Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 31, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-33287 | |
Entity Registrant Name | Information Services Group Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-5261587 | |
Entity Address, Address Line One | 2187 Atlantic Street | |
Entity Address, City or Town | Stamford | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06902 | |
City Area Code | 203 | |
Local Phone Number | 517-3100 | |
Title of 12(b) Security | Shares of Common Stock, $0.001 par value | |
Trading Symbol | III | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 48,873,566 | |
Entity Central Index Key | 0001371489 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 18,650 | $ 30,587 |
Accounts receivable and contract assets, net of allowance of $433 and $272, respectively | 92,499 | 80,170 |
Prepaid expenses and other current assets | 7,268 | 4,724 |
Total current assets | 118,417 | 115,481 |
Restricted cash | 166 | 83 |
Furniture, fixtures and equipment, net | 5,418 | 5,929 |
Right-of-use lease assets | 5,379 | 6,780 |
Goodwill | 94,874 | 94,972 |
Intangible assets, net | 12,027 | 14,380 |
Deferred tax assets | 3,224 | 2,818 |
Other assets | 4,084 | 2,585 |
Total assets | 243,589 | 243,028 |
Current liabilities | ||
Accounts payable | 11,771 | 15,925 |
Current maturities of long-term debt | 4,300 | |
Contract liabilities | 6,688 | 7,058 |
Accrued expenses and other current liabilities | 22,481 | 23,908 |
Total current liabilities | 40,940 | 51,191 |
Long-term debt, net of current maturities | 79,175 | 74,416 |
Deferred tax liabilities | 2,553 | 2,391 |
Operating lease liabilities | 3,591 | 4,857 |
Other liabilities | 11,602 | 9,742 |
Total liabilities | 137,861 | 142,597 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity | ||
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued | ||
Common stock, $0.001 par value; 100,000 shares authorized; 49,472 shares issued and 48,808 outstanding at September 30, 2023 and 49,472 shares issued and 48,300 outstanding at December 31, 2022 | 49 | 49 |
Additional paid-in capital | 218,843 | 226,293 |
Treasury stock (664 and 1,172 common shares, respectively, at cost) | (3,384) | (7,487) |
Accumulated other comprehensive loss | (9,948) | (9,677) |
Accumulated deficit | (99,832) | (108,747) |
Total stockholders' equity | 105,728 | 100,431 |
Total liabilities and stockholders' equity | $ 243,589 | $ 243,028 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivables and contract assets, allowances | $ 433 | $ 272 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 49,472 | 49,472 |
Common stock, shares outstanding | 48,808 | 48,300 |
Treasury stock, shares | 664 | 1,172 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME | ||||
Revenues | $ 71,773 | $ 68,836 | $ 224,868 | $ 212,100 |
Operating expenses | ||||
Direct costs and expenses for advisors | 43,032 | 39,786 | 138,048 | 125,111 |
Selling, general and administrative | 20,992 | 20,334 | 63,992 | 60,806 |
Depreciation and amortization | 1,526 | 1,286 | 4,692 | 3,872 |
Operating income | 6,223 | 7,430 | 18,136 | 22,311 |
Interest income | 104 | 37 | 285 | 126 |
Interest expense | (1,533) | (824) | (4,676) | (1,997) |
Foreign currency transaction (loss) gain | (2) | 131 | (40) | 248 |
Income before taxes | 4,792 | 6,774 | 13,705 | 20,688 |
Income tax provision | 1,591 | 1,218 | 4,680 | 5,245 |
Net income | $ 3,201 | $ 5,556 | $ 9,025 | $ 15,443 |
Weighted average shares outstanding: | ||||
Basic | 48,711 | 47,888 | 48,542 | 48,191 |
Diluted | 50,257 | 49,844 | 50,287 | 50,637 |
Earnings per share: | ||||
Basic | $ 0.07 | $ 0.12 | $ 0.19 | $ 0.32 |
Diluted | $ 0.06 | $ 0.11 | $ 0.18 | $ 0.30 |
Comprehensive income: | ||||
Net income | $ 3,201 | $ 5,556 | $ 9,025 | $ 15,443 |
Foreign currency translation loss, net of tax benefit of $128, $629, $86 and $1,515, respectively | (427) | (1,997) | (271) | (4,799) |
Comprehensive income | $ 2,774 | $ 3,559 | $ 8,754 | $ 10,644 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME | ||||
Foreign currency translation loss, net of tax benefit | $ 128 | $ 629 | $ 86 | $ 1,515 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Deficit Cumulative effect adjustment | Accumulated Deficit | Cumulative effect adjustment | Total |
Balance at Dec. 31, 2021 | $ 49 | $ 237,628 | $ (3,871) | $ (6,940) | $ (128,473) | $ 98,393 | ||
Balance (in shares) at Dec. 31, 2021 | 49,362 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net Income (Loss) | 15,443 | 15,443 | ||||||
Other comprehensive loss | (4,799) | (4,799) | ||||||
Treasury shares repurchased | (15,804) | (15,804) | ||||||
Proceeds from issuance of ESPP shares | (136) | 831 | 695 | |||||
Issuance of treasury shares for RSUs vested | (9,713) | 9,713 | ||||||
Accrued dividends on unvested shares | (270) | (270) | ||||||
Cash dividends paid to shareholders | (5,448) | (5,448) | ||||||
Stock based compensation | 5,432 | 5,432 | ||||||
Balance at Sep. 30, 2022 | $ 49 | 227,493 | (9,131) | (11,739) | (113,030) | 93,642 | ||
Balance (in shares) at Sep. 30, 2022 | 49,362 | |||||||
Balance at Jun. 30, 2022 | $ 49 | 232,994 | (10,523) | (9,742) | (118,586) | 94,192 | ||
Balance (in shares) at Jun. 30, 2022 | 49,362 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net Income (Loss) | 5,556 | 5,556 | ||||||
Other comprehensive loss | (1,997) | (1,997) | ||||||
Treasury shares repurchased | (4,281) | (4,281) | ||||||
Proceeds from issuance of ESPP shares | (36) | 283 | 247 | |||||
Issuance of treasury shares for RSUs vested | (5,390) | 5,390 | ||||||
Accrued dividends on unvested shares | (13) | (13) | ||||||
Cash dividends paid to shareholders | (2,049) | (2,049) | ||||||
Stock based compensation | 1,987 | 1,987 | ||||||
Balance at Sep. 30, 2022 | $ 49 | 227,493 | (9,131) | (11,739) | (113,030) | 93,642 | ||
Balance (in shares) at Sep. 30, 2022 | 49,362 | |||||||
Balance at Dec. 31, 2022 | $ 49 | 226,293 | (7,487) | (9,677) | $ (110) | (108,747) | $ (110) | $ 100,431 |
Balance (in shares) at Dec. 31, 2022 | 49,472 | 49,472 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net Income (Loss) | 9,025 | $ 9,025 | ||||||
Other comprehensive loss | (271) | (271) | ||||||
Treasury shares repurchased | (4,455) | (4,455) | ||||||
Proceeds from issuance of ESPP shares | (285) | 1,004 | 719 | |||||
Issuance of treasury shares for RSUs vested | (7,554) | 7,554 | ||||||
Accrued dividends on unvested shares | 169 | 169 | ||||||
Cash dividends paid to shareholders | (6,532) | (6,532) | ||||||
Stock based compensation | 6,752 | 6,752 | ||||||
Balance at Sep. 30, 2023 | $ 49 | 218,843 | (3,384) | (9,948) | (99,832) | $ 105,728 | ||
Balance (in shares) at Sep. 30, 2023 | 49,472 | 49,472 | ||||||
Balance at Jun. 30, 2023 | $ 49 | 221,094 | (5,128) | (9,521) | (103,033) | $ 103,461 | ||
Balance (in shares) at Jun. 30, 2023 | 49,472 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net Income (Loss) | 3,201 | 3,201 | ||||||
Other comprehensive loss | (427) | (427) | ||||||
Treasury shares repurchased | (923) | (923) | ||||||
Proceeds from issuance of ESPP shares | (63) | 301 | 238 | |||||
Issuance of treasury shares for RSUs vested | (2,366) | 2,366 | ||||||
Accrued dividends on unvested shares | 427 | 427 | ||||||
Cash dividends paid to shareholders | (2,345) | (2,345) | ||||||
Stock based compensation | 2,096 | 2,096 | ||||||
Balance at Sep. 30, 2023 | $ 49 | $ 218,843 | $ (3,384) | $ (9,948) | $ (99,832) | $ 105,728 | ||
Balance (in shares) at Sep. 30, 2023 | 49,472 | 49,472 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | ||||
Cash dividends paid to shareholders (USD per share) | $ 0.045 | $ 0.04 | $ 0.13 | $ 0.11 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net income | $ 9,025 | $ 15,443 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation expense | 2,340 | 2,292 |
Amortization of intangible assets | 2,352 | 1,580 |
Deferred tax benefit from stock issuances | (230) | (1,248) |
Write-off of deferred financing costs | 379 | |
Amortization of deferred financing costs | 182 | 257 |
Stock-based compensation | 6,752 | 5,432 |
Change in fair value of contingent consideration | 77 | 1,420 |
Provisions for credit losses | 432 | 314 |
Deferred tax provision | 125 | 1,426 |
Changes in operating assets and liabilities: | ||
Accounts receivable and contract assets | (12,380) | (6,763) |
Prepaid expenses and other assets | (2,145) | 623 |
Accounts payable | (4,653) | (6,853) |
Contract liabilities | (370) | 7 |
Accrued expenses and other liabilities | 720 | (9,335) |
Net cash provided by operating activities | 2,606 | 4,595 |
Cash flows from investing activities | ||
Purchase of furniture, fixtures and equipment | (1,640) | (2,614) |
Net cash used in investing activities | (1,640) | (2,614) |
Cash flows from financing activities | ||
Proceeds from revolving facility (Note 10) | 84,175 | |
Repayment of outstanding debt (Note 10) | (84,175) | |
Principal payments on borrowings | (3,225) | |
Proceeds from issuance of employee stock purchase plan shares | 719 | 695 |
Debt financing costs | (827) | |
Payments related to tax withholding for stock-based compensation | (2,461) | (3,734) |
Payment of contingent consideration | (1,460) | (1,000) |
Cash dividends paid to shareholders | (6,532) | (5,448) |
Treasury shares repurchased | (1,994) | (12,070) |
Net cash used in financing activities | (12,555) | (24,782) |
Effect of exchange rate changes on cash | (265) | (4,983) |
Net decrease in cash, cash equivalents, and restricted cash | (11,854) | (27,784) |
Cash, cash equivalents, and restricted cash, beginning of period | 30,670 | 47,609 |
Cash, cash equivalents, and restricted cash, end of period | 18,816 | 19,825 |
Supplemental disclosures of cash flow information: | ||
Interest | 3,798 | 1,543 |
Taxes, net of refunds | 6,848 | 10,761 |
Non-cash investing and financing activities: | ||
Issuance of treasury stock for vested restricted stock units | $ 7,554 | $ 9,713 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 9 Months Ended |
Sep. 30, 2023 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Information Services Group, Inc. (Nasdaq: III) (the “Company,” “ISG,” “we,” “us” or “our”) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the top 100 enterprises in our markets, ISG is committed to helping corporations, public sector organizations and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. Based in Stamford, Connecticut, ISG employs approximately 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com. The information on or accessible through our website is not part of and is not incorporated by reference into this Quarterly Report on Form 10-Q, and the inclusion of our website address in this Quarterly Report on Form 10-Q is only for reference. Our Company was founded in 2006 with the strategic vision to become a high-growth, leading provider of information-based advisory services. We continue to believe that our vision will be realized through the acquisition, integration and successful operation of market leading brands within the data, analytics and advisory industry. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 2—BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 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 September 30, 2023, the results of operations for the three and nine months ended September 30, 2023 and 2022 and the cash flows for the nine months ended September 30, 2023 and 2022. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the Company’s audited consolidated financial statements. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. 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”). Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended December 31, 2022, which are included in the Company’s 2022 Annual Report on Form 10-K filed with the SEC. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates 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. 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. Numerous internal and external factors can affect estimates. Estimates are also used for but are not limited to: allowance for credit losses, useful lives of furniture, fixtures and equipment and definite lived intangible assets, depreciation expense, fair value assumptions in evaluating goodwill for impairment, income taxes and deferred tax asset valuation and the valuation of stock-based compensation. Restricted Cash Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes. Fair Value 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 September 30, 2023 and December 31, 2022 due to the short-term nature of these accounts. Fair value measurements were applied with respect to our nonfinancial 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. Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy: ● Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market; ● Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and ● Level 3 measurements include those that are unobservable and of a highly subjective measure. The following tables summarize the assets and liabilities (as applicable) measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements September 30, 2023 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 4,210 $ 4,210 Total $ — $ — $ 4,210 $ 4,210 Basis of Fair Value Measurements December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 5,593 $ 5,593 Total $ — $ — $ 5,593 $ 5,593 (1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of September 30, 2023 and December 31, 2022. The following table represents the change in the contingent consideration liability during the nine months ended September 30, 2023: Nine Months Ended September 30, 2023 Beginning Balance $ 5,593 Change 4 Growth contingent consideration payment (1,460) Accretion of contingent consideration 77 Ending Balance $ 4,210 The Company’s financial instruments include outstanding borrowings of $79.2 million both as of September 30, 2023, and December 31, 2022, 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 $79.9 million and $76.5 million as of September 30, 2023 and December 31, 2022, respectively. 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 7.0% and 6.3% as of September 30, 2023 and December 31, 2022, 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. In the third quarter of 2023, the Company borrowed $5.0 million against the revolver and subsequently repaid $5.0 million during the quarter. The Company is currently in compliance with its financial covenants. Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable and contract assets, and available-for-sale debt securities. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses and additional disclosures. We adopted this standard using the modified retrospective approach with an effective date of January 1, 2023 |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2023 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 4 — ACQUISITIONS Change 4 Growth Acquisition 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. At the agreement date, the Company estimated such earn-out payment would be $5.6 million. The following table summarizes the consideration transferred to acquire Change 4 Growth and the amounts of identified assets acquired, and liabilities assumed, as of the agreement date: Cash $ 3,450 Accrued working capital adjustment 378 ISG common stock 600 Contingent consideration 5,560 Total allocable purchase price $ 9,988 This acquisition was accounted for under the acquisition method of accounting, and as such, the aggregate purchase price was allocated to the assets acquired and liabilities assumed based on the fair values as of the closing date. Based on the valuation and other factors as described above, the purchase price assigned to intangible assets were as follows: Accounts receivable and contract assets $ 1,841 Intangible assets 4,300 Accounts payable and accrued expense (428) Contract liabilities (85) Net assets acquired $ 5,628 Goodwill $ 4,360 The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, were the inclusion of the legacy Change 4 Growth workforce and associated organizational change management expertise to enhance and expand the offerings of the ISG Enterprise Change service line. Costs associated with this acquisition are included in the selling, general and administrative expense in the Consolidated Statement of Income and Comprehensive Income and totaled $0.2 million during year ended December 31, 2022. Based on the valuation and other factors as described above, the purchase price assigned to intangible assets and the amortization period were as follows: Purchase Price Estimated Allocation Useful Lives Amortizable intangible assets: Trademark and trade name $ 1,100 3 years Customer relationships 2,900 8 years Noncompete agreements 300 2 years Total intangible assets $ 4,300 |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2023 | |
REVENUE | |
REVENUE | NOTE 5—REVENUE The majority of our revenue is derived from contracts that can span from a few months to several years. We enter into contracts that can include various combinations of services, which, depending on the contract type, are sometimes capable of being distinct. If services are determined to be distinct, they are accounted for as separate performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, is not distinct. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using our best estimate of the standalone selling price, or SSP, of each distinct product or service in the contract. The Company establishes SSP based on management’s estimated selling price or observable prices of products or services sold separately in comparable circumstances to similar clients. Our contracts may include promises to transfer multiple services and products to a client. Determining whether services and products are considered distinct performance obligations that should be accounted for separately versus together may require judgment. Contract Balances The timing of revenue recognition, billings and cash collections result in billed accounts receivables, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities). Our clients are billed based on the type of arrangement. A portion of our services is billed monthly based on hourly or daily rates. There are also client engagements in which we bill a fixed amount for our services. This may be one single amount covering the whole engagement or several amounts for various phases, functions or milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits before revenue is recognized, resulting in contract liabilities. Contract assets and liabilities are generally reported in the current assets and current liabilities sections of the consolidated balance sheet, at the end of each reporting period, based on the timing of the satisfaction of the related performance obligation(s). For multi-year software sales with annual invoicing, we perform a significant financing component calculation and recognize the associated interest income throughout the duration of the financing period. In addition, we reclassify the resulting contract asset balances as current and noncurrent receivables as receipt of the consideration is conditional only on the passage of time and there are no performance risk factors present. See the table below for a breakdown of contract assets and contract liabilities: September 30, December 31, 2023 2022 Contract assets $ 44,585 $ 32,249 Contract liabilities $ 6,688 $ 7,058 Revenue recognized for the three and nine months ended September 30, 2023 that was included in the contract liability balance at January 1, 2023 was $0.6 million and $5.9 million, respectively, and primarily represented revenue from our subscription contracts. Remaining Performance Obligations As of September 30, 2023, the Company had $109.2 million of remaining performance obligations, the majority of which are expected to be satisfied within the next twelve months. |
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE | 9 Months Ended |
Sep. 30, 2023 | |
NET INCOME PER COMMON SHARE | |
NET INCOME PER COMMON SHARE | NOTE 6—NET INCOME PER COMMON SHARE Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. 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 and nine months ended September 30, 2023, 0.5 million and 1.2 million restricted stock units, respectively, and for both the three and nine months ended September 30, 2022, 0.0 million The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic: Net income $ 3,201 $ 5,556 $ 9,025 $ 15,443 Weighted average common shares 48,711 47,888 48,542 48,191 Earnings per share $ 0.07 $ 0.12 $ 0.19 $ 0.32 Diluted: Net income $ 3,201 $ 5,556 $ 9,025 $ 15,443 Basic weighted average common shares 48,711 47,888 48,542 48,191 Potential common shares 1,546 1,956 1,745 2,446 Diluted weighted average common shares 50,257 49,844 50,287 50,637 Diluted earnings per share $ 0.06 $ 0.11 $ 0.18 $ 0.30 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 7—INCOME TAXES The Company’s effective tax rate for the three and nine months ended September 30, 2023 was 33.2% and 34.1%, respectively, based on pretax income of $4.8 million and $13.7 million, respectively. The Company’s effective tax rate for the quarter ended September 30, 2023 was impacted by non-deductible expenses and earnings and losses in certain foreign jurisdictions and the impact of the vesting of restricted stock units. The Company’s effective tax rate for the three and nine months ended September 30, 2022 was 18.0% and 25.4%, respectively. The difference is primarily due to the impact of earnings and losses in certain foreign jurisdictions and the impact of the vesting of restricted stock units. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 8—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 September 30, 2023 and December 31, 2022. Change 4 Growth Contingent Consideration As of September 30, 2023, the Company has recorded a liability of $4.2 million representing the estimated fair value of contingent consideration related to the acquisition of Change 4 Growth, which is classified as “Accrued expenses and other current liabilities” and “Other liabilities” on the consolidated balance sheet. In April 2023, the Company made a contingent consideration payment of $1.5 million. |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
SEGMENT AND GEOGRAPHICAL INFORMATION | NOTE 9—SEGMENT AND GEOGRAPHICAL INFORMATION The Company operates as one reportable segment consisting primarily of fact-based sourcing advisory services. The Company operates principally in the Americas, Europe and Asia Pacific. Geographical revenue information for the segment is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues Americas $ 42,469 $ 42,174 $ 133,149 $ 123,059 Europe 22,090 19,321 69,496 66,039 Asia Pacific 7,214 7,341 22,223 23,002 $ 71,773 $ 68,836 $ 224,868 $ 212,100 The segregation of revenues by geographic region is based upon the location of the legal entity performing the services. The Company does not measure or monitor gross profit or operating income by geography or by service line for the purposes of making operating decisions or allocating resources. |
FINANCING ARRANGEMENTS AND LONG
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2023 | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | NOTE 10—FINANCING ARRANGEMENTS AND LONG-TERM DEBT On February 22, 2023, the Company amended and restated its senior secured credit facility to increase the revolving commitments per the revolving facility (the “2023 Credit Agreement”) from $54.0 million to $140.0 million and eliminate its term loan. The material terms under the 2023 Credit Agreement are as follows: Capitalized terms used but not defined herein have the meanings ascribed to them in the 2023 Credit Agreement: ● The revolving credit facility has a maturity date of February 22, 2028. ● The credit facility is secured by all of the equity interests owned by the Company, and its direct and indirect domestic subsidiaries and, subject to agreed exceptions, the Company’s direct and indirect “first-tier” foreign subsidiaries, and a perfected first priority security interest in all of the Company’s and its direct and indirect domestic subsidiaries’ tangible and intangible assets. ● The Company’s direct and indirect existing and future wholly owned domestic subsidiaries serve as guarantors to the Company’s obligations under the senior secured facility. ● At the Company’s option, the credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate”, (b) the Federal Funds Rate plus 0.5% per annum and (c) Term SOFR, plus 1.0% ), plus the applicable margin (as defined below) or (ii) Term SOFR (which is the Term SOFR screen rate for the relevant interest period plus a credit spread adjustment of 0.10% ) as determined by the administrative agent, plus the applicable margin. The applicable margin is adjusted quarterly based upon the Company’s consolidated leverage ratio. Prior to the end of the first quarter-end following the closing of the credit facility, the applicable margin shall be a percentage per annum equal to 0.50% for the revolving loans maintained as Base Rate loans or 1.50% 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. 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. The Company’s financial statements include outstanding borrowings of $79.2 million both as of September 30, 2023 and December 31, 2022, 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 $79.9 million and $76.5 million as of September 30, 2023 and December 31, 2022, respectively. 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 7.0% and 6.3% as of September 30, 2023 and December 31, 2022, 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. In the third quarter of 2023, the Company borrowed $5.0 million against the revolver and subsequently repaid $5.0 million during the quarter. The Company is currently in compliance with its financial covenants. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Sep. 30, 2023 | |
SUBSEQUENT EVENT. | |
SUBSEQUENT EVENT | NOTE 11—SUBSEQUENT EVENTS On November 1, 2023, the Board approved a fourth-quarter dividend of $0.045 per share, payable December 20, 2023, to shareholders of record as of December 5, 2023. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | Use of Estimates 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. 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. Numerous internal and external factors can affect estimates. Estimates are also used for but are not limited to: allowance for credit losses, useful lives of furniture, fixtures and equipment and definite lived intangible assets, depreciation expense, fair value assumptions in evaluating goodwill for impairment, income taxes and deferred tax asset valuation and the valuation of stock-based compensation. |
Restricted Cash | Restricted Cash Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes. |
Fair Value | Fair Value 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 September 30, 2023 and December 31, 2022 due to the short-term nature of these accounts. Fair value measurements were applied with respect to our nonfinancial 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. Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy: ● Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market; ● Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and ● Level 3 measurements include those that are unobservable and of a highly subjective measure. The following tables summarize the assets and liabilities (as applicable) measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements September 30, 2023 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 4,210 $ 4,210 Total $ — $ — $ 4,210 $ 4,210 Basis of Fair Value Measurements December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 5,593 $ 5,593 Total $ — $ — $ 5,593 $ 5,593 (1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of September 30, 2023 and December 31, 2022. The following table represents the change in the contingent consideration liability during the nine months ended September 30, 2023: Nine Months Ended September 30, 2023 Beginning Balance $ 5,593 Change 4 Growth contingent consideration payment (1,460) Accretion of contingent consideration 77 Ending Balance $ 4,210 The Company’s financial instruments include outstanding borrowings of $79.2 million both as of September 30, 2023, and December 31, 2022, 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 $79.9 million and $76.5 million as of September 30, 2023 and December 31, 2022, respectively. 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 7.0% and 6.3% as of September 30, 2023 and December 31, 2022, 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. In the third quarter of 2023, the Company borrowed $5.0 million against the revolver and subsequently repaid $5.0 million during the quarter. The Company is currently in compliance with its financial covenants. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable and contract assets, and available-for-sale debt securities. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses and additional disclosures. We adopted this standard using the modified retrospective approach with an effective date of January 1, 2023 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of assets measured at fair value on a recurring basis | Basis of Fair Value Measurements September 30, 2023 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 4,210 $ 4,210 Total $ — $ — $ 4,210 $ 4,210 Basis of Fair Value Measurements December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 5,593 $ 5,593 Total $ — $ — $ 5,593 $ 5,593 (1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of September 30, 2023 and December 31, 2022. |
Schedule of change in the contingent consideration liability | Nine Months Ended September 30, 2023 Beginning Balance $ 5,593 Change 4 Growth contingent consideration payment (1,460) Accretion of contingent consideration 77 Ending Balance $ 4,210 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
ACQUISITIONS | |
Schedule of consideration transferred and the amounts of identified assets acquired, and liabilities assumed as of the Agreement date | Cash $ 3,450 Accrued working capital adjustment 378 ISG common stock 600 Contingent consideration 5,560 Total allocable purchase price $ 9,988 Accounts receivable and contract assets $ 1,841 Intangible assets 4,300 Accounts payable and accrued expense (428) Contract liabilities (85) Net assets acquired $ 5,628 Goodwill $ 4,360 |
Schedule of purchase price assigned to intangible assets and the amortization period | Purchase Price Estimated Allocation Useful Lives Amortizable intangible assets: Trademark and trade name $ 1,100 3 years Customer relationships 2,900 8 years Noncompete agreements 300 2 years Total intangible assets $ 4,300 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
REVENUE | |
Schedule of contract assets and contract liabilities | September 30, December 31, 2023 2022 Contract assets $ 44,585 $ 32,249 Contract liabilities $ 6,688 $ 7,058 |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
NET INCOME PER COMMON SHARE | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic: Net income $ 3,201 $ 5,556 $ 9,025 $ 15,443 Weighted average common shares 48,711 47,888 48,542 48,191 Earnings per share $ 0.07 $ 0.12 $ 0.19 $ 0.32 Diluted: Net income $ 3,201 $ 5,556 $ 9,025 $ 15,443 Basic weighted average common shares 48,711 47,888 48,542 48,191 Potential common shares 1,546 1,956 1,745 2,446 Diluted weighted average common shares 50,257 49,844 50,287 50,637 Diluted earnings per share $ 0.06 $ 0.11 $ 0.18 $ 0.30 |
SEGMENT AND GEOGRAPHICAL INFO_2
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
Schedule of geographical revenue information for the segment | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues Americas $ 42,469 $ 42,174 $ 133,149 $ 123,059 Europe 22,090 19,321 69,496 66,039 Asia Pacific 7,214 7,341 22,223 23,002 $ 71,773 $ 68,836 $ 224,868 $ 212,100 |
DESCRIPTION OF ORGANIZATION A_2
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) - Minimum | Sep. 30, 2023 employee client country |
Number of clients | 900 |
Number of clients from top 100 enterprises in the markets | 75 |
Number of digital-ready professionals | employee | 1,600 |
Number of countries | country | 20 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Apr. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | ||||
Liabilities: | ||||||||
Contingent consideration | $ 4,210 | $ 4,210 | $ 5,593 | |||||
Change in the contingent consideration liability | ||||||||
Beginning Balance | 5,593 | |||||||
Change 4 Growth contingent consideration payment | $ (1,500) | (1,460) | $ (1,000) | |||||
Accretion of contingent consideration | 77 | |||||||
Ending Balance | 4,210 | 4,210 | ||||||
Outstanding borrowings | 79,200 | 79,200 | 79,200 | |||||
Fair value of outstanding borrowing | $ 79,900 | $ 79,900 | $ 76,500 | |||||
Debt instrument, valuation technique, extensible list | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember | |||||
Debt instrument, measurement input, extensible list | us-gaap:MeasurementInputDiscountRateMember | us-gaap:MeasurementInputDiscountRateMember | us-gaap:MeasurementInputDiscountRateMember | |||||
Debt instrument, measurement input | 0.070 | 0.070 | 0.063 | |||||
Borrowing against revolver | $ 5,000 | $ 84,175 | ||||||
Revolver repaid | 5,000 | 84,175 | ||||||
Accumulated deficit | (99,832) | (99,832) | $ (108,747) | |||||
Allowance for credit losses | 433 | 433 | 272 | |||||
Cumulative effect adjustment | ASU 2016-13 | ||||||||
Change in the contingent consideration liability | ||||||||
Accumulated deficit | (100) | |||||||
Allowance for credit losses | 100 | |||||||
Recurring | ||||||||
Assets: | ||||||||
Cash equivalents | 18 | 18 | 18 | |||||
Total | 18 | 18 | 18 | |||||
Liabilities: | ||||||||
Contingent consideration | 4,210 | [1] | 4,210 | [1] | 5,593 | |||
Total | 4,210 | 4,210 | 5,593 | |||||
Change in the contingent consideration liability | ||||||||
Beginning Balance | 5,593 | |||||||
Ending Balance | [1] | 4,210 | 4,210 | |||||
Recurring | Level 1 | ||||||||
Assets: | ||||||||
Cash equivalents | 18 | 18 | 18 | |||||
Total | 18 | 18 | 18 | |||||
Recurring | Level 3 | ||||||||
Liabilities: | ||||||||
Contingent consideration | 4,210 | [1] | 4,210 | [1] | 5,593 | |||
Total | 4,210 | 4,210 | $ 5,593 | |||||
Change in the contingent consideration liability | ||||||||
Beginning Balance | 5,593 | |||||||
Ending Balance | [1] | $ 4,210 | $ 4,210 | |||||
[1] The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of September 30, 2023 and December 31, 2022. |
ACQUISITIONS - Total allocable
ACQUISITIONS - Total allocable purchase price (Details) - Change 4 Growth, LLC $ in Thousands | Oct. 31, 2022 USD ($) |
Business Acquisition [Line Items] | |
Cash consideration | $ 3,800 |
Cash | 3,450 |
Accrued working capital adjustment | 378 |
ISG common stock | 600 |
Contingent consideration | 5,560 |
Total allocable purchase price | $ 9,988 |
ACQUISITIONS - Recognized ident
ACQUISITIONS - Recognized identifiable assets acquired and liabilities assumed and acquisition costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Sep. 30, 2023 | Oct. 31, 2022 | |
Identified assets acquired, and liabilities assumed | |||
Goodwill | $ 94,972 | $ 94,874 | |
Change 4 Growth, LLC | |||
Identified assets acquired, and liabilities assumed | |||
Accounts receivable and contract assets | $ 1,841 | ||
Intangible assets | 4,300 | ||
Accounts payable and accrued expense | (428) | ||
Contract liabilities | (85) | ||
Net assets acquired | 5,628 | ||
Goodwill | $ 4,360 | ||
Acquisition related cost | $ 200 |
ACQUISITION - Amortizable intan
ACQUISITION - Amortizable intangible assets and period (Details) - Change 4 Growth, LLC $ in Thousands | Oct. 31, 2022 USD ($) |
Amortizable intangible assets: | |
Total intangible assets | $ 4,300 |
Trademark and trade name | |
Amortizable intangible assets: | |
Total intangible assets | $ 1,100 |
Estimated useful life | 3 years |
Customer relationships | |
Amortizable intangible assets: | |
Total intangible assets | $ 2,900 |
Estimated useful life | 8 years |
Noncompete agreements | |
Amortizable intangible assets: | |
Total intangible assets | $ 300 |
Estimated useful life | 2 years |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
REVENUE | ||
Contract assets | $ 44,585 | $ 32,249 |
Contract liabilities | $ 6,688 | $ 7,058 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
REVENUE | ||
Revenue recognized, included in contract liability balance | $ 0.6 | $ 5.9 |
Remaining performance obligations | $ 109.2 | $ 109.2 |
NET INCOME PER COMMON SHARE - A
NET INCOME PER COMMON SHARE - Antidilutive Securities (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restricted Stock Units R S U | ||||
Antidilutive securities | ||||
Securities considered antidilutive (in shares) | 0.5 | 0 | 1.2 | 0 |
NET INCOME PER COMMON SHARE - C
NET INCOME PER COMMON SHARE - Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Basic: | ||||
Net income | $ 3,201 | $ 5,556 | $ 9,025 | $ 15,443 |
Weighted average common shares (in shares) | 48,711 | 47,888 | 48,542 | 48,191 |
Earnings per share (in dollars per share) | $ 0.07 | $ 0.12 | $ 0.19 | $ 0.32 |
Diluted: | ||||
Net income | $ 3,201 | $ 5,556 | $ 9,025 | $ 15,443 |
Basic weighted average common shares (in shares) | 48,711 | 47,888 | 48,542 | 48,191 |
Potential common shares (in shares) | 1,546 | 1,956 | 1,745 | 2,446 |
Diluted weighted average common shares (in shares) | 50,257 | 49,844 | 50,287 | 50,637 |
Diluted earnings per share (in dollars per share) | $ 0.06 | $ 0.11 | $ 0.18 | $ 0.30 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
INCOME TAXES | ||||
Effective income tax rates (as a percent) | 33.20% | 18% | 34.10% | 25.40% |
Pretax income | $ 4,792 | $ 6,774 | $ 13,705 | $ 20,688 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Apr. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Contingent Consideration | ||||
Contingent consideration | $ 4,210 | $ 5,593 | ||
Contingent consideration payment | $ 1,500 | 1,460 | $ 1,000 | |
Change 4 Growth Acquisition | ||||
Contingent Consideration | ||||
Contingent consideration | $ 4,200 |
SEGMENT AND GEOGRAPHICAL INFO_3
SEGMENT AND GEOGRAPHICAL INFORMATION (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | |
Segment and geographical information | ||||
Number of segments | segment | 1 | |||
Revenues | $ 71,773 | $ 68,836 | $ 224,868 | $ 212,100 |
Americas | ||||
Segment and geographical information | ||||
Revenues | 42,469 | 42,174 | 133,149 | 123,059 |
Europe | ||||
Segment and geographical information | ||||
Revenues | 22,090 | 19,321 | 69,496 | 66,039 |
Asia Pacific | ||||
Segment and geographical information | ||||
Revenues | $ 7,214 | $ 7,341 | $ 22,223 | $ 23,002 |
FINANCING ARRANGEMENTS AND LO_2
FINANCING ARRANGEMENTS AND LONG-TERM DEBT (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Feb. 22, 2023 USD ($) | Sep. 30, 2023 USD ($) | Mar. 31, 2022 | Sep. 30, 2023 USD ($) | Feb. 21, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Repayment of term loan facility | $ 5,000 | $ 84,175 | ||||
Outstanding borrowings | 79,200 | 79,200 | $ 79,200 | |||
Fair value of outstanding borrowing | $ 79,900 | $ 79,900 | $ 76,500 | |||
Debt Instrument, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember | |||
Debt Instrument, Measurement Input [Extensible List] | us-gaap:MeasurementInputDiscountRateMember | us-gaap:MeasurementInputDiscountRateMember | us-gaap:MeasurementInputDiscountRateMember | |||
Debt instrument, measurement input | 0.070 | 0.070 | 0.063 | |||
Borrowing against revolver | $ 5,000 | $ 84,175 | ||||
Revolver repaid | $ 5,000 | $ 84,175 | ||||
Credit Agreement 2023 | Base Rate | ||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Applicable margin (as a percent) | 0.50% | |||||
Credit Agreement 2023 | Federal Funds Rate | ||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Applicable margin (as a percent) | 0.50% | |||||
Credit Agreement 2023 | Secured Overnight Financing Rate (SOFR) | ||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Applicable margin (as a percent) | 1% | 1.50% | ||||
Credit Spread Adjustment Percentage | 0.10% | |||||
Credit Agreement 2023 | Revolving Credit Facility | ||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Maximum borrowing capacity | $ 140,000 | $ 54,000 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Millions | Nov. 01, 2023 | Oct. 31, 2023 |
SUBSEQUENT EVENT | ||
Dividends declared (in US$ per share) | $ 0.045 | |
Ventana Research, Inc [Member] | ||
SUBSEQUENT EVENT | ||
Cash consideration paid at closing | $ 1 | |
Term of contingent consideration (in months) | 26 months |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 3,201 | $ 5,556 | $ 9,025 | $ 15,443 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Rule 10b5-1 Arrangement Modified | false |
Non-Rule 10b5-1 Arrangement Modified | false |