Q4 2023 Information Services Group Inc Earnings Call
Operator: Good morning, and welcome everyone to the Information Services Group fourth quarter 2023 conference call. This call is being recorded, and a replay will be available on ISG's website within 24 hours. Now, I'd like to turn the call over to Mr. Barry Holt for his opening remarks and introductions. Mr. Holt, please go ahead.
Good morning, and welcome everyone to the information services group fourth quarter two days since Q3 conference call. This call is being recorded and a replay will be available on Isg's website within 24 hours now I'd like to turn the call over to Mr. Barry Holt for his opening remarks and intra.
<unk> Mr. Holt. Please go ahead.
Barry Holt: Thank you, operator. Hello, good morning. My name is Barry Holt.
Thank you operator, Hello. Good morning, My name is Barry Holt I'm, a senior communications executive at ISG I'd like to welcome everyone to Isg's fourth quarter Conference call I'm joined today by Michael Connors, Chairman and Chief Executive Officer, and Michael <unk>, Executive Vice President and Chief Financial Officer.
Barry Holt: I'm a senior communications executive at ISG. I'd like to welcome everyone to ISG's fourth quarter conference call. I'm joined today by Michael Connors, chairman and chief executive officer, and Michael Sherrick, executive vice president and chief financial officer.
Barry Holt: 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 that represent the current expectations and beliefs of the management of ISG concerning future events and their potential effects. These statements are not guaranteed and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated.
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 of future results and are subject to certain risks and uncertainties that could cause actual results to differ materially from.
Those anticipated.
Barry Holt: 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 8K that was furnished last night to the SEC and the risk factors section in ISG's Form 10K 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 ISG. You'll 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.
For a more detailed listing of the risks and other factors that could affect future results. Please refer to the forward looking statements 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'll be able to obtain free copies of any of Isg's SEC filings on either Isg's website at www Dot ISG dash, one dot com or the Sec's website at www.
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ISG undertakes no obligation to update or revise any forward looking statements 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.
Barry Holt: During this call, we will discuss certain non-GAAP financial measures, which ISJ believes improve 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 on today include adjusted EBITDA, adjusted net earnings, and the presentation of selected financial data on a constant currency basis. Non-GAAP measures are provided in additional information and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
The non-GAAP measures, which we will touch on today include adjusted EBITDA adjusted net earnings and the presentation of selected financial data on a constant currency basis non-GAAP measures are provided an additional <unk>.
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 8-K, which was filed last night with the SEC.
Barry Holt: 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 Michael Sherrick. Mike. Thank you, Barry. And good morning, everyone.
And now I'd like to turn the call over to Michael Connors, who will be followed by Michael sure Mike.
Thank you Barry and good morning, everyone.
Michael P. Connors: Today we will review our results for the fourth quarter and full year, including our recurring revenue growth and our strong Q4 cash generation, as well as our investments in two growth initiatives, enterprise AI and next generation sourcing, and the current demand environment and our outlook for the first quarter. Although our fourth quarter was soft, 2023 was largely a successful year for ISG. We grew our top line by 2% in an industry that was down 6% last year. We advanced our recurring revenues by 16%, and we invested in two growth areas: enterprise AI and next-gen sources. For the full year, ISG delivered record revenues of $291 million.
We will review our results for the fourth quarter and full year, including our recurring revenue growth and our strong Q4 cash generation.
Our investments into growth initiatives enterprise AI and next generation sourcing.
And the current demand environment and our outlook for the first quarter.
Although our fourth quarter was saw 2023 was largely a successful year for ISG we.
Grew our topline, 2% and an industry that was down 6% last year.
We advanced our recurring revenues by 16%.
And we invested in two growth areas enterprise AI and Nextgen sourcing.
For the full year ISG delivered record revenues of $291 million.
Michael P. Connors: Given the overall IT and business services industry was down 6% last year, as reported by the ISG index in January, we consider our top line growth of 2% to be solid. Our strategic investments in recurring revenue streams continue to pay off. For the year, we generated record recurring revenues of $125 million, up 16%, driven by our research and ISG platform business. Recurring revenue represents 43% of our total firm-wide revenue, up 500 basis points from the prior year. Our Q4 results, $66 million in revenues, and adjusted EBITDA of $6 million, were impacted by slower client decision making due to the uncertain macro environment, as well as the advent of AI, which is extending sales cycles. More on that latter point in a moment.
Given the overall it and business services industry was down 6% last year as reported by the ISG Index in January we consider our topline growth of 2% to be solid.
Our strategic investments and recurring revenue streams continue to pay off for.
For the year, we generated record recurring revenues of $125 million up 16% driven by our research and ISG platform businesses.
Recurring revenue represented 43% of our total firm wide revenue up 500 basis points from the prior year.
Our Q4 results $66 million of revenues and adjusted EBITDA of $6 million were impacted by slower client decision, making due to the uncertain macro environment as.
As well as the advent of AI, which is extending sales cycles more on that latter point in a moment.
Michael P. Connors: During Q4, we saw growth in our research, platforms, and software advisory businesses, and in our consumer services and public sector industries. Recurring revenue represented 45% of our total firm-wide revenue for the quarter. We also generated nearly $10 million of cash in the fourth quarter, the highest amount in the year since 2019. Now, a further word on the demand environment. It's easy to understand how current macro conditions are impacting client decision making.
During Q4, we saw growth in our research platforms and software advisory businesses.
And in our consumer services and public sector industries.
Recurring revenue represented 45% of our total firm wide revenue for the quarter.
We also generated nearly $10 million in cash in the fourth quarter, the highest amount to end the year since 2019.
Now I'll further word on the demand environment.
It's easy to understand how current macro conditions are impacting client decision, making.
Michael P. Connors: What's less evident is the impact of AI on the market. And we have seen this before, most recently with the advent of cloud computing. It takes a while for the market to adjust to a major new technology. For many enterprises, knowing how to apply and govern AI is a challenge. They need time to understand the practical applications and see the potential for ROI before they go all in. Much of the hype today is around generative AI. But other forms of AI are already taking root.
What's less evident is the impact of AI on the market.
And we have seen this before most recently with the advent of cloud computing.
It takes a while for the market to adjust to a major new technology.
For many enterprises, knowing how to apply and govern AI is a challenge.
They need time to understand the practical applications and see the potential for ROI before they go all in.
Much of the hype today is around generative AI.
But other forms of AI are already taking root.
Michael P. Connors: Clients are asking us to embed AI in almost all of our sourcing transactions, in areas such as AI operations and AI-enabled applications. They are also seeking data and AI capabilities to experiment. To take full advantage of AI, however, our clients need to see the big picture and create a strategic plan for adopting AI at scale. And this is where ISG comes in.
Clients are asking us to embed AI in almost all of our sourcing transactions and.
In areas, such as AI ops and AI enabled applications.
They are also seeking data and AI capabilities to experiment.
To take full advantage of AI, however, our clients need to see the big picture and create a strategic plan for adopting AI at scale.
And this is where ISG comes in.
Michael P. Connors: ISG launched a new enterprise AI advisory business at the start of this year to guide clients through the intricate maze of AI adoption. We brought together our trusted experience in technology sourcing, our deep expertise in AI, and our broad access to the provider ecosystem to create a new and unique approach to sourcing AI. Clients are relying on our experts to establish their AI strategy, set guardrails, identify use cases, and build their AI ecosystems and to ensure we are capturing new opportunities. We have trained and certified more than 1,200 of our employees in enterprise AI during the fourth quarter. Demand for AI and digital transformation is growing.
ISG launched a new enterprise AI advisory business at the start of this year to guide clients through the intricate maze of AI adoption.
We brought together our trusted experience in technology sourcing our deep expertise in AI and our broad access to the provider ecosystem.
A new and unique approach to sourcing AI.
Clients are relying on our experts to establish their AI strategy set.
Set guardrails identify use cases and build their AI ecosystem.
And to ensure we are capturing new opportunities, we have scaled up our workforce.
Training and certifying more than 12 100 of our employees and enterprise AI during the fourth quarter.
Demand for AI and digital transformation is growing.
Michael P. Connors: Our pipeline, though slower to close, is 14% larger now than it was last year. Our other key investment is in our new sourcing platform. Yesterday, we announced the launch and availability of ISG Tango, the first fully integrated digital platform designed to simplify and expedite sourcing. ISG Tango is the result of a year-long development effort. It digitizes all elements of ISG FutureSource. The industry's most respected sourcing process and methodology, from Initial Service Scope to Provider Selection, Contract Creation, and Signature.
Our pipeline, though slower to close is 14% larger now than it was last year.
Our other key investment is in our new sourcing platform.
Yesterday, we announced the launch and availability of ISG Tango.
The first fully integrated digital platform designed to simplify and expedite sourcing.
ISG Tango as a result of a year long development effort.
It Digitizes all elements of ISG future source.
The industry's most respected sourcing process and methodology.
From initial service scope to provider selection to contract creation and signature.
Michael P. Connors: The new platform leverages ISG's market-leading transaction data, Provider Evaluations and Market Insights, and includes a virtual deal room to secure document exchange and user interaction. Powered by AI, ISG Tango also automates contract creation and provides real-time predictive insight, streamlining the entire transaction process and Accelerating Time to Value.
The new platform Leverages, isg's market, leading transaction data provider revaluations and market insights and.
And includes a virtual deal room to secure document exchange and user interaction.
Powered by AI ISG Tango also automate automates contract creation and.
And provides real time predictive insights to streamline the entire transaction process and.
And accelerate time to value.
Michael P. Connors: Because of its ability to scale, ISG Tango will allow us to capture more unadvised transaction activity over the next few years among our current G2000 clients. And for the first time, it will allow us to penetrate the underserved mid-market, which spends about $130 billion on technology and business services annually, most of it through unadvised transactions. This is an exciting new development for ISG. We expect ISG Tango to help us expand our margins, in line with other elements of our ISG Next operating model. Now turning to our region, the Americas delivered $40 million of revenue in the quarter, down 8% versus the prior year. For the full year, revenues were $173 million, up 4%.
Because of its ability to scale ISG tango will allow us to capture more on advise transaction activity over the next few years among our current G 2000 clients.
And for the first time, it will allow us to penetrate the underserved mid market, which spans about $130 billion on technology and business services annually.
Most of it through Unadvised transactions.
This is an exciting new development for ISG.
We expect <unk> to help us expand our margins in line with our other elements of our ISG next operating model.
Now turning to our regions.
The Americas delivered $40 million of revenue in the quarter down 8% versus the prior year.
For the full year revenues were $173 million up 4%.
Michael P. Connors: During Q4, we saw double-digit growth in our consumer, public sector, energy, and utilities industry vertical, and among our services, research was also up double digits. Key client engagements during the fourth quarter included Centene, U.S. Steel, Carnival, and Safe Life. During the quarter, a global hospitality and entertainment company awarded ISG a strategically important data analytics and AI engagement. Our work will help this client leverage recent advances in AI to support personalized marketing and optimize their operations. We were also selected by a U.S. state government to support the upcoming implementation of a new statewide ERP system for Finance and Procurement. Turning to Europe, our Q4 revenues of $20 million were down 15% from last year. For the full year, revenues were flat at $90 million.
During Q4, we saw double digit growth in our consumer public sector energy and utilities industry verticals.
And among our services research was also up double digits.
Key client engagements during the fourth quarter included Centene U S steel.
Carnival and safely.
During the quarter, a global hospitality and entertainment company awarded ISG, a strategically important data analytics and AI engagement.
Our work will help this client leverage recent advances in AI.
To support personalized marketing and optimize their operations.
We were also selected by a U S state government to support an upcoming implementation of a new state wide ERP system.
For finance and procurement.
Turning to Europe, our Q4 revenues of $20 million were down 15% from last year for.
For the full year revenues were flat at $90 million.
Michael P. Connors: During the quarter, Europe delivered double-digit revenue growth in our banking industry vertical and in our network and software advisory business. Key Client Engagements in Europe in the 4th Quarter included the financial services firm IQEQ, Nestle, Volkswagen, and Deutsche Bahn.
During the quarter Europe delivered double digit revenue growth in our banking industry vertical and.
And in our network and software advisory business.
Key client engagements in Europe in the fourth quarter.
Included the financial services firm IQ EQ.
Next slide Volkswagen and Deutsche Bond.
Michael P. Connors: In the fourth quarter, we expanded our already robust relationship with a European CPG company by delivering a nearly $2 million software advisory engagement. We helped this client renegotiate its worldwide contract with SAP, Microsoft, DocuSign, and Adobe at a savings of more than $10 million. And we began an assessment of the company's procurement and vendor management organization to generate ongoing sustainable savings. Now turning to Asia-Pacific, our Q4 revenues of $6 million were down 12%. For the full year, they were down 5% to $28 million.
In the fourth quarter, we expanded our already robust relationship with a European CPG company.
By delivering a nearly $2 million software advisory engagement.
We help this client renegotiated worldwide contract with SAP.
Microsoft Doc you sign and Adobe at a savings of more than $10 million and we began an assessment of the company's procurement and vendor management organization to generate ongoing sustainable savings.
Now turning to Asia Pacific, Our Q4 revenues of $6 million were down 12% for the full year, they were down 5% to $28 million.
Michael P. Connors: In the fourth quarter, we saw double-digit growth in our banking and manufacturing industry verticals. Key clients of the quarter included the Australian Taxation Office, the Department of Home Affairs, C.B.H. Group, and Insurance Australia Group. In Q4, ISG delivered sourcing advisory and software negotiation support to a leader in the Australian grain industry for its transformation journey from legacy SAP to S4HANA. Now, let me turn to guidance.
In the fourth quarter, we saw double digit growth in our banking and manufacturing industry verticals.
Key clients in the quarter included the Australian Taxation office, the Department of home Affairs.
Cba's group and insurance Australia group.
In Q4, ISG deliver of sourcing advisory and software negotiation support to a leader in the Australian grain industry for its transformation journey from legacy.
To ask for Hana.
Now, let me turn to guidance, we expect the market to accelerate over the course of this year as inflation continues to call <unk>.
Michael P. Connors: We expect the market to accelerate over the course of this year, as inflation continues to cool. Central banks respond, and clients become more comfortable with AI decision-making. With this in mind, for the first quarter, we are targeting revenues between $65 and $67 million and adjusted EBITDA between $6 and $7 million. I would point out that we will face a difficult comp with our record first quarter last year, based on our next two-year business plan and in anticipation of accelerating demand and the margin impact we expect from ISG Tango. We remain committed to driving toward our target of a 17% adjusted EBITDA margin for the firm by the end of 2025. So with that, let me turn the call over to Michael, who will summarize our financial results. Okay?
Central banks respond and clients become more comfortable with AI decision, making.
With this in mind for the first quarter, we are targeting revenues between 65% and $67 million and adjusted EBITDA between six and $7 million.
I would point out that we will face a difficult comp with our record first quarter last year.
Based on our next two year business plan and in anticipation of accelerating demand.
And the margin impact we expect from ISG Tango.
We remain committed to driving towards our target of a 17% adjusted EBITDA margin for the firm by the end of 2025.
So with that let me turn the call over to Michael who will summarize our financial results. Michael. Thank you, Mike and good morning, everyone before I begin I want to provide some context on our bad debt reserve, we took in the quarter during the fourth quarter. We recorded a reserve for bad debt of $4 8 million related to collections from a Dubai based client.
Michael A. Sherrick: Thank you, Mike. And good morning, everyone. Before I begin, I want to provide some context on a bad debt reserve we took in the fourth quarter. During the fourth quarter, we recorded a reserve for bad debt of $4.8 million related to collections from a Dubai-based client that were past due and for which we were unable to agree upon a revised payment structure. I want to stress that this is a reserve. We are early in the collections process and that we are pursuing collections of the full amount. We will use all channels, legal and other, available to us towards such collections. Now on to the details of the court. Revenues for the fourth quarter were $66.2 million, down 11% compared with the fourth quarter last year.
That were past due and for which we were unable to agree upon a revised payment structure.
I want to stress that this is a reserve we are early in the collections process and that we are pursuing collection of the full amount owed we will use all channels legal and other available to us towards such collections.
Now onto the details of the quarter revenues for the fourth quarter was $66 2 million down 11% compared with the fourth quarter last year.
Michael A. Sherrick: Currency positively impacted reported revenues by $0.7 million versus the prior year. In the Americas, reported revenues were $40.1 million, down 8% versus the prior year. In Europe, revenues were $20.2 million, down 15%, and in Asia-Pacific, revenues were $5.9 million, down 12%. Fourth quarter adjusted EBITDA was $5.9 million, down from $11.1 million last year, resulting in an EBITDA margin of 8.9% compared with 15% in the prior year's fourth quarter. ISG had a fourth-quarter operating loss of $3.5 million compared with operating income of $7.2 million in the prior year. Our reported net loss for the quarter was $2.9 million, or a loss of $0.06 per fully diluted share, compared with net income of $4.3 million, or $0.09 per fully diluted share, in the prior year.
Currency positively impacted reported revenues by <unk> 7 million versus the prior year.
In the Americas reported revenues were $40 1 million down 8% versus the prior year in Europe revenues were $20 2 million down 15% and in Asia Pacific revenues were $5 9 million down 12%.
Fourth quarter, adjusted EBITDA was $5 9 million down from $11 1 million last year, resulting in an EBITDA margin of eight 9% compared with 15% in the prior year's fourth quarter.
ISG had a fourth quarter operating loss of $3 5 million compared with operating income of $77 2 million in the prior year our.
Our reported net loss for the quarter was $2 9 million or a loss of <unk> <unk> per fully diluted share compared with net income of $4 3 million or <unk> <unk> per fully diluted share in the prior year.
Michael A. Sherrick: Excluding the previously mentioned reserve, net income and GAAP EPS would have been $0.8 million and $0.02 per fully diluted share, respectively. Fourth quarter adjusted net income was $3.1 million or $0.06 per fully diluted share compared with adjusted net income of $6.5 million or $0.13 per fully diluted share in the prior year's fourth quarter. Headcount as of December 31, 2023 was 1,518, down 32 professionals or 2.1% from the third quarter.
Excluding the previously mentioned reserve net income and GAAP EPS would have been 0.8 million and <unk> <unk> per fully diluted share respectively.
Fourth quarter adjusted net income was $3 1 million or <unk> <unk> per fully diluted share compared with adjusted net income of $6 5 million or <unk> 13 per fully diluted share in the prior year's fourth quarter.
Head count as of December 31, 2023 was 1518 down 32 professionals or two 1% from the third quarter.
Michael A. Sherrick: Consulting utilization for the fourth quarter was 65%, impacted by slower client decision-making in the quarter and our retention of advisory talent. Our full-year utilization was 70 percent. Even with some cost-cutting moves in Q4 and Q1, we are maintaining our core strength in advisory services, retaining the key talent we need when demand begins to accelerate. Our balance sheet continues to be solid and provides us with the flexibility to support our business over the long term. For the quarter, net cash provided by operations was a solid $9.7 million, and $12.3 million for the year.
Consulting utilization for the fourth quarter was 65% impacted by slower client decision, making in the quarter and our retention of advisory talent, our full year utilization was 70%.
Even with some cost cutting moves in Q4 and Q1, we are maintaining our core strength in advisory services retaining the key talent we need.
When demand begins to accelerate this year.
Our balance sheet continues to be solid and provides us with the flexibility to support our business over the long term.
For the quarter net cash provided by operations was a solid $9 7 million and $12 3 million for the year, we ended the quarter and the year with $22 6 million of cash up strong from $18 7 million at the end of the third quarter.
Michael A. Sherrick: We ended the quarter and the year with $22.6 million of cash, up strongly from $18.7 million at the end of the third quarter. During the fourth quarter, ISG paid dividends totaling $2.2 million and repurchased $1.7 million of ISG shares. Our next quarterly dividend will be payable March 29th to shareholders of record as of March 19th. We ended the fourth quarter with a debt balance of $79.2 million, unchanged from Q3.
During the fourth quarter, ISG paid dividends totaling $2 2 million and repurchased $1 7 million of ISG shares. Our next quarterly dividend will be payable March 29 to shareholders of record as of March 19.
We ended the fourth quarter with a debt balance of $79 2 million unchanged from Q3 importantly, we remain comfortable with our debt to EBITDA ratio.
Michael A. Sherrick: Importantly, we remain comfortable with our debt-to-EBITDA ratio. Our average borrowing rate for the quarter was 7%, up from 5.2% last year, and we ended the quarter with 49.7 million fully diluted shares outstanding. Mike will now share his concluding remarks before we take Q&A. Thank you. Thank you, Michael. To summarize, ISG achieved record revenues and grew our recurring revenues by 16% in 2023. Despite Q4 results that were impacted by slower client decision-making, we had an outstanding cash quarter in Q4, generating almost $10 million in cash.
Our average borrowing rate for the quarter was 7% up from five 2% last year and we ended the quarter with $49 7 million fully diluted shares outstanding Mike will now share concluding remarks before we take Q&A Mike.
Thank you Michael.
To summarize ISG achieved record revenues and grew our recurring revenues by 16% in 2023.
Despite Q4 results that were impacted by slower client decision, making.
We had an outstanding cash quarter in Q4, generating almost $10 million of cash.
Michael P. Connors: We made investments in both enterprise AI and next-gen sourcing to accelerate our growth. We are excited and optimistic about the future. We expect client demand to accelerate over the course of 2024.
We made investments in both enterprise AI and Nextgen sourcing to accelerate our growth.
We are excited and optimistic about the future.
We expect client demand to accelerate over the course of 2024.
Michael P. Connors: As macro additions improve, clients will become more comfortable investing in AI. Overall, we have a solid business plan in place to enhance our growth and profitability, and we remain confident in reaching our stated objectives. As always, we are focused on creating shareholder value for the long term. And we are steadfast in our mission to deliver operational excellence to our clients. So, thank you very much for calling in this morning.
As macro conditions improve and clients become more comfortable investing in AI.
Overall, we have a solid business plan in place to enhance our growth and profitability.
We remain confident in reaching our stated objectives.
As always we are focused on creating shareholder value for the long term.
And we are steadfast in our mission to deliver operational excellence to our clients.
So thank you very much for calling in this morning, and now let me turn the session over to our operator for your questions.
Today's question and answer session will be conducted electronically if you will.
Operator: And now, let me turn the session over to our operator for your questions. Today's question and answer session will be conducted electronically. If you'd like to ask a question, you can do so by pressing star and one on your telephone keypad. If you find that your question has been answered and you'd like to remove yourself from the queue, you may do so by pressing star one again.
I'd like to ask a question you can do so by pressing star one on your telephone keypad. If you find that your question has been answered and you'd like to remove yourself from the queue. You may do so by pressing the star one again and again, if you would like to ask a question you can do so by pressing star one on your Touchtone.
Operator: And again, if you would like to ask a question, you can do so by pressing the star and one on your touch screen. Keep going. And we'll pause for just a moment to compile the questions. Q&A follow-up. And your first question comes from the line of Dave Storms from Stonegate. Your line is open. Good morning, David.
Key keypad, and we'll pause for just a moment to compile the questions.
Q&A follows.
And your first question comes from the line of Dave storms from Stonegate. Your line is open.
Good morning.
Morning, David.
Yes.
Just hoping we could talk about the sales cycle, a little bit I know you mentioned that.
Michael P. Connors: I just hope- Talk about the sales cycle a little bit. I know you mentioned that clients are taking their time making decisions. How willing are you to negotiate on things like price and terms to get those sales over? So, David, first of all, I think it's not a matter of price.
<unk> taken their time, making decisions.
How willing are you to negotiate on things like price and terms.
To get those sales over the line.
So David first of all I think it's not a matter of price.
Michael P. Connors: The challenge from clients is what we are seeing is there are a lot more variables that they want to consider, primarily around AI. They want to understand some use cases, they want some tutorials, and they need to be educated on AI before they enter into a multi-year agreement with a tech provider. That's an added feature.
The challenge from clients is what we are seeing is there is a lot more variables that they want to consider primarily around AI.
They want to understand some use cases, they want some tutorials and they need to be educated on how AI before they enter into a multi year agreement with a tech provider.
As an added feature it's going to be a good feature for the enterprise and it's going to be good for ISG.
Michael P. Connors: It's going to be a good feature for the enterprise, and it's going to be good for ISG. But what it does, instead of moving right straight ahead into, let's move on a transaction, let's understand what the ecosystem is, it is being slowed down by a bit more on the AI and understanding what that is. Because AI will be a solution, part of the solution in every deal. So I don't think it's pricey.
But what it does instead of moving right straight ahead into let's move on a transaction, let's understand what the ecosystem is it is being slowed down by a bit more on the AI and understanding what that is because AI will be a solution part of the solution of every deal. So I don't think its price.
Michael P. Connors: I think that the slowdown is both a macro or the confidence level to move forward on things that are a little more discretionary in some cases is slower. And then also, we are educating and tutorializing, if you will, and providing use cases to our clients around AI. So I think that's really where the sluggishness, if you will, of decision making comes from, not around price. Thank you, and then just I want to look back at that.
I think that the slowdown is both a macro or the confidence level to move forward on things that's a little more discretionary in some cases is slower and then also we are educating and to <unk>. If you will and providing use cases to our clients around AI. So I think thats really where the <unk>.
Sluggishness, if you will of decision, making not around price.
Understood Thats great color. Thank you.
And then just I want to look back at the acquisition you made last quarter is there any update you can give us there about.
Michael P. Connors: We had a question about customer acquisition and how that integration is going. I know that opened up a lot of white space for ISG. So, just hoping for an update.
Customer acquisition, how that integration is going I know that opens up a lot of white space for ISG and so just hoping for an update there.
Michael P. Connors: Yeah, a ton of research. Outstanding, as we mentioned when we acquired the asset. Ventana kind of gives us access, more access, to the 800 billion dollar software industry. They are a terrific team of about two dozen analysts that understand software. They are a key part of the future of part of our recurring revenue streams because of the research associated with that segment. And as you can see, the overall research part of the business is part of our recurring revenue, and it's been growing at double digits. So we are very pleased. It's in the early stages. It's in the early stages, and we can't be more pleased with the team and what they bring to the table. Your next question comes from Michael Matheson from Stingular Research.
Yes, the tunnel research outstanding as we.
Mentioned, when we acquired the asset.
Ventana iconic gives us access more access to the 800 billion dollar software industry.
They are a terrific team of about two dozen analysts that understand software.
They are a key part of the future of part of our recurring revenue streams because of the research associated with that segment.
And as you can see with the overall research part of the business.
As part of our recurring revenue.
And it's been growing at double digits. So we are very pleased it's early stages.
It's early stages and we.
We can't be more pleased with the team and what they bring to the table.
Your next question comes from the line of Michael Nathanson from singular Research. Your line is open.
Michael P. Connors: Your line is open. Good morning, you guys. Good morning, Michael. Yeah, difficult macro environment. Congratulations on your resilience and doing better on the market as a whole. Thank you, Michael. I have a couple of questions for you. You really intrigue me with the idea of Tango, which is potentially transformational, opening up a lot of transactions that you're not currently a part of. Do you have pilots lined up already?
Good morning, guys.
Good morning, Michael.
Yeah.
<unk> macro environment, congratulations on year resilience and doing better than the market as a whole.
Thank you my question's for you.
You really intrigued me with the idea of Tango, that's potentially transformational opening up a lot of transactions that youre not currently part of <unk>.
You have pilots lined up already.
Michael P. Connors: Yes, we are, and we have been beta testing this with a few clients that we are active in today. And just to put some parameters around this, our view of ISG Tango, this platform, is that it's going to provide two new opportunities for us in addition to being more efficient. The two new opportunities are taking our current client base, where they have smaller technology deals, and we are thinking of them as kind of less than five million ACV a year. So some of these things are two and three years, so think of them as 10 or 15 million dollar type contracts that the G2000 have that we have not really been able to tap into in an efficient way that we think Tango will allow us to then expand with the current client base. And then secondly, the mid-market. And the mid-market, you know, think about it, certainly well below 10 billion in revenue but probably closer to 5 billion and under. Again, same kind of parameters, less than 5 million ACV.
Yes, we are we.
We have been beta testing this with a few clients that we are active in today and just to put some parameters around this our view of ISG Tango this platform.
Is it is going to provide two new opportunities for us in addition to be more efficient.
The two new opportunities are taking our current client base.
They have smaller technology deals and we are thinking of it as kind of less than $5 million of HCV a year or.
So some of these things are two and three years. So think about it was 10 or $15 million type contracts that D. G. 2000 have that we have not really been able to tap into in an efficient way that we think tango will allow us to then expand with the current client base and then secondly, the mid market.
And the mid market think about it's certainly well below $10 billion of revenue, but probably closer to the $5 billion and under again same kind of parameters less than $5 million of HCV that mid market is essentially an advised and our sense is using the platform that we will be.
Michael P. Connors: That mid-market is essentially unadvised, and our sense is, using the platform, that we will be able to penetrate the mid-market at a bunch of different price points for them and a good margin for us, where it's a lighter touch, but we will be able to have access to that area. So that's how we think about Tango.
Able to penetrate the mid market at a bunch different price point for them and a good margin for us, whereas a lighter touch.
But we will be able to have an access to that area. So that's how we think about tango.
Michael P. Connors: As we think about our margin target that we set for ourselves internally, which is to try to get to about 17% at the end of next year, we think Tango will allow us to do part of that way through margin expansion. So that's how we think about it. Thank you. Turning to the macro environment, we're nearly to the end of Q1, do you see any signs yet of stabilizing in the revenue environment? If so, in which geographies and which verticals would stand out? You want to take that one, Michael? Yeah. No, I think Michael. So, go ahead, Michael. Michael Sherrick
As we think about our our margin target that we set for ourselves internally, which is to try to get the so about 17% at the end of next year, We think tango will allow us part of that way by margin expansion. So that's how we think about it Michael.
Interesting. Thank you.
Turning to the macro environment, where nearly to the end of Q1 do you see any signs yet of stabilizing in the revenue environment, if so in which geographies and which verticals would stand out.
You would take that one Michael Yes, no I think Michael So Michael Michael share it, but I think.
Michael P. Connors: Go ahead. I think you meant me. I'll take that one for you. Yeah. No, Michael.
I'll take that one for you.
No Michael I think we've we've seen as Mike noted, we've seen the strength in recovery and in terms of pipeline right. So the demand is there its the decision, making I think that.
Michael A. Sherrick: I think we've seen, as Mike noted, the strength and recovery in terms of pipeline, right? So, the demand is there. It's the decision-making. I think that we're pleased with what we're seeing in terms of building that pipeline and progressing it, really, in both Europe and the Americas. I mean, Asia-Pac, I think, is more stable, if you will.
We're pleased with what we're seeing in terms of building that pipeline and progressing it really in both Europe and the Americas and Asia Pac I think is is more.
As more stable if you will.
Michael A. Sherrick: So, I think we feel good as we look at it. It really just comes down to the client decision-making component, right? It's how quickly they make that decision, and we're able to begin the projects and burn the revenue. So, I don't think it's really that different by geography, to be quite honest. I think we're looking at the same thing. I think last year we saw softer growth in Europe.
We feel good as we look at it it really just comes down to the client decision, making component right. It's how quickly they make that decision and.
And we're able to begin the projects and burn the revenue. So I don't think it's really that different by by Geo to be quite honest I think we're looking at the same I think last year, we saw softer in Europe that has improved in terms of the pipeline and what we're seeing there.
Michael A. Sherrick: That has improved in terms of the pipeline and what we're seeing there. You should not see it in the first quarter; that's why we gave the guidance we did. So you should see this as an acceleration as we progress through the year, Michael. Goddamn, thank you.
You would you should not see it in the first quarter. That's why we gave the guidance. We did so you should see this as an acceleration as we progress through the year Michael.
Got that thank you.
Michael P. Connors: Well, thanks for all the color and good luck in the coming quarter. Thank you. Your next question comes from a line called Vincent Colicchio from Barrington Research. Your line is open.
Well, thanks for all the color and good luck in the coming quarters.
Thank you.
Your next question comes from the line of Vincent Colicchio from Barrington Research. Your line is open.
Michael P. Connors: Yeah, Mike, curious how you would weight the two factors, you know, comfort with AI and general economic concerns, in terms of holding back better spending for the balance of the year. Yeah, I don't know if I could wait for it, Vince, but I would say there are two things. The slower decision-making clearly is the macro cloud. You know, the confidence level to move forward on transformation at a pace is not quite there yet. And that's why I've said before, I think, If there is some movement around rate cuts, it will add a level of confidence to the buying community that things are on their way back. So that's one part of it. The AI piece is just a bit of a slowing down of how you can pace it.
Okay.
Yes, Mike curious, how you would wait the two factors.
Comfortable with AI and general economic concerns us.
In terms of holding back better spending for the balance of the year.
Yes.
Weighted Vince, but I would say there is two things the slower decision, making clearly is the macro clouds.
Confidence level to move forward on transformation at a pace is not quite there yet and that's why I've said before I think.
If there is some movement around right.
The rate cuts that will add a level of confidence to the buying community that things are on its way back. So that's one part of it.
AIP is just a bit of a slowing down of how you can pace it.
Michael P. Connors: So we have started conversations with a number of clients around AI, around helping them with their sourcing strategy, but they want to be educated because they want to be able to use AI to their benefit. Now the providers themselves are going to want to try to take some of that AI margin for themselves. And of course, our role from an enterprise standpoint is we want the enterprise to be able to recover that AI productivity. So in order to do so, they want to make sure they understand what is there, what is possible, how fast it could happen, and if I sign a three- or four- or five-year contract with a large technology provider, what can I expect to have in terms of AI productivity, and how will I benefit as an enterprise? So that would be how I would distinguish between the two, Vince.
So we are started and a number of clients around.
Around helping them with their sourcing strategy, but they want to be educated because they want to be able to use AI to their benefit.
Now the providers themselves are going to want to try to take some of that AI margin for themselves and of course, our role from an enterprise standpoint is we want to get the enterprise to be able to recover that AI productivity. So in order to do so they want to make sure. They understand what is there what is Pos.
<unk>, how fast can it happen and if I sign a three or four or five year contract with a large technology provider what can I expect to have in terms of AI productivity and how will I benefit as an enterprise. So that's that would be how I would distinguish the two events.
Michael P. Connors: And if we look at the pipeline, I think you said it's been improving. Are you seeing a better mix away from cost reduction, or is that still, you know, a relatively high portion of the mix? So it's still a heavy mix.
And if we look at the pipeline I think you said it's been improving.
Are you seeing a better mix away from cost reduction or is that still.
A relatively high portion of the mix.
Still it's still a heavy mix I would say that the transformation piece is picking up.
Michael P. Connors: I would say that the transformation piece is picking up, so the balance is getting closer on transformation in the pipeline. And I think what we'll see as the year progresses, I think we'll start seeing the pipeline in the back half of the year to be heavier on transformation than cost, and the Dubai client. Are they a financially distressed client? Just kind of characterize how you feel about being able to ultimately collect from them. Yeah, no, so we have no knowledge that the client has any financial issues or is unable to pay.
So the balance is getting closer on transformation in the pipeline and I think what we'll see as the year progresses, I think we'll start seeing the pipeline in the back half of the year to be heavier on transformation and cost.
And the Dubai client.
Are they a financially distressed client.
Characterize how you feel about being able to ultimately collect from them.
Yeah, no. So we have no knowledge that the client has any financial issuers unable to pay.
Michael A. Sherrick: You know, the reserve was really a function of the aging of the receivables and the inability for us, along with the client, to agree upon a revised payment plan. And really, at that point, we felt it was appropriate to take the reserve. But it has nothing to do with any knowledge or understanding of an inability to pay.
The reserve was really a function of the aging of the receivables and the inability for us along with the client to agree upon a revised payment plan.
And really at that point, we felt it was appropriate to take the reserve, but it has nothing to do with any knowledge or understanding of an inability to pay.
Michael P. Connors: And then one last one, Mike, what verticals do you feel best about for the year? Well, right now, manufacturing is very hot, for sure. I think utilities are also leading a bit of the pack, and interestingly, the public sector is moving. As you know, they tend to be the laggards.
And then one last one Mike.
What verticals do you feel best about for the year would you say.
Well right now manufacturing is very hot.
For sure I think utilities are also leading a bit of a pack and interestingly the public sector is moving as you know they tend to be the laggard.
Michael P. Connors: Everybody else moves at a pace, and the public sector usually is a slow, slow follower, but we're seeing some good growth in the public sector, and that could very much be a double-digit growther this year, both in the U.S. and outside the U.S. So those would be the areas. And is the UK part of that? I know you used to do a lot of business with the UK government. Yes, I would say the UK, the Italian government, and Australia, for sure.
Everybody else moves at pace in the public sector, usually is a slow slow follower, but we're seeing some good growth in the public sector area and that very much could be a double digit grower. This year, both in the U S and outside the U S. Those will be the the three areas in particular.
Maybe consumer services I would probably add Vince so those would be the areas and as UK part of that I know you should do a lot of business with the UK government, Yes, I would say the U K the.
The Italian government, Australia for sure during the back half of the year, we have a number of things in the pipeline in Australia and certainly at the state level. We just I think you mentioned one of them. We just want a pretty good sized deal in one of the states.
Michael P. Connors: During the back half of the year, we have a number of things in the pipeline in Australia, and certainly at the state level. We have just, I think, mentioned one of them. We just won a pretty big deal in one of the states, and they're also wanting to understand how they can transform, how they might be able to use AI, and how they can protect themselves so that there are guardrails. There's a lot more protection and compliance issues in the public sector.
And there are also wanting to understand how they can transform how they might be able to use AI. How they can protect themselves. So that theres guardrail theres, a lot more protections and compliance issues on the public sector, but they are now beginning to move around if you will at a little bit faster pace than they have over the year that's why.
Michael P. Connors: But they are now beginning to move around, if you will, at a little bit faster pace than they have over the years. That's why we're pretty bullish on what we're seeing in the public sector. Thanks Mike. Thanks, man.
We are pretty bullish on what we're seeing on the public sector.
Thanks, Mike.
Vince.
Your next question comes from the line of Joshua was up.
<unk> capital your line is open.
Good morning, guys taken out for Joe today.
Good morning.
Michael P. Connors: Your next question comes from the line of Joshua Zoepfel from Noble Capital. Your line is open. Good morning, guys. I'm taking over for Joe today. Yeah. Good morning.
So yes, it kind of just wanted to start off just plain.
<unk> just America obviously.
During the quarter was it just because obviously you guys talked about the slowness in decision, making was it just that you can see any more things happening right might be trending down first quarter bleeding into 2024, just kind of a little color on that.
Michael P. Connors: Hi, so yeah, I kind of want to start off just by looking at just America, obviously, you know, down during the quarter. Was it just, I know, obviously, you guys talked about the slow decision making, was it just that? Do you kind of see any more things happening where it may be trending down first quarter bleeding into 2024? Just kind of a little color on that.
Yeah, No look I think all of the regions.
Have a bit of slower decision, making and I don't theyre not any no region is immune to it at the moment.
So I would say so if you took the Americas overall for the year, they are up 4% and considering where the overall market was which was down about six.
We think the Americas had a strong performance and frankly, Europe being flat for the full year and that kind of a market. It's not what we are used to clearly historically, but considering the market conditions.
Michael P. Connors: Yeah, no, look, I think all the regions, you know, have a bit of slower decision making. And I don't, you know, they're not any, no region is immune to it at the moment. So I would say, though, if you took the Americas overall for the year, they're up 4%. And considering where the overall market was, which was down about six, we think the Americas had a strong performance. And frankly, Europe being flat for the full year in that kind of market is not what we are used to, clearly, historically.
Wouldn't differentiate by region at the moment.
Okay.
Just.
Looking at the income statement.
SG&A expenses kind of went up pretty much over 25% can you kind of provide a little color as to why that could be.
Yes, the biggest component to that is that the reserve.
We took is in that number so.
So if you normalize for that Youll youll see that.
SGA was up.
Probably a little under $1 million and that was as we had all discussed I think post the call last time, we had.
Several internal events that take place in the fourth quarter that had not taken place pre COVID-19 and so we had expected that sequential increase absent again the reserve.
Michael A. Sherrick: But considering the market conditions, I wouldn't differentiate by region at the moment. Okay, and um... Just looking at the income statement, you know, I saw SG&A expenses kind of went up pretty much over 25%. Can you kind of provide a little color as to why that could be?
Okay, Perfect and then last one for me guys.
When you talked about these ISG tango and all of the assets.
Wanted to get any updates on the training into service.
Yes. Good question training as a service we just won a very large deal with one of our largest automotive clients. It's a multiyear multimillion dollar deal.
Michael A. Sherrick: Yeah, the biggest component to that is that the reserve that we took is in that number. So if you normalize for that, you'll see that SGA was up probably a little under a million. And that was, as we had all discussed, I think, post the call last time, we had several internal events that took place in the fourth quarter that had not taken place pre-COVID. And so we had expected that sequential increase absent, again, the reserve. Perfect, perfect.
We're very bullish on what we call Taz <unk>.
Training as a service. So yes that is that is moving along nicely and most of it is recurring multiyear type type of agreements. So that's the push on that and that of course is helping our overall recurring revenues.
Yes, thanks, guys for taking my questions.
Yes. Thank you.
Your next question comes from the line of Marc Riddick from Sidoti <unk> Company. Your line is open.
Michael P. Connors: And then last one from you guys, if I may. Yeah, we talked about ISG, Tango, and all the AIS stuff, but I was wondering if you guys have any updates on training as a service now? Yes, good question. Training as a service. We just won a very large deal with one of our largest automotive clients. It's a multi-year, multi-million dollar deal.
Good morning.
Hey, Mark.
So I wanted to circle back to tangle for a moment could you talk a little bit about sort of the.
The sort of how you view that is rolling out as far as do you feel as though youre going to need to in the type of investments you're guaranteed to making the adding of head count or any potential.
Michael P. Connors: We're very bullish on what we call TAS, training as a service. So yes, that is moving along nicely, and most of it is recurring multi-year type agreements. So that's the push on that, and that, of course, is helping our overall recurring revenue. Thanks, guys, for taking my questions. Yep, thank you. Your next question comes from the line of Marc Riddick from Sidoni & Company. Your line is open. Good morning. Morning, Marc.
Services or things that you see underneath that umbrella that you'll be investing in throughout the year.
Yeah. Good question. So the Tango platform version one is done we developed it during the course of.
Kind of under wraps on purpose for competitive reasons during 2023.
So it is it is ready and it is going to be it's being soft launched now we have some beta clients that are using it.
Michael P. Connors: So I wanted to circle back to Tango for a moment. Could you talk a little bit about sort of how you view that as rolling out as far as the type of investments you're going to need to make in the addition of headcount or any potential services or things that you see underneath that umbrella that you'll be investing in? Good question.
Keep in mind with this is this takes our this takes our provider research our market intelligence.
What we call our candidate kind of provider qualification systems, it's known in the industry of Cpus.
Michael P. Connors: So the Tango platform version one is done. We developed it during the course of, kind of under wraps on purpose for competitive reasons during 2023. So it is ready, and it is going to be, it's being soft launched now. We have some beta clients that are using it. Keep in mind what this is, is that this takes our provider research, or Market Intelligence, and what we call our candidate kind of provider qualification system, it's known in the industry as CPQs, and we load it all into the platform, fully integrated. And then it allows the enterprise plus the bidders, if you will, on the service side, and ISG then to be able to use a platform to be able to go from beginning to end and execute a transaction. That's the beauty of it.
And we loaded all onto the platform is fully integrated and then it allows the enterprise plus.
Plus the bidders if you will on the service side.
And ISG, then to be able to use a platform to be able to go from beginning to end and execute a transaction.
That's the beauty of it is secure it's got its own data room.
It uses all of our data collection capabilities.
Team interact et cetera. So that's kind of version one these things always have add ons and when you make changes. So we would expect I would call. It a small kind of capital spend each year and think about it in a half a million dollars range not much greater than that.
And in terms of people know we have the talent we've taken one of our most senior partners.
Lead our global.
Effort around ISG Tango and our plan is is that we will be easing it out here kind of in there in the first several months of this year and then our plan is that this will be the platform that we will use for every transaction sourcing transaction that we have going forward. So that's the idea.
Michael P. Connors: It's secure. It's got its own data room. It uses all of our data collection capabilities. You can team interact, et cetera. So that's kind of version one.
Michael P. Connors: These things always have add-ons, and you make changes. So we would expect, I would call it, a small capital spend each year and think about it in the half-a-million range, not much greater than that. And in terms of people, no.
That will eliminate excel spreadsheets it eliminates a lot of different conversations.
It eliminates a lot of kind of off.
Michael P. Connors: We have the talent. We've taken one of our most senior partners to lead our global effort around ISG Tango. And our plan is that we will be easing it out here kind of during the first several months of this year. And then our plan is that this will be the platform that we will use for every transaction, sourcing transaction, that we have going forward. So that's the idea. It will eliminate Excel spreadsheets.
Each unit are each party doing different things in a different way. So it will be much more productive and frankly, we think it will speed.
Two for the enterprise to get real value out of the decision and a faster pace. So that's that's the beauty of this.
And we will see it unfold here over the months ahead.
Great and then in the.
In the prepared remarks.
Michael P. Connors: It eliminates a lot of different conversations. It eliminates a lot of kind of each unit or each party doing different things in a different way. So it will be much more productive. And frankly, we think it will speed up the enterprise to get real value out of the decision at a faster pace. So that's the beauty of this.
Yes release definitely I think remarks, as well you made mentioned as far as some of the the client wins in a row.
Around the AI related.
Engagements I was wondering if you talk a little bit about maybe some of the things that maybe drove some of those wins and maybe maybe how you're seeing that sort of the competitive environment for winning those engagements at such.
Michael P. Connors: And we will see it unfold here in the months ahead. And then in the prepared remarks, well, the press release, definitely, I think, in prepared remarks as well, you made mention as far as some of the client wins and around AI-related engagements. I was wondering if you could talk a little bit about maybe some of the things that maybe drove some of those wins and maybe how you see sort of the competitive environment for winning those engagements at such an important and opportune time. Yeah, so look, I think the first thing that we did was make sure that our clients understood that we were educating ourselves, we were getting access to all of our technology providers, understanding what they each were doing around the AI area. We began to, we did some research, you may recall, that we launched late in the third quarter last year around AI globally. And so I think that that has helped us.
An important an opportune timeframe.
Yes, so look I think.
First things that we did is we had to make sure that our clients understood that we were educating ourselves we were getting access to all of our technology providers understanding what they each were doing around the AI area.
We began two we did some research you may recall that we launched.
Late in the third quarter last year around AI globally.
And so I think that has helped us.
So we were able to get into things like we're in a global hospitality and entertainment company.
They want us to be able to use AI to have the user interface be smarter and quicker with their with their customer base.
Michael P. Connors: So we were able to get into things like we're at a global hospitality and entertainment company. There, they want us to be able to use AI to have the user interface, be smarter, and quicker with their customer base. A major global oil and gas company down in Houston, Texas, wanted us to understand how they might be able to use AI as they think about their oil drilling capabilities. What would the ecosystem look like?
A major kind of global oil and gas company down in Houston, Texas wanted us to understand how they might be able to use AI as they think about their oil drilling capabilities, what would be the ecosystem, who might be out there relative that can help them from an AI standpoint, who are the providers.
The upstart the new players.
So, creating an ecosystem and AI ecosystem is also part of the key to all of this just like we have an ecosystem to do ops, we have an ecosystem new applications in HR and so forth, they're looking to ISG to create this ecosystem, where they can tap into who are the players that can help.
Michael P. Connors: Who might be out there a relative that could help them from an AI standpoint? Who are the providers, the upstarts, the new players? So creating an ecosystem, an AI ecosystem, is also part of the key to all of this. Just like we have an ecosystem to do operations, we have an ecosystem to do applications, and HR, and so forth, they're looking to ISG to create this ecosystem where they can tap into who are the players that can help them in my particular industry. We have a European utility company, a Canadian bank, and a railway company in Europe.
And my particular industry.
Specifics, we are a European utility company, a Canadian bank, we have a railway company in Europe. These are the kinds of companies in both in almost every industry that was wanting to understand how AI might be able to help them in their ops and their applications and their customer experiences hopefully that helps a little bit more.
Michael P. Connors: These are the kinds of companies in almost every industry that wanted to understand how AI might be able to help them in their operations, in their applications, and in their customer experience. Hopefully, that helps a little bit, Marc.
Yes, absolutely and then the last one for me is is that we shifting over to use of cash I mean, we had the purchase of Ventana.
Late last years, maybe you could talk a little bit about maybe what youre seeing as far as the acquisition pipeline as to availability and valuation.
Michael P. Connors: And then the last one for me, as we're shifting over to the use of cash, I mean, we had the purchase of Ventana late last year. Maybe you could talk a little bit about what you're seeing as far as the acquisition pipeline as to availability and valuation and whether or not there's opportunities in general and then maybe a little more specifically around your AI journey as well. Well, let me comment on M&A, and then I'll ask Michael just to comment about our use of cash in general. But right now, in the M&A environment, we continue to look at areas that we think can add recurring revenue streams or in the area of digital, which includes AI for us. If you think about what we just did with Ventana Research, the reason is they have recurring revenues from the software industry, and it's a large industry.
Whether or not there is opportunities in general and then maybe a little more specifically around your AI journey as well thanks, well, let me comment on the M&A and then I'll ask Michael just to comment about our use of cash in general.
But right now the M&A environment, we continue to look at areas that we think can add recurring revenue streams.
Or in the area of digital which includes AI for us.
If you think about what we just did with Ventana research. The reason is they have recurring revenues into the software industry and its a large industry. So we continue to look at that.
<unk> always pretty damn pretty disciplined around our pricing.
And Thats why we dance for quite some time, we're pretty balanced we know what we want to do and at what levels do it at all.
Michael P. Connors: So we continue to look at that. We are always pretty disciplined around our pricing, and that's why we dance for quite some time. We're pretty balanced.
And so the pipeline is still quite good for us we're continuing to look but we also are very measured in our approach and it is still part of our overall string of pearls strategy.
Michael A. Sherrick: We know what we want to do and at what levels we need to do it at. And so the pipeline is still quite good for us. We're continuing to look, but we are also very measured in our approach, and it is still part of our overall string of pearls strategy. Michael, do you want to just comment overall? Yeah, no, I mean, overall, Marc, I mean, no change to our uses of cash. As you know, we really have four areas we can put it, dividend, M&A, debt paydown, and buyback. And I think, as you've seen, we've been opportunistic across those just based on return and where we think the greatest value will be created. So really, no change.
Michael you want to just comment overall, yes.
Overall marketing no change to our uses of cash as you know we really have.
Four four areas, we can put it dividend M&A debt paydown and buyback and I think as you've seen we've been optimistic opportunistic across those just based on return and where we think the greatest value will be created so really no change there.
Great. Thank you very much.
And I'm showing no further questions I'll turn the call back to Mike Connors for his closing remarks.
Okay, well, thank you and let me close by saying Thank you to all of our professionals worldwide for their dedication to our clients and for working together as a global team to deliver a largely successful year in 2023.
Our people have a passion for delivering the best advice and support to our clients as they continue their digital and AI journeys in both good times and in more uncertain times and I could not be more prouder of them and what they have all accomplished and thanks to all of you on the call today for your continued support and confidence in our firm.
Michael A. Sherrick: Thank you very much, and I'm showing no further questions. I'll turn the call back to Mike Connors for his closing remarks. Okay, well, thank you. And let me close by saying thank you to all of our professionals worldwide for their dedication to our clients and for working together as a global team to deliver a largely successful year in 2023. Our people have a passion for delivering the best advice and support to our clients as they continue their digital and AI journeys in both good times and in more uncertain times, and I could not be prouder of them and what they have all accomplished. And thanks to all of you on the call today for your continued support and confidence in our firm. Have a great rest of the day. This does conclude today's teleconference. You may disconnect at any time.
Have a great rest of the debt.
This does conclude today's conference you may disconnect at any time.
Okay.
Okay.
Okay.
[music].
Okay.
Thank you.