Information Services Corporation

Second-quarter revenue was $64.3 million, down 14% year over year and flat sequentially. Adjusted EBITDA was $7.1 million, up more than 60% sequentially but down from $10.1 million a year ago, with adjusted EBITDA margin at 11.1% versus 13.6% last year. Gross margin was 39.5%, up 340 basis points from Q1. Reported net income was $2 million, or $0.04 per diluted share, versus $2.3 million, or $0.05 per share, a year ago; adjusted net income was $3.8 million, or $0.08 per diluted share, versus $5.3 million, or $0.11. For Q3, management guided to revenue of $64 million to $66 million and adjusted EBITDA of $7 million to $8 million.

Michael Connors emphasized that Q2 showed stabilization and improving operating leverage despite a difficult macro environment. He highlighted record utilization, stronger recurring revenue, and early momentum from Tango and AI as reasons he believes demand can improve later this year. His tone was constructive but measured, repeatedly noting that Q3 should be seasonally softer and that a broader macro recovery is still needed.

Michael Sherrick said Q2 revenue of $64.3 million was flat sequentially, supporting the view that demand has stabilized, though results were down 14% year over year against a record prior-year quarter. He pointed to adjusted EBITDA of $7.1 million, gross margin of 39.5%, and record utilization of 78% as drivers of the sequential improvement; he also noted cash of $11.8 million, debt of $74.2 million, $2 million of share repurchases, and $1.7 million of earnout payments. Operating cash flow was $2.2 million, headcount was 1,497, and average borrowing rate was 7.3%.

Analysts focused on whether the 78% utilization rate can hold, and management said it is 'lava hot' and not sustainable, with mid-70s viewed as the ongoing target and summer seasonality likely to pull it down. Questions also centered on pipeline timing, geography, Tango adoption, and AI; management said the Americas have the strongest pipeline, Europe is softer due to macro/geopolitics, and they expect year-over-year growth to return in Q4 first in the Americas. On Tango, management said there have been no major vendor objections, over 100 vendors were trained (closer to 200), more than 90% of sourcing clients are expected to use it, and the $4 billion figure represents transaction value flowing through the platform, not ISG revenue.