Information Services Group Inc.

Previous wording

Information Services Group, Inc. (Nasdaq: III) is a global AI-centered technology research and advisory firm. 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. The firm, founded in 2006, is known for its proprietary market data and research, in-depth knowledge and governance of provider ecosystems, and the expertise of its approximately 1,500 professionals worldwide working together to help clients maximize the value of their technology investments. For more information,

Current wording

Information Services Group, Inc. (Nasdaq: III) is a global AI-centered technology research and advisory firm. 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. The firm, founded in 2006, is known for its proprietary market data and research, in-depth knowledge and governance of provider ecosystems, and the expertise of its approximately 1,500 professionals

Previous wording

visit www.isg-one.com. The content on our website is available for informational purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Quarterly Report on Form 10-Q or any other filings.

Current wording

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. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Quarterly Report on Form 10-Q or any other filings.

Previous wording

Our results are impacted principally by our full-time consultants’ utilization rate, the number of business days in each quarter and the number of our revenue-generating professionals who are available to work. Our utilization rate can be negatively affected by increased hiring because there is generally a transition period for new professionals that result in a temporary drop in our utilization rate. Our utilization rate can also be affected by seasonal variations in the demand for our services from our clients. The number of business workdays is also affected by the number of vacation days taken by our consultants and holidays in each quarter. We typically have fewer business workdays available in the fourth quarter of the year, which can impact revenues during that period. 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.

Current wording

Our results are impacted principally by our full-time consultants’ utilization rate, the number of business days in each quarter and the number of our revenue-generating professionals who are available to work. Our utilization rate can be negatively affected by increased hiring because there is generally a transition period for new professionals that results in a temporary drop in our utilization rate. Our utilization rate can also be affected by seasonal variations in the demand for our services from our clients. The number of business workdays is also affected by the number of vacation days taken by our consultants and holidays in each quarter. We typically have fewer business workdays available in the fourth quarter of the year, which can impact revenues during that period. 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.

Previous wording

Revenues increased $1.6 million, or approximately 3%, in the first quarter of 2026 compared to the first quarter of 2025. The increase in revenues in Europe was primarily due to increases in the Consulting and Network & Software (“NaSa”) service lines. The decrease in revenues in the Americas was primarily due to the decline in the NaSa and the Consulting service lines, partially offset by an increase in GovernX and Research service lines. The decrease in revenues in Asia Pacific was attributable to a decrease in the Consulting and Research service lines. The translation of foreign currency revenues into U.S. dollars positively impacted performance compared to the prior year by $1.8 million.

Current wording

Revenues increased $3.9 million, or approximately 6%, in the second quarter of 2026 compared to the second quarter of 2025. The increase in revenues in the Americas was primarily due to the increase in the Research, GovernX and Consulting service lines, partially offset by a decrease in Network & Software (“NaSa”) service line. The increase in revenues in Europe was primarily due to increases in the Consulting, NaSa and GovernX service lines, partially offset by a decrease in the Research service line. The decrease in revenues in Asia Pacific was attributable to a decrease in the Research service line. The translation of foreign currency revenues into U.S. dollars positively impacted performance compared to the prior year by $0.7 million.

Previous wording

Total operating expenses were relatively consistent for the first quarter of 2026 compared to the first quarter of 2025. The increase in operating expenses was primarily driven by higher contract labor of $0.9 million, travel and entertainment of $0.3 million, and computer expense of $0.2 million. These increases were partially offset by lower compensation expense of $0.8 million, stock-based compensation expense of $0.7 million, and professional fees of $0.1 million.

Current wording

Total operating expenses increased $2.7 million, or approximately 5%, for the second quarter of 2026 compared to the second quarter of 2025. The increase in operating expenses was primarily attributable to higher bad debt expense of $4.3 million (refer to Note 5 – Revenue – “Accounts Receivable and Contract Assets” for further details), higher compensation expense of $1.4 million, and higher stock-based compensation expense of $0.2 million. These increases were partially offset by lower contractor labor expense of $3.0 million, of which $4.3 million is discussed in Note 5, lower professional fees of $0.1 million and lower restructuring costs of $0.1 million.

Previous wording

Compensation costs consist of a mix of fixed and variable salaries, annual bonuses, benefits and profit-sharing plan contributions. 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. Bonus compensation is determined based on achievement against Company financial targets and is accrued monthly throughout the year based on management’s estimates of target achievement. Statutory and elective profit-sharing plans are offered to employees as appropriate. Direct costs also include employee taxes, health insurance, workers’ compensation and disability insurance.

Current wording

Compensation costs consist of a mix of fixed and variable salaries, annual bonuses, benefits and profit-sharing plan contributions. A portion of compensation expenses for certain billable employees is allocated between direct costs and selling, general and administrative costs based on relative time spent between billable and non-billable activities. Bonus compensation is determined based on achievement against Company financial targets and is accrued monthly throughout the year based on management’s estimates of target achievement. Statutory and elective profit-sharing plans are offered to employees as appropriate. Direct costs also include employee taxes, health insurance, workers’ compensation and disability insurance.

Previous wording

Depreciation and amortization expenses were $1.0 million and $1.1 million for the first quarters of 2026 and 2025, respectively. Our fixed assets consist of furniture, fixtures, equipment (mainly personal computers) and leasehold improvements. Depreciation expense is generally computed by applying the straight-line method over the estimated useful lives of assets. We also capitalize certain 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.

Current wording

Depreciation and amortization expenses were $1.1 million and $1.2 million for the second quarters of 2026 and 2025, respectively. Our fixed assets consist of furniture, fixtures, equipment (mainly personal computers) and leasehold improvements. Depreciation expense is generally computed by applying the straight-line method over the estimated useful lives of assets. We also capitalize certain 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.

Previous wording

The total decrease in other expenses of $0.3 million, or approximately 30% in the first quarter of 2026 compared to the first quarter of 2025, was primarily due to lower interest expense attributable to lower interest rates, and fluctuations in foreign exchange rates.

Current wording

The total decrease in other expenses of $0.5 million, or approximately 44%, in the second quarter of 2026 compared to the second quarter of 2025, was primarily due to fluctuations in foreign exchange rates and lower interest expense attributable to lower interest rates.

Previous wording

Our quarterly effective tax rate varies from period to period based on the mix of our earnings among the various state and foreign tax jurisdictions in which our business is conducted and the level of non-deductible expenses projected to be incurred during the current fiscal year. Our effective tax rate for the quarter ended March 31, 2026 was 37.2% compared to 37.9% for the quarter ended March 31, 2025. The difference for the quarter ended March 31, 2026 was primarily due to the impact of an increase in pre-tax earnings. The Company’s effective tax rate for the quarter ended March 31, 2026 was higher than the statutory rate primarily due to non-deductible expenses and the impact of earnings in foreign jurisdictions. There were no significant changes in uncertain tax position reserves during the quarter ended March 31, 2026.

Current wording

Our quarterly effective tax rate varies from period to period based on the mix of our earnings among the various state and foreign tax jurisdictions in which our business is conducted and the level of non-deductible expenses projected to be incurred during the current fiscal year. Our effective tax rate for the quarter ended June 30, 2026 was 37.1% compared to 38.7% for the quarter ended June 30, 2025. The difference for the quarter ended June 30, 2026 was primarily due to the impact of an increase in pre-tax earnings as well as the mix of earnings as discussed above. The Company also wrote off a receivable in Europe which was recognized as a discrete event in the quarter. The Company’s effective tax rate for the quarter ended June 30, 2026 was higher than the statutory rate primarily due to non-deductible expenses and the impact of earnings in foreign jurisdictions. There were no significant changes in uncertain tax position reserves during the quarter ended June 30, 2026.

Previous wording

We use non-GAAP financial measures to supplement the financial information presented on a GAAP basis. 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, acquisition and disposition-related costs, gain on assets disposal 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, gain on assets disposal and severance, integration and other expense, on a tax-adjusted basis) and adjusted net income per diluted share, excluding the net tax effect of the items set forth in the table below. 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. However, they are not measurements of financial performance under GAAP and should not be considered as alternatives to measures of performance derived in accordance with GAAP. These non-GAAP financial measures exclude non-cash and certain other special charges that some investors believe may obscure the user’s overall understanding of the Company’s current financial performance and the Company’s prospects for the future. We 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. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the respective financial results presented in accordance with GAAP.

Current wording

We use non-GAAP financial measures to supplement the financial information presented on a GAAP basis. 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, acquisition and disposition-related costs, gain/loss on asset disposal, 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, gain/loss on asset disposal, and severance, integration and other expense, on a tax-adjusted basis) and adjusted net income per diluted share, excluding the net tax effect of the items set forth in the table below. 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. However, they are not measurements of financial performance under GAAP and should not be considered as alternatives to measures of performance derived in accordance with GAAP. These non-GAAP financial measures exclude non-cash and certain other special charges that some investors believe may obscure the user’s overall understanding of the Company’s current financial performance and the Company’s prospects for the future. We 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. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the respective financial results presented in accordance with GAAP.

Previous wording

As of March 31, 2026, our cash, cash equivalents and restricted cash totaled $22.8 million compared to $28.8 million as of December 31, 2025, a net decrease of $6.0 million, which was primarily attributable to the following:

Current wording

As of June 30, 2026, our cash, cash equivalents and restricted cash totaled $23.8 million compared to $28.8 million as of December 31, 2025, a net decrease of $5.0 million, which was primarily attributable to the following:

Previous wording

The Company’s financial statements include outstanding borrowings of $59.2 million at both March 31, 2026 and December 31, 2025, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company’s outstanding borrowings was approximately $59.5 million at both March 31, 2026 and December 31, 2025, 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 incremental borrowing rate used to discount future cash flows was 5.3% at both March 31, 2026 and December 31, 2025, 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. During the three months ended March 31, 2026, the Company borrowed $20.0 million and subsequently repaid $20.0 million of the outstanding balance on its revolving credit. The Company is currently in compliance with its financial covenants.

Current wording

The Company’s financial statements include outstanding borrowings of $59.2 million at both June 30, 2026 and December 31, 2025, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company’s outstanding borrowings was approximately $59.5 million at both June 30, 2026 and December 31, 2025. 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 incremental borrowing rate used to discount future cash flows was 5.3% at both June 30, 2026 and December 31, 2025. 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. During the six months ended June 30, 2026, the Company borrowed $20.0 million and subsequently repaid $20.0 million of the outstanding balance on its revolving credit facility. The Company is currently in compliance with its financial covenants.

Previous wording

On March 3, 2026, the Company’s Board of Directors (the “Board”) approved a first-quarter dividend of $0.045 per share, which was paid on March 26, 2026, to shareholders of record as of March 20, 2026 .

Current wording

On May 5, 2026, the Board approved a second-quarter dividend of $0.045 per share, paid on June 26, 2026, to shareholders of record as of June 5, 2026.

Previous wording

On May 5, 2026, the Board approved a second-quarter dividend of $0.045 per share, payable June 26, 2026, to shareholders of record as of June 5, 2026.

Current wording

On August 4, 2026, the Board approved a third-quarter dividend of $0.045 per share, payable September 25, 2026, to shareholders of record as of September 4, 2026.

Previous wording

See Note 3 to our condensed consolidated financial statements included elsewhere in this report.

Current wording

See Note 3—Summary of Significant Accounting Policies to our condensed consolidated financial statements included elsewhere in this report.