INFORMATION SERVICES GROUP (NASDAQ:III) Tops Q3 Earnings and Revenue Estimates

Information Services Group (NASDAQ:III) reported third-quarter financial results that surpassed analyst expectations, though the market's initial reaction appeared muted. The global technology research and advisory firm posted earnings and revenue figures that exceeded consensus estimates, while also providing forward-looking guidance for the upcoming quarter.

Earnings and Revenue Performance

The company delivered solid financial results for the quarter ended September 30, 2025, with both top-line revenue and bottom-line earnings coming in ahead of market expectations.

• Revenue: $62.4 million reported versus $61.6 million estimated
• Adjusted EPS: $0.09 per share versus $0.08 estimated

Excluding results from the company's divested automation unit, which was sold on October 1, 2024, revenues showed stronger growth of 8 percent compared to the prior year. The company's performance was particularly robust in the Americas, where revenues increased 11 percent when excluding the automation business. Europe also returned to growth with a 7 percent increase on the same basis, while Asia Pacific faced challenges with a 15 percent decline on a reported basis.

Profitability and Operational Highlights

Information Services Group demonstrated improved profitability metrics during the quarter, driven by what management described as a more profitable business mix and continued focus on operating efficiency.

• Adjusted EBITDA increased 19 percent to $8.4 million
• Adjusted EBITDA margin expanded 196 basis points to 13.5 percent
• Operating income reached $4.6 million, up from $4.3 million in the prior year
• Net income improved to $3.1 million compared to $1.1 million in Q3 2024

The company also generated strong cash flow from operations of $11.1 million and ended the quarter with a cash balance of $28.7 million, representing a 14 percent increase from the previous quarter. During the period, the firm returned capital to shareholders through $2.4 million in dividend payments and $2.8 million in share repurchases.

Fourth Quarter Outlook and Market Positioning

Looking ahead to the final quarter of 2025, management provided revenue and EBITDA guidance that aligns with current analyst expectations. The company is targeting revenues between $60.5 million and $61.5 million, compared to analyst estimates of $61.6 million. For adjusted EBITDA, the firm anticipates growth in the 15 to 20 percent range year-over-year, with a projected range of $7.5 million to $8.5 million.

Chairman and CEO Michael P. Connors highlighted the company's early mover advantage in artificial intelligence, noting that "clients continue to turn to ISG to support their cost optimization objectives, map their AI strategy, and invest in the foundational technology they need to achieve AI at scale." He also observed a modest improvement in the macro environment, with stronger demand in the U.S. compared to other regions and beginning signs of recovery in European markets.

Market Reaction and Analysis

The stock showed limited movement following the earnings release, suggesting investors may have anticipated the solid results or are taking a cautious approach given the mixed regional performance and broader economic uncertainties mentioned in the company's commentary. The market's tempered response could reflect balancing the positive earnings beat against the company's conservative fourth-quarter revenue guidance, which sits at the lower end of analyst expectations.

The company's strategic focus on AI-centered products and services appears to be resonating with clients seeking to navigate technological transformation and cost optimization challenges. With its strong cash position and ongoing capital return program, Information Services Group maintains financial flexibility while continuing to invest in growth initiatives.

For more detailed earnings analysis and future estimates, readers can review additional information on the company's earnings estimates page.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.