Information Services Group, Inc. (NASDAQ: III) reported second-quarter 2026 results that exceeded guidance, with revenue increasing 6.4% year-over-year to $65.5 million and adjusted EBITDA rising 13% to $9.4 million. The adjusted EBITDA margin expanded 80 basis points to 14.3%, reflecting the company's ability to convert improving demand, pricing, and AI-enabled delivery efficiencies into stronger profitability. These results underscore a pivotal shift: AI is now strengthening both sides of ISG's earnings model, generating demand across governance, sourcing, research, and advisory, while also supporting delivery efficiency and a higher-value mix.
AI-related revenue surged 64% year-over-year to $26 million, with nearly half of clients now generating AI-related revenue. This acceleration is complemented by record recurring revenue of $30 million, up 7% year-over-year. The combination of AI-driven demand and growing recurring revenue is critical to ISG's forward outlook, as it enhances visibility in a traditionally project-oriented business. Management highlighted that the pipeline is probably as strong as it has ever been, though client decision timing remains the primary constraint on near-term growth.
Geographically, growth broadened across the Americas and Europe, despite measured enterprise decision-making. Underlying growth remained mid-single digits when excluding foreign exchange and the Martino acquisition. The company's guidance for the third quarter of 2026 calls for continued year-over-year growth and margin expansion, supported by a robust pipeline and improving regional trends. Key areas to monitor include AI governance expansion, conversion of larger opportunities, recurring-revenue mix, and APAC's return to growth.
For more details, view the full announcement at Stonegate Capital Partners.
