Information Services Group, Inc. (NASDAQ: III) reported second-quarter 2026 results that exceeded expectations, with revenue and adjusted EBITDA surpassing guidance. The company’s AI-related revenue jumped 64% year-over-year to $26 million, and recurring revenue reached a record $30 million, up 7% from the prior year. These figures underscore a broader trend: AI is now a significant driver of both demand and operational performance for the consulting firm.
The company’s total revenue increased 6.4% year-over-year to $65.5 million, while adjusted EBITDA rose 13% to $9.4 million, with margins expanding by 80 basis points to 14.3%. This performance reflects improved demand, pricing power, a shift toward higher-value advisory services, and AI-enabled delivery efficiencies that are enhancing operating leverage.
According to Stonegate Capital Partners, which updated its coverage on ISG, the key takeaway is that AI is strengthening both sides of ISG’s earnings model. On the demand side, AI governance is generating new work across governance, sourcing, research, and advisory services. On the supply side, AI is boosting delivery efficiency, contributing to a higher-value service mix and margin expansion.
Underlying growth remained in the mid-single digits when excluding currency effects and the Martino acquisition, with growth broadening across the Americas and Europe. This occurred despite measured enterprise decision-making, but management noted that the pipeline is “probably as strong as it has ever been.” However, the timing of client decisions remains the primary constraint on visibility.
The record recurring revenue is particularly notable because it adds greater predictability to ISG’s traditionally project-oriented advisory work. This, combined with the strong pipeline, supports a constructive outlook for the second half of 2026. Management has guided to continued year-over-year growth and margin expansion in the third quarter.
Stonegate Capital Partners, a capital markets advisory firm, highlighted several areas to monitor, including AI governance expansion, conversion of larger opportunities, the mix of recurring revenue, and a return to growth in the Asia-Pacific region. The firm’s updated coverage is available in the full announcement.
For more details, view the full announcement, including downloadable images and bios, at Stonegate’s website. Information about Stonegate Capital Markets can be found at Stonegate Capital Markets.
