Michael Connors: Great. Thank you, Michael, and welcome again to our team. To summarize, despite a slower spending environment, ISG delivered its best revenue performance in the third quarter with revenues of $72 million. We delivered 19% growth in recurring revenues and 14% growth in Europe. We just expanded our recurring revenue growth engine with the acquisition of Ventana Research, a move that will accelerate the growth of our ISG research business and we believe generate additional advisory opportunities in the robust software segment. Looking ahead, our pipeline remains strong and we will navigate the slower pace of client spending over the next several months. But it is clear, cost optimization and all things digital including generative AI are top of mind for clients and in the sweet spot for ISG.
Our longer-term objectives remain. Deliver $150 million in recurring revenues and increase our EBITDA margin to 17% by the end of 2025. 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 the operator for your questions.
Operator: Thank you. Today’s question-and-answer session will be conducted electronically. [Operator Instructions] And we’ll go first to Dave Storms at Stonegate Capital Markets.
Dave Storms : Good morning.
Michael Connors : Good morning, Dave.
Dave Storms : Congrats on the quarter and top line revenue it looks great. I just wanted to start with Ventana. Hopefully, you can give us a little more color on what that integration process and the time line to get them up to speed looks like. And additionally, if there’s any all ready if there’s any overlap that’s already seen between your customer base and theirs.
Michael Connors : Great. Okay. Thanks very much. Well, look, Ventana Research was sole sourced by ISG. We have known about them for some time and sometimes timing works out great. We were looking for an asset that had great reputation in the software industry and had a team of analysts that people respected and Ventana Research met that criteria for us. They have — we have over 40 clients all of which are all brand new to ISG. Our client base tends to be on the managed services side and not on the software vendor side. And this opens up all new incremental opportunities for ISG, including recurring revenues. The other thing that this does is that we have a software advisory business today. That business is a consulting group that goes into enterprises assesses what they currently have in terms of software.
Think about it as Salesforce as an example or ServiceNow. And we look at their spending we look at the benchmarks and we help them identify opportunities to either get more efficient, more effective and make sure that their usage matches up to the cost. This allows us to also now look on the vendor software side and opens up new opportunities for us not only to sell all in research to the software vendors, but we believe opens up new consulting opportunities. So this was white space for us. There’s very little overlap. I think literally only four or five clients were revenue-producing clients of ours versus Ventana. And just one point. I think we have a great track record on the research side. We acquired a company a few years back called Experton that was based in Germany.
That business was small it’s a couple of million dollars and we used that engine over in Germany to build it out into a global business that is now considered our ISG Provider Lens business IPL and the size of that business is six times or seven times the size of the asset that we bought. We think Ventana Research over time can be like that for us. Hopefully that answered that Dave.
Dave Storms: Understood. No, that’s very helpful. Thank you. And then are the cost optimization it looks like that’s really starting to take hold. Can you just kind of walk us through how much of that may be temporary response and how much of that expects to be sturdy going forward?
Michael Connors : So I would call it in a normalized environment will represent about 30% of our pipeline 25% 30%. Today that pipeline is more like 45%. And the reason of course is I think the environment, we’re now seeing more intense pressure on CIOs and others to think about things a little more cautiously. So the cost optimization is everything from modernizing applications and taking costs out to either drop it to earnings per share or still in many cases to use it to help with some of their growth initiatives whether that’s around the user experience or in other areas. So cost optimization think about it in the kind of 40% plus now in our pipeline and normalize maybe 25%. So it gives you an idea of the magnitude of the interest in the market on the optimization side.
Dave Storms: Understood. Thank you for taking my questions and good luck on the fourth quarter.
Michael Connors : Thank you, Dave.
Operator: We’ll move next to Marc Riddick at Sidoti.
Marc Riddick: Hi. Good morning.
Bert Alfonso: Hey, good morning, Marc.
Marc Riddick: So I wanted to touch — and congratulations on the acquisition. I was wondering if you could touch a little bit on sort of maybe, what this does for your acquisition appetite going forward and maybe you could sort of bring us up to speed on maybe what you’re seeing out there as to availability and valuations underling?
