Information Services Group, Inc. · NASDAQ:III
Information Services — Q4 2023 Earnings Presentation
24 slides from Information Services's earnings presentation, Jan 18, 2024
Slide 1: IT & Business Services Industry Update 4Q 2023
IT & Business Services Industry Update January 18, 2024 4Q 2023 HOSTED BY Bryan Bergin Managing Director Cowen © 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, i
Slide 2: Three Big Thoughts
Three Big Thoughts Strong demand for cost optimization led to the best year ever for Managed Services. Managed Services demand will remain strong in 2024 as enterprises continue to look for ways to reduce costs while deploying AI. AI will generate new demand; however, talent shortages and discretion
Slide 3: Global Broader Market
Global Broader Market ACV $B Quarterly Trends 24.2 23.4 23.4 On a sequential basis, Combined Market turned positive during both 14.2 13.1 13.4 10.0 10.3 10.0 3Q23 and 4Q23, indicating a bottoming from recent low 4Q 3Q 4Q 4Q 3Q 4Q 4Q 3Q 4Q 22 23 23 22 23 23 22 23 23 Managed Services posted its fifth
Slide 4: Managed Services ITO/BPO Results
Managed Services ITO/BPO Results Annual Trends ACV $B 2022 2023 ITO market posted its best year ever ADM 22% ADM ACV up 22.5% in 2023 with each quarterly result setting a 30.4 record for best quarter ever 13% -14% Infrastructure -1% Third consecutive year that Full Full Infrastructure ACV declined Y
Slide 5: Managed Services Regional Results
Managed Services Regional Results Quarterly ACV $B Managed Services Trends 6.0 3.9 Americas: Managed Services up 5% 5.0 5.2 3.6 3.6 1.3 Y/Y led by record-setting Restructuring 0.6 0.8 activity 4Q 3Q 4Q 4Q 3Q 4Q 4Q 3Q 4Q EMEA: Regional ACV gains driven 22 23 23 22 23 23 22 23 23 by New Scope awards,
Slide 6: Managed Services Full Year Industry Results
Managed Services Full Year Industry Results 2023 Full Retail & Travel, Year Business Consumer Financial Healthcare Telecom Transport ACV Change Services Packaged Goods Energy Services & Pharma Manufacturing & Media Leisure Combined Market -19% -5% 10% -4% 8% -7% -4% -12% Managed -2% 4% 25% Flat 50%+
Slide 7: Best Year for Mega-Deals Since 2014
Best Year for Mega-Deals Since 2014 Mega-Deal Trends Mega Award ACV % of Total Industry ACV from Mega Awards Mega-deal ACV and award count had $7 30% best result since 2014 2023 was best year for $6 mega awards since 2014 25% Mega-deals generated 15% of $5 industry ACV, up from 9% in 2022, but down
Slide 8: IaaS Results
IaaS Results Annual Trends IaaS Y/Y ACV Growth Big 3 Y/Y ACV Growth IaaS ACV down 16% for the full year; 75% negative for the first time since we moved to this IaaS view in 2015 50% Big 3 hyperscalers (AWS, Azure and GCP) ACV declined 22%, 600 bps more than the Broader Index 25% IaaS rate of decline
Slide 9: SaaS Results
SaaS Results Annual Trends ACV $B 2022 2023 Since bottoming in 2Q23, segment App Category ACV Growth generated both Y/Y and Q/Q gains for CRM 2.7 -13% each quarter during 2H23 ERP 2.6 -1% SaaS market declined slightly by 3% for 15.5 the full year, the first time ever ITSM 2.2 -3% Difficult macro dro
Slide 10: The State of AI
The State of AI AI & Cloud AI & Talent Generative vs. Predictive AI ⬤ AI workloads take place primarily ⬤ Enterprises need more skilled ⬤ Generative will have bigger in the cloud; cloud platforms resources to use AI impact in areas like information keep expensive GPUs more ⬤ Only 23% of enterprises
Slide 11: AI Impact on IT Services
AI Impact on IT Services Market Opportunity Industry Adoption Price Performance ⬤ AI represents massive ⬤ BFSI is leading adoption, with ⬤ 2024 will see significant opportunity for IT services over 90% of banking leaders improvements in contractually industry indicating AI is top spending committed
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 4Q23 © 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 ⚫ Global Broader Market up 5%, most ever ACV awarded ⚫ Inflation cooling throughout US and Europe ⚫ Each of the three regions was up in 2023, with Americas and ⚫ Central Banks stabilizing monetary policy and planning rate EMEA s
Slide 15: Thank you!
The 85 Quarterly th Thank you! © 2024 Information Services Group, Inc. All Rights Reserved.
Slide 16: Index Insider
Index Insider TM Subscribe to the ISG Index Insider to stay on top of what's important in the IT & Stanton Jones Alex Bakker business services sector. Delivered to your inbox every Friday from the ISG Index Research Team. Amanda Lytle Sunder Sarangan https://isg-one.com/research/isg-index-insider/is
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 12.4 12.3 11.8 Combined Market ACV dipped below $12B; 4th time in the past 6 quarters 7.4 6.3 6.5 5.0 6.0 5.2 where Y/Y growth declined Managed Services up 5% Y/Y led by 4Q 3Q 4Q 4Q 3Q 4Q 4Q 3Q 4Q 22 23 23 22 23 23 22 23 23 record-setting Restr
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 7.2 6.9 7.2 Combined Market rebounded above $7B level, increasing 4% sequentially 3.6 3.9 3.6 3.6 3.2 3.3 Managed Services ACV up 7% both Y/Y and Q/Q; only region to post 4Q 3Q 4Q 4Q 3Q 4Q 4Q 3Q 4Q 22 23 23 22 23 23 22 23 23 gains Y/Y and Q/Q Manag
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 4.6 4.5 Combined Market ACV advanced 7% 4.2 3.6 3.3 3.5 Q/Q; best sequential growth rate 1.3 0.6 0.9 since 4Q21 Managed Services ACV rebounded 4Q 3Q 4Q 4Q 3Q 4Q 4Q 3Q 4Q 22 23 23 22 23 23 22 23 23 sequentially above $800M level but was stil
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: About ISG
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
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