Information Services Group, Inc. (NASDAQ: III) reported second-quarter 2026 results that exceeded guidance, with revenue increasing 6.4% year-over-year to $65.5 million and adjusted EBITDA rising 13% to $9.4 million. The adjusted EBITDA margin expanded 80 basis points to 14.3%, reinforcing that the company is converting improving demand, pricing, higher-value advisory mix, and AI-enabled delivery efficiencies into better operating leverage.
The most notable development was the acceleration in AI-related revenue, which grew 64% year-over-year to $26 million, with nearly half of clients now generating AI-related revenue. This growth is being driven by demand across governance, sourcing, research, and advisory services. Additionally, recurring revenue increased 7% year-over-year to a record $30 million. This combination is important because AI is strengthening both sides of ISG's earnings model: it creates incremental demand across existing client relationships while recurring revenue adds greater visibility to a traditionally project-oriented model.
Geographically, growth broadened across the Americas and Europe, even as enterprise decision-making remained measured. Management indicated that the pipeline is probably as strong as it has ever been, although client decision timing remains the primary constraint on visibility. The company guided to continued year-over-year growth and margin expansion in the third quarter, and the strength of the pipeline supports a constructive second-half outlook.
Excluding foreign exchange and the Martino acquisition, underlying growth remained mid-single digits, with growth broadening across regions. The record recurring revenue provides a more stable foundation beneath the project-based advisory work, which could lead to more predictable financial performance in the future.
Stonegate Capital Partners highlighted key takeaways from the quarter, including the acceleration in AI-related revenue and the record recurring revenue. The firm is monitoring AI governance expansion, larger opportunity conversion, recurring-revenue mix, and the return to growth in Asia-Pacific. For more details, view the full announcement on Stonegate's website: Stonegate Capital Partners.
ISG's results underscore the growing importance of AI in consulting services, not only as a revenue driver but also as a tool for improving delivery efficiency and margin expansion. The company's ability to generate higher-margin recurring revenue in a traditionally project-based industry may differentiate it from peers and support long-term shareholder value.
