Europe and AsiaPac Decline Hits ISG Revenue

Third quarter revenue at US-based Information Services Group (ISG) has fallen to $46.5m, down 2% in constant currency terms. A good performance in the US was more than off-set by a 15% fall in Europe and 17% in Asia Pacific.

Founded in 2007 as an acquisition vehicle, the firm first bought outsourcing advisory firm TPI, then last year added UK-based benchmarking and analytics firm Compass and public sector advisor STA Consulting.

For the period ended September 30, 2012, revenues were up 12% (constant currency) to $26.8m in the Americas, while in Europe they fell to $14.2m and in Asia Pacific to $5.4m.

Chairman and CEO Michael Connors (pictured) said that even though the firm's full year results will be lowered by the results in Europe, it is preparing itself for growth in the region in 2013. 'We are riding out the European storm and believe our broad geographic reach and the diversity of our service offerings ensure that our strategy will continue to be embraced by the marketplace,' he added.

Third quarter operating income was $2.4m, up from $1.8m a year earlier, while adjusted net income was $1.8m, against an adjusted net loss of $0.5m in Q3 2011. Adjusted EBITDA fell just $0.1m to $5.3m, due entirely to currency effects.

Headcount increased by 45 in the quarter to 810, as the firm recruited staff to support projected growth primarily in Managed Services, where revenue was up 82%.

For the first nine months of 2012, revenues increased 5% in constant currency terms to $143.2m (up 2% on a reported basis), from $139.8m in the same period last year. On the same basis, revenues were up 18% in the Americas to $77.9m and 11% to $19.3m in Asia Pacific, but fell 11% in Europe to $46.0m.

ISG says that in light of the situation in Europe and unfavorable currency rates, it has updated its full year revenue guidance to $187m - $192m, and adjusted EBITDA to between $16m and $19m. Connors says that with potential expansion in the UK public sector, the increase in committed Managed Services multi-year contracts, and growth in the Americas, the company will enter 2013 in a 'strong position'.

Web site: www.informationsg.com .