new opportunities and ensure they stay ahead of competitors. With a powerful mix of advisory, digital transformation and research capabilities, ISG helps close the gap between where enterprises are and where they need to be.
Biggest changeWith a powerful mix of advisory, digital transformation and research capabilities, ISG helps close the gap between where enterprises are and where they need to be. ISG Research has a focus on bringing buyers and sellers of technology together, including large service, cloud and software providers.
We continue to believe that our vision will be realized through the acquisition, integration and successful operation of market-leading brands within the data, analytics and advisory industry. Our private and public sector clients continue to face significant technological, business and economic challenges that will fuel demand for the professional services we provide.
We continue to believe that our vision will be realized through the acquisition, integration and successful operation of market-leading brands within the data, analytics and advisory industry. Our private and public sector clients continue to face significant technological, business and economic challenges that we believe will fuel demand for the professional services we provide.
As these companies transform into AI-powered enterprises, ISG provides crucial buying advice, access to diverse AI technologies and niche implementors via a marketplace, and impartial governance solutions. By offering a comprehensive understanding of various AI providers and platforms, ISG helps companies make informed decisions that align with their specific needs. This strategic advice is essential in an ever-evolving AI landscape.
As companies transform into AI-powered enterprises, ISG provides crucial buying advice, access to diverse AI technologies and niche implementors via a marketplace, and impartial governance solutions. By offering a comprehensive understanding of various AI providers and platforms, ISG helps companies make informed decisions that align with their specific needs. This strategic advice is essential in an ever-evolving AI landscape.
Every year, our employees attest to reviewing our global policies via digital signature, including in 2023 a new policy regarding the acceptable use of generative automated intelligence. Learning ISG’s success depends on the knowledge and productivity of its employees. To that end, the Company invests a significant amount of time and money into providing development opportunities.
Every year, our employees attest to reviewing our global policies via digital signature, including in 2023 a new policy regarding the acceptable use of generative automated intelligence. Learning ISG’s success depends on the knowledge and productivity of our employees. To that end, the Company invests a significant amount of time and money into providing development opportunities.
While we have made progress in our workforce diversity representation, we seek to continually improve in this area. ISG WorkLife We have also introduced ISG WorkLife, which is a series of progressive, best practice, Next-Gen HR offerings designed to improve the quality of our work-life experience, while helping us achieve our firm-wide objectives.
While we have made progress in our workforce diversity representation, we seek to continually improve in this area. ISG WorkLife We have also introduced ISG WorkLife, which is a series of progressive, best practice, Next-Gen HR offerings designed to improve the quality of our employees’ work-life experience, while helping us achieve our firm-wide objectives.
We make available through our Internet website under the link titled “Investors” our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments or exhibits thereto, as soon as reasonably practicable after we electronically file any such materials with the Securities and Exchange Commission (the “SEC”).
We make available through our Internet website under the link titled “Investors” our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments or exhibits thereto, as soon as reasonably practicable after we electronically file any such materials with the Securities and Exchange Commission (the “SEC”).
Client demand for networks that are secure, interconnected, interoperable and profitable is rising, as are concerns over security, scale, cost and the complexity of the expanding Internet of Things (“IoT”) landscape. ISG Network Select is designed to help clients find the best solutions, faster, to power their digital transformation initiatives.
Client demand for networks that are secure, interconnected, interoperable and profitable is rising, as are concerns over security, scale, cost and the complexity of the expanding Internet of Things landscape. ISG Network Select is designed to help clients find the best solutions, faster, to power their digital transformation initiatives.
Our Services ISG specializes in digital transformation services, including sourcing advisory, automation, cloud and data analytics; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. ISG supports both private and public sector organizations to transform and optimize their operational environments.
Our Services ISG specializes in digital transformation services, including sourcing advisory, cloud and data analytics; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. ISG supports both private and public sector organizations to transform and optimize their operational environments.
Some of the key offerings here include: ● ISG Cares , our enhanced volunteering program, which, among other things, provides employees paid time off to attend to charitable pursuits. ● ISG Academy , our global learning and development program. ● ISG Aspire , our global mentoring program. ● ISG iRefer , which allows the Company to attract talent through employee referrals, for which employees may earn referral bonuses. ● ISG iTime , which provides flexible paid time off arrangements for employees in certain countries . ● ISG Brand Ambassador, which highlights and encourages our people’s community support and charitable pursuits while elevating the firms global brand. ​ We understand that employees have varied interests both in and outside of the workplace.
Some of the key offerings here include: ● ISG Cares , our enhanced volunteering program, which, among other things, provides employees paid time off to attend to charitable pursuits. ● ISG Academy , our global learning and development program. ● ISG Aspire , our global mentoring program. ● ISG iRefer , which allows the Company to attract talent through employee referrals, for which employees may earn referral bonuses. ● ISG iTime , which provides flexible paid time off arrangements for employees in certain countries. ● ISG Brand Ambassador , which highlights and encourages our people’s community support and charitable pursuits while elevating the firm’s global brand. ​ We understand that employees have varied interests both in and outside of the workplace.
Employees at ISG are anchored in our core values, which include trust, integrity, respect, diversity, passion, entrepreneurship, balance and mentorship. Our more than 1,500 employees, located in over 20 countries with more than one-fourth in the United States, perform a variety of different roles. We are participants in the competitive research and advisory industries.
Employees at ISG are anchored in our core values, which include trust, integrity, respect, diversity, passion, entrepreneurship, balance and mentorship. Our more than 1,300 employees, located in over 20 countries with more than one-fourth in the United States, perform a variety of different roles. We are participants in the competitive research and advisory industries.
The Company’s operating model is aimed at extending our market leadership, enhancing growth opportunities and driving significant value for all stakeholders. We provide services that address our clients’ most pressing business challenges in two areas most important to them—their continuing digital transformation and getting the most from their digital investments.
The Company’s operating model is aimed at extending our market leadership, enhancing growth opportunities and driving significant value for all stakeholders. We provide services that address our clients’ most pressing business challenges in two areas we believe are most important to them—their continuing digital transformation and getting the most from their digital investments.
For the Governance pillar, ISG has a well-established set of policies, governing bodies and independent validation measures. ISG is governed on a day-to-day basis by our internal international executive board, which meets weekly. ISG also receives governance and support from an external board of directors (“the Board of Directors”).
For the Governance pillar, ISG has a well-established set of policies, governing bodies and independent validation measures. ISG is governed on a day-to-day basis by our internal international executive board, which meets weekly. ISG also receives governance and support from an external board of directors (the “Board of Directors”).
In our pursuit of the Company’s growth initiatives, we are committed to maintaining a strong financial position with flexibility and liquidity. The priorities for uses of available cash include payment of dividends, funding growth, repurchases of shares and debt reduction.
In our pursuit of the Company’s growth initiatives, we are committed to maintaining a strong financial position with flexibility and liquidity. The priorities for uses of available cash include funding growth, payment of dividends, share repurchases and debt reduction.
These diverse perspectives produce enhanced results for our clients and result in a preferred place to work. We exhibit our commitment to diversity and inclusion through our hiring practices, opportunities for learning and advancement and the distribution of rewards.
We believe that these diverse perspectives produce enhanced results for our clients and result in a preferred place to work. We exhibit our commitment to diversity and inclusion through our hiring practices, opportunities for learning and advancement and the distribution of rewards.
ISG GovernX leverages cognitive technology to automate the management of third-party supplier relationships, including contract and project lifecycles and risk management. Enterprises can leverage the platform to deliver more value from their outsourcing spend. ISG GovernX users can easily manage new contracts and proactive renewals, make timely amendments and handle contract terminations—all on one platform.
ISG GovernX leverages AI to automate the management of third-party supplier relationships, including contract and project lifecycles and risk management. Enterprises leverage the platform to deliver more value from their outsourcing spend. ​ ISG GovernX users can easily manage new contracts and proactive renewals, make timely amendments and handle contract terminations—all on one platform.
ISG also assists clients in adapting to these changes by helping them reassess the value of their traditional IT operations and contracts with partners - in the context of AI-enhanced productivity. This reassessment or 'marking to market' is crucial for companies to realize the full benefits of AI integration. ​ 2.
ISG also assists clients in adapting to these changes by helping them reassess the value of their traditional IT operations and contracts with partners — in the context of AI-enhanced productivity. We believe that this reassessment or ‘marking to market’ is crucial for companies to realize the full benefits of AI integration. 2.
To make this happen, we have certain programs, training, policies and practices in place, including the following: Diversity/Inclusion ISG believes a key to our success is our value of diverse backgrounds, experiences and cultures. Our employees function within a collaborative community that welcomes varied ideas and styles.
To make this happen, we have certain programs, training, policies and practices in place, including the following: 9 Table of Contents Diversity/Inclusion ISG believes a key to our success is our value of diverse backgrounds, experiences and cultures. Our employees function within a collaborative community that welcomes varied ideas and styles.
We maintain procedures, policies and codes of conduct around ethical business practices, whistleblowing, suppliers, data protection, information security, privacy, confidentiality, employee comportment and travel. With regard to cybersecurity, we regularly provide training, reporting and scans in compliance with our ISO-27001 certifications and best practices.
We maintain procedures, policies and codes of conduct around ethical business practices, whistleblowing, suppliers, data protection, information security, privacy, confidentiality, employee comportment and travel. With regard to cybersecurity, we regularly provide training, reporting and scans in compliance with our ISO-27001 certifications and 10 Table of Contents best practices.
We recognize the value of our intellectual property and vigorously defend it. As a result, the Company maintains strict policies and procedures regarding ownership, use and protection of our intellectual property with all parties, including our employees. Clients We operate in over 20 countries and across numerous industries.
We recognize the value of our intellectual property and vigorously defend it. As a result, we maintain strict policies and procedures regarding ownership, use and protection of our intellectual property with all parties, including our employees. ​ Clients We operate in over 20 countries and across numerous industries.
In the private sector, for example, we believe that companies will continue to face significant challenges associated with globalization and technological innovation, including the need to decrease operating costs, increase efficiencies, compete against new market entrants and evaluate and adopt increasing numbers of emerging and transformational technologies such as Generative AI.
In the private sector, for example, we believe that companies will continue to face significant challenges associated with globalization and technological innovation, including the need to decrease operating costs, increase efficiencies, compete against new market entrants and evaluate and adopt increasing numbers of emerging and transformational technologies, such as Artificial Intelligence.
These programs, and others under ISG WorkLife, provide employees with the opportunity to pursue these activities. This allows us to attract and retain productive employees and enhance diverse perspectives. 10 Table of Contents Environmental Social and Governance (ESG) The ISG Environmental Social and Governance program was developed with corporate commitment and accountability on a global level in mind.
These programs, and others under ISG WorkLife, provide employees with the opportunity to pursue these activities. This allows us to attract and retain productive employees and enhance diverse perspectives. Environmental Social and Governance (ESG) The ISG Environmental Social and Governance program was developed with corporate commitment and accountability on a global level in mind.
The platform delivers easy integration with other enterprise applications, such as ServiceNow, and is tightly connected to ISG Research offerings, such as benchmarks, assessments and total-cost-of-ownership evaluations. Additionally, ISG GovernX clients can mitigate supply chain risks and ensure business continuity by reviewing and validating their providers’ business and IT continuity plans and procedures.
The platform allows for integration with other enterprise applications, such as ServiceNow, and is tightly connected to ISG Research offerings, such as contract benchmarks, assessments and total-cost-of-ownership evaluations. Additionally, ISG GovernX clients can mitigate supply chain risks and ensure business continuity by reviewing and validating their providers’ business and IT continuity plans and procedures.
It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K or any other filings. Our Company was founded in 2006 with the strategic vision to become a high-growth, leading provider of information-based advisory services.
It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10-K or any other filings. Our Company was founded with the strategic vision to become a high-growth, leading provider of information-based advisory services.
It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K or any other filings.
It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10-K or any other filings.
Our purpose in the digital marketplace is to be a trusted advisor, guiding our clients through digital transformation toward practical innovation of their business models, leveraging strategic partners, emerging technology and thought leadership. 6 Table of Contents Our digital services now span a volume of offerings and have become embedded as part of our traditional transaction services.
Our purpose in the marketplace is to be a trusted advisor, guiding our clients through their AI and technology transformations toward practical innovation of their business models, leveraging strategic partners, emerging technology and thought leadership. ​ Our digital services now span a volume of offerings and have become embedded as part of our traditional transaction services.
We also continue to build more industry-specific capabilities in such areas as banking, insurance and smart manufacturing. Every client engagement passes through our dedicated Solution Hub to bring the best thinking, tools and capabilities to bear to solve every client challenge.
We also continue to build more industry-specific capabilities in such areas as banking, insurance and smart manufacturing. 5 Table of Contents Every client engagement passes through our dedicated Solution Hub to bring the best thinking, tools and capabilities to bear to solve client challenges.
We will consider and may pursue opportunities to enter joint ventures and to buy or combine with other businesses. Our Proprietary Data Assets and Market Intelligence One of our core assets is the information, data, analytics, methodologies and other intellectual property the Company possesses.
We will consider and may pursue opportunities to enter joint ventures and to buy or combine with other businesses. 8 Table of Contents Our Proprietary Data Assets and Market Intelligence One of our core assets is the information, data, analytics, methodologies and other intellectual property we possess.
Item 1. Business As used herein, unless the context otherwise requires, ISG, the registrant, is referred to in this Annual Report on Form 10-K for the fiscal year ended December 31,2023 (“Form 10-K”) as the “Company,” “we,” “us” and “our.” Our Company Information Services Group, Inc. (Nasdaq: III) is a leading global technology research and advisory firm.
Item 1. Business Unless the context otherwise requires, Information Services Group, Inc., the registrant, is referred to in this Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Form 10-K”) as the “Company,” “ISG”, “we,” “us” and “our.” Our Company Information Services Group, Inc. (Nasdaq: III) is a global AI-centered technology research and advisory firm.
ISG Inform 2.0 provides a quantified view of the health of the user’s enterprise IT landscape through a series of easy-to-read visual dashboards that display key performance indicators for infrastructure, applications and digital capabilities compared with industry peers. Data and insights are drawn from the ISG sourcing database.
ISG Inform 2.0 provides a quantified view of the health of the user’s enterprise IT landscape through a series of easy-to-read visual dashboards that display key performance indicators for infrastructure, applications and digital capabilities compared with industry peers.
We believe we are well-positioned to leverage our leading market positions and strong brand recognition to expand through acquisitions and other growth opportunities. Acquiring firms with complementary services and products would allow us to further develop and broaden our service offerings and domain expertise.
The business services, information and advisory market is highly fragmented. We believe we are well-positioned to leverage our leading market positions and strong brand recognition to expand through acquisitions and other growth opportunities. Acquiring firms with complementary services and products would allow us to further develop and broaden our service offerings and domain expertise.
The focus will be on creating repeatable methods used to drive growth of emerging services, including Generative AI; ISG Automation; ISG Network Select™; HR Technology & Transformations; Providers-as-a-Business; ISG Platform; ISG Digital Engineering; ISG Research; and ISG Training-as-a-Service. 1. ISG Generative AI: ISG is significantly influencing how our clients adopt Generative Artificial Intelligence (GenAI).
The focus will be on creating repeatable methods used to drive growth of emerging services, including AI, ISG Training-as-a-Service, ISG Network Select™, HR Technology & Transformations and ISG Research. 1. ISG AI: ISG is focused on influencing how our clients adopt Artificial Intelligence.
We strive to continue to strengthen our market-facing organization to drive increased revenue around 9 global industries: Banking and Financial Services, Consumer Services, Energy and Utilities, Health Sciences, Insurance, Manufacturing, Media and Technology Software and Services, Private Equity and Public Sector. · Aggressively Expand Our Market Focus.
We plan to continue to invest in and strengthen our market-facing organization to drive increased revenue targeting nine global industries: Banking and Financial Services, Consumer Services, Energy and Utilities, Health Sciences, Insurance, Manufacturing, Media and Technology Software and Services, Private Equity and Public Sector. ● Expand Our Offering Focus.
Clients get access to detailed and current data on their vendor and technology options, insights to help negotiate better pricing, and processes to accelerate ISG Tango networking solutions. 4. HR Technology & Transformations: Advances in technology are transforming the business of HR.
Clients get access to detailed and current data on their vendor and technology options and insights to help negotiate better pricing. 4. HR Technology & Transformations: Advances in AI-centric technologies are transforming the business of HR.
Building on this success, ISG offers outsourced managed learning services for organizations with limited resources and growing demand for custom learning content and 8 Table of Contents digital learning platforms. These organizations are typically looking for longer-term training support to address the needs of an evolving workforce.
Training-as-a-Service (TaaS): ISG offers training-as-a-service (TaaS) and outsourced managed learning services for organizations with limited resources and growing demand for custom learning content and digital learning platforms. These organizations are typically looking for longer-term training support to address the needs of an evolving workforce.
Employees As of December 31, 2023, we employed 1,518 people worldwide. 9 Table of Contents Our employee base includes executive management, service leads, partners, directors, advisors, analysts, technical specialists and functional support staff. We recruit advisors from service providers and consulting firms with direct operational experience.
Employees As of December 31, 2024, we employed 1,323 people worldwide, of which 1,289 are full-time employees. Our employee base includes executive management, service leads, partners, directors, advisors, analysts, technical specialists and functional support staff. We recruit advisors from service providers and consulting firms with direct operational experience.
In addition, we expect our cash flow generation and a solid balance sheet to support the current financial strategy. · Strengthen Our Industry Expertise .
We expect our cash flow generation and solid balance sheet to support the firm’s current operating strategy . ● Strengthen Our Industry Expertise.
With each engagement we conduct, we enhance both the quantity and quality of the intellectual property we employ on behalf of our clients, thus providing a continuous, evolving and unique source of information, data and analytics. This intellectual property is proprietary, and we rely on multiple legal and contractual provisions and devices to protect our intellectual property rights.
This intellectual property underpins the independent nature of our operational assessments, strategy development, deal structuring, negotiation and other consulting services we provide to our clients. ​ With each engagement we conduct, we enhance both the quantity and quality of the intellectual property we employ on behalf of our clients, thus providing a continuous, evolving and unique source of information, data and analytics. ​ This intellectual property is proprietary, and we rely on multiple legal and contractual provisions and devices to protect our intellectual property rights.
Our ISG Tango sourcing platform is a unique and comprehensive solution that helps enterprises and public sector organizations to quickly evaluate their business requirements, identify desired outcomes, fast-track the provider identification and selection process, collaborate with providers on developing the right solution, get to a signed contract and transition operations faster than before.
Our ISG Tango sourcing platform is a unique, AI embedded, comprehensive solution that enables enterprises and public sector organizations to quickly evaluate their business requirements, identify desired outcomes, fast-track the provider identification and selection process, collaborate with providers on developing the right solution, get to a signed contract and transition operations faster than before. ​ ISG continues to expand our Supplier and Contract Management capabilities powered by our GovernX® platform, a market leading vendor compliance and risk management digital solution.
As companies begin to recognize the importance of managing the post-sourcing transaction period, managed services have emerged as a revenue driver for the Company, with our offerings delivered through multi-year managed services contracts.
All are characterized by subscriptions (i.e., renewal-centric as opposed to project-centric revenue streams) or multi-year contracts. As companies begin to recognize the importance of managing the post-sourcing transaction period, managed services have emerged as a revenue driver for the Company, with our offerings delivered through multi-year managed services contracts.
We are well-positioned as a third party, objective advisory group with no affiliation to the software providers. ISG will continue to invest in the digitization of these services, driving increased automation, greater profitability and even more value for our clients. ● Consider Acquisitions and Other Growth Opportunities. The business services, information and advisory market is highly fragmented.
We believe we are well-positioned as a third party, objective advisor with no affiliation to the software providers. ISG will continue to invest in the evolution of these services, with an aim to drive increased AI adoption, greater profitability and even more value for our clients. ● Consider Acquisitions and Other Growth Opportunities.
It enables ISG to better meet the growing demand for such leading-edge networking solutions as software-defined networking (SD-WAN, SD-LAN), SD security services, 5G mobility, unified communications-as-a-service (UCaaS) and call center-as-a-service (CCaaS) — which are all critical to enterprise digital transformation.
ISG Network Select: This offering helps streamline and simplify how enterprises build their network solutions. It enables ISG to address the growing demand for such leading-edge networking solutions as software-defined networking (SD-WAN, SD-LAN), SD security services, 5G mobility, unified communications-as-a-service (UCaaS) and call center-as-a- 7 Table of Contents service (CCaaS) — which are all critical to enterprise transformation.
Stockholders may request free copies of these documents, including our Annual Report to Stockholders, by writing to Information Services Group, Inc., 2187 Atlantic Street, Stamford, CT 06902, Attention: Michael A. Sherrick, or by calling (203) 517-3100.
Stockholders may request free copies of these documents, including our Annual Report to Stockholders, by writing to Information Services Group, Inc., 2187 Atlantic Street, Stamford, CT 06902, Attention: Michael A. Sherrick, or by calling (203) 517-3100. Our annual and quarterly reports and other information statements are also available to the public through the SEC’s website at www.sec.gov .
In 2023, most learning was virtual; there were over 1,200 digital certified professionals that participated in various sessions, devoting a total of more than 45,000 hours to learning and development. ​ Available Information Our Internet address is www.isg-one.com . The content on our website is available for informational purposes only.
In 2024, most learning was virtual; there were over 1,300 digital certified professionals that participated in various sessions, which average 12 hours of training per professional that has been devoted to learning and development. ​ Available Information Our Internet address is www.isg-one.com . The content on our website is available for informational purposes only.
ISG TaaS uses an agile approach with rapid content development tools to accelerate training content and digital adoption platforms (DAP) to integrate learning into the daily flow of work.
ISG TaaS uses an agile approach with rapid content development tools to accelerate training content and digital adoption platforms (DAP) to integrate learning into the daily flow of work. Services include training advisory, analysis, strategy, custom development, delivery support, learning software subscription models, learning administration and learning assessment. 3.
This gives us valuable insights into pricing, capabilities and stability. When large enterprises need to evaluate providers, they reach out to ISG Research for a deep understanding of capabilities, pricing, breadth of coverage and past experience.
ISG tracks over 180,000 unique technology service contracts and measures and writes about more than 4,000 service and software providers each year. This gives us valuable insights into pricing, capabilities and stability. When large enterprises need to evaluate providers, they reach out to ISG Research for a deep understanding of capabilities, pricing, breadth of coverage and past experience.
ISG plans to expand resources and intellectual property (“IP”) around digitization.
ISG plans to expand resources and intellectual property around AI-centered technologies.
We are seeking to drive our service portfolio and relationships with clients further into Digital Advisory Services, including Generative AI, Automation, Business Advisory Services, Strategy, Data & Analytics, Transition and Organizational Change and Network & Software Advisory. These are all areas in which we are investing additional focus to drive increased revenues and expanded relationships with clients.
We seek to drive our service portfolio and relationships with clients further into AI-centered Technology Advisory Services, including Business Advisory Services, AI-Centered Technology Strategy, Data & Analytics, IT Transition Services, Organizational Change Management (OCM) and Network & Software Advisory. These are all areas in which we are investing in an attempt to drive increased revenue and expand client relationships.
Our research not only incorporates what a traditional analyst firm might cover, but also actual feedback and perspectives from practitioners in the market who are helping some of the largest enterprise clients transform their business. ISG tracks over 180,000 unique technology service contracts and measures and writes about more than 4,000 service and software providers each year.
Our advisory business gives ISG Research a unique perspective on the overall technology and sourcing market. Our research not only incorporates what a traditional analyst firm might cover, but also actual feedback and perspectives from practitioners in the market who are helping some of the largest enterprise clients transform their business.
We expect the trend toward globalization and greater operating efficiency and technological innovation to play an increasing role in the growth in demand for our services. We plan to leverage our combined operating platform to serve the growing number of private and public sector organizations utilizing outside advisors when undertaking transformational projects.
We expect the trend toward operational efficiency led by the accelerating adoption of AI-based technologies to play an increasing role in the demand for our services. We plan to leverage our proprietary operating platform (Tango) to serve the growing number of private and public sector organizations utilizing outside advisors when undertaking cost optimization and transformation programs.
In addition to monitoring the operational performance and financial viability of their suppliers, ISG GovernX helps enterprises address a range of other internal and external risks, from data security and regulatory issues, to adverse environmental, health and geopolitical events, to social responsibility, diversity and inclusion considerations.
In addition to monitoring the operational performance and financial viability of their suppliers, ISG GovernX helps enterprises address a range of other internal and external risks, from data security and regulatory issues, to adverse environmental, health and geopolitical events, to social responsibility, diversity and inclusion considerations. ​ We continue to invest in ISG Inform™ 2.0, an enhanced version of our data-as-a-service solution that provides benchmarking capability to track digital transformation and application development maturity and performance against industry peers.
To meet these needs, we formed two global client solution areas: ISG Digital, focused on developing technology, transformation, sourcing and digital solutions for clients, and ISG Enterprise, focused on helping clients manage change and optimize operations in such areas as finance, human resources (“HR”) and Procure2Pay. 5 Table of Contents Our core solutions are supported by ISG Research, with its extensive market analyses and provider evaluations, our ISG Network and Software Advisory services and our software platforms, including ISG GovernX®.
To meet these needs, we formed two global client solution areas: ISG Digital, focused on developing technology, transformation, sourcing and digital solutions for clients, and ISG Enterprise, focused on helping clients manage change and optimize operations in such areas as finance, human resources (“HR”) and training.
Advancements continue to be made to further ‘digitize’ our traditional services. For example, we continue to modernize our traditional sourcing services to bring agility, nimbleness and AI capability to the process of sourcing, RFPs and contracting.
We are now leveraging the advancements of AI into our digital services. For example, we continue to modernize our traditional sourcing services 6 Table of Contents to leverage AI, data and analytics to bring agility and nimbleness to the process of sourcing, RFPs and contracting.
A trusted business partner to more than 900 clients, including more than 75 of the top 100 enterprises in our markets, ISG is committed to helping corporations, public sector organizations and service and technology providers achieve operational excellence and faster growth.
A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services sourcing that is now focused on leveraging AI to help organizations achieve operational excellence and faster growth.
Similarly, public sector organizations at the national, regional and local levels increasingly must deal with the complex and converging issues of outdated technology systems, reduced budgets and an aging workforce.
Similarly, public sector organizations at the national, regional and local levels increasingly must deal with the complex and converging issues of outdated technology systems, reduced budgets and an aging workforce. Overall, we believe the global marketplace dynamics at work in both the private and public sectors support growing demand for the professional services, analytics, platforms and advice ISG can provide.
ISG combines deep subject matter expertise, market data and financial frameworks along with sourcing of technology and service providers to help organizations develop and execute HR technology strategies that are right for them. 5. Providers-as-a-Business: Historically, ISG had targeted traditional service providers for these types of services, which included a combination of consulting and research solutions.
ISG combines deep subject matter expertise, market data and financial frameworks, along with sourcing of technology and service providers, to help organizations develop and execute HR technology strategies that are right for them. 5. ISG Research: In today’s digital marketplace, ISG helps large enterprises confront emerging challenges, prepare for new opportunities and ensure they stay ahead of competitors.
With the rapid pace of technology including GenAI, ISG Research is ready and well-positioned with buyers and sellers to ensure our clients avoid the hype and capitalize on outcomes. 9. Training-as-a-Service (TaaS): ISG has launched a subscription-based, recurring revenue service that has lowered training development costs at major clients called Training as a Service (TaaS).
With the rapid pace of technological evolution including AI, we believe that ISG Research is ready and well-positioned with enterprises to ensure our clients avoid the hype and capitalize on outcomes.
The addition of Generative AI will allow companies to automate “high touch” functions and processes historically requiring human focus.
Data and insights are drawn from the ISG total cost of ownership and sourcing databases. ​ AI is fundamentally reshaping the way businesses work. It will allow companies to automate “high touch” functions and processes historically requiring human focus. ISG offers clients AI assessments and strategy. ​ ● Expand Emerging Services .
Based in Stamford, Connecticut, ISG employs over 1,500 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com. The content on our website is available for informational purposes only.
The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its more than 1,300 professionals worldwide working together to help clients maximize the value of their technology investments. For more information, visit www.isg-one.com. The content on our website is available for informational purposes only.
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The Company specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis.
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Our core solutions are supported by ISG Research, with its extensive market analyses and provider evaluations, our ISG Network and Software Advisory services and our software platforms, including ISG GovernX® and ISG Tango.
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These technological challenges have only been intensified by the post-COVID-19 pandemic remote or hybrid work environment and, therefore, present further opportunity for ISG to assist our private and public sector clients with digital transformation services.
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This offering provides clients a strategic and disciplined approach to supplier relationship and large contract management. Our suite of offerings includes supplier performance improvement, reducing spend, third-party risk mitigation, and supplier-based management.
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Overall, we believe the global marketplace dynamics at work in both the private and public sectors support growing demand for the professional services, analytics, platforms and advice ISG can provide.
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In addition to serving enterprises, ISG research also helps providers navigate the marketplace through market intelligence, client retention programs, pursuit assessments and client satisfaction benchmarking. ● Expand “Recurring Revenue Streams.” These include such annuity-based ISG offerings as ISG GovernX, ISG Research Lens, ISG Inform and multi-year Public Sector contracts.
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ISG continues to expand its Supplier and Contract Management capabilities powered by the GovernX® platform, the market’s leading vendor compliance and risk management digital solution. This service provides clients a strategic and disciplined approach to managing supplier relationships and large contract portfolios.
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These services assist clients with improving supplier performance, reducing spend, mitigating third party risk, and managing/collaborating/innovating with their supplier base.
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We continue to invest in ISG Inform™ 2.0, an enhanced version of our data-as-a-service solution that provides benchmarking capability to track digital transformation and application development maturity and performance against industry peers.
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Robotic Process Automation coupled with Generative AI is fundamentally reshaping the way businesses work. Automation is increasingly enabling automated 24/7/365 execution of business processes at a fraction of the cost of human equivalents, as well as leading to dramatic improvements in process execution and cost models.
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ISG Automation offers clients a full portfolio of services, including automation and Generative AI assessments and strategy, proof-of-concept deployments, implementation and integration of software bots, and establishment of centers of excellence to scale automation, as well as training and managed services. ● Expand Emerging Services .
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ISG Automation: ISG’s capabilities and service offerings include implementation services for Robotic Process and Cognitive Automation Technology. ISG Automation guides clients through the hurdles of adoption, ensuring the optimal future state with best-fit technologies. ISG Automation tailors programs to specific business needs and helps build governance that works inside the culture of our clients.
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The size of the Automation market is expected to continue to grow significantly over the next few years. Automation is fundamentally reshaping the world of Information Technology Outsourcing and Business Process Outsourcing. Our solutions will work to optimize repetitive processes using ‘bots’ 7 Table of Contents instead of human labor.
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ISG Automation will continue to be marketed by industry (e.g., claims processing for insurance) and by back-office functions (e.g., accounting). 3. ISG Network Select: This offering helps streamline and simplify how enterprises build their network solutions.
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These services include market intelligence, client retention programs, pursuit effectiveness, satisfaction benchmarking, go-to-market consulting and health checks. 6. ISG Platform: We see growth opportunities in tool-enabling the part of consulting that solves for standard problems.
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The digital solutioning of ISG will reach its next level as we develop the ISG Platform, an integrated set of software-driven solutions, data and research that will allow us to increase our subscription-based recurring revenues and penetrate new market segments.
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ISG Inform and ISG GovernX will be at the core of the ISG Platform, as will our new set of offerings that will continue to streamline and digitize the provider selection process. In early 2022, ISG launched ISG Executive Insights™, a market intelligence and data analytics platform that addresses the challenges of managing increasingly complex supplier ecosystems.
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The new data-analytics-as-a-solution offering is powered by ISG’s market-leading data repository—a comprehensive, curated database of global IT, business process and engineering outsourcing contracts—paired with ISG’s patented IT price benchmarking, market cost intelligence and other analytical tools. We continue to develop and invest in our ISG Platform, which will help us drive recurring revenues. 7.
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ISG Digital Engineering: ISG has an opportunity to develop and scale a Digital Engineering capability that meets the growing need of enterprises to integrate information technology, operational technology and engineering technology.
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Over the past five years, enterprise business models have been shifting from selling products as a one-time transaction to becoming more software-oriented to drive more features and functionality, shifting focus to aftermarket solutions to generate recurring revenues via services (servitization) and enhancing customer experience to increase customer acquisition and retention rates.
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As companies are reimagining their products and services, Digital Engineering is growing rapidly due to the increasing data and software content of products and processes.
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Our aim is to become an independent governance and end-to-end transformation partner including the sourcing of engineering system integrators and engineering platforms like SIEMENS and Dassault throughout each client’s digital engineering transformation journey, serving multiple industries with an initial focus on manufacturing. 8.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIt is expected that our international revenues will continue to grow as European and Asian Pacific markets adopt sourcing solutions. The translation of our revenues into U.S. dollars, as well as our costs of operating internationally, may adversely affect our business, results of operations and financial condition.
Biggest changeThe translation of our revenues into U.S. dollars, as well as our costs of operating internationally, may adversely affect our business, results of operations and financial condition. 17 Table of Contents Risks Related to Data, Cybersecurity and Confidential Information Data protection laws and self-regulatory codes may restrict our activities and increase our costs.
Failure to consistently meet service requirements of a client or errors made by our employees while delivering services to our clients could disrupt the client’s business and result in a reduction in revenues or a claim for damages against us.
Failure to consistently meet the service requirements of a client or errors made by our employees while delivering services to our clients could disrupt the client’s business and result in a reduction in revenues or a claim for damages against us.
Actual results will vary from the guidance and the variations may be material. Investors should also recognize that the reliability of any forecasted financial data diminishes the farther in the future that the data is forecast. In light of the foregoing, investors are urged to put the guidance in context and not to place undue reliance on it.
Actual results will vary from the guidance and the variations may be material. Investors should also recognize that the reliability of any forecasted financial data diminishes the farther in the future that the data is forecast. In light of the foregoing, investors are urged to put any guidance in context and not to place undue reliance on it.
Our guidance is not prepared with a view toward compliance with published guidelines of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), and neither our independent registered public accounting firm nor any other independent expert or outside party compiles or examines the guidance and, accordingly, no such person expresses any opinion or any other form of assurance with respect thereto.
Our guidance is not prepared with a view toward compliance with published guidelines of the Public Company Accounting Oversight Board (United States) and neither our independent registered public accounting firm nor any other independent expert or outside party compiles or examines the guidance and, accordingly, no such person or firm expresses any opinion or any other form of assurance with respect thereto.
Our failure to comply with the covenants in our credit agreement could materially and adversely affect our financial condition and liquidity. Our credit agreement contains financial covenants requiring that we maintain, among other things, certain leverage and interest coverage ratios. Poor financial performance could cause us to be in default of these covenants.
Our failure to comply with the covenants in our credit agreement could materially and adversely affect our financial condition and liquidity. The 2023 Credit Agreement contains financial covenants requiring that we maintain, among other things, certain leverage and interest coverage ratios. Poor financial performance could cause us to be in default of these covenants.
Because of the complexity of many of our client engagements, accurately estimating the cost, scope and duration of a particular engagement can be a difficult task. If we fail to make accurate estimates, we could be forced to devote additional resources to these engagements for which we will not receive additional compensation.
Because of the complexity of many of our client engagements, accurately estimating the cost, scope and duration of a particular engagement can be difficult. If we fail to make accurate estimates, we could be forced to devote additional resources to these engagements for which we will not receive additional compensation.
As a global firm, ISG must comply with various international and domestic data privacy regulations such as (i) the EU and UK General Data Protection Regulation (“GDPR”), which has extra-territorial scope and substantial fines for breaches (up to 4% of global annual revenue or €20 million, whichever is greater), (ii) the California Consumer Privacy Act, which, unlike data privacy provisions enacted by other US states, covers individuals acting in a commercial or employment context not just as consumers, and (iii) the Australian Privacy Act, among others.
As a global company, ISG must comply with various international and domestic data privacy regulations such as (i) the EU and UK General Data Protection Regulation (“GDPR”), which has extra-territorial scope and substantial fines for breaches (up to 4% of global annual revenue or €20 million, whichever is greater), (ii) the California Consumer Privacy Act, which, unlike data privacy provisions enacted by other US states, covers individuals acting in a commercial or employment context not just as consumers, and (iii) the Australian Privacy Act, among others.
Risks in this section are grouped in the following categories: (1) risks related to outstanding debt; (2) risks related to acquisitions; (3) strategy and operation risks; (4) risks related to management and employees; (5) macroeconomic risks; (6) risks related to data, cybersecurity and confidential information; and (7) general risk factors.
Risks in this section are grouped in the following categories: (1) risks related to outstanding debt; (2) risks related to acquisitions and dispositions; (3) strategy and operation risks; (4) risks related to management and employees; (5) macroeconomic risks; (6) risks related to data, cybersecurity and confidential information; and (7) general risk factors.
Our revenues and operating results may vary significantly from accounting period to accounting period due to factors including: ● fluctuations in revenues earned on contracts; ● commencement, completion or termination of engagements during any particular period; ● additions and departures of key advisors; ● transitioning of advisors from completed projects to new engagements; ● seasonal trends; ● introduction of new services by us or our competitors; ● changes in fees, pricing policies or compensation arrangements by us or our competitors; ● strategic decisions by us, our clients or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; ● global economic and political conditions and related risks, including acts of terrorism, war, such as the war in Ukraine and the conflict in the Middle East, pandemics, inflation, slowing growth, rising interest rates and recession; and ● conditions in the travel industry that could prevent our advisors from traveling to client sites.
Our revenues and operating results may vary significantly from accounting period to accounting period due to factors including: 13 Table of Contents ● fluctuations in revenues earned on contracts; ● commencement, completion or termination of engagements during any particular period; ● additions and departures of key advisors; ● transitioning of advisors from completed projects to new engagements; ● seasonal trends; ● introduction of new services by us or our competitors; ● changes in fees, pricing policies or compensation arrangements by us or our competitors; ● strategic decisions by us, our clients or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; ● global economic and political conditions and related risks, including acts of terrorism, war, such as the war in Ukraine and the conflict in the Middle East, pandemics, inflation, slowing growth, rising interest rates and recession; and ● conditions in the travel industry that could prevent our advisors from traveling to client sites.
Developing new service offerings involves inherent risks, including: ● a lack of market understanding; ● competition from more established market participants; ● our inability to estimate demand for the new service offerings; and ● unanticipated expenses to hire qualified consultants and to market our new service offerings.
Developing new service offerings involves inherent risks, including: ● a lack of market understanding; ● competition from more established market participants; ● any inability to estimate demand for the new service offerings; and ● unanticipated expenses to hire qualified consultants and to market our new service offerings.
Difficulties in integrating businesses we have acquired, or may acquire in the future, may demand time and attention from our senior management. Integrating businesses we have acquired, or may acquire in the future, may involve unanticipated delays, costs and/or other operational and financial problems.
Difficulties in integrating businesses we have acquired, or may acquire in the future, may demand time and attention from our senior management. Integrating businesses we have acquired, or may acquire in the future, may involve unanticipated delays, costs and/or other operational and financial difficulties.
The cybersecurity risks we face range from cyberattacks common to most industries, such as the development and deployment of malicious software to gain access to our networks and attempt to steal confidential information, launch distributed denial of service attacks, or attempt other coordinated disruptions, to more advanced threats that target us because of our prominence in the global research and advisory field.
The cybersecurity risks we face range from cyberattacks common to most industries, such as the development and deployment of malicious software to gain access to our networks and attempt to steal confidential information, launch distributed denial of service attacks or attempts at other coordinated disruptions, to more advanced threats that target us because of our prominence in the global research and advisory field.
When the factors, events and contingencies described below or elsewhere in this Form 10-K materialize, there could be a material adverse impact on our business, prospects, results of operations, financial condition and cash flows, any of which could have a potential negative effect on the trading price of our common stock.
When the factors, events and contingencies described below or elsewhere in this Annual Report on Form 10-K materialize, there could be a material adverse impact on our business, prospects, results of operations, financial condition and cash flows, any of which could have a potential negative effect on the trading price of our common stock.
Any material decline in our ability to secure new advisory arrangements could have an adverse impact on our revenues and financial condition. If we are unable to achieve or maintain adequate utilization for our consultants, our operating results could be adversely impacted. Our profitability depends to a large extent on the utilization of our consultants.
Any material declines in our ability to secure new advisory arrangements could have an adverse impact on our revenues and financial condition. If we are unable to achieve or maintain adequate utilization for our consultants, our operating results could be adversely impacted. Our profitability depends to a large extent on the utilization of our consultants.
In addition, there is an increasing public concern regarding data and consumer protection issues, with the result that the number of jurisdictions with data protection laws continues to increase and the scope of existing privacy laws and the data considered to be covered by such laws keep expanding.
In addition, there is an increasing public concern regarding data and consumer protection issues, with the result that the number of jurisdictions with data protection laws continues to increase and the scope of existing privacy laws and the data considered to be covered by such laws keeps expanding.
Utilization of our consultants is affected by a number of factors, including: ● additional hiring of consultants because there is generally a transition period for new consultants; ● the number and size of client engagements; ● the unpredictability of the completion and termination of engagements; ● our ability to transition our consultants efficiently from completed engagements to new engagements; ● unanticipated changes in the scope of client engagements or unexpected terminations of client engagements; and 14 Table of Contents ● our ability to maintain an appropriate level of consultants by forecasting the demand for our services.
Utilization of our consultants is affected by a number of factors, including: ● additional hiring of consultants because there is generally a transition period for new consultants; ● the number and size of client engagements; ● the unpredictability of the completion and termination of engagements; ● our ability to transition our consultants efficiently from completed engagements to new engagements; ● unanticipated changes in the scope of client engagements or unexpected terminations of client engagements; and ● our ability to maintain an appropriate level of consultants by forecasting the demand for our services.
Unauthorized disclosure of sensitive or confidential client data, whether through breach of our processes, systems or otherwise, could subject us to liability, damage our reputation and cause us to lose existing and potential clients. We may also be subject to civil actions and/or criminal prosecution by government or quasi-government agencies for breaches relating to such 19 Table of Contents data.
Unauthorized disclosure of sensitive or confidential client data, whether through breach of our processes, systems or otherwise, could subject us to liability, damage our reputation and cause us to lose existing and potential clients. We may also be subject to civil actions and/or criminal prosecution by government or quasi-government agencies for breaches relating to such data.
The cost of our obtaining an amendment or waiver could be significant, and further, there can be no assurance that we would be able to obtain an amendment or waiver. 12 Table of Contents If our lenders were unwilling to enter into an amendment or provide a waiver, all amounts outstanding under our credit facility would become immediately due and payable.
The cost of our obtaining an amendment or waiver could be significant, and further, there can be no assurance that we would be able to obtain an amendment or waiver. If our lenders were unwilling to enter into an amendment or provide a waiver, all amounts outstanding under our credit facility would become immediately due and payable.
If others were able to use our intellectual property or were to independently develop our methodologies or analytical tools, our ability to compete effectively and to charge appropriate fees for our services may be adversely affected. We face competition and our failure to compete successfully could materially adversely affect our results of operations and financial condition.
If others were able to use our intellectual property or were to independently develop our methodologies or analytical tools, our ability to compete effectively and to charge appropriate fees for our services may be adversely affected. 15 Table of Contents We face competition and our failure to compete successfully could materially adversely affect our results of operations and financial condition.
While losses on our fixed-fee contracts are rare, to the extent that an expenditure of additional resources is required on an engagement, this could reduce the profitability of, or result in a loss on, the engagement. Our contracts with contingent-based revenue may cause unusual variations in our operating results.
While losses on our fixed-fee contracts are rare, to the extent that an expenditure of additional resources is required on an engagement, this could reduce the profitability of, or result in a loss on, the engagement. 14 Table of Contents Our contracts with contingent-based revenue may cause unusual variations in our operating results.
We urge you to consider carefully the factors described below and the risks that they present for our operations, as well as the risks addressed in other reports and materials that we file with the SEC and the other information included or incorporated by reference in this Form 10-K.
We urge you to consider carefully the factors described below and the risks that they present for our operations, as well as the risks addressed in other reports and materials that we file with the SEC and the other information included or incorporated by reference in this Annual Report on Form 10-K.
If we were to lose a number of key members of our management team and were unable to replace these people quickly, we could have difficulty maintaining our growth and certain key relationships with large clients and face competition from these former managers if the restrictive covenants are unenforceable.
If we were to lose a number of key members of our management team and were unable to replace such individuals quickly, we could have difficulty maintaining our growth and certain key relationships with large clients and face competition from these former managers if the restrictive covenants are unenforceable.
As part of our continuous improvement in our third-party risk management process, we plan to engage the services of a third-party risk monitoring services to monitor threat intelligence and known vulnerabilities.
As part of our continuous improvement in our third-party risk management process, we engage the services of a third-party risk monitoring service to monitor threat intelligence and known vulnerabilities.
Pursuant to rules adopted by the SEC implementing Section 404 of the Sarbanes Oxley Act of 2002, we are required to assess the effectiveness of our internal control over financial reporting and provide a management report on our internal control over financial reporting in all annual reports.
Pursuant to rules adopted by the SEC implementing Section 404 of the Sarbanes Oxley Act of 2002, we are required to assess the effectiveness of our internal control over financial reporting and provide a management report on our internal control over financial reporting 19 Table of Contents in all annual reports.
While we were in compliance with these covenants as of December 31, 2023, there can be no assurance that we will remain in compliance in the future.
While we were in compliance with these covenants as of December 31, 2024, there can be no assurance that we will remain in compliance in the future.
There can be no assurance that the steps we have taken to protect our intellectual property rights will be adequate to deter misappropriation of our rights or that we will be able to detect unauthorized use and take timely and effective steps to enforce our rights.
There can be no assurance that the steps we have taken, or may take in the future, to protect our intellectual property rights will be adequate to deter misappropriation of our rights or that we will be able to detect unauthorized use and take timely and effective steps to enforce our rights.
These advisors could resign and join one of our competitors or provide sourcing advisory services to our clients through their own ventures. 16 Table of Contents We must also recruit staff globally to support our services and products.
These advisors could resign and join one of our competitors or provide sourcing advisory services to our clients through their own ventures. We must also recruit staff globally to support our services and products.
As a result of the substantial variable costs associated with the debt obligations, we expect that: ● a decrease in revenues will result in a disproportionately greater percentage decrease in earnings; ● we may not have sufficient liquidity to fund all of these variable costs if our revenues decline or costs increase; ● we may have to use our working capital to fund these variable costs instead of funding general corporate requirements, including capital expenditures; ● we may not have sufficient liquidity to respond to business opportunities, competitive developments and adverse economic conditions; and ● our results of operations will be adversely affected if interest rates increase because, based on our current outstanding borrowings in the amount of $79.2 million as of December 31, 2023, a 1% increase in interest rates would result in a pre-tax impact on earnings of approximately $0.8 million per year.
As a result of the substantial variable costs associated with the debt obligations, we expect that: ● a decrease in revenues will result in a disproportionately greater percentage decrease in earnings; ● we may not have sufficient liquidity to fund all of these variable costs if our revenues decline or costs increase; ● we may have to use our working capital to fund these variable costs instead of funding general corporate requirements, including capital expenditures; 11 Table of Contents ● we may not have sufficient liquidity to respond to business opportunities, competitive developments and adverse economic conditions; and ● our results of operations will be adversely affected if interest rates increase because, based on our current outstanding borrowings in the amount of $59.2 million as of December 31, 2024, a 1% increase in interest rates would result in a pre-tax impact on earnings of approximately $0.6 million per year.
Borrowing under our credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate,” (b) the Federal Funds Rate plus 0.5% per annum and (c) Term SOFR, plus 1.0%), plus the applicable margin (as defined below) or (ii) Term SOFR (which is the Term SOFR screen rate for the relevant interest period plus a credit spread adjustment of 0.10%) as determined by the administrative agent, plus the applicable margin.
Borrowing under 2023 Credit Agreement bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate,” (b) the Federal Funds Rate plus 0.5% per annum and (c) Term SOFR, plus 1.0%), plus the applicable margin or (ii) Term SOFR (which is the Term SOFR screen rate for the relevant interest period plus a credit spread adjustment of 0.10%) as determined by the administrative agent, plus the applicable margin.
Any failure to continue to respond to developments, technologies and trends in a manner that meets market needs could have an adverse effect on our business results. 15 Table of Contents We may be unable to protect important intellectual property rights.
Any failure to continue to respond to developments, technologies and trends in a manner that meets market needs could have an adverse effect on our business results. We may be unable to protect important intellectual property rights.
We derive a significant portion of our revenues from our largest clients and could be materially and adversely affected if we lose one or more of our large clients. Our 25 largest clients accounted for approximately 33% and 35% of revenue in 2023 and 2022, respectively.
We derive a significant portion of our revenues from our largest clients and could be materially and adversely affected if we lose one or more of our large clients. Our 25 largest clients accounted for approximately 30% and 33% of revenue in 2024 and 2023, respectively.
Macroeconomic Risks Our international operations expose us to a variety of risks that could negatively impact our future revenue and growth. Approximately 39% of our revenues for 2023 and 42% of our revenue for 2022 were derived from sales outside of the Americas.
Macroeconomic Risks Our international operations expose us to a variety of risks that could negatively impact our future revenue and growth. Approximately 36% of our revenues for 2024 and 39% of our revenue for 2023 were derived from sales outside of the Americas.
These debt obligations may also impair our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business. Our indebtedness under the senior secured revolving credit facility is secured by substantially all of our assets, leaving us with limited collateral for additional financing.
These debt obligations may also impair our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business. Our indebtedness under the 2023 Credit Agreement is secured by substantially all of our assets, leaving us with limited collateral for additional financing.
In such a situation, it is unlikely that we would be able to fulfill our obligations, repay the accelerated indebtedness or otherwise cover our fixed costs. As of December 31, 2023, the total principal outstanding under the revolving credit facility was $79.2 million.
In such a situation, it is unlikely that we would be able to fulfill our obligations, repay the accelerated indebtedness or otherwise cover our fixed costs. As of December 31, 2024, the total principal outstanding under the 2023 Credit Agreement was $59.2 million.
On February 22, 2023, the Company amended and restated its senior secured credit facility to increase the revolving commitments per the revolving facility (the “2023 Credit Agreement”) from $54.0 million to $140.0 million and eliminate its term loan.
On February 22, 2023, the Company amended and restated its senior secured credit facility to increase the revolving commitments per the revolving facility from $54.0 million to $140.0 million and eliminate its term loan (as further amended on June 27, 2024, the “2023 Credit Agreement”).
Our variable rate indebtedness will subject us to interest rate risk, which could cause our annual debt service obligations to increase significantly.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.
An increase in debt service obligations under our variable rate indebtedness could affect our ability to make payments required under the terms of our credit facility. Risks Related to Acquisitions We have risks associated with acquisitions or investments. Since our inception, we have expanded through acquisitions. In the future, we plan to pursue additional acquisitions and investments as opportunities arise.
An increase in debt service obligations under our variable rate indebtedness could affect our ability to make payments required under the terms of our credit facility. Risks Related to Acquisitions and Dispositions We have risks associated with acquisitions or investments. Since our inception, we have expanded through acquisitions.
Additionally, we could incur liability if a process we manage for a client were to result in internal control failures or impair our client’s ability to comply with their own internal control requirements.
Additionally, 18 Table of Contents we could incur liability if a process we manage for a client was to result in internal control failures or impair our client’s ability to comply with their own internal control requirements.
If we encounter unexpected problems as we try to integrate an acquired firm into our business, our management may be required to expend time and attention to address the problems, which would divert their time and attention from other aspects of our business.
If we encounter unexpected problems as we try to integrate an acquired firm into our 12 Table of Contents business, our management may be required to expend time and attention to address the problems, which would divert their time and attention from other aspects of our business. We have risks associated with dispositions.
Moreover, the terms of our indebtedness under the senior secured revolving credit facility restrict our ability to take certain actions, including the incurrence of additional indebtedness, mergers and acquisitions, investments and asset sales.
Moreover, the terms of our indebtedness under the 2023 Credit Agreement restrict our ability to take certain actions, including the incurrence of additional indebtedness, mergers and acquisitions, investments and asset sales.
Such breaches could lead to shutdowns or disruptions of or damage to our systems and those of our clients, alliance partners and vendors and unauthorized disclosure of sensitive or confidential information, including personal data. In addition, Third Party Cyber Security Risk is a critical focus for us. All potential new suppliers go through our Data Protection Impact Assessment (“DPIA”) process.
Such breaches could lead to shutdowns or disruptions of or damage to our systems and those of our clients, alliance partners and vendors and unauthorized disclosure of sensitive or confidential information, including confidential or personal data. In addition, third party Cyber Security Risk is a critical focus for us.
We also face risks related to our use of third-party suppliers if such suppliers are affected by a cybersecurity threat or incident, which could result in a reduction in or loss of their ability to service us (which could be a significant component of our services to clients), the exposure of ISG or client data or a potential backdoor into ISG’s systems and network. 18 Table of Contents We may be subject to claims for substantial damages by our clients arising out of disruptions to their businesses or inadequate service, and our insurance coverage may be inadequate.
We also face risks related to our use of third-party suppliers if such suppliers are affected by a cybersecurity threat or incident, which could result in a reduction in or loss of their ability to service us (which could be a significant component of our services to clients), the exposure of ISG or client data or a potential backdoor into ISG’s systems and network.
We may not be able to successfully integrate businesses that we acquire in the future without substantial expense, delays or other operational or financial problems. We may not be able to identify, acquire or profitably manage additional businesses.
In the future, we plan to pursue additional acquisitions and investments as opportunities arise. We may not be able to successfully integrate businesses that we acquire in the future without substantial expense, delays or other operational or financial problems. In addition, we may not be able to identify, acquire or profitably manage additional businesses.
As we expand our business into new countries, regulatory, personnel, technological and other difficulties may increase our expenses or delay our ability to start up operations or become profitable in such countries.
As we expand our business into new countries, regulatory, personnel, technological and other difficulties may increase our expenses or delay our ability to start up operations or become profitable in such countries. This may affect our relationships with our clients and could have an adverse effect on our business.
If the risk assessment identifies that the baseline Information Security & Privacy technical and organizational controls are not met, the business will be advised accordingly. The outcome of all DPIAs is recorded on the DPIA register.
From this, our security team assesses the third party, conducts further due diligence, and reviews contractual clauses. If the risk assessment identifies that the baseline Information security & privacy technical and organizational controls are not met, the business will be advised accordingly. The outcome of all DPIAs is recorded on the DPIA register.
Risks Related to Data, Cybersecurity and Confidential Information Data protection laws and self-regulatory codes may restrict our activities and increase our costs. Various statutes and rules regulate conduct in areas such as privacy and data protection that may affect our collection, use, storage, and transfer of information both abroad and in the United States.
Various statutes and rules regulate conduct in areas such as privacy and data protection that may affect our collection, use, storage, and transfer of information both abroad and in the United States.
Our clients may decide at any time to abandon, postpone and/or reduce our involvement in an engagement. Our engagements can be terminated, or the scope of our responsibilities may be diminished, with limited advance notice. If an engagement is terminated, delayed or reduced unexpectedly, the professionals working on the engagement could be underutilized until we assign them to other projects.
Our engagements may be terminated, delayed or reduced in scope by clients at any time. Our clients may decide at any time to abandon, postpone and/or reduce our involvement in an engagement. Our engagements can be terminated, or the scope of our responsibilities may be diminished, with limited advance notice.
Strategy and Operation Risks Our operating results have been, and may in the future be, adversely affected by worldwide economic conditions and credit tightening. Our results of operations are affected by the level of business activity of our clients, which in turn is affected by the level of economic activity in the industries and markets that they serve.
Our results of operations are affected by the level of business activity of our clients, which in turn is affected by the level of economic activity in the industries and markets that they serve.
Companies that have already invested substantial resources in developing in-house information technology and business process functions may be particularly reluctant or slow to move to a sourcing solution that may make some of their existing personnel and infrastructure obsolete. 13 Table of Contents Our engagements may be terminated, delayed or reduced in scope by clients at any time.
Companies that have already invested substantial resources in developing in-house information technology and business process functions may be particularly reluctant or slow to move to a sourcing solution that may make some of their existing personnel and infrastructure obsolete. We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation or financial results.
Any failure to retain key personnel or hire and train additional qualified personnel as required supporting the evolving needs of clients or growth in our business could adversely affect the quality of our products and services, and our future business and operating results.
Any failure to retain key personnel or hire and train additional qualified personnel as required to support the evolving needs of clients or growth in our business could adversely affect the quality of our products and services, and our future business and operating results. 16 Table of Contents We may have agreements with certain clients that limit the ability of particular advisors to work on some engagements for a period of time.
Additional risks not currently known to us or that we now deem immaterial may also harm us and negatively affect your investment.
Additional risks not currently known to us or that we now deem immaterial may also harm us and negatively affect your investment. Additional or unforeseen effects from the global economic and geopolitical climate may give rise to or amplify many of these risks discussed below.
This starts with an initial screening questionnaire. The questionnaire covers what personal data and client data is processed, whether the third party has any access requirements to our environment and how is data is transferred. From this, our security team assesses the third party, conducts further due diligence, and reviews contractual clauses.
All potential new suppliers go through our Data Protection Impact Assessment (“DPIA”) process. This starts with an initial screening questionnaire. The questionnaire covers what personal data and client data is processed, whether the third party has any access requirements to our environment and how is data is transferred.
To mitigate the risk and negative exposure of data outside ISG, we have put in place a data protection framework that includes policies, procedures, guidance, and records. This includes policies and procedures for rights and usage of personal and client data. We are exposed to risks related to cybersecurity.
This includes policies and procedures for rights and usage of personal and client data. We are exposed to risks related to cybersecurity.
We may have agreements with certain clients that limit the ability of particular advisors to work on some engagements for a period of time. We provide services primarily in connection with significant or complex sourcing transactions and other matters that provide potential competitive advantage and/or involve sensitive client information.
We provide services primarily in connection with significant or complex sourcing transactions and other matters that provide potential competitive advantages and/or involve sensitive client information.
Most of our service contracts with clients contain service level and performance requirements, including requirements relating to the quality of our services.
We may be subject to claims for substantial damages by our clients arising out of disruptions to their businesses or inadequate service, and our insurance coverage may be inadequate. Most of our service contracts with clients contain service level and performance requirements, including requirements relating to the quality of our services.
Accordingly, the termination or significant reduction in the scope of a single large engagement, or multiple smaller engagements, could harm our business results. Our operating results may fluctuate significantly from period to period as a result of factors outside of our control.
Our operating results may fluctuate significantly from period to period as a result of factors outside of our control.
In addition, the new India Digital Personal Data Protection Act 2023 (“DPDP”) is likely to come into force in 2024. Like the GDPR, the DPDP has extra-territorial reach. The DPDP shares many provisions with existing privacy laws, and ISG therefore anticipates that its existing processes already broadly align with the new law.
The DPDP shares many provisions with existing privacy laws, and ISG therefore anticipates that its existing processes already broadly align with the new law. However, like the GDPR, failure to comply with the DPDP may lead to substantial fines.
This may affect our relationships with our clients and could have an adverse effect on our business. 17 Table of Contents We operate in a number of international areas which exposes us to significant foreign currency exchange rate risk. We have significant international revenue, which is predominantly collected in local currency.
We operate in a number of international areas which exposes us to significant foreign currency exchange rate risk. We have significant international revenue, which is predominantly collected in local currency. It is expected that our international revenues will start to show growth as European and Asian Pacific markets adopt to sourcing solutions.
Removed
In addition to the effects of the global economic and geopolitical climate on our business and operations discussed in Item 7 of this Form 10-K and in the risk factors below, additional or unforeseen effects from the global economic and geopolitical climate may give rise to or amplify many of these risks discussed below.
Added
We have conducted dispositions in the past and may again in the future.
Removed
However, like the GDPR, failure to comply with the DPDP may lead to substantial fines. ISG is continuing to monitor the development of the EU’s ePrivacy Regulation proposal and industry response and will determine whether to take further action, as needed, if it is adopted.
Added
Disposition involve risks and uncertainties, such as our ability to sell such businesses for a satisfactory price and terms and in a timely manner, or at all, potential disruptions to other parts of our organization and distraction of management, the reallocation of internal resources that would otherwise be devoted to completing strategic acquisitions, potential losses of key employees or customers, exposure to unanticipated liabilities, any ongoing obligations to support the business following any such disposition, and other adverse financial impacts.
Removed
We could be subject to liability and our reputation could be damaged if our confidential information or client data is compromised through security breaches, cyberattacks or otherwise. We may be liable to our clients for damages caused by disclosure of confidential information or personal data.
Added
The realization of any of these risks could adversely affect our business. Strategy and Operation Risks Our operating results have in the past been, and may in the future be, adversely affected by worldwide economic conditions and credit tightening.
Removed
We are often required to collect and store sensitive or confidential client data to perform the services we provide under our contracts. Many of our contracts do not limit our potential liability for breaches of confidentiality.
Added
Artificial Intelligence (“AI”) presents new risks and challenges that may affect our business. We have made, and expect to continue to make, investments to integrate AI and machine learning technology into our services. Given the nature of AI technology, we face significant competition from other companies and an evolving regulatory landscape.
Removed
If any person, including any of our current or former employees, penetrates our network security or misappropriates sensitive data or if we do not adapt to changes in data protection legislation, we could be subject to significant liabilities to our clients or to our clients’ customers for breaching contractual confidentiality provisions or privacy laws.
Added
Our AI efforts may not be successful, and our competitors may incorporate AI into their products more successfully than us, which could impair our ability to compete effectively and adversely affect our financial results.
Removed
Also, we could face cyber-based attacks and attempts by hackers and similar unauthorized users to gain access to or corrupt our information technology systems to gain access to confidential information and client data. Such attacks could disrupt our business operations, cause us to incur unanticipated losses or expenses, and result in unauthorized disclosures of confidential or proprietary information.
Added
The rapid evolution of AI combined with the uncertain and often inconsistent regulatory landscape may require significant additional resources and costs and could in some cases limit our ability to implement AI capabilities in our solutions or potentially result in the implementation failing to produce the desired outcome.
Added
Despite our implementation of programs designed to support responsible AI use and development, we may not successfully address all issues that may arise. For example, privacy concerns, user consent, supply chain security, transparency and the accuracy, completeness and suitability of data sets are all potential issues that could adversely affect our business, reputation or financial results.
Added
If an engagement is terminated, delayed or reduced unexpectedly, the professionals working on the engagement could be underutilized until we assign them to other projects. Accordingly, the termination or significant reduction in the scope of a single large engagement, or multiple smaller engagements, could harm our business results.
Added
In addition, the new India Digital Personal Data Protection Act 2023 (“DPDP”) draft rules are out for consultation, which closed in February 2025. The DPDP is anticipated to come into force within two years. Like the GDPR, the DPDP has extra-territorial reach.
Added
ISG is continuing to monitor the development of the EU’s ePrivacy Regulation and published guidelines to determine whether further action as required. To mitigate the risk and negative exposure of data outside ISG, we have put in place a data protection framework that includes policies, procedures, guidance and records.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeISG performs annual assessments, by two independent third parties, against the International Organization Standardization (“ISO”) 27001 Information Security Management System requirements for which we maintain certification. ISG also maintains certification across other cyber security frameworks, including the Trusted Information Security Assessment Exchange and UK Cyber Essentials, and is preparing for SOC2 attestation across our GovernX platforms .
Biggest changeISG performs annual assessments, by two independent third parties, against the International Organization Standardization (“ISO”) 27001 Information Security Management System requirements for which we maintain certification. ISG also maintains certification across other cyber security frameworks, including the Trusted Information Security Assessment Exchange and UK Cyber Essentials.
ISG recognizes that if our third-party suppliers are affected by cyber security incidents, we could be indirectly impacted, including, the potential loss of service (which could be a significant component of our services to clients), exposure of ISG or client data or a potential backdoor into ISG systems or network.
ISG recognizes that if our third-party suppliers are affected by cyber security incidents, we could be indirectly impacted, including, through the potential loss of service (which could be a significant component of our services to clients), exposure of ISG or client data or a potential backdoor into ISG systems or network.
Responsibility for cybersecurity risk has been delegated to the ISC, which consists of senior executives (including three IEB members), namely the Chief Financial Officer (IEB member), Chief Human Resources Officer (IEB member), Chief Information Officer, Chief Data and Analytics Officer (IEB member), Chief Information Security Officer, Legal Counsel, Director of Corporate Governance and Data Privacy Manager.
Responsibility for cybersecurity risk has been delegated to the ISC, which consists of senior executives (including three IEB members), namely our Chief Financial Officer (IEB member), Chief Human Resources Officer (IEB member), Chief Information Officer, Chief Data and Analytics Officer (IEB member), Chief Information Security Officer, Legal Counsel, Director of Corporate Governance and Data Privacy Manager.
These tests and assessments are useful tools for maintaining a robust cybersecurity program to protect our investors, clients, employees, vendors, intellectual property and drive continuous improvement across the security domain.
These tests and assessments are useful tools for maintaining a robust cybersecurity program to protect our investors, clients, employees, vendors, intellectual property and drive continuous improvement across our security domain.
The CISO manages a team of qualified cybersecurity professionals with broad experience and expertise across cyber security disciplines that provide ad-hoc reports to the CISO regarding cybersecurity threats and incidents.
The CISO manages a team of qualified cybersecurity professionals with broad experience and expertise across cybersecurity disciplines that provide ad-hoc reports to the CISO regarding cybersecurity threats and incidents.
The Company’s cybersecurity efforts are led by the Chief Information Security Officer (“CISO”), who reports to the Chief Information Officer (“CIO”) and has responsibilities that cover the management of cybersecurity risk and the protection and defense of our networks and systems.
The Company’s cybersecurity efforts are led by the Chief Information Security Officer (“ CISO ”) , who reports to the Chief Information Officer (“CIO”) and has responsibilities that cover the management of cybersecurity risk and the protection and defense of our networks and systems .
Added
In 2024, the Company achieved a System and Organization Controls 2 (“SOC2”) Type 1 against our GovernX platforms, and we are preparing to continue maturity in this area by seeking to attain SOC2 Type 2 in 2025.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have leased offices in the United States, Canada, Denmark, Switzerland, the Netherlands, Finland, Australia, France, Germany, India, Italy, Sweden and the United Kingdom.
Biggest changeWe have leased offices in the United States, Canada, Denmark, Switzerland, the Netherlands, Finland, France, Germany, India, Italy and the United Kingdom.
Item 2. Properties We maintain our executive offices in Stamford, Connecticut. The lease on our executive offices covers approximately eighteen thousand square feet and expires on September 30, 2025. The majority of our business activities are performed on client sites or remotely. We do not own offices or properties.
Item 2. Properties We maintain our executive offices in Stamford, Connecticut. The lease for our executive offices covers approximately eighteen thousand square feet and expires on September 30, 2025. The majority of our business activities are performed on client sites or remotely. We do not own offices or properties.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 3. Legal Proceedings From time to time, in the normal course of business, we are a party to various legal proceedings. We are not aware of any asserted or unasserted legal proceedings or claims that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.
Added
Item 3. Legal Proceedings We and our consolidated subsidiaries are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against us or our consolidated subsidiaries that, in each case, are required to be disclosed under Item 103 of Regulation S-K.
Added
From time to time, we and our consolidated subsidiaries may be a party to certain legal proceedings in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table details the repurchases that were made during the three months ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Numbers of Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Shares (or Units) ​ Value of Shares ​ ​ Total Number of ​ ​ ​ ​ Purchased ​ That May Yet Be ​ ​ Shares ​ Average ​ as Part of Publicly ​ Purchased Under ​ ​ Purchased ​ Price Paid per ​ Announced Plans or Programs ​ the Plans or Programs Period (In thousands) ​ Share (In thousands) (In thousands) (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1 - October 31 5 ​ $ 4.38 5 ​ $ 27,669 November 1 - November 30 ​ 117 ​ $ 4.33 117 ​ $ 27,163 December 1 - December 31 268 ​ $ 4.61 268 ​ $ 25,928 23 Table of Contents (1) On August 5, 2023, the Board of Directors approved a stock repurchase plan authorizing the Company to repurchase an aggregate of $25 million in shares of the common stock.
Biggest changeThere is no guarantee as to the number of shares that will be repurchased, and the repurchase program may be extended, suspended or discontinued at any time without notice at the Company’s discretion. ​ 23 Table of Contents The following table details the repurchases that were made during the three months ended December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Shares ​ Value of Shares ​ ​ Total Number of ​ ​ ​ ​ Purchased ​ That May Yet Be ​ ​ Shares ​ Average ​ as Part of Publicly ​ Purchased Under ​ ​ Purchased ​ Price Paid per ​ Announced Plans or Programs ​ the Plans or Programs Period (In thousands) ​ Share (In thousands) (In thousands) (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1 - October 31 1 ​ $ 3.27 1 ​ $ 20,616 November 1 - November 30 ​ 257 ​ $ 3.44 257 ​ $ 19,731 December 1 - December 31 396 ​ $ 3.60 396 ​ $ 18,304 (1) On August 1, 2023, the Board of Directors approved a new stock repurchase plan authorizing the Company to repurchase an aggregate of an additional $25 million in shares of the Company’s common stock.
The timing and the amount of any repurchases will be determined by the Company’s management based on its evaluation of market conditions, capital allocation alternatives and other factors.
The timing, the amount and the method of any repurchases will be determined by the Company’s management based on its evaluation of market conditions, capital allocation alternatives and other factors.
As of March 1, 2024, there were 647 holders of record of ISG common stock. The actual number of stockholders is significantly greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
As of February 25, 2025, there were 587 holders of record of ISG common stock. The actual number of stockholders is significantly greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Market for Registrant’s Common Equi ty, Related Stockholder Matters and Issuer Purchases of Equity Securities The following table sets forth the high and low closing sales price of our common stock, as reported on The Nasdaq Stock Market LLC under the symbol “III” for the periods shown: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Quarter Ending High Low March 31, 2023 ​ $ 5.62 ​ $ 4.63 ​ June 30, 2023 ​ 5.85 ​ 4.88 ​ September 30, 2023 ​ 5.48 ​ 4.33 ​ December 31, 2023 ​ 4.92 ​ 3.99 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Quarter Ending High Low March 31, 2022 ​ $ 7.78 ​ $ 6.20 ​ June 30, 2022 ​ 6.96 ​ 5.52 ​ September 30, 2022 ​ 7.66 ​ 4.72 ​ December 31, 2022 ​ 5.75 ​ 4.26 ​ ​ On March 1, 2024, the last reported sale price for our common stock on The Nasdaq Stock Market was $4.32 per share.
Market for Registrant’s Common Equi ty, Related Stockholder Matters and Issuer Purchases of Equity Securities The following table sets forth the high and low closing sales price of our common stock, as reported on The Nasdaq Stock Market LLC under the symbol “III” for the periods shown: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Quarter Ended High Low March 31, 2024 ​ $ 4.78 ​ $ 3.91 ​ June 30, 2024 ​ 4.08 ​ 2.94 ​ September 30, 2024 ​ 3.56 ​ 2.99 ​ December 31, 2024 ​ 3.80 ​ 3.07 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Quarter Ended High Low March 31, 2023 ​ $ 5.62 ​ $ 4.63 ​ June 30, 2023 ​ 5.85 ​ 4.88 ​ September 30, 2023 ​ 5.48 ​ 4.33 ​ December 31, 2023 ​ 4.92 ​ 3.99 ​ ​ ​ On February 25, 2025, the last reported sale price for our common stock on The Nasdaq Stock Market was $3.07 per share.
The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, pursuant to a Rule 10b5-1 repurchase plan or by other means in accordance with federal securities laws.
The Company had approximately $18.3 million in the aggregate available under its current share repurchase program as of December 31, 2024. The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, pursuant to a Rule 10b5-1 repurchase plan or by other means in accordance with federal securities laws.
On August 1, 2023, the Board of Directors approved a new stock repurchase plan authorizing the Company to repurchase an aggregate of an additional $25 million in shares of the Company’s common stock.
Issuer Purchases of Equity Securities On August 5, 2021, the Board of Directors approved a stock repurchase plan authorizing the Company to repurchase an aggregate of $25 million in shares of the Company’s common stock (the “2021 Repurchase Program”).
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividends to Shareholders In May 2023, the Board of Directors approved quarterly dividends of $0.045 per share of ISG common stock.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividends to Shareholders On March 4, 2025, the Board of Directors approved a fourth quarter dividend of $0.045 per share, payable on March 28, 2025, to shareholders of record as of March 21, 2025.
We anticipate we will continue to pay regular quarterly dividends on our common stock for the foreseeable future, the declaration, timing and amounts of any such dividends remain subject to the discretion of our Board of Directors.
These dividends are funded through cash flow from operations, available cash on hand and/or borrowings under our revolving credit facility. We anticipate we will continue to pay regular quarterly dividends on our common stock for the foreseeable future, and the declaration, timing and amounts of any such dividends remain subject to the discretion of our Board of Directors.
During the fiscal quarter and fiscal year ended December 31, 2023, we paid dividends and dividend equivalents of $2.2 million and $8.7 million, respectively. Issuer Purchases of Equity Securities On August 1, 2023, the Board of Directors approved a new share repurchase authorization of an additional $25.0 million.
During the fiscal quarter and fiscal year ended December 31, 2024, we paid dividends and dividend equivalents of $4.5 million and $9.4 million, respectively.
The new share repurchase program will take effect upon completion of the Company’s current program, which had approximately $0.9 million remaining as of January 1, 2024. The Company had approximately $25.9 million in aggregate available under its share repurchase program as of December 31, 2023.
On August 1, 2023, the Board of Directors approved a new stock repurchase plan authorizing the Company to repurchase an aggregate of an additional $25 million in shares of the Company’s common stock. The new share repurchase program took effect upon the completion of the 2021 Repurchase Program, which was exhausted in the quarter ended March 31, 2024.
Removed
The Company expects to pay a total cash dividend of $0.18 per share for the four quarters ending June 2024. These dividends are funded through cash flow from operations, available cash on hand and/or borrowings under our revolving credit facility.
Added
The new share repurchase program took effect upon the completion of the 2021 Repurchase Program, which was exhausted in the quarter ended March 31, 2024. ​ ​ Item 6. [Reserved] ​
Removed
There is no guarantee as to the number of shares that will be repurchased, and the repurchase program may be extended, suspended or discontinued at any time without notice at the Company’s discretion.
Removed
STOCK PERFORMANCE GRAPH The following graph compares the 5 year cumulative total shareholder return on our common stock from December 31, 2018 through December 31, 2023, with the cumulative total return for the same period of (i) the Russell 2000 index and (ii) the Peer Group described below.
Removed
The comparison assumes for the same period the investment of $100 on December 31, 2018 in our common stock and in each of the indices and in each case, assumes reinvestment of all dividends. *$100 invested on December 31, 2018 in stock or index, including reinvestment of dividends ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Measurement Periods ISG Russell 2000 Index Peer Group(a) December 31, 2019 ​ $ 59.67 ​ $ 125.52 ​ $ 107.65 ​ December 31, 2020 ​ $ 77.36 ​ $ 150.58 ​ $ 132.46 ​ December 31, 2021 ​ $ 182.10 ​ $ 172.90 ​ $ 138.63 ​ December 31, 2022 ​ $ 112.69 ​ $ 137.56 ​ $ 77.88 ​ December 31, 2023 ​ $ 119.63 ​ $ 160.85 ​ $ 66.61 ​ (a) The Peer Group consists of the following companies: American Software, Inc., Edigo, Inc., Forrester Research, Inc., Lesaka Technologies Inc., Repay Holding Corp., The Hackett Group, Tucows, Inc.
Removed
The Peer Group is weighted by market capitalization. ​ ​ Item 6. [Reserved] ​ 24 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] 24 Item 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations 25 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 33 Item 8 . Financial Statements and Supplementary Data . 34 Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 34 Item 9A .
Biggest changeItem 6. [Reserved] 24 Item 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 33 Item 8 . Financial Statements and Supplementary Data 34 Item 9 . Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 34 Item 9A .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe believe that these non-GAAP measures provide useful information to investors because they improve the comparability of the financial results between periods and provide for greater transparency of key measures used to evaluate the Company’s performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 2021 ​ ​ (in thousands) Net income $ 6,154 $ 19,726 ​ $ 15,529 Plus: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense (net of interest income) ​ 5,693 ​ 2,968 ​ 2,200 Income taxes ​ 2,607 ​ 6,956 ​ 7,582 Depreciation and amortization ​ 6,258 ​ 5,368 ​ 5,331 Interest accretion associated with contingent consideration ​ 104 ​ 33 ​ 101 Acquisition-related costs (1) ​ 201 ​ 282 ​ 240 Severance, integration and other expense ​ 2,513 ​ 633 ​ 1,406 Account Receivables Reserves ​ ​ 4,822 ​ ​ — ​ ​ — Tax indemnity receivables ​ ​ 35 ​ ​ — ​ ​ — Foreign currency transaction loss (gain) ​ 158 ​ (170) ​ (44) Non-cash stock compensation ​ 9,132 ​ 7,460 ​ 6,467 Adjusted EBITDA ​ $ 37,677 ​ $ 43,256 ​ $ 38,812 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 2021 ​ ​ (in thousands) Net income ​ $ 6,154 $ 19,726 ​ $ 15,529 Plus: ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-cash stock compensation ​ 9,132 ​ 7,460 ​ 6,467 Intangible amortization ​ ​ 3,164 ​ ​ 2,323 ​ ​ 2,643 Interest accretion associated with contingent consideration ​ 104 ​ 33 ​ 101 Acquisition-related costs (1) ​ 201 ​ 282 ​ 240 Account Receivables Reserves ​ ​ 4,822 ​ ​ — ​ ​ — Severance, integration and other expense ​ 2,513 ​ 633 ​ 1,406 Write-off of deferred financing costs ​ ​ 379 ​ ​ — ​ ​ — Foreign currency transaction loss (gain) ​ 158 ​ (170) ​ (44) Tax effect (2) ​ (6,551) ​ (3,379) ​ (3,460) Adjusted net income ​ $ 20,076 ​ $ 26,908 ​ $ 22,882 ​ 29 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 2021 Net income per diluted share ​ $ 0.12 ​ $ 0.39 ​ $ 0.30 Non-cash stock compensation ​ 0.18 ​ 0.15 ​ 0.12 Intangible amortization ​ 0.06 ​ 0.05 ​ 0.05 Interest accretion associated with contingent consideration ​ 0.00 ​ 0.00 ​ 0.00 Acquisition-related costs (1) ​ 0.01 ​ 0.00 ​ 0.01 Account Receivables Reserves ​ ​ 0.10 ​ ​ — ​ ​ — Severance, integration and other expense ​ 0.05 ​ 0.01 ​ 0.03 Write-off of deferred financing costs ​ ​ 0.01 ​ ​ — ​ ​ — Foreign currency transaction loss (gain) ​ 0.00 ​ 0.00 ​ 0.00 Tax effect (2) ​ (0.13) ​ (0.07) ​ (0.07) Adjusted net income per diluted share ​ $ 0.40 ​ $ 0.53 ​ $ 0.44 ________________________________________ (1) Consists of expenses from acquisition-related costs and non-cash fair value adjustments on pre-acquisition contract liabilities.
Biggest changeWe believe that these non-GAAP financial measures provide useful information to investors because they improve the comparability of the financial results between periods and provide for greater transparency of key measures used to evaluate the Company’s performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 ​ ​ (in thousands) Net income $ 2,839 $ 6,154 ​ Plus: ​ ​ ​ ​ ​ ​ ​ Interest expense (net of interest income) ​ 5,055 ​ 5,693 ​ Income taxes ​ 2,388 ​ 2,607 ​ Depreciation and amortization ​ 5,888 ​ 6,258 ​ Gain on sale of business ​ ​ (4,532) ​ ​ — ​ Interest accretion associated with contingent consideration ​ 77 ​ 104 ​ Change in contingent consideration (Note 2) ​ ​ (2,390) ​ ​ — ​ Acquisition and disposition-related costs (1) ​ 2,880 ​ 201 ​ Severance, integration and other expense ​ 4,887 ​ 2,513 ​ Accounts receivable reserves (3) ​ ​ — ​ ​ 4,822 ​ Tax indemnity receivables ​ ​ — ​ ​ 35 ​ Foreign currency transaction loss ​ 7 ​ 158 ​ Non-cash stock compensation ​ 8,046 ​ 9,132 ​ Adjusted EBITDA ​ $ 25,145 ​ $ 37,677 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 ​ (in thousands) Net income $ 2,839 $ 6,154 ​ Plus: ​ ​ ​ ​ ​ ​ Non-cash stock compensation 8,046 ​ 9,132 ​ Intangible amortization ​ 2,606 ​ ​ 3,164 ​ Interest accretion associated with contingent consideration 77 ​ 104 ​ Change in contingent consideration (Note 2) ​ (2,390) ​ ​ — ​ Acquisition and disposition-related costs (1) 2,880 ​ 201 ​ Accounts receivable reserves (3) ​ — ​ ​ 4,822 ​ Gain on sale of business ​ (4,532) ​ ​ — ​ Severance, integration and other expense 4,887 ​ 2,513 ​ Write-off of deferred financing costs ​ — ​ ​ 379 ​ Foreign currency transaction loss 7 ​ 158 ​ Tax effect (2) (4,452) ​ (6,551) ​ Adjusted net income $ 9,968 ​ $ 20,076 ​ ​ 29 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 Net income per diluted share ​ $ 0.06 ​ $ 0.12 ​ Non-cash stock compensation ​ 0.16 ​ 0.18 ​ Intangible amortization ​ 0.05 ​ 0.06 ​ Interest accretion associated with contingent consideration ​ 0.00 ​ 0.00 ​ Change in contingent consideration (Note 2) ​ ​ (0.05) ​ ​ — ​ Acquisition and disposition-related costs (1) ​ ​ 0.06 ​ ​ 0.01 ​ Accounts receivable reserves (3) ​ ​ — ​ ​ 0.10 ​ Gain on sale of business ​ ​ (0.09) ​ ​ — ​ Severance, integration and other expense ​ 0.10 ​ 0.05 ​ Write-off of deferred financing costs ​ ​ — ​ ​ 0.01 ​ Foreign currency transaction loss ​ 0.00 ​ 0.00 ​ Tax effect (2) ​ (0.09) ​ (0.13) ​ Adjusted net income per diluted share ​ $ 0.20 ​ $ 0.40 ​ ________________________________________ (1) Consists of expenses from acquisition and disposition-related costs and non-cash fair value adjustments on pre-acquisition contract liabilities.
Income Tax Expense Our effective tax rate varies from period to period based on the mix of earnings among the various state and foreign tax jurisdictions in which business is conducted and the level of non‑deductible expenses incurred in any given period.
Income Tax Expense Our effective tax rate varies from period to period based on the mix of earnings among the various state and foreign tax jurisdictions in which our business is conducted and the level of non‑deductible expenses incurred in any given period.
Capitalized terms used but not defined herein have the meanings ascribed to them in the 2023 Credit Agreement: ● The revolving credit facility has a maturity date of February 22, 2028. ● The credit facility is secured by all of the equity interests owned by the Company, and its direct and indirect domestic subsidiaries and, subject to agreed exceptions, the Company’s direct and indirect “first-tier” foreign subsidiaries, and a perfected first priority security interest in all of the Company’s and its direct and indirect domestic subsidiaries’ tangible and intangible assets. ● The Company’s direct and indirect existing and future wholly owned domestic subsidiaries serve as guarantors to the Company’s obligations under the senior secured facility. ● At the Company’s option, the credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate,” (b) the Federal Funds Rate plus 0.5% per annum and (c) Term SOFR, plus 1.0%), plus the applicable margin (as defined below) or (ii) Term SOFR (which is the Term SOFR screen rate for the relevant interest period plus a credit spread adjustment of 0.10%) as determined by the administrative agent, plus the applicable margin.
Capitalized terms used but not defined herein have the meanings ascribed to them in the 2023 Credit Agreement: ● The revolving credit facility has a maturity date of February 22, 2028. ● The credit facility is secured by all of the equity interests owned by the Company, and its direct and indirect domestic subsidiaries and, subject to agreed exceptions, the Company’s direct and indirect “first-tier” foreign subsidiaries, and a perfected first priority security interest in all of the Company’s and its direct and indirect domestic subsidiaries’ tangible and intangible assets. ● The Company’s direct and indirect existing and future wholly owned domestic subsidiaries serve as guarantors to the Company’s obligations under the senior secured facility. ● At the Company’s option, the credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate,” (b) the Federal Funds Rate plus 0.5% per annum and (c) Term SOFR, plus 1.0%), plus the applicable margin or (ii) Term SOFR (which is the Term SOFR screen rate for the relevant interest period plus a credit spread adjustment of 0.10%) as determined by the administrative agent, plus the applicable margin.
In addition, the Company is required to comply with a consolidated leverage ratio and consolidated interest coverage ratio. ● The senior secured credit facility contains customary events of default, including cross-default to other material agreements, judgment default and change of control.
In addition, the Company is required to comply with a consolidated leverage ratio and consolidated interest coverage ratio. ● The senior secured credit facility contains customary events of default, including cross-default to other material agreements, judgment default and change of control provisions.
Since future events and their impact cannot be determined with certainty, the actual results may differ from estimates. Such differences may be material to the consolidated financial statements. We believe the application of accounting policies, and the estimates inherently required therein, are reasonable.
Since future events and their impact cannot be determined with certainty, the actual results may differ from estimates. Such differences may be material to out consolidated financial statements. We believe the application of our accounting policies, and the estimates inherently required therein, are reasonable.
References to “we,” “our” and “us” in this MD&A are to the Company and its consolidated subsidiaries.
References to “ISG”, “we,” “our” and “us” in this MD&A are to the Company and its consolidated subsidiaries.
Selling costs consist principally of compensation expense related to business development, proposal preparation and delivery and negotiation of new client contracts. Selling costs also include travel expenses relating to the pursuit of sales opportunities, expenses for hosting periodic client conferences, public relations activities, participation in industry conferences, industry relations, website maintenance and business intelligence activities.
Selling costs consist principally of compensation expense related to business development, proposal preparation, acquisition and disposition-related cost and delivery and negotiation of new client contracts. Selling costs also include travel expenses relating to the pursuit of sales opportunities, expenses for hosting periodic client conferences, public relations activities, participation in industry conferences, industry relations, website maintenance and business intelligence activities.
The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if economic conditions change from 31 Table of Contents those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that may have a material effect on the cash flow or profitability of our business.
The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if economic conditions change from those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that may have a material effect on the cash flow or profitability of our business.
Selling, general and administrative expenses consist principally of executive management compensation, allocations of billable employee compensation related to general management activities, IT infrastructure and costs for finance, accounting, information technology and human resource functions. General and administrative costs also reflect continued investment associated with implementing and operating client and employee management systems.
Selling, general and administrative expenses consist principally of executive management compensation, allocations of billable employee compensation related to general management activities, IT infrastructure and costs for finance, accounting, information 27 Table of Contents technology and human resource functions. General and administrative costs also reflect continued investment associated with implementing and operating client and employee management systems.
Direct costs also include employee taxes, health insurance, workers compensation and disability insurance. 27 Table of Contents A portion of compensation expenses for certain billable employees are allocated between direct costs and selling, general and administrative costs based on relative time spent between billable and non-billable activities.
Direct costs also include employee taxes, health insurance, workers compensation and disability insurance. A portion of compensation expenses for certain billable employees are allocated between direct costs and selling, general and administrative costs based on relative time spent between billable and non-billable activities.
See “Non-GAAP Financial 28 Table of Contents Measures” below for information about our use of these non-GAAP financial measures, including our reasons for including these measures and reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure. NON-GAAP FINANCIAL MEASURES We use non-GAAP financial measures to supplement the financial information presented on a GAAP basis.
See “Non-GAAP Financial Measures” below for information about our use of these non-GAAP financial measures, including our reasons for including these measures and reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure. NON-GAAP FINANCIAL MEASURES We use non-GAAP financial measures to supplement the financial information presented on a GAAP basis.
Employee Retirement Plans For the fiscal years ended December 31, 2023 and 2022, we contributed $0.0 million and $2.1 million, respectively, to our 401(k) plan (the “Savings Plan”) on a fully discretionary basis. These amounts were invested by the participants in a variety of investment options under an arrangement with a third-party asset manager.
Employee Retirement Plans For the fiscal years ended December 31, 2024 and 2023, we contributed $0.7 million and $0.0 million, respectively, to our 401(k) plan (the “Savings Plan”) on a fully discretionary basis. These amounts were invested by the participants in a variety of investment options under an arrangement with a third-party asset manager.
This percentage is multiplied by the contracted dollar amount of the project to determine the amount of revenue to recognize in an accounting period. The contracted amount used in this calculation typically excludes the amount the client pays for reimbursable expenses.
This percentage is multiplied by the contracted dollar amount of the project to determine the amount 32 Table of Contents of revenue to recognize in an accounting period. The contracted amount used in this calculation typically excludes the amount the client pays for reimbursable expenses.
We provide adjusted EBITDA (defined as net income, plus interest, taxes, depreciation and amortization, foreign currency transaction gains/losses, non-cash stock compensation, interest accretion associated with contingent consideration, tax indemnity receivables, accounts receivables reserve, acquisition-related costs, and severance, integration and other expense), adjusted net income (defined as net income, plus amortization of intangible assets, non-cash stock compensation, foreign currency transaction gains/losses, interest accretion associated with contingent consideration, acquisition-related costs, accounts receivables reserves, write-off of deferred financing cost and severance, integration and other expense on a tax-adjusted basis) and adjusted net income per diluted share, excluding the net of tax effect of the items set forth in the table below.
We provide adjusted EBITDA (defined as net income, plus interest, taxes, depreciation and amortization, foreign currency transaction gains/losses, non-cash stock compensation, interest accretion associated with contingent consideration, tax indemnity receivables, accounts receivables reserve, acquisition and disposition-related costs, gain/loss on sale of business and severance, integration and other expense), adjusted net income (defined as net income, plus amortization of intangible assets, non-cash stock compensation, foreign currency transaction gains/losses, interest accretion associated with contingent consideration, acquisition and disposition-related costs, accounts receivable reserves, write-off of deferred financing cost and severance, integration, gain/loss sales of business and other expense on a tax-adjusted basis) and adjusted net income per diluted share, excluding the net of tax effect of the items set forth in the table below.
On February 22, 2023, the Company amended and restated its senior secured credit facility to increase the revolving commitments per the revolving facility (the “2023 Credit Agreement”) from $54.0 million to $140.0 million and eliminate its term loan. The material terms under the 2023 Credit Agreement are as follows.
On February 22, 2023, the Company amended and restated its senior secured credit facility to increase the revolving commitments per the revolving facility from $54.0 million to $140.0 million and eliminate its term loan (as further amended on June 27, 2024, the “2023 Credit Agreement”). The material terms under the 2023 Credit Agreement are as follows.
We may not be able to obtain financing arrangements in amounts or on terms acceptable to us in the future. The Company has financial covenants underlying its debt which require a debt to adjusted EBITDA ratio of 3.25. The Company was in compliance with its financial covenants under the 2023 Credit Agreement as of December 31, 2023.
We may not be able to obtain financing arrangements in amounts or on terms acceptable to us in the future. The Company has financial covenants underlying its debt which require a debt to adjusted EBITDA ratio of 2.32. The Company was in compliance with its financial covenants under the 2023 Credit Agreement as of December 31, 2024.
Prior to the commencement of a project, we reach agreement with the client on rates for services based upon the scope of the project, staffing requirements and the level of client involvement.
Prior to the commencement of a project, we reach agreement with the client on rates for services based upon the scope of the project, staffing requirements and the level of 24 Table of Contents client involvement.
The Company’s financial statements include outstanding borrowings of $79.2 million both as of December 31, 2023 and December 31, 2022, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy.
The Company’s financial statements include outstanding borrowings of $59.2 million as of December 31, 2024 and $79.2 million as of December 31, 2023, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy.
We also derive our revenues from certain recurring revenue streams. These include such annuity-based ISG offerings as ISG GovernX, Research, Software as a Subscription (Automation licenses), ISG Inform and the multi-year Public Sector contracts. These offerings are characterized by subscriptions (i.e., renewal-centric as opposed to project-centric revenue streams) or, in some instances, multi-year contracts.
We also derive our revenues from certain recurring revenue streams. These include such annuity-based ISG offerings as ISG GovernX, ISG Research Lens. ISG Inform and the multi-year Public Sector contracts. These offerings are characterized by subscriptions (i.e., renewal-centric as opposed to project-centric revenue streams) or, in some instances, multi-year contracts.
The incremental borrowing rate used to discount future cash flows was 6.9% and 6.3% for December 31, 2023 and December 31, 2022, respectively. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions and interest rates.
The incremental borrowing rate used to discount future cash flows was 6.4% and 6.9% for December 31, 2024 and December 31, 2023, respectively. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions and 31 Table of Contents interest rates.
NON-GAAP FINANCIAL PRESENTATION This management’s discussion and analysis presents supplemental measures of our performance that are derived from our consolidated financial information but are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
NON-GAAP FINANCIAL PRESENTATION This MD&A presents supplemental measures of our performance that are derived from our consolidated financial information but are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The fair value of the Company's outstanding borrowings is approximately $79.8 million and $76.5 million as of December 31, 2023 and December 31, 2022, respectively. The fair values of debt have been estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate for similar borrowing arrangements.
The fair value of the Company’s outstanding borrowings was approximately $59.6 million and $79.8 million as of December 31, 2024 and December 31, 2023, respectively. The fair values of debt have been estimated using a discounted cash flow analysis based on the Company’s incremental borrowing rate for similar borrowing arrangements.
The variance from the U.S. statutory rate of 21.0% for the year ended December 31, 2023 was primarily caused by the impact of higher tax rates applicable on company earnings in foreign jurisdictions and non-deductible expenses for tax purposes in the United States.
The variance from the U.S. statutory rate of 21.0% for the year ended December 31, 2024, was primarily caused by state taxes, the impact of higher tax rates applicable on company earnings in foreign jurisdictions, non-deductible expenses for tax purposes in the United States, and a benefit from the sale of the automation business.
The increase in revenue in the Americas was primarily attributable to an increase in our Consulting and Automation service lines. The slight decrease in revenue in Europe was primarily attributable to a decrease in our Advisory service line, partially offset by an increase in our Automation and Research service lines.
The decrease in revenue in the Americas was primarily attributable to a decrease in our Advisory, Network & Software Advisory Services (“NaSa”) and Automation service lines, partially offset by an increase in Research service line. The decrease in revenue in Europe was primarily attributable to a decrease in our Advisory and Automation service lines.
Time-and-expense engagements do not provide us with a high degree of predictability as to performance in future periods. Unexpected changes in the demand for our services can result in significant variations in utilization and revenues and present a challenge to optimal hiring and staffing.
Time-and-expense engagements do not provide us with a high degree of predictability as to performance in future periods. Unexpected changes in the demand for our services can result in significant variations in utilization and revenues and present a challenge to optimal hiring and staffing. The volume of work performed for any particular client can vary widely from period to period.
Net cash provided from operations was primarily attributable to our net income after adjustments for non-cash charges of approximately $25.5 million partially offset by $13.2 million use of working capital primarily attributable to a $6.7 million change in accounts receivables and contract assets, a $6.5 million change in prepaid expense and other assets, a $4.9 million change in accounts payables, partially offset by a $3.8 million change in accrued expenses and other liabilities; and $1.1 million change in contract liabilities; ● treasury share repurchases of $3.5 million; ● repayment of outstanding debt of $84.2 million; ● payments related to tax withholding for stock-based compensation of $2.7 million; ● cash dividends paid to shareholders of $8.7 million; ● proceeds from revolving facility of $84.2 million; ● payment of contingent consideration of $1.5 million; ● payment for Ventana acquisition of $1.0 million: 30 Table of Contents ● payments related to debt financing costs of $0.8 million; ● capital expenditures for property, plant and equipment of $3.4 million; and ● proceeds from issuance of employee stock purchase plan shares of $0.9 million.
Net cash provided from operations was primarily attributable to our net income after adjustments for non-cash charges of approximately $10.0 million and $9.9 million provided from working capital primarily attributable to $7.1 million change in account receivables, a change in prepaid expenses and other assets of $5.0 million, $0.7 million change in contract liabilities, partially offset by a $1.6 million change in accounts payable and a $1.4 million change in accrued expenses and other liabilities; ● treasury share repurchases of $5.6 million; ● repayment of outstanding debt of $48 million; 30 Table of Contents ● payments related to tax withholding for stock-based compensation of $2.1 million; ● cash dividends paid to shareholders of $9.4 million; ● proceeds from revolving facility of $28.0 million; ● payment of contingent consideration of $1.7 million; ● proceed from the sale of automation business of $21.8 million: ● capital expenditures for property, plant and equipment of $2.8 million; and ● proceeds from issuance of employee stock purchase plan shares of $0.8 million.
These are non-GAAP measures that the Company believes provide useful information to both management and investors by excluding certain expenses and financial implications of foreign currency translations that management believes are not indicative of ISG’s core operations. These non-GAAP measures are used by the Company to evaluate the Company’s business strategies and management’s performance.
These are non-GAAP measures that the 28 Table of Contents Company believes provide useful information to both management and investors by excluding certain expenses and financial implications of foreign currency translations that management believes are not indicative of ISG’s core operations.
Our effective tax rate for the year ended December 31, 2023 was 29.8% compared to 26.1% for the year ended December 31, 2022.
Our effective tax rate for the year ended December 31, 2024 was 45.7% compared to 29.8% for the year ended December 31, 2023.
Because our billable personnel operate remotely or on client premises, all occupancy expenses are recorded as general and administrative. Depreciation and amortization expenses in 2023 and 2022 were $6.3 million and $5.4 million, respectively. The increase of $0.9 million was primarily due to the acquisitions of Change 4 Growth and Ventana Research.
Because our billable personnel operate remotely or on client premises, all occupancy expenses are recorded as general and administrative. Depreciation and amortization expenses amounted to $5.9 million in 2024 and $6.3 million in 2023, respectively. The decrease of $0.4 million was primarily due to the sale of the automation business in 2024.
Our strategy is to strengthen our existing market position and develop new services and products to support future growth plans. As a result, we are focused on growing our existing service model, expanding geographically, developing new industry sectors, productizing market data assets, expanding our managed services offerings and growing via acquisitions.
As a result, we are focused on growing our existing service model, expanding geographically, developing new industry sectors, productizing market data assets, expanding our managed services offerings and growing via acquisitions.
These non-GAAP financial measures exclude non-cash and certain other special charges that many investors believe may obscure the user’s overall understanding of the Company’s current financial performance and the Company’s prospects for the future.
These non-GAAP measures are used by the Company to evaluate the Company’s business strategies and management’s performance and exclude non-cash and certain other special charges that some investors may believe obscure the user’s overall understanding of the Company’s current financial performance and the Company’s prospects for the future.
There are situations where the number of hours to complete projects may exceed our original estimate as a result of an increase in project scope or unforeseen events.
There are situations where the number of hours to complete projects may exceed our original estimate as a result of an increase in project scope or unforeseen events. The results of any revisions in these estimates are reflected in the period in which they become known.
The following table summarizes our cash flows for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2023 2022 2021 ​ ​ (in thousands) ​ Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating activities $ 12,272 $ 11,146 $ 41,942 ​ Investing activities ​ (4,433) ​ (6,873) ​ (2,320) ​ Financing activities ​ (16,198) ​ (18,941) ​ (34,125) ​ Effect of exchange rate changes on cash ​ 498 ​ (2,271) ​ (1,713) ​ Net (decrease) increase in cash, cash equivalents, and restricted cash ​ $ (7,861) ​ $ (16,939) ​ $ 3,784 ​ As of December 31, 2023, our liquidity and capital resources included cash, cash equivalents and restricted cash of $22.8 million compared to $30.7 million as of December 31, 2022, a net decrease of $7.9 million, which was primarily attributable to the following: ● our operating activities provided net cash of $12.3 million for the year ended December 31, 2023.
The following table summarizes our cash flows for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 ​ ​ (in thousands) Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ Operating activities $ 19,865 $ 12,272 Investing activities ​ 18,992 ​ (4,433) ​ Financing activities ​ (37,906) ​ (16,198) ​ Effect of exchange rate changes on cash ​ (602) ​ 498 ​ Net increase (decrease) in cash, cash equivalents, and restricted cash ​ $ 349 ​ $ (7,861) ​ As of December 31, 2024, our liquidity and capital resources included cash, cash equivalents and restricted cash of $23.2 million compared to $22.8 million as of December 31, 2023, a net increase of $0.4 million, which was primarily attributable to the following: ● our operating activities provided net cash of $19.9 million for the year ended December 31, 2024.
The cost increases were partially offset by lower compensation expenses of $2.4 million. Compensation costs consist of a mix of fixed and variable salaries, annual bonuses, benefits and retirement plan contributions. Statutory and 401(k) plans are offered to employees as appropriate.
These costs were partially offset by higher acquisition- and disposition-related cost of $2.7 million and bad debt expense of $0.6 million. Compensation costs consist of a mix of fixed and variable salaries, annual bonuses, benefits and retirement plan contributions. Statutory and 401(k) plans are offered to employees as appropriate.
The translation of foreign currency revenues into U.S. dollars was flat with a negative impact in Asia Pacific, being offset by a positive impact in Europe compared to the prior year.
The translation of foreign currency revenues into U.S. dollars had a positive impact in Europe and Asia Pacific compared to the prior year by $0.7 million.
Our foreign operations are subject to local government regulations and to the uncertainties of the economic and political conditions of those areas, and the revenue for our foreign operations is predominantly invoiced and collected in local currency. ​ Geographical revenue information for the segment is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Geographic Area 2023 2022 Change Change ​ ​ (in thousands) Americas ​ $ 177,131 $ 166,661 $ 10,470 6 % Europe ​ 87,074 ​ 89,908 ​ (2,834) (3) % Asia Pacific ​ 26,849 ​ 29,698 ​ (2,849) (10) % Total revenues ​ $ 291,054 ​ $ 286,267 ​ $ 4,787 2 % ​ Revenues increased by $4.8 million or approximately 2% in 2023.
Our foreign operations are subject to local government regulations and to the uncertainties of the economic and political conditions of those areas, and the revenue for our foreign operations is predominantly invoiced and collected in local currency. 26 Table of Contents ​ Geographical revenue information for the segment is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Geographic Area 2024 2023 Change Change ​ ​ (in thousands) Americas ​ $ 158,853 $ 177,131 $ (18,278) (10) % Europe ​ 67,730 ​ 87,074 ​ (19,344) (22) % Asia Pacific ​ 21,002 ​ 26,849 ​ (5,847) (22) % Total revenues ​ $ 247,585 ​ $ 291,054 ​ $ (43,469) (15) % ​ Revenues decreased by $43.5 million or approximately 15% in 2024.
These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team. When we recognize revenues in advance of billing, those revenues are recorded as contract assets. When we invoice in advance of earning revenues, those amounts are recorded as contract liabilities.
These provisions typically prohibit us from performing a defined range of services that we might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team. When we recognize revenues in advance of billing, those revenues are recorded as contract assets.
The Company continuously monitors these changes and evaluates any effect. If our costs, in particular personnel-related costs, were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases in future periods.
If our costs, in particular personnel-related costs, were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases in future periods. Our inability or failure to realize these offsets could adversely affect our business operations, financial performance and results of operations.
The increase in operating expenses was due primarily to higher bad debt expense of $5.1 million (refer to Note 2 for details), license fees of $5.0 million, contract labor of $3.0 million, restructuring costs of $1.9 million, travel and entertainment expenses of $1.7 million, non-cash stock based compensation of $1.7 million, computer expenses of $1.0 million, professional fees of $0.7 million and conference expenses of $0.5 million.
The decrease in operating expenses was due primarily to lower contract labor of $13.7 million, compensation expenses of $10.5 million, license fees of $5.7 million, contingent consideration adjustment of $2.5 million, restructuring costs of $2.4 million, non-cash stock-based compensation of $1.1 million, professional fees of $0.7 million and travel and entertainment expenses of $0.6 million.
For network and software contingency contracts with termination for convenience clauses, revenue is recognized over time due to the existence of provisions for payment for progress incurred to date plus a reasonable profit margin. The contract periods range from a few months to in excess of a year.
Additionally, these contracts can also have a fixed component and a contingent component based on the savings generated by the Company. For network and software contingency contracts with termination for convenience clauses, revenue is recognized over time due to the existence of provisions for payment for progress incurred to date plus a reasonable profit margin.
This MD&A provides an analysis of our consolidated financial results and cash flows for 2023 and 2022 under the headings “Results of Operations,” “Non-GAAP Financial Presentation,” “Non-GAAP Financial Measures,” and “Liquidity and Capital Resources.” For a similar detailed discussion comparing 2022 and 2021, refer to those headings under Item 7.
This MD&A provides an analysis of our consolidated financial results and cash flows for 2024 and 2023 under the headings “Results of Operations,” “Non-GAAP Financial Presentation,” “Non-GAAP Financial Measures,” and “Liquidity and Capital Resources.” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Operating Expenses The following table presents a breakdown of our operating expenses by functional category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Operating Expenses 2023 2022 Change Change ​ ​ ​ (in thousands) Direct costs and expenses for advisors ​ $ 178,913 $ 169,650 $ 9,263 5 % Selling, general and administrative ​ ​ 91,271 ​ 81,769 ​ 9,502 12 % Depreciation and amortization ​ ​ 6,258 ​ 5,368 ​ 890 17 % Total operating expenses ​ ​ $ 276,442 ​ $ 256,787 ​ $ 19,655 8 % ​ Total operating expenses increased by $19.7 million, or approximately 8%, in 2023.
Operating Expenses The following table presents a breakdown of our operating expenses by functional category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Operating Expenses 2024 2023 Change Change ​ ​ ​ (in thousands) Direct costs and expenses for advisors ​ $ 150,306 $ 178,913 $ (28,607) (16) % Selling, general and administrative ​ ​ 85,634 ​ 91,271 ​ (5,637) (6) % Depreciation and amortization ​ ​ 5,888 ​ 6,258 ​ (370) (6) % Total operating expenses ​ ​ $ 241,828 ​ $ 276,442 ​ $ (34,614) (13) % ​ Total operating expenses decreased by $34.6 million, or approximately 13%, in 2024.
For ongoing managed services contract, revenue is recognized over time, consistent with the weekly or monthly fee specified within such arrangements. We also derive revenues based on negotiating reductions in network and software costs of companies with the entities’ related service providers and providing other services such as audits of network and communication expenses and consultation for network architecture.
We also derive revenues based on negotiating reductions in network and software costs of companies with the entities’ related service providers and providing other services such as audits of network and communication expenses and consultation for network architecture. These contracts can be fixed in fees or can be based on the level of savings achieved related to its communications costs.
We also enter into arrangements for the sale of automation software licenses and related delivery of consulting or implementation services at the same time or within close proximity to one another. Such software-related performance obligations include the sale of on-premise software, hybrid and software-as-a-service licenses, as well as other software-related services.
The contract periods range from a few months to in excess of a year. We also previously entered into arrangements for the sale of automation software licenses and related delivery of consulting or implementation services at the same time or within close proximity to one another.
Inflation has not had a material effect on our business operations, financial performance and results of operations, other than its impact on the general economy. Our exposure from changes to interest rates has impacted our business operations, financial performance and results of operations, as our interest expense has increased from $3.2 million in 2022 to $6.2 million in 2023.
CURRENT ENVIRONMENT Inflation rates and the adverse effect of interest rates have been volatile in the past year. Inflation has not had a material effect on our business operations, financial performance and results of operations, other than its impact on the general economy.
We also capitalize some costs associated with the purchase and development of internal-use software, system conversions and website development costs. These costs are amortized over the estimated useful life of the software or system. We amortize our intangible assets (e.g., client relationships and databases) over their estimated useful lives.
These costs are amortized over the estimated useful life of the software or system. We amortize our intangible assets (e.g., client relationships and databases) over their estimated useful lives. Goodwill related to acquisitions is not amortized but is subject to annual impairment testing.
A trusted business partner to over 900 clients, including more than 75 of the top 100 enterprises in our markets, ISG is committed to helping corporations, public sector organizations and service and technology providers achieve operational excellence and faster growth.
A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services sourcing that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth.
Conversely, revenue associated with research subscriptions is recognized over time, as the customer accesses our data or related platforms. In addition, we sell research products for which the revenue is recognized at a point in time upon delivery to the client.
Revenue associated with events is recognized at the point of time at which the event occurs and is primarily comprised of sponsorships. Conversely, revenue associated with research subscriptions is recognized over time, as the customer accesses our data or related platforms.
The agreements entered into in connection with a project typically allow our clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by us through the effective date of the termination.
In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by us through the effective date of the termination. In addition, from time to time, we enter into agreements with clients that limit our right to enter into business relationships with specific competitors of that client for a specific time period.
(2) Marginal tax rate of 32%, reflecting U.S. federal income tax rate of 21% plus 11% attributable to U.S. states and foreign jurisdictions. LIQUIDITY AND CAPITAL RESOURCES Liquidity Our primary sources of liquidity are cash flows from operations, existing cash and cash equivalents and borrowings under our revolving line of credit.
(2) Marginal tax rate of 32%, reflecting U.S. federal income tax rate of 21% plus 11% attributable to U.S. states and foreign jurisdictions.
The decrease in revenue in Asia Pacific was primarily attributable to a decrease in our Advisory and NaSa service lines, partially offset by an increase in our Research service line.
The decrease in revenue in Asia Pacific was primarily attributable to a decrease in our Advisory service line. The sale of Automation service line also attributed to the decrease in revenue in the Americas and Europe.
The results of any revisions in these estimates are reflected in the period in which they become known. 32 Table of Contents For managed service implementation contracts, revenue is recognized over time as a percentage of hours incurred to date as compared to the total expected hours of the implementation, consistent with the transfer of control to the customer.
For managed service implementation contracts, revenue is recognized over time as a percentage of hours incurred to date as compared to the total expected hours of the implementation, consistent with the transfer of control to the customer. For ongoing managed services contract, revenue is recognized over time, consistent with the weekly or monthly fee specified within such arrangements.
See Note 4—Acquisition in the Notes to Consolidated Financial Statements for more regarding these acquisitions. Our fixed assets consist of furniture, fixtures, equipment (mainly personal computers) and leasehold improvements. Depreciation expenses are generally computed by applying the straight-line method over the estimated useful lives of assets.
Our fixed assets consist of furniture, fixtures, equipment (mainly personal computers) and leasehold improvements. Depreciation expenses are generally computed by applying the straight-line method over the estimated useful lives of assets. We also capitalize some costs associated with the purchase and development of internal-use software, system conversions and website development costs.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this report.
When we invoice in advance of earning revenues, those amounts are recorded as contract liabilities. Recent Accounting Pronouncements See Note 2 to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Other Income (Expense), Net The following table presents a breakdown of other expense, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Other income (expense), net ​ 2023 2022 Change Change ​ ​ ​ (in thousands) Interest income ​ $ 497 $ 189 $ 308 163 % Interest expense ​ ​ (6,190) ​ (3,157) ​ (3,033) (96) % Foreign currency transaction gain ​ ​ (158) ​ 170 ​ (328) (193) % Total other expense, net ​ ​ $ (5,851) ​ $ (2,798) ​ $ (3,053) (109) % ​ The total increase of $3.1 million was primarily the result of higher interest expense attributable to higher interest rates, our higher debt balance and $0.4 million associated with the write-off of deferred financing costs.
Other Income (Expense), Net The following table presents a breakdown of other expense, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Other income (expense), net ​ 2024 2023 Change Change ​ ​ ​ ($ in thousands) Interest income ​ $ 782 $ 497 $ 285 57 % Interest expense ​ ​ (5,837) ​ (6,190) ​ 353 6 % Gain on the sale of business ​ ​ ​ 4,532 ​ ​ - ​ ​ 4,532 ​ nil % Foreign currency transaction gain ​ ​ (7) ​ (158) ​ 151 96 % Total other expense, net ​ ​ $ (530) ​ $ (5,851) ​ $ 5,321 91 % ​ The total decrease of $5.3 million was primarily attributable to gain on the sale of business of $4.5 million that is related to the sale of the automation business.
ISG Tango™, we believe, will enable us to capture more unadvised transaction activity among the world’s largest enterprises (the G2000), and penetrate the underserved middle market, which spends an estimated $130 billion annually on technology and business services. ​ 26 Table of Contents RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2023 COMPARED TO YEAR ENDED DECEMBER 31, 2022 Revenues Revenues are generally derived from fixed-fee contracts as well as engagements priced on a time and materials basis, which are recorded based on actual time worked as the services are performed.
This was due to our disciplined operating approach, our higher utilization in the fourth quarter – up more than 700 basis points year over year – and our improved business mix. ​ RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2024 COMPARED TO YEAR ENDED DECEMBER 31, 2023 Revenues Revenues are generally derived from fixed-fee contracts as well as engagements priced on a time and materials basis, which are recorded based on actual time worked as the services are performed.
Revenue associated with the software performance obligation is primarily recognized at the point at which the software is installed or access is granted. Revenue associated with events is recognized at the point of time at which the event occurs and is primarily comprised of sponsorships.
Such software-related performance obligations included the sale of on-premises software, hybrid and software-as-a-service licenses, as well as other software-related services. Revenue associated with the software performance obligation is primarily recognized at the point at which the software is installed, or access is granted. We sold our automation business line in Q4 2024.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2022. BUSINESS OVERVIEW Information Services Group, Inc. (Nasdaq: III) is a leading global technology research and advisory firm.
BUSINESS OVERVIEW Information Services Group, Inc. (Nasdaq: III) is a global Artificial AI-centered technology research and advisory firm.
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The Company specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis.
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The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,300 professionals worldwide working together to help clients maximize the value of their technology investments. For more information, visit www.isg-one.com. The content on our website is available for informational purposes only.
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Founded in 2006, and based in Stamford, Connecticut, ISG employs over 1,500 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.
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It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10 K or any other filings. Our strategy is to strengthen our existing market position and develop new services and products to support future growth plans.
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The volume of work performed for any particular client can vary widely from period to period. 25 Table of Contents CURRENT ENVIRONMENT Inflation rates and the adverse effect of interest rates have increased significantly in the past year.
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Changes to interest rates has impacted our business operations, financial performance and results of operations, as our interest expense has decreased from $6.2 million in 2023 to $5.8 million in 2024. The Company continuously monitors these changes and evaluates any effect.
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Our inability or failure to realize these offsets could adversely affect our business operations, financial performance and results of operations. EXECUTIVE SUMMARY 2023 was a largely successful year for ISG. We delivered another year of record revenues, at $291 million.
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EXECUTIVE SUMMARY 2024 was a challenging year for our industry and our firm. Enterprises were cautious in the face of challenging global economic and geopolitical conditions, pulling back on discretionary technology spending. This impacted the entire technology services industry.
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A strong first nine months of the year was followed by a soft fourth quarter, due to lingering macro concerns that impacted demand for advisory services in the short term. Given that the overall IT and business services industry was down 6 percent for the year, we consider our topline growth of 2 percent to be a solid performance.
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But the clouds of client caution are beginning to lift, and we are starting to see signs client spending is on the rise, beginning in the U.S., in the early months of 2025. ​ In particular, we are seeing a resurgence in cloud transformations, as clients push even more infrastructure and applications to the cloud.
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Our investments in our recurring-revenue businesses continue to pay off. For the year, we generated record recurring revenues of $125 million, up 16 percent, driven by our research and platforms businesses. Recurring revenue now represents 43 percent of our overall revenue, up 500 basis points from the prior year.
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The cloud offers both operating efficiencies and the scalability needed to power large language models and AI-driven applications. ​ ISG has been investing in AI for more than two years now.
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This puts us on track to reach our previously announced target of $150 million in recurring revenues by the end of 2025. Our profitability, as measured by adjusted EBITDA, was $38 million, down from the prior year.
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In that time, we’ve been making AI investments in our people, platforms and products, to better serve our clients and help them harness the power of AI to achieve operational excellence and faster growth. ​ In February 2025, we announced a strategic repositioning of our firm, reflecting the expanding role ISG has been playing in helping our clients adopt AI at scale.
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Even as discretionary spending on advisory services slowed in toward the end of the year, we decided to retain much of our advisory team globally in anticipation of a rebound in 2024, while investing in training more than 1,200 of our employees in AI technology during the fourth quarter.
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We are now positioned as a “global AI-centered technology research and advisory firm.” ​ AI is at the heart of everything we do—from the technology strategies we develop and the partners we recommend to our clients, to the impact of AI on the future of work.
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We continue to expand our business for current and future growth—organically in areas like Cybersecurity, Training-as-a-Service (TaaS), and most recently Enterprise AI Advisory—and through acquisition, with our October purchase of Ventana Research.
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We have truly become an AI-centered firm. ​ During 2024, our two biggest innovations were the launch of our Enterprise AI Advisory business in January and the introduction of our AI-enabled sourcing platform, ISG Tango™, in March. ​ Born out of our first-mover research on the state of the AI services market in 2023, Enterprise AI is really an extension of our existing capabilities, leveraging our market influence and permission as the world’s leading sourcing and governance advisor to help clients navigate the complexities and implications of adopting this game-changing technology at scale. ​ 25 Table of Contents ISG has worked with more than 100 clients this past year to set AI strategy, create AI-ready infrastructure and data, build AI provider ecosystems, and establish AI governance frameworks.
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A leading technology research business covering the $800 billion global software industry, Ventana Research gives us unmatched analyst coverage of software vendors—adding an important new pillar to our ISG Research portfolio and a strong complement to our Software Advisory business.
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Our ISG Research business, meanwhile, has produced detailed AI market surveys and analysis covering both the service and software provider ecosystems. ​ AI is also playing a role in modernizing our approach to sourcing advisory, through our groundbreaking ISG Tango sourcing platform.
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With this addition, ISG is increasing its recurring revenue streams, while gaining more than 40 unique new clients and adding nearly two dozen talented research professionals to our roster of world-class technology analysts. Our acquisition of Ventana Research came one year to the day after we acquired Change 4 Growth, a leading change management firm, in 2022.
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With ISG Tango, we have digitized elements of our market-leading sourcing transactions business to better serve clients and improve transaction speed and efficiency.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe majority of the Company’s cash and cash equivalents are with large investment-grade commercial banks. Accounts receivable and contract assets balances deemed to be collectible from customers have limited concentration of credit risk due to our diverse customer base and geographies. ​ ​
Biggest changeThe majority of the Company’s cash and cash equivalents are with large investment-grade commercial banks. Accounts receivable and contract asset balances deemed to be collectible from customers have limited concentration of credit risk due to our diverse customer base and geographies. Actual collections from customers may differ from the Company’s estimates.
However, due to our debt to EBITDA ratio of 2.4 times and forecasted rates from external banks, we believe that our total exposure is limited and is considered in our forecasted cash uses. ​ Foreign Currency Risk ​ A significant portion o f our revenues are typically derived from sales outside of the United States.
However, due to our debt to EBITDA ratio of 2.3 times and forecasted rates from external banks, we believe that our total exposure is limited and such exposure is considered in our forecasted cash uses. ​ Foreign Currency Risk ​ A significant portion o f our revenues are typically derived from sales outside of the United States.
In 2023, the impact on revenues from foreign currency transactions was not material to our condensed consolidated financial statements. ​ Credit Risk ​ Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of short-term, highly liquid investments classified as cash equivalents and accounts receivable and contract assets.
In 2024, the impact on revenues from foreign currency transactions was not material to our consolidated financial statements. ​ Credit Risk ​ Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of short-term, highly liquid investments classified as cash equivalents and accounts receivable and contract assets.
Note 12 — Financing Arrangements and Long-Term Debt in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt obligations. ​ All of the Company’s total debt outstanding as of December 31, 2023 was based on a floating base rate (SOFR – Secured Overnight Financing Rate) of interest, which potentially exposes the Company to increases in interest rates.
Note 13 — Financing Arrangements and Long-Term Debt in the Notes to Consolidated Financial Statements provides additional information regarding the Company’s outstanding debt obligations. ​ All of the Company’s total debt outstanding as of December 31, 2024 was based on a floating base rate (SOFR – Secured Overnight Financing Rate) of interest, which potentially exposes the Company to increases in interest rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to financial market risks primarily related to changes in interest rates. A 100 basis point change in interest rates would result in an annual change in the results of operations of $0.8 million pre‑tax.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to financial market risks primarily related to changes in interest rates. A 100 basis point change in interest rates would result in an annual change in our results of operations of $0.6 million pre‑tax.
Among the major foreign currencies in which we conduct business are the Euro, the British Pound and the Australian dollar. The reporting currency of our consolidated financial statements is the U.S. dollar.
Among the major foreign currencies in which we conduct business are the Euro, the British Pound and the Australian dollar. The reporting currency of our consolidated 33 Table of Contents financial statements is the U.S. dollar.
We do not enter into investments for trading or speculative purposes. ​ Interest Rate Risk ​ As of December 31, 2023, the Company had $79.2 million in total debt principal outstanding.
We do not enter into investments for trading or speculative purposes. ​ Interest Rate Risk ​ As of December 31, 2024, the Company had $59.2 million in total debt principal outstanding.
Adjustments resulting from the translation of these assets and 33 Table of Contents liabilities are deferred and recorded as a component of stockholders’ equity. In 2023, the impact of foreign currency translation on our Statement of Stockholders’ Equity was $0.7 million.
Adjustments resulting from the translation of these assets and liabilities are deferred and recorded as a component of stockholders’ equity. In 2024, the impact of foreign currency translation on our Statement of Stockholders’ Equity was $1.1 million.
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See “Accounts Receivable, Contract Assets and Allowance for Doubtful Accounts” in Note 2 to the Notes to Consolidated Financial Statements. ​

Other III 10-K year-over-year comparisons