Information Services Group, Inc.

Please stand by. We're about to begin. Good day and welcome to the Information Services Group first quarter 2022 results conference call. Today's conference is being recorded and the replay will be available on the ISG's website within 24 hours. At this time, for opening remarks and introductions, I would like to turn the conference over to Mr. Barry Holt. Please go ahead.

Thank you, Operator. Hello and good morning. My name is Barry Holt. I'm a Senior Communications Executive at ISG. I'd like to welcome everyone to ISG's first quarter conference call. I'm joined today by Michael Connors, Chairman and Chief Executive Officer, and Bert Alfonso, Executive Vice President and Chief Financial Officer. Before we begin, I'd like to read a forward-looking statement. It is important to note that this communication may contain forward-looking statements which represent the current expectations and beliefs of the management of ISG concerning future events and their potential effects. These statements are not guaranteed future results and are subject to certain risks and uncertainties that could cause actual results that differ materially from those anticipated. For a more detailed listing of the risks and other factors that could affect future results, please refer to the forward-looking statement contained in our Form 8-K that was furnished last night to the SEC and the Risk Factors section in ISG's Form 10-K covering full-year results. You should also read ISG's annual report on Form 10-K and any other relevant documents, including any amendments or supplements to these documents, filed with the SEC. You will be able to obtain free copies of any of ISG's SEC filings on either ISG's website at www.isg-1.com or the SEC's website at www.sec.gov. ISG undertakes no obligation to update or revise any forward-looking statement to reflect subsequent events or circumstances. During this call, we will discuss certain non-GAAP financial measures, which ISG believes improves the comparability of the company's financial results between periods and provides for greater transparency of key measures used to evaluate the company's performance. The non-GAAP measures, which we will touch upon today, include adjusted EBITDA, adjusted net earnings, and the presentation of selected financial data on a constant currency basis. Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the reconciliation of all non-GAAP measures presented to the most closely applicable GAAP measure, please refer to our current report on Form 8K, which was filed last night with the SEC. And now, I'd like to turn the call over to Michael Connors, who will be followed by Bert Alfonso. Mike?

Thank you, Barry, and good morning, everyone. Today we will review our record financial results, our continuing business momentum, our decision to raise our dividend by 33%, and our outlook for the second quarter. ISG had an outstanding first quarter, indeed our best start to a year ever. We generated record revenues of $73 million, an all-time quarterly high. And we delivered record profitability. with adjusted EBITDA of $11 million, up 23 percent from the prior year, with an EBITDA margin of 15 percent, up more than 165 basis points. We continue to expand our recurring revenues, reaching a record $26 million, up 13 percent over last year, driven by our subscription GovernX and research businesses. and on our way to our year-end goal of $100 million. We saw good growth in our Americas, Europe, and Asia-Pacific regions. And with a focus on delivering end-to-end solutions via our ISG IFLEX global delivery model, our utilization for the first quarter was 79% of 320 basis points compared with the first quarter last year. This is the highest utilization in our history. Our clients are investing aggressively in technology and are depending more than ever on our expertise. Our long-term strategic initiatives have positioned us well to increase our footprint with a wide range of global enterprises. We continue to strengthen our GovernX vendor compliance and risk management solutions. During the quarter, we acquired Agreement, an AI-powered contracting platform that brings important new capabilities to GovernX, capabilities we plan to also use to enhance other platform solutions now in development. From a client perspective, we served 500 clients in the first quarter, including 59 brand new to ISG. Coming off a record 2021, we've extended our momentum into 2022, and the outlook for our business is strong. We see continuing demand for our data, insights, advice, and tools as enterprises continue to invest in technology and services to enable greater efficiency and faster growth. Technology is crucial to improving customer and employee experiences. and making organizations more agile and adaptable to dynamic market conditions. Coming through the worst of the pandemic, companies are increasing their reliance on the cloud and other digital solutions to power their businesses. There is growing demand for specialized services like cybersecurity, data analytics, application development, and technology modernization. The number of choices is staggering, and making your internal technology and external ecosystems work together is no easy feat. More and more companies are looking for a trusted partner like ISG to bring clarity to complexity, support continuous transformation, and help get the most out of technology investments. It is against this backdrop that our Board has authorized a 33% increase in our quarterly dividend, part of our ongoing efforts to enhance shareholder value. The new quarterly rate, $0.04 per share, is payable June 17 to shareholders of record as of June 3. The increase in our dividend is made possible by the strong cash-generating power of our business and disciplined operating approach. It is part of our overall capital allocation strategy, which also includes share buybacks, debt reduction, and acquisitions. Turning to our regions, the Americas delivered $41 million of revenue in the quarter, up 9% versus the prior year. During the quarter, we saw double-digit growth in our media and health sciences industry verticals, and among our services, research, GovernX, Network, and Software Advisory were all up double digits. Key client engagements during the first quarter included McKesson, USAA, Verizon, McDonald's, and C&O. During the quarter, we landed a number of notable wins in the healthcare sector. Among them is a nearly $2 million extension of work for a long-standing client, supporting the ongoing modernization of their infrastructure, security, and applications, while consolidating their supplier ecosystem. We are also working with a major contract research organization to automate critical business processes, including clinical trial data, data reconciliation, regulatory requirements, auditing and reporting. This engagement is worth nearly $1 million. ISG also is providing digital engineering services to a major telecommunications company. This $1 million engagement is helping the client leverage 5G, AI, cloud, and edge computing as it seeks to position itself as a hyperscaler for the connected world. Turning to Europe, our Q1 revenues of $24 million were up 3% versus the prior year and up 10% in constant currency. That's the best operating growth for this region since the first quarter of 2019. For the quarter, Europe delivered double-digit revenue growth in our consulting, automation, and GovernX businesses, and in our public sector, media, and banking industry verticals. Key client engagements in Europe in the first quarter included Volkswagen, Allianz, BNP Paribas, and the UK Ministry of Defense. During the first quarter, ISG was awarded a $1.6 million engagement with a major automotive manufacturer to provide technology management support, essential to the company's ambitions to transform itself into a services-oriented organization. In the financial sector, we continue to expand our relationship with a long-standing insurance client, including new work worth more than $1.5 million for cloud transformation and cybersecurity. We are also helping a major bank assess its sourcing contracts to close gaps in outdated agreements and bring them up to current market pricing and service levels. Now turning to Asia Pacific, this region had a record-setting Q1 performance with revenues of $7.7 million, up 34% versus the prior year, driven by growth in our insurance, media, public sector, and health sciences industry verticals. Key clients in the quarter included the Australian Taxation Office, Insurance Australia Group, Rio Tinto, and the Australian Department of Home Affairs. Among our major engagements, we are supporting a technology company in Asia with digital engineering services to develop a connected mall as a service platform. This $1 million engagement is creating new digital capabilities that will open doors to other retail digitization work for ISG. It is the latest in a series of wins for ISG in the digital engineering space, which is now a multimillion-dollar business and growing. Now, let me turn to guidance. Our clients continue to face a number of challenges, including inflation, supply chain disruptions, higher energy costs, geopolitical concerns, and talent shortages. And yet, they remain focused on continuous digital transformation of their businesses. Of course, we continue to monitor the situation in Ukraine, which has become a major hub for technology services. Although ISG has no employees in Ukraine, some of our clients have used the region for software development and other services. Thus far, we are seeing little overall effect on the global technology and business services industry apart from work shifting to other geographies. Globally, the bigger concern is the industry's ability to meet overall demand in the face of talent shortages. ISG is working with clients on this issue now. So balancing digital demand with these macroeconomic factors, for the second quarter, we are targeting revenues of between $73 and $75 million, including a negative FX impact of approximately 300 basis points. and adjusted EBITDA between $10 and $11 million. So with that, let me turn the call over to Bert, who will summarize our financial results. Bert?