Information Services Group, Inc. · NASDAQ:III
Information Services — Q3 2024 Earnings Presentation
24 slides from Information Services's earnings presentation, Oct 15, 2024
Slide 1: IT & Business Services Industry Update 3Q 2024
IT & Business Services Industry Update October 15, 2024 3Q 2024 HOSTED BY Sumeet Jain Investment Analyst CLSA © 2024 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means, in
Slide 2: Market-Level Set
Market-Level Set Managed Services remains resilient despite weakness in BFSI. Infrastructure-as-a-Service recovery fully underway. SaaS recovery slower as enterprises move to consumption-based models. AI project growth remains strong, but pilots have yet to meaningfully scale. 2024 forecast unchange
Slide 3: Global Broader Market
Global Broader Market ACV $B Key Trends 23.2 24.9 26.7 Combined Market achieves record-high levels in 3Q24 14.7 15.8 12.8 10.4 10.1 10.9 Managed Services market generates best quarter ever 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 23 24 24 23 24 24 23 24 24 Mega deal activity returns in 3Q24, and deal durations ar
Slide 4: Managed Services ITO Results
Managed Services ITO Results Key Trends ACV $B 2023 YTD 2024 YTD ITO ACV up slightly YTD Stand-alone 13.8 Stand-alone ADM up Y/Y but 1H weakness ADM -6% 22.6 22.7 contributes to YTD decline 20.1 GenAI will reduce coding and testing effort, which will have significant impact ADM Bundled 3.6 0.2% 20%
Slide 5: Managed Services BPO Results
Managed Services BPO Results Key Trends ACV $B 2023 YTD 2024 YTD Second-best ever result for BPO at the nine- month mark Industry-Specific 15% 2.4 Industry Specific BPO segment up YTD but still lags record-setting pace of 2022 8.8 8.4 8.0 ER&D up YTD on strength in EMEA; best ER&D 22% 2.0 YTD ACV in
Slide 6: Managed Services Regional Results
Managed Services Regional Results ACV $B Key Trends 4.9 6.1 Americas: Americas ACV declines Y/Y 5.2 3.6 4.0 4.7 1.4 versus record-setting 3Q23 on weakness in 0.7 0.8 smaller, discretionary deals; demand for larger, transformational deals growing 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 23 24 24 23 24 24 23 24 24
Slide 7: Industry Verticals
Industry Verticals Consumer Travel, YTD Business Packaged Goods Financial Healthcare Telecom Transport Trends Services & Retail Energy Services & Pharma Manufacturing & Media Leisure Combined Market 16% 15% 8% -1% -5% 10% 5% 32% Managed Services -2% 13% 7% -11% -24% 11% -8% 50%+ As-a-Service 25% 16%
Slide 8: IaaS Results
IaaS Results Key Trends IaaS ACV Growth Rates, 1Q22-3Q24 IaaS ACV up 30% Y/Y; best result Total IaaS Big Three Hyperscalers since 1Q22 80% 60% Big 3 hyperscalers (AWS, Azure Big 3 hyperscalers up 49% Y/Y and GCP) ACV up 49% Y/Y 40% Nearly 40% of enterprises plan 20% on increasing IaaS consumption 0%
Slide 9: SaaS Results
SaaS Results Key Trends SaaS ACV Growth Rates, 1Q22-3Q24 SaaS recovery taking longer than Total SaaS Top 10 SaaS Providers IaaS; ACV up 5% Y/Y 50% 40% Top 10 SaaS firms benefit from consolidation, up 8% Y/Y 30% Top 10 SaaS providers up 8% Y/Y 20% Shift to consumption-based models in cost-constrained
Slide 10: Data & AI
Data & AI Enterprise Software Services Spending on GenAI Data Platforms are Data Platforms creating initiatives will increase convergence of demand for new by 50% in 2025 relational & object stores analytics & AI services However, most GenAI Growing data volumes Data & Report use cases are not yet l
Slide 11: AI Market Acceleration
AI Market Acceleration Key Trends The Super 7 The Top 5 Under 5 $15.2B of AI revenue on a TTM Service # of AI-Related Service # of AI-Related basis; up 42% Provider Projects (TTM) Provider Projects (TTM) AI represents ≈5% of total Accenture 2,950 TTEC 350 revenue for service providers IBM 2,150 Genp
Slide 12: ISG Global Service & Technology Provider Standouts
Global Service & Technology Provider Standouts THE ISG 15 Our ISG Contract KnowledgeBase™ is used to determine The Big 15 placements based on the annual value of commercial contracts awarded in the past 12 months The Building 15 The Breakthrough 15 The Booming 15 3Q24 © 2024 Information Services Gro
Slide 13: Service & Technology Provider Standouts – Global
Service & Technology Provider Standouts – Global The ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Revenues > $10B Revenues $3B-$10B Revenues $
Slide 14: Summary and Outlook
Summary and Outlook Summary Market Outlook Managed Services Macro Recap l Managed Services has its best quarter ever l Recent rate cuts by both the Fed and ECB have created some l New Scope hits record highs driven by growth in smaller optimism within the IT Services sector discretionary deals in EM
Slide 15: Thank you!
The 88 Quarterly th Thank you! © 2024 Information Services Group, Inc. All Rights Reserved.
Slide 16: Index Insider Weekly Briefing
Index Insider Weekly Briefing Subscribe to the ISG Index Insider to stay on top of what's important in the IT & Stanton Jones Alex Bakker business services industry. Delivered to your inbox every Friday from the ISG Market Lens Team. Michael Dornan Sunder Sarangan https://isg-one.com/research/isg-in
Slide 17: Appendix
Appendix © 2024 Information Services Group, Inc. All Rights Reserved.
Slide 18: Americas Broader Market Results
Americas Broader Market Results ACV $B Quarterly Trends 12.3 13.2 12.2 Combined Market surpasses $13B 7.5 8.0 for only the second time ever and 6.1 6.2 4.7 5.2 shows Q/Q increase for three straight quarters 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 23 24 24 23 24 24 23 24 24 Managed Services declines 15% Y/Y versu
Slide 19: Service & Technology Provider Standouts – Americas
Service & Technology Provider Standouts – Americas The ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Revenues > $10B Revenues $3B-$10B Revenues
Slide 20: EMEA Broader Market Results
EMEA Broader Market Results ACV $B Quarterly Trends 8.9 7.8 6.8 Combined Market surpasses $8B for 4.9 the first time ever 4.0 3.8 4.0 3.6 3.2 Best quarter ever for Managed Services, both in terms of ACV and 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 23 24 24 23 24 24 23 24 24 the number of contracts awarded Signifi
Slide 21: Service & Technology Provider Standouts – EMEA
Service & Technology Provider Standouts – EMEA The ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Revenues > $10B Revenues $3B-$10B Revenues $1B
Slide 22: Asia Pacific Broader Market Results
Asia Pacific Broader Market Results ACV $B Quarterly Trends 4.8 4.6 Combined Market remains above 4.2 3.8 3.5 3.4 $4B for the sixth consecutive 1.4 0.7 0.8 quarter After two quarters of $1B+ Managed 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 23 24 24 23 24 24 23 24 24 Services during 1H, Asia’s ACV normalizes to $7
Slide 23: Service & Technology Provider Standouts – Asia Pacific
Service & Technology Provider Standouts – Asia Pacific The ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Revenues > $10B Revenues $3B-$10B Reve
Slide 24: isg-one.com
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service
Information Services Group — Q3 2024 Earnings Presentation on 6ix