What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-09 · 113 added, 49 removed, 275 unchanged (37% of the section changed)

30 unchanged sentences

100,000 shares authorized;

49,658 shares issued and 48,111 outstanding at March 31, 2025 and 49,658 shares issued and 48,542 outstanding at December 31, 2024

49,658 shares issued and 48,323 outstanding at June 30, 2025 and 49,658 shares issued and 48,542 outstanding at December 31, 2024

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Operating expenses

2 unchanged sentences

Depreciation and amortization

Operating income (loss)

Operating income

Interest income

Interest expense

Foreign currency transaction gain (loss)

Foreign currency transaction (loss) gain

Income (loss) before taxes

Income tax provision (benefit)

Income tax provision

Net income (loss)

1 unchanged sentence

Earnings (loss) per share:

Comprehensive income:

Comprehensive income (loss):

Net income (loss)

7 unchanged sentences

Stockholders’

Balance December 31, 2024

Balance March 31, 2025

Other comprehensive income

5 unchanged sentences

Stock based compensation

Balance June 30, 2025

Comprehensive

Stockholders’

Balance December 31, 2024

Other comprehensive income

Treasury shares repurchased

Proceeds from issuance of ESPP shares

Issuance of treasury shares for RSUs vested

Accrued dividends on unvested shares

Cash dividends paid to shareholders ($ 0.090 per share)

Stock based compensation

Balance June 30, 2025

Comprehensive

Stockholders’

Balance March 31, 2024

Other comprehensive income

Treasury shares repurchased

Proceeds from issuance of ESPP shares

Issuance of treasury shares for RSUs vested

Issuance of shares for Change 4 Growth

Accrued dividends on unvested shares

Dividend payable

Cash dividends paid to shareholders ($ 0.045 per share)

Stock based compensation

Balance June 30, 2024

Comprehensive

5 unchanged sentences

Issuance of treasury shares for RSUs vested

Issuance of shares for Change 4 Growth

Accrued dividends on unvested shares

Dividend payable

Cash dividends paid to shareholders ($ 0.085 per share)

Stock based compensation

Balance March 31, 2024

Balance June 30, 2024

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation expense

22 unchanged sentences

Payments related to tax withholding for stock-based compensation

Payment of contingent consideration

Cash dividends paid to shareholders

25 unchanged sentences

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, 2025, the results of operations for the three months ended March 31, 2025 and 2024 and the cash flows for the three months ended March 31, 2025 and 2024.

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 June 30, 2025, the results of operations for the three and six months ended June 30, 2025 and 2024 and the cash flows for the six months ended June 30, 2025 and 2024.

The condensed consolidated balance sheet as of December 31, 2024 has been derived from the Company’s audited consolidated financial statements.

Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

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”).

3 unchanged sentences

of $ 2.0 million.

Out-of-Period Adjustment

In conjunction with the Company’s close process for the second quarter of 2024, management identified a $ 0.5 million error related to revenue incorrectly recognized during the third quarter of 2022.

Accordingly, the Company recorded a $ 0.5 million adjustment in the second quarter of 2024 to reduce revenue.

Management evaluated the pre-tax impact of this error of $ 0.5 million on the Company’s previously reported interim and annual financial statements for Q3 2022 and full year 2022 and determined that the error was not material to any previously issued financial statements and

that the out-of-period adjustment recorded in Q2 2024 was not material to the three or six months ended June 30, 2024 or the annual period ended December 31, 2024.

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

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.

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 to the customer over time affect the amounts of revenues, expenses, contract assets and contract liabilities.

3 unchanged sentences

Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes.

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, 2025 and December 31, 2024 due to the short-term nature of these accounts.

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 June 30, 2025 and December 31, 2024 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.

9 unchanged sentences

Basis of Fair Value Measurements

March 31, 2025

June 30, 2025

Cash equivalents

4 unchanged sentences

Contingent consideration (1)

(1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of March 31, 2025 and December 31, 2024.

The following table represents the change in contingent consideration liability during the three months ended March 31, 2025:

Three Months Ended

(1) As of June 30, 2025, the current contingent consideration is included in “Accrued expenses and other current liabilities”.

As of December 31, 2024, the current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities”.

The following table represents the change in contingent consideration liability during the six months ended June 30, 2025:

Six Months Ended

Beginning Balance

Change 4 Growth contingent consideration payment

Accretion of contingent consideration

Ending Balance

The Company’s accompanying unaudited condensed consolidated financial instruments include outstanding borrowings of $ 59.2 million both as of March 31, 2025 and December 31, 2024, respectively, which are carried at amortized cost.

The Company’s accompanying unaudited condensed consolidated financial instruments include outstanding borrowings of $ 59.2 million at both June 30, 2025 and December 31, 2024, 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 and $ 59.6 million as of March 31, 2025 and December 31, 2024, respectively.

The fair value of the Company’s outstanding borrowings was approximately $ 59.6 million at both June 30, 2025 and December 31, 2024.

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 6.1 % and 6.4 % as of March 31, 2025 and December 31, 2024, respectively.

The incremental borrowing rate used to discount future cash flows was 6.1 % and 6.4 % as of June 30, 2025 and December 31, 2024, 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.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued updated guidance to enhance the transparency of income tax disclosure by requiring disaggregated information about an entity’s effective tax rate

reconciliation, as well as information on taxes paid.

This updated guidance is effective for annual periods beginning after December 15, 2024 and is not expected to have a material impact on the Company’s consolidated financial statements.

30 unchanged sentences

Contract liabilities

Revenue recognized for the three months ended March 31, 2025 that was included in the contract liability balance at January 1, 2025 was $ 5.1 million, primarily representing revenue from the Company’s subscription, fixed-fee, and research contracts.

Revenue recognized for the three and six months ended June 30, 2025 that was included in the contract liability balance at January 1, 2025 was $ 2.5 million and $ 7.6 million, respectively, primarily representing revenue from the Company’s subscription, fixed-fee, and research contracts.

Remaining Performance Obligations

As of March 31, 2025, the Company had $ 120.5 million of remaining performance obligations, the majority of which are expected to be satisfied within the next twelve months.

As of June 30, 2025, the Company had $ 112.1 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, failed to make payments as per the contracted payment schedule, and the Company therefore ceased performing services under the agreements.

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, and the Company therefore 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 $ 4.8 million associated with this client.

The specific reserve recorded as of December 31, 2024 represents management’s best estimate of the probable amount of collection related to the outstanding amounts under these agreements.

The reserve that was recorded remained unchanged as of March 31, 2025.

The Company is currently pursuing legal action against the former client, which has resulted in a favorable preliminary judgment for ISG that is being appealed by the former client.

Actual collections from the client may differ from the Company' s estimate.

The Company is currently engaged in litigation with a client over a disputed accounts receivable balance for services rendered, and mediation arrangements are currently being explored.

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 the current period.

As of June 30, 2025, $ 1.3 million of the reserve on the other multi-year project remains, and the Company is continuing to pursue legal action against the former client, which has resulted in a favorable judgment for ISG.

As collection efforts are ongoing, actual collections from the client may differ from the Company’s estimate.

Separately, the Company is currently engaged in litigation with a client over a disputed accounts receivable balance for services rendered, and mediation arrangements are currently being explored.

As the Company believes the balance of approximately $ 4.7 million is collectible, it has not recorded a reserve.

3 unchanged sentences

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, 2025 and March 31, 2024, 1.1 million and 4.2 million restricted stock units, respectively, have not been considered in the diluted earnings per share calculation, as the effect would be anti-dilutive.

For the three and six months ended June 30, 2025, 0.8 million and 1.9 million restricted stock units, respectively, and for the three and six months ended June 30, 2024, 1.8 million and 4.7 million restricted stock units, respectively, have not been considered in the diluted earnings per share calculation, as the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

7 unchanged sentences

NOTE 6—INCOME TAXES

The Company’s effective tax rate for the three months ended March 31, 2025 and 2024 was 37.9 % and 6.4 %, respectively, based on pretax income and loss of $ 2.4 million and $ 3.6 million, respectively.

The Company’s effective tax rate for the quarter ended March 31, 2025 was impacted by non-deductible expenses and earnings and losses in certain foreign jurisdictions.

The Company’s effective tax rate for the three and six months ended June 30, 2025 was 38.7 % and 38.4 %, respectively, based on pretax income of $ 3.6 million and $ 6.0 million, respectively.

The Company’s effective tax rate for the quarter ended June 30, 2025 was impacted by non-deductible expenses and earnings and losses in certain foreign jurisdictions.

The Company’s effective tax rate for the three and six months ended June 30, 2024 was 12.0 % and ( 3.7 %) , respectively, based on pretax income and loss of $ 2.3 million and $ 1.3 million, respectively.

The Company’s effective tax rate for the quarter ended June 30, 2024 was impacted by non-deductible expenses and earnings and losses in certain foreign jurisdictions.

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law, making significant changes to the U.S.

federal tax code.

At the date of issuance of these financial statements, the Company is currently in the process of evaluating the impacts of the legislation on its consolidated financial statements.

NOTE 7—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, 2025 and December 31, 2024.

All material liabilities of which management is aware are properly reflected in the financial statements as of June 30, 2025 and December 31, 2024.

Ventana Research Contingent Consideration

3 unchanged sentences

Ventana Research will also have the right to receive additional consideration paid via earn-out payments, if certain financial targets are met.

As of March 31, 2025, the Company has recorded a liability of $ 0.7 million representing the estimated fair value of contingent consideration related to the acquisition of Ventana Research, which is classified as noncurrent and included in other liabilities on the condensed consolidated balance sheet.

As of June 30, 2025, the Company has recorded a liability of $ 0.7 million representing the estimated fair value of contingent consideration related to the acquisition of Ventana Research, which is classified as current and included in “Accrued expenses and other current liabilities” on the condensed consolidated balance sheet.

Change 4 Growth Contingent Consideration

On October 31, 2022, a subsidiary of the Company executed an Asset Purchase Agreement with Change 4 Growth, LLC (“Change 4 Growth”) and consummated the acquisition of substantially all the assets, and assumed certain liabilities, of Change 4 Growth.

The purchase price was comprised of $ 3.8 million of cash consideration, $ 0.6 million of shares of ISG common stock issued promptly after closing and Change 4 Growth will also have the right to receive additional consideration paid via earn-out payments, if certain financial targets are met.

As of March 31, 2025, the Company has recorded a liability of $ 0.5 million representing the estimated fair value of contingent consideration related to the acquisition of Change 4 Growth, which is classified as current and included in accrued expenses on the condensed consolidated balance sheet.

liabilities, of Change 4 Growth.

The purchase price was comprised of $ 3.8 million of cash consideration, $ 0.6 million of shares of ISG common stock issued promptly after closing and Change 4 Growth also had the right to receive additional consideration paid via earn-out payments, if certain financial targets were met.

The Company paid $ 0.5 million in cash consideration in April 2025, which was related to 2024 performance.

The Company no longer has a related liability as of June 30, 2025.

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 Accounting Standards Codification (“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 8—SEGMENT AND GEOGRAPHICAL INFORMATION

1 unchanged sentence

The Company operates principally in the Americas, Europe and Asia Pacific.

The Company Chief Operating Decision Maker (the “CODM”) is our Chairman & Chief Executive Officer, Michael Connors.

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.

1 unchanged sentence

Three Months Ended

Six Months Ended

The segregation of revenues by geographic region is based upon the location of the legal entity performing the services.

2 unchanged sentences

Three Months Ended

Six Months Ended

Compensation expense

Contract labor

License fees expense

Third party costs

Travel and entertainment

9 unchanged sentences

Net income (loss)

(1) Other segment expenses include communication, occupancy, marketing, stock-based compensation, acquisition- and-disposition and other overhead expenses.

NOTE 9—FINANCING ARRANGEMENTS AND LONG-TERM DEBT

8 unchanged sentences

For the first three months of 2025, the applicable margin was decreased by 0.25 % percentage of the revolving loans maintaining a Base Rate loans of 1.75 % for the revolving loans maintained as Term SOFR loans.

● 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.

(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, 2025 and December 31, 2024, which are carried at amortized cost.

The Company’s financial statements include outstanding borrowings of $ 59.2 million at both June 30, 2025 and December 31, 2024, 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 and $ 59.6 million as of March 31, 2025 and December 31, 2024, respectively.

The fair value of the Company’s outstanding borrowings was approximately $ 59.6 million at both June 30, 2025 and December 31, 2024.

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 6.1 % and 6.4 % as of March 31, 2025 and December 31, 2024, respectively.

The incremental borrowing rate used to discount future cash flows was 6.1 % and 6.4 % as of June 30, 2025 and December 31, 2024, respectively.

During the first quarter of 2025, the Company borrowed $ 5.0 million and subsequently repaid $ 5.0 million of the revolver loan during the quarter.

During the six months ended June 30, 2025, the Company borrowed $ 5.0 million and subsequently repaid $ 5.0 million of the revolver loan.

The Company is currently in compliance with its financial covenants.

NOTE 10—LEASES

The Company recognizes lease payments in the Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments.

The Company leases its office space and office equipment under long-term operating lease agreements that expire at various dates through October 2033, some of which include options to extend the leases for up to 3 years , and some of which included options to terminate the leases within 1 year .

Under the operating leases, the Company pays certain operating expenses relating to the office equipment and leased property.

In April 2025, the Company entered into a new operating ten-year lease for approximately 17,500 square feet of office space in Stamford, Connecticut and includes annual base rent of $ 0.9 million, subject to annual escalation of 2 % with an option to terminate the lease effective on the seventh (7th) anniversary of the rent commencement date.

The lease commencement date is expected to be in September 2025, and the rent commencement date is expected to be November 2026.

The Company is still evaluating the financial impact of this new lease.

NOTE 11—SUBSEQUENT EVENTS

On May 6, 2025 , the Company’s Board of Directors (the “Board”) approved a second-quarter dividend of $ 0.045 per share, payable June 27, 2025 , to shareholders of record as of June 6, 2025 .

On August 5, 2025 , the Company’s Board of Directors (the “Board”) approved a third-quarter dividend of $ 0.045 per share, payable September 26, 2025 , to shareholders of record as of September 5, 2025 .

The dividends are accounted for as a decrease to Stockholders’ Equity.

All future dividends will be subject to the Board’s approval.

All future dividends will be subject to the Board’s prior approval.

On August 1, 2025, a subsidiary of the Company entered into a definitive purchase agreement to acquire Martino & Partners s.r.l (“M&P”), with the anticipated closing of such acquisition to occur on September 1, 2025, subject to customary closing conditions.

The total purchase price is comprised of EUR 1.5 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 in cash, to be paid no later than April 30, 2028.

M&P will also have the right to receive additional consideration paid via earn-out payments, if certain financial targets are met.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements