Information Services Group Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) ​ INFORMATION SERVICES GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except par value) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ASSETS ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 22,689 ​ $ 28,661 ​ Accounts receivable and contract assets, net of allowance of $ 2,401 and $ 2,359 , respectively ​ 59,447 ​ 59,409 ​ Prepaid expenses and other current assets ​ 4,915 ​ 6,001 ​ Total current assets ​ 87,051 ​ 94,071 ​ Restricted cash ​ 91 ​ 93 ​ Furniture, fixtures and equipment, net ​ 6,942 ​ 6,597 ​ Right-of-use lease assets ​ 9,838 ​ 10,809 ​ Goodwill ​ 89,330 ​ 89,375 ​ Intangible assets, net ​ 3,049 ​ 3,305 ​ Deferred tax assets ​ 5,100 ​ 4,982 ​ Other assets ​ 1,386 ​ 1,769 ​ Total assets ​ $ 202,787 ​ $ 211,001 ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 8,604 ​ $ 10,111 ​ Contract liabilities ​ 7,336 ​ ​ 9,788 ​ Accrued expenses and other current liabilities ​ 16,880 ​ ​ 20,258 ​ Total current liabilities ​ 32,820 ​ ​ 40,157 ​ Long-term debt, net of current maturities ​ 59,175 ​ ​ 59,175 ​ Deferred tax liabilities ​ 1,584 ​ ​ 1,536 ​ Operating lease liabilities ​ 8,607 ​ ​ 9,007 ​ Other liabilities ​ 6,410 ​ ​ 6,450 ​ Total liabilities ​ 108,596 ​ ​ 116,325 ​ Commitments and contingencies (Note 8) ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.001 par value; 10,000 shares authorized; none issued ​ — ​ ​ — ​ Common stock, $ 0.001 par value; 100,000 shares authorized; 49,707 shares issued and 47,767 outstanding at March 31, 2026 and 49,707 shares issued and 47,774 outstanding at December 31, 2025 ​ 50 ​ ​ 50 ​ Additional paid-in capital ​ 200,479 ​ ​ 202,702 ​ Treasury stock ( 1,940 and 1,933 common shares, respectively, at cost) ​ ( 9,868 ) ​ ​ ( 9,383 ) ​ Accumulated other comprehensive loss ​ ( 8,663 ) ​ ​ ( 8,170 ) ​ Accumulated deficit ​ ( 87,807 ) ​ ​ ( 90,523 ) ​ Total stockholders’ equity ​ 94,191 ​ ​ 94,676 ​ Total liabilities and stockholders’ equity ​ $ 202,787 ​ $ 211,001 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 2 INFORMATION SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Revenues ​ $ 61,183 ​ $ 59,583 ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ Direct costs and expenses for advisors ​ 34,803 ​ 33,927 ​ Selling, general and administrative ​ 20,317 ​ 21,155 ​ Depreciation and amortization ​ 1,046 ​ 1,105 ​ Operating income ​ 5,017 ​ 3,396 ​ Interest income ​ 32 ​ 55 ​ Interest expense ​ ( 878 ) ​ ( 1,056 ) ​ Foreign currency transaction gain ​ 152 ​ 3 ​ Income before taxes ​ 4,323 ​ 2,398 ​ Income tax provision ​ 1,607 ​ 910 ​ Net income ​ $ 2,716 ​ $ 1,488 ​ Weighted average shares outstanding: ​ ​ ​ ​ ​ ​ ​ Basic ​ 47,746 ​ 48,369 ​ Diluted ​ 50,175 ​ 50,252 ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.06 ​ $ 0.03 ​ Diluted ​ $ 0.05 ​ $ 0.03 ​ Comprehensive income: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,716 ​ $ 1,488 ​ Foreign currency translation gain, net of tax expense (benefit) of $( 81 ), and $ 126 respectively ​ ( 493 ) ​ 400 ​ Comprehensive income ​ $ 2,223 ​ $ 1,888 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 3 INFORMATION SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-in ​ Treasury ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Capital ​ ​ ​ Stock ​ ​ ​ Loss ​ ​ ​ Deficit ​ ​ ​ Equity Balance December 31, 2025 ​ 49,707 ​ $ 50 ​ $ 202,702 ​ $ ( 9,383 ) ​ $ ( 8,170 ) ​ $ ( 90,523 ) ​ $ 94,676 Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,716 ​ ​ 2,716 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 493 ) ​ ​ — ​ ​ ( 493 ) Treasury shares repurchased ​ — ​ ​ — ​ ​ — ​ ​ ( 2,086 ) ​ ​ — ​ ​ — ​ ​ ( 2,086 ) Proceeds from issuance of employee stock purchase plan (ESPP) shares ​ — ​ ​ — ​ ​ 39 ​ ​ 120 ​ ​ — ​ ​ — ​ ​ 159 Issuance of treasury shares for restricted stock units ("RSUs") vested ​ — ​ ​ — ​ ​ ( 1,481 ) ​ ​ 1,481 ​ ​ — ​ ​ — ​ ​ — Accrued dividends on unvested shares ​ — ​ ​ — ​ ​ ( 290 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 290 ) Cash dividends paid to shareholders ($ 0.045 per share) ​ — ​ ​ — ​ ​ ( 2,245 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,245 ) Stock-based compensation ​ — ​ ​ — ​ ​ 1,754 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,754 Balance March 31, 2026 ​ 49,707 ​ $ 50 ​ $ 200,479 ​ $ ( 9,868 ) ​ $ ( 8,663 ) ​ $ ( 87,807 ) ​ $ 94,191 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-in ​ Treasury ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Capital ​ ​ ​ Stock ​ ​ ​ Loss ​ ​ ​ Deficit ​ ​ ​ Equity Balance December 31, 2024 ​ 49,658 ​ $ 50 ​ $ 210,149 ​ $ ( 3,996 ) ​ $ ( 10,053 ) ​ $ ( 99,864 ) ​ $ 96,286 Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,488 ​ ​ 1,488 Other comprehensive income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 400 ​ ​ — ​ ​ 400 Treasury shares repurchased ​ — ​ ​ — ​ ​ — ​ ​ ( 3,421 ) ​ ​ — ​ ​ — ​ ​ ( 3,421 ) Proceeds from issuance of ESPP shares ​ — ​ ​ — ​ ​ ( 8 ) ​ ​ 147 ​ ​ — ​ ​ — ​ ​ 139 Issuance of treasury shares for restricted stock units ("RSUs") vested ​ — ​ ​ — ​ ​ ( 1,759 ) ​ ​ 1,759 ​ ​ — ​ ​ — ​ ​ — Accrued dividends on unvested shares ​ — ​ ​ — ​ ​ ( 31 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 31 ) Cash dividends paid to shareholders ($ 0.045 per share) ​ — ​ ​ — ​ ​ ( 2,245 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,245 ) Stock-based compensation ​ — ​ ​ — ​ ​ 2,420 ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,420 Balance March 31, 2025 49,658 ​ $ 50 ​ $ 208,526 ​ $ ( 5,511 ) ​ $ ( 9,653 ) ​ $ ( 98,376 ) ​ $ 95,036 ​ ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ ​ ​ ​ ​ 4 INFORMATION SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,716 ​ $ 1,488 ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation expense ​ 811 ​ ​ 787 ​ Amortization of intangible assets ​ 235 ​ ​ 318 ​ Deferred tax (benefit) expense from stock issuances ​ ( 8 ) ​ ​ 112 ​ Amortization of deferred financing costs ​ 56 ​ ​ 56 ​ Stock-based compensation ​ 1,754 ​ ​ 2,420 ​ Change in fair value of contingent consideration ​ ​ 5 ​ ​ 12 ​ Provisions for credit losses ​ ​ 71 ​ ​ 37 ​ Deferred tax provision (benefit) ​ 170 ​ ​ ( 128 ) ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts receivable and contract assets ​ 111 ​ ​ ( 5,515 ) ​ Prepaid expenses and other assets ​ 2,114 ​ ​ 2,965 ​ Accounts payable ​ ( 2,143 ) ​ ​ ( 1,300 ) ​ Contract liabilities ​ ( 2,452 ) ​ ​ ( 78 ) ​ Accrued expenses and other liabilities ​ ( 4,112 ) ​ ​ ( 196 ) ​ Net cash (used in) provided by operating activities ​ ( 672 ) ​ 978 ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ Purchase of furniture, fixtures and equipment ​ ( 841 ) ​ ( 837 ) ​ Net cash used in investing activities ​ ( 841 ) ​ ( 837 ) ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ Proceeds from revolving facility (Note 10) ​ ​ 20,000 ​ ​ 5,000 ​ Repayment of outstanding debt (Note 10) ​ ​ ( 20,000 ) ​ ​ ( 5,000 ) ​ Additional proceeds from the sale of the Automation business ​ ​ — ​ ​ 1,954 ​ Proceeds from issuance of employee stock purchase plan shares ​ 159 ​ ​ 139 ​ Payments related to tax withholding for stock-based compensation ​ ( 770 ) ​ ​ ( 756 ) ​ Cash dividends paid to shareholders ​ ​ ( 2,245 ) ​ ​ ( 2,245 ) ​ Treasury shares repurchased ​ ( 1,316 ) ​ ​ ( 2,565 ) ​ Net cash used in financing activities ​ ( 4,172 ) ​ ( 3,473 ) ​ Effect of exchange rate changes on cash ​ ( 289 ) ​ 376 ​ Net decrease in cash, cash equivalents, and restricted cash ​ ( 5,974 ) ​ ( 2,956 ) ​ Cash, cash equivalents, and restricted cash, beginning of period ​ 28,754 ​ 23,158 ​ Cash, cash equivalents, and restricted cash, end of period ​ $ 22,780 ​ $ 20,202 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ ​ ​ ​ ​ Cash paid for: ​ ​ ​ ​ ​ ​ ​ Interest ​ $ 878 ​ $ 1,062 ​ Taxes, net of refunds ​ $ 879 ​ $ 512 ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ ​ Issuance of treasury stock for vested restricted stock units ​ $ 1,481 ​ $ 1,759 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements . ​ ​ ​ 5 ​ INFORMATION SERVICES GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (tabular amounts in thousands, except per share data) (Unaudited) ​ ​ NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS ​ Information Services Group, Inc. (the “Company”, “ISG”, “we”, “us”, or “our”) 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 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, 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 Form 10-Q or any other filings. ​ NOTE 2—BASIS OF PRESENTATION ​ The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are considered necessary for a fair statement of the financial position of the Company as of March 31, 2026, the results of operations for the three months ended March 31, 2026 and 2025 and the cash flows for the three months ended March 31, 2026 and 2025. The condensed consolidated balance sheet as of December 31, 2025 has been derived from the Company’s audited consolidated financial statements. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. ​ Certain information and disclosures normally included in the notes to annual financial statements prepared in accordance with GAAP have been omitted from these interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC. ​ S a le of Automation Business Line ​ Based on the achievement of certain contractual requirements for the year ended December 31, 2024, during the first quarter of 2025, the Company received additional proceeds in cash from the sale of its Automation business line from UST Global Inc. of $ 2.0 million. ​ ​ NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ​ Use of Estimates ​ The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the revenue recognition guidance for contracts in which control is transferred 6 ​ to the customer over time affect the amounts of revenues, expenses, contract assets and contract liabilities. Numerous internal and external factors can affect estimates. Estimates are also used for but are not limited to allowance for credit losses, useful lives of furniture, fixtures and equipment and definite lived intangible assets, depreciation expense, fair value assumptions in evaluating goodwill for impairment, income taxes and deferred tax asset valuation and the valuation of stock-based compensation. ​ Restricted Cash ​ Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes. ​ Fair Value ​ The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities and accrued interest approximated their fair values as of March 31, 2026 and December 31, 2025 due to the short-term nature of these accounts. ​ Fair value measurements were applied with respect to the Company’s non-financial assets and liabilities measured on a nonrecurring basis, which would consist of measurements primarily to goodwill, intangible assets and other long-lived assets and assets acquired and liabilities assumed in a business combination. ​ Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy: ​ ● Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market; ​ ● Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and ​ ● Level 3 measurements include those that are unobservable and of a highly subjective measure. ​ The following tables summarize the assets and liabilities (as applicable) measured at fair value on a recurring basis at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis of Fair Value Measurements ​ ​ ​ March 31, 2026 ​ ​ ​ ​ ​ ​ Level 1 ​ ​ ​ ​ Level 2 ​ ​ ​ ​ Level 3 ​ ​ ​ ​ Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents $ 98 $ — $ — $ 98 ​ Total $ 98 $ — $ — $ 98 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent consideration (1) $ — $ — $ 339 $ 339 ​ Total $ — $ — $ 339 $ 339 ​ 7 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis of Fair Value Measurements ​ ​ ​ December 31, 2025 ​ ​ ​ ​ ​ ​ Level 1 ​ ​ ​ ​ Level 2 ​ ​ ​ ​ Level 3 ​ ​ ​ ​ Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents $ 98 $ — $ — $ 98 ​ Total $ 98 $ — $ — $ 98 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent consideration (1) $ — $ — $ 334 $ 334 ​ Total $ — $ — $ 334 $ 334 ​ (1) As of March 31, 2026 and December 31, 2025, the noncurrent contingent consideration is included in “Other liabilities”. ​ The following table represents the change in contingent consideration liability during the three months ended March 31, 2026: ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ March 31, ​ ​ ​ ​ ​ 2026 ​ ​ ​ ​ Beginning Balance ​ $ 334 ​ Accretion of contingent consideration ​ 5 ​ Ending Balance ​ $ 339 ​ ​ The Company’s accompanying unaudited condensed consolidated financial instruments 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. 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. In the first quarter of 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. ​ Recently Issued Accounting Pronouncements ​ Income Statement Disaggregation In November 2024, the Financial Accounting Standards Board (the “FASB”) issued ASU 2024-03 to improve the disaggregation of income statement expenses. This updated guidance requires additional disclosure of certain amounts included in the expense captions presented on the statement of operations as well as disclosures about selling expenses. The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued. The Company does not expect ASU 2024-03 to have a material impact on the Company’s consolidated financial statements. Intangibles-Goodwill and Other-Internal-Use Software In September 2025, the FASB issued ASU 2025-06 to modernize the accounting for software costs. Under the new guidance, internal-use software costs are capitalized when management has authorized and committed to funding the project, and it is probable that the software will be completed and used for its intended function. This updated guidance addresses challenges in applying outdated guidance to modern software development methods, such as agile programming, which are incremental and iterative rather than sequential. The ASU is effective on a prospective basis, with the option for 8 ​ retrospective application, for annual periods beginning after December 15, 2027. The Company is currently evaluating the impact on our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ NOTE 4—ACQUISITION ​ AI Maturity Index Acquisition On January 13, 2026, ISG entered into an asset purchase agreement to acquire substantially all of the assets of AI Maturity Index, a SaaS (Software as a Service) platform that allows organizations to assess the AI readiness of their workforces and improve their employees’ ability to leverage AI technology, for total consideration of $ 750,000 , consisting of $ 500,000 paid at closing and $ 250,000 of fixed deferred consideration payable two years from the signing date. The assets acquired consist primarily of developed software and related intellectual property that will be integrated into ISG’s AI-related offerings, including the ISG AI Maturity Index. The acquired assets will not operate as a standalone business post-acquisition. The related software acquired, which is capitalized within “Furniture, fixtures and equipment, net,” will be amortized on a straight-line basis over four years . Martino & Partners Acquisition On September 1, 2025, the Company completed the acquisition of Martino & Partners s.r.l. (“Martino & Partners”), a strategic advisory firm serving public and private sectors clients in Italy, for total consideration of EUR 2.0 million (USD 2.3 million) in cash paid at closing; USD 250,000 worth of shares of ISG’s common stock, issued promptly following the closing; and EUR 350,000 (USD 0.4 million) in cash, to be paid no later than April 30, 2028. Martino & Partners will also have the right to receive additional consideration paid via earn-out payments if certain financial targets are met. The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations . The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands): ​ ​ ​ ​ Cash ​ $ 2,331 Deferred purchase consideration ​ ​ 410 Contingent liabilities ​ ​ 468 ISG common stock ​ ​ 250 Total allocable purchase price ​ $ 3,459 ​ ​ ​ ​ Current assets ​ $ 1,050 Intangible assets ​ ​ 1,020 Fixed assets ​ ​ 22 Current liabilities ​ ​ ( 376 ) Debt assumed ​ ​ ( 34 ) Net assets acquired ​ $ 1,682 ​ ​ ​ ​ Goodwill ​ $ 1,777 ​ The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, were the inclusion of legacy Martino & Partners workforce and the expansion of the Company’s client base, geographic footprint and capabilities in the European market. Costs associated with this acquisition are included in the selling, general and administrative expenses in the Consolidated Statement of Income and Comprehensive Income and were immaterial. 9 ​ Based on the valuation and other factors as described above, the purchase price assigned to intangible assets and the amortization period were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchase Price ​ ​ ​ Estimated ​ ​ ​ ​ ​ Allocation ​ ​ ​ ​ Useful Lives Amortizable intangible assets: ​ ​ ​ ​ ​ Trademark and trade name ​ $ 220 3 years Customer relationships ​ ​ 760 ​ 7 years Noncompete agreements ​ ​ 40 ​ 4 years Total intangible assets ​ $ 1,020 ​ ​ ​ ​ NOTE 5—REVENUE The majority of our revenue is derived from contracts that can span from a few months to several years. We enter into contracts that can include various combinations of services, which, depending on contract type, are sometimes capable of being distinct. If services are determined to be distinct, they are accounted for as separate performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, is not distinct. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using our best estimate of the standalone selling price, or SSP, of each distinct product or service in the contract. The Company establishes SSP based on management’s estimated selling price or observable prices of products or services sold separately in comparable circumstances to similar clients. Our contracts may include promises to transfer multiple services and products to a client. Determining whether services and products are considered distinct performance obligations that should be accounted for separately versus together may require judgment. Contract Balances The timing of revenue recognition, billings and cash collections result in billed accounts receivables, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities). Our clients are billed based on the type of arrangement. A portion of our services are billed monthly based on hourly or daily rates. There are also client engagements in which we bill a fixed amount for our services. This may be one single amount covering the whole engagement or several amounts for various phases, functions or milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits before revenue is recognized, resulting in contract liabilities. Contract assets and liabilities are generally reported in the current assets and current liabilities sections of the consolidated balance sheet, at the end of each reporting period, based on the timing of the satisfaction of the related performance obligation(s). For multi-year sales contracts with annual invoicing, we perform a significant financing component calculation and recognize the associated interest income throughout the duration of the financing period. In addition, we reclassify the resulting contract asset balances as current and noncurrent receivables as receipt of the consideration is conditional only on the passage of time and there are no performance risk factors present. See the table below for a breakdown of contract assets and contract liabilities. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ ​ December 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Contract assets ​ $ 19,944 ​ $ 14,489 Contract liabilities ​ $ 7,336 ​ $ 9,788 ​ Non-current contract assets of $ 1.0 million as of March 31, 2026 and $ 1.3 million as of December 31, 2025 are included in “Other assets” on the Consolidated Balance Sheet. 10 ​ Revenue recognized for the three months ended March 31, 2026 that was included in the contract liability balance at January 1, 2026 was $ 5.9 million, primarily representing revenue from the Company’s subscription, fixed-fee, and research contracts. Remaining Performance Obligations As of March 31, 2026, the Company had $ 123.0 million of remaining performance obligations, the majority of which are expected to be satisfied within the next twelve months. Accounts Receivable and Contract Assets During the fourth quarter of 2023, a client that had engaged the Company for two multi-year projects, which previously commenced in 2021 and 2022, respectively, failed to make payments as per the contracted payment schedule. As a result, the Company ceased performing services under the agreements. After unsuccessful negotiations, the Company provided the client with notice that it would be terminating the respective projects. Accordingly, during the fourth quarter of 2023, the Company recorded through bad debt expense an allowance for doubtful accounts reserve of $ 4.9 million associated with this client. The specific reserve recorded as of December 31, 2024 represented management’s best estimate of the probable amount of collection related to the outstanding amounts under these agreements. During the three months ended June 30, 2025, after exhausting all collection efforts on one of the projects, the Company wrote-off $ 3.6 million of the outstanding amounts against the previously established reserve. As all amounts written off were previously fully reserved, there was no incremental impact to the income statement in such period. As of March 31, 2026, $ 1.3 million of the reserve on the other multi-year project remains. The Company commenced legal action against the client in April 2024 to collect the outstanding receivables on the other multi-year project. On September 3, 2025, the court issued its final non-appealable judgment holding the client liable to the Company for approximately $ 5.6 million, plus applicable legal interest at 5 % per annum until full payment is made. The Company is continuing to aggressively pursue collection on this judgement against the former client through asset discovery authorized by court orders, though no assets have yet been identified to satisfy the judgement. As collection efforts are ongoing, actual collections from the client may differ from the Company’s estimate. It is unclear at this time if the court judgement will be satisfied by this client’s assets. Separately, the Company is currently engaged in litigation with a client over a disputed accounts receivable balance for services rendered. The Company is pursuing collection of the full outstanding balance of $ 4.7 million in litigation. As of March 31, 2026, we have not recorded material reserves against this balance. The Company will continue to reassess ultimate collectability and the need for reserves in future periods. NOTE 6—NET INCOME PER COMMON SHARE ​ Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would share in the net income of the Company. For the three months ended March 31, 2026 and March 31, 2025, 0.2 million and 1.1 million restricted stock units, respectively, have not been considered in the diluted earnings per share calculation, as the effect would be anti-dilutive. ​ ​ 11 ​ The following table sets forth the computation of basic and diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Basic: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,716 ​ $ 1,488 ​ Weighted average common shares ​ 47,746 ​ 48,369 ​ Earnings per share ​ $ 0.06 ​ $ 0.03 ​ Diluted: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,716 ​ $ 1,488 ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic weighted average common shares ​ 47,746 ​ 48,369 ​ Potential common shares ​ 2,429 ​ 1,883 ​ Diluted weighted average common shares ​ 50,175 ​ 50,252 ​ Diluted earnings per share ​ $ 0.05 ​ $ 0.03 ​ ​ ​ NOTE 7—INCOME TAXES ​ The Company’s effective tax rate for the three months ended March 31, 2026 and March 31, 2025 was 37.2 % and 37.9 %, respectively, based on pretax income of $ 4.3 million and $ 2.4 million, respectively. The Company’s effective tax rate for the quarter ended March 31, 2026 was impacted by non-deductible expenses and earnings and losses in certain foreign jurisdictions. ​ On July 4, 2025, H.R. 1, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14” (the “Act”), commonly referred to as the “One Big Beautiful Bill Act,” was enacted in the United States. The legislation includes several changes to corporate taxation, including modifications to depreciation deductions and the limitation on interest expense deductions, as well as the reinstatement of 100% bonus depreciation for certain fixed assets acquired and placed in service after January 19, 2025. ​ NOTE 8—COMMITMENTS AND CONTINGENCIES ​ The Company is subject to contingencies which arise through the ordinary course of business. All material liabilities of which management is aware are properly reflected in the financial statements as of March 31, 2026 and December 31, 2025. ​ Martino & Partners Contingent Consideration ​ As of March 31, 2026, the Company has recorded a liability of EUR 0.3 million (USD 0.4 million) representing the estimated fair value of contingent consideration related to the acquisition of Martino & Partners, which was classified as non-current and included in other liabilities on the consolidated balance sheet. ​ 12 ​ ​ Legal Reserves From time to time, the Company is a party to litigation, claims and other contingencies, including regulatory and employee matters as well as examinations and investigations by governmental agencies, which arise in the ordinary course of business. The Company records a contingent liability when it is probable that a loss has been incurred and the amount of loss is reasonably estimable in accordance with ASC Topic 450, Contingencies, or other applicable accounting standards. Such reserves are included in accrued liabilities on the condensed consolidated balance sheets. Based on the information available at the present time, the Company is unable to predict the ultimate outcome of any litigation or claims. However, the Company intends to vigorously defend its legal position on all claims and, to the extent necessary, seek recovery. NOTE 9—SEGMENT AND GEOGRAPHICAL INFORMATION ​ The Company operates as one reportable segment consisting primarily of fact-based sourcing advisory services. The Company operates principally in the Americas, Europe and Asia Pacific. ​ The Company’s Chief Operating Decision Maker (the “CODM”) is our Chairman & Chief Executive Officer, Michael Connors. The CODM uses net income as presented on our Consolidated Statement of Income and Comprehensive Income in evaluating performance and determining how to allocate resources of the Company as a whole. Geographical revenue information for the segment is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ March 31, ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Revenues ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ $ 39,814 ​ $ 41,002 ​ ​ Europe ​ 17,284 ​ 13,794 ​ ​ Asia Pacific ​ 4,085 ​ 4,787 ​ ​ ​ ​ $ 61,183 ​ $ 59,583 ​ ​ ​ The segregation of revenues by geographic region is based upon the location of the legal entity performing the services. The Company does not measure or monitor gross profit or operating income by geography or any other measure or metric, other than consolidated, for the purposes of making operating decisions or allocating resources. ​ 13 ​ The following table represents a breakdown of net income that is used to help determine how resources are allocated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ Revenue ​ ​ ​ $ 61,183 ​ ​ ​ $ 59,583 Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Compensation expense ​ 39,132 ​ 39,988 Contract labor ​ ​ 5,139 ​ ​ 4,279 Third-party costs ​ 594 ​ 519 Travel and entertainment ​ ​ 2,694 ​ ​ 2,376 Professional fees ​ ​ 1,981 ​ ​ 1,895 Computer expense ​ ​ 1,250 ​ ​ 1,123 Restructuring costs ​ ​ 425 ​ ​ 383 Other segment expenses (1) ​ ​ 3,905 ​ ​ 4,519 Depreciation and amortization ​ ​ 1,046 ​ ​ 1,105 Interest income ​ ​ ( 32 ) ​ ​ ( 55 ) Interest expense ​ ​ 878 ​ ​ 1,056 Foreign currency translation ​ ​ ( 152 ) ​ ​ ( 3 ) Income tax provision ​ ​ 1,607 ​ ​ 910 Net income ​ $ 2,716 ​ $ 1,488 (1) Other segment expenses include communication, occupancy, marketing, stock-based compensation, acquisition and disposition and other overhead expenses. ​ NOTE 10—FINANCING ARRANGEMENTS AND LONG-TERM DEBT ​ 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, the “2023 Credit Agreement”). The material terms under the 2023 Credit Agreement are as follows. 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 Secured Overnight Financing Rate (“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. The applicable margin is adjusted quarterly based upon the Company’s consolidated leverage ratio. During the fourth quarter of 2025, the applicable margin was decreased by 0.25 percentage of the revolving loans maintaining a Base Rate loans of 1.50 % for the revolving loans maintained as Term SOFR loans. 14 ​ ● The senior secured credit facility contains a number of covenants that, among other things, place restrictions on matters customarily restricted in senior secured credit facilities, including restrictions on indebtedness (including guarantee obligations), liens, fundamental changes, sales or dispositions of property or assets, investments (including loans, advances, guarantees and acquisitions), transactions with affiliates, dividends and other payments in respect of capital stock, optional payments and modifications of other material debt instruments, negative pledges and agreements restricting subsidiary distributions and changes in line of business. 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. 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. 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. In the first quarter of 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. ​ ​ ​ ​ ​ ​ NOTE 11—SUBSEQUENT EVENTS ​ On May 5, 2026 , the Company’s Board of Directors (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 . The dividends are accounted for as a decrease to Stockholders’ Equity. All future dividends will be subject to the Board’s prior approval. ​