Information Services Group, Inc.

Q1 revenue was $61.2 million, up 3% year over year. Adjusted EBITDA was $8.3 million, up 11.8%, and adjusted EBITDA margin expanded 111 basis points to 13.5%. Operating income was $5 million, up 47.7%, with operating margin at 8.2%. GAAP net income was $2.7 million, or $0.05 per diluted share, versus $1.5 million, or $0.03 per diluted share, a year ago; adjusted net income was $4.3 million, or $0.09 per diluted share, versus $3.7 million, or $0.07 per diluted share. By region, Americas revenue was $39.8 million, Europe was $17.3 million, and Asia Pacific was $4.1 million. Recurring revenue was 47% of total revenue, and AI-related revenue was $21 million. For Q2, management targets revenue of $62.5 million to $63.5 million and adjusted EBITDA of $8 million to $9 million.

Michael Connors framed the quarter as a strong start to the year and repeatedly tied the company’s momentum to AI transformation work, governance, and cost optimization. He said AI is already showing up in revenue, margins, and client demand, and highlighted ISG’s role as an independent adviser as clients navigate growing complexity. His tone was confident and constructive, but he also stressed that the company is still early in May and is being conservative in guidance because of an uncertain macro environment.

Michael Sherrick emphasized that Q1 results were in line with expectations and showed continued operating leverage, with adjusted EBITDA margin at 13.5% and operating cash use of $700,000, which he said was normal seasonality. He noted cash of $22.7 million, gross debt-to-EBITDA just under 1.8x, and an average borrowing rate of 5.4%, down 115 basis points year over year. He also said the company paid $2.2 million in dividends and repurchased $2.1 million of stock, while reiterating that strong operating cash flow is expected for the rest of the year.

Analysts pressed on the new large AI governance contract, whether deals of that size are becoming more common, and whether clients are still early in AI adoption or moving into a more mature phase. Management said both are true: some clients are just starting, while others are moving from strategy into execution and need help governing the proliferation of AI tools. Questions also focused on Europe, where management said “welcome back” clients and health sciences demand are improving as companies move faster on AI, and on APAC, where public sector spending is beginning to pick up. On the AI Index, management said feedback has been positive and that the index is helping structure the market narrative around infrastructure, software, and managed services.