Information Services Group, Inc. (NASDAQ: III) reported second-quarter 2026 results that beat guidance, with revenue and adjusted EBITDA exceeding expectations, while AI-related revenue accelerated and recurring revenue reached a record high. The company's performance underscores a differentiated narrative: AI is strengthening both sides of ISG's earnings model, generating demand across governance, sourcing, research, and advisory, while also supporting delivery efficiency, a higher-value mix, and margin expansion.
Revenue increased 6.4% year-over-year to $65.5 million, and adjusted EBITDA rose 13% to $9.4 million, both above company guidance. Adjusted EBITDA margin expanded 80 basis points to 14.3%. The quarter reinforces the view that ISG is converting improving demand, pricing, higher-value advisory mix, and AI-enabled delivery efficiencies into better operating leverage. Underlying growth remained mid-single digits excluding foreign exchange and the Martino acquisition, with growth broadening across the Americas and Europe despite measured enterprise decision-making.
AI-related revenue increased 64% year-over-year to $26 million, with nearly half of clients now generating AI-related revenue. Recurring revenue increased 7% year-over-year to a record $30 million. The combination is important to the forward setup, as AI governance is creating incremental demand across existing client relationships while recurring revenue adds greater visibility to ISG's traditionally project-oriented model. Management noted that the pipeline is probably as strong as it has ever been, although client decision timing remains the primary visibility constraint.
The company's growth broadened across the Americas and Europe, while management guided to continued year-over-year growth and margin expansion in the third quarter of 2026. Although enterprise decision timing remains a near-term constraint, the strength of the pipeline and improving regional trends support a constructive second-half outlook. Stonegate Capital Partners, which updated coverage on ISG, highlighted key takeaways from the quarter, including the record recurring revenue and the acceleration in AI-related revenue.
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Its affiliate, Stonegate Capital Markets (member FINRA), provides a full spectrum of investment banking, equity research, and capital raising for public and private companies. For more information, visit the full announcement at Stonegate's website.
