Financial Data and Key Metrics Changes - Consolidated revenues for Q1 2025 totaled INR 48.3 million, reflecting a year-over-year increase of 3.2% compared to Q1 2024 [15] - GAAP net income for Q1 2025 was a net loss of $1.4 million or $0.12 per diluted share, compared to a net loss of $200,000 or $0.01 per diluted share in Q1 2024 [18] - Non-GAAP net income for Q1 2025 was $800,000 or $0.06 per diluted share, unchanged from Q1 2024 [18] - Consolidated gross profit dollars increased by 6.3% in Q1 2025 compared to the same quarter in 2024, with gross margins improving by 80 basis points [18] Business Line Data and Key Metrics Changes - The Data Analytics Services segment reported revenues of INR 9 million in Q1 2025, an increase of 11.1% compared to Q1 2024 [16] - Revenues in the IT Staffing Services segment totaled INR 39.4 million in Q1 2025, a 1.6% increase from Q1 2024, despite a decline in the billable consultant base by 15 consultants [17] Market Data and Key Metrics Changes - The company noted that client spending patterns were impacted by economic uncertainty, but still achieved year-over-year revenue growth in both business segments [15][10] - The average bill rate increased to between 84.5 and 85.5, up from 83 to 83.5 in the previous quarter and from 79 a year ago, reflecting higher rates on new assignments [42] Company Strategy and Development Direction - The company is focused on synergizing data modernization and IT staffing solutions to offer cohesive high-value services [9] - An expanded partnership with Informatica aims to enhance data modernization capabilities and support AI-led transformation initiatives for clients globally [6][7] - The company plans to unveil a go-forward strategy later this year to position itself as a leading partner for Global 2,000 enterprise customers transitioning to AI-first organizations [9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, acknowledging ongoing uncertainty but highlighting strong long-term demand for AI-driven transformations [37][39] - The company is committed to supporting clients through the shift to an AI-first world, while recognizing that near-term volatility may continue to bring uncertainty [11] Other Important Information - The company had a cash balance of INR 24.7 million as of March 31, 2025, with no bank debt outstanding and cash availability of INR 23.7 million under its revolving credit facility [18] Q&A Session Summary Question: Concerns about Data and Analytics segment margins - Management acknowledged that gross margins in the Data and Analytics segment were impacted by lower utilization and a one-time reserve adjustment, estimating a reduction of about two percentage points [21] Question: Details on the relationship with Informatica - The expanded partnership with Informatica is seen as a strategic enhancement, focusing on co-developing industry-specific solutions and launching an outcomes lab for clients [23] Question: Stock buybacks in the quarter - The company has not executed any stock buybacks in the last quarter but has 423,000 shares available for repurchase and plans to become active in the buyback program moving forward [26] Question: Consultant count for the quarter - The billable headcount in staffing landed at 991 [31] Question: Client demand and feedback trends - Management noted that there was no significant month-to-month lumpiness in client demand, with continued growth in AI-driven digital modernization [34] Question: Insights on company leadership and market conditions - Management remains cautiously optimistic about the market, noting that while clients are reprioritizing spending, they are not pausing transformation agendas altogether [37]

Financial Performance - Total consolidated revenues increased by 3% to $48.3 million, compared to $46.8 million in Q1 2024[5] - Consolidated gross profits increased by 6% to $12.9 million, with gross margins rising to 26.7% from 25.9% in Q1 2024[3][5] - The Data and Analytics Services segment reported revenues of $9.0 million, an 11% increase from $8.1 million in Q1 2024[5] - The IT Staffing Services segment achieved a 2% revenue increase, totaling $39.4 million compared to $38.8 million in Q1 2024[22] Net Income and Loss - GAAP net loss for Q1 2025 was ($1.4 million) or ($0.12) per diluted share, compared to a net loss of ($161,000) or ($0.01) per diluted share in Q1 2024[3][5] - Non-GAAP net income for Q1 2025 was $0.8 million, or $0.06 per diluted share, consistent with Q1 2024[3][5] Cash and Financial Position - Cash balances on hand as of March 31, 2025, were $24.7 million, with no bank debt and $23.7 million available under the revolving credit facility[6] - Days Sales Outstanding (DSO) stood at 56 days, well within the targeted range[6] Expenses and Future Outlook - The Company incurred $1.4 million in severance expenses during Q1 2025, compared to no severance expenses in Q1 2024[5] - The Company remains cautiously optimistic about future growth despite a challenging demand environment[6]

Core Insights - Mastech Digital, Inc. reported a 6% increase in consolidated gross profits for the first quarter of 2025, reflecting resilience in a challenging demand environment [1][3]. Financial Performance - Revenues for Q1 2025 reached $48.3 million, up from $46.8 million in Q1 2024, marking a 3% increase [3][7]. - Gross profits for Q1 2025 were $12.9 million, compared to $12.1 million in Q1 2024, with gross margins improving to 26.7% from 25.9% [3][7]. - The GAAP net loss for Q1 2025 was ($1.4 million) or ($0.12) per diluted share, compared to a net loss of ($161,000) or ($0.01) per diluted share in Q1 2024 [3][7]. - Non-GAAP net income for Q1 2025 was $0.8 million, consistent with the same period in 2024, translating to $0.06 per diluted share [3][7]. Segment Performance - The Data and Analytics Services segment generated revenues of $9.0 million, an 11% increase from $8.1 million in Q1 2024 [7]. - The IT Staffing Services segment saw a 2% revenue increase in Q1 2025 compared to the same quarter in 2024 [7]. - Order bookings for the Data and Analytics Services segment totaled $11.7 million, while demand for IT Staffing Services was lower than the previous year due to market uncertainties [4][5]. Management Commentary - The CEO highlighted the challenging demand environment but expressed cautious optimism, noting year-over-year growth in both business units [5]. - The CFO reported a cash balance of $24.7 million as of March 31, 2025, with no bank debt and $23.7 million available under the revolving credit facility [5]. Balance Sheet Overview - As of March 31, 2025, total assets were $110.1 million, with total liabilities at $23.1 million, resulting in shareholders' equity of $86.9 million [15].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended March 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Registrant's telephone number, including area code: (412) 787-2100 | | Trading | | --- | --- | | Title of each class | Securities registered pursuant to Section 12(b) of the ...

PITTSBURGH, May 7, 2025 /PRNewswire/ -- Mastech Digital, Inc. (NYSE American: MHH), a leading provider of Digital Transformation IT Services, has scheduled a conference call to discuss the results for the first quarter ended March 31, 2025. The conference call will occur on Friday, May 16th at 9:00 a.m. Eastern Time and will be hosted by Mr. Nirav Patel, CEO, and Mr. Kannan Sugantharaman, CFO. The conference call can be accessed through a listen-only dial-in number or through a live webcast. To listen to th ...

Kannan Sugantharaman to Join as Chief Financial and Operations Officer on April 14, 2025; Jack Cronin to Step Down After 27 Years of Service. PITTSBURGH, April 7, 2025 /PRNewswire/ -- Mastech Digital, Inc. (NYSE American: MHH), a leading provider of Digital Transformation Services, today announced the appointment of Kannan Sugantharaman as Chief Financial and Operations Officer, effective April 14, 2025. Sugantharaman succeeds Jack Cronin, who will step down after more than two decades of distinguished serv ...

Company Overview - Mastech Digital, Inc. operates in the IT staffing and digital transformation services sector, bridging older workforce solutions with newer technology consulting [1] Investment Focus - Grassroots Trading emphasizes objective and unbiased research, focusing on small- to mid-cap companies while also identifying opportunities in larger companies [1]

Revenue Performance - Total revenues for 2024 were $198.9 million, a 1.1% decline from $201.1 million in 2023, with Data and Analytics Services segment revenues increasing by 6.6% and IT Staffing Services segment revenues decreasing by 2.6%[209] - Mastech Digital, Inc. reported revenues of $198.943 million for the year ended December 31, 2024, a decrease of 1% from $201.098 million in 2023[308] - The Data and Analytics Services segment generated $36,625,000 in 2024, up 6.6% from $34,358,000 in 2023, but down 9.8% from $40,594,000 in 2022[389] - The IT Staffing Services segment reported revenues of $162,318,000 in 2024, a decrease of 2.5% from $166,740,000 in 2023 and a decrease of 19.5% from $201,644,000 in 2022[389] - Revenue from the United States was $195,455,000 in 2024, a slight decrease from $197,246,000 in 2023 and a significant decrease from $236,187,000 in 2022[391] Profitability and Margins - Gross profit for 2024 increased to $55.6 million, an 8.9% increase year-over-year, with total gross margin percentage rising to 27.9% from 25.4% in 2023[214] - Gross margins for Data and Analytics Services segment improved to 49.1% in 2024, up 560 basis points from 43.5% in 2023, reflecting higher utilization and improved efficiencies[215] - The company's gross profit increased to $55.597 million in 2024, up 9% from $51.036 million in 2023[308] - In 2023, the company's gross profit decreased to $51.0 million, a 19% decline from $63.2 million in 2022, with gross profit as a percentage of revenue at 25.4% compared to 26.1% in 2022[224] Expenses and Cost Management - SG&A expenses decreased to $51.8 million in 2024, representing 26.0% of total revenues, down from $60.3 million or 30.0% in 2023[216] - The company's SG&A expenses in 2023 totaled $60.3 million, representing 30.0% of total revenues, up from $51.0 million or 21.1% in 2022, with adjusted SG&A expenses at 23.2% in 2023 versus 19.2% in 2022[228] - Selling, general and administrative expenses decreased to $51.806 million in 2024, down from $60.311 million in 2023, reflecting improved cost management[308] Client Concentration - The top ten clients accounted for 54% of total revenues in 2024, with financial services representing approximately 49% of total revenues[213] - The Company's top ten clients accounted for approximately 54% of total revenues in 2024, compared to 53% in both 2023 and 2022[391] - The Company had two clients, CGI and Allegis, that exceeded 10% of total revenues in 2024, with CGI accounting for 14.5% and Allegis for 10.7%[389] Cash Flow and Financial Position - Cash provided by operating activities was $7.2 million in 2024, down from $16.0 million in 2023, with a net loss of $7.1 million in 2023[236] - The company had cash balances of $27.7 million as of December 31, 2024, with no bank debt outstanding and approximately $22.6 million of borrowing capacity[232] - The company’s cash and cash equivalents rose to $27.742 million in 2024, an increase of 31% from $21.147 million in 2023[306] - The company’s total equity as of December 31, 2024, was $87,434,000, an increase from $81,444,000 in 2023[315] Tax and Valuation - The effective tax rate for 2024 was 23.1%, compared to a negative rate of (21.0%) in 2023, influenced by a worthless stock deduction from the dissolution of a Singapore entity[219] - The effective tax rate for 2023 was (21.0%), compared to 30.3% in 2022, largely due to shortfalls in expected tax benefits on stock options[231] - As of December 31, 2024, the Company provided a valuation allowance of $452,000 related to the uncertainty of the realization of foreign net operating losses[275] - The company evaluates its deferred tax assets and records a valuation allowance when it is more likely than not that some portion will not be realized[275] Goodwill and Impairment - The company reported a goodwill impairment charge of $5.3 million in 2023, related to the Data and Analytics Services segment, compared to no impairment in 2022[225] - Goodwill remained unchanged at $27.210 million, with no impairment recorded in 2024, compared to an impairment of $5.300 million in 2023[301][308] - The Company performed quantitative impairment tests related to its IT Staffing Services segment and found no impairment associated with the carrying amount of goodwill for 2024, 2023, and 2022[264] Operational Highlights - Bookings for 2024 totaled $41 million, consistent with the full year 2023's performance, indicating stable demand[210] - The Company recognizes revenue on fixed price contracts over time as services are rendered, using a cost-based input method to measure progress[254] - Unbilled receivables represent amounts recognized as revenues based on services performed, which will be invoiced in a subsequent period[257] - The Company expanded its service offerings to include engineering staffing services in late 2023[388] Stock and Shareholder Information - The weighted average diluted shares outstanding increased to 12.014 million in 2024 from 11.613 million in 2023[308] - The company repurchased 9,222 shares of common stock at an average price of $8.70 per share in 2024, and 67,699 shares at an average price of $9.10 per share in 2023[371] - The company held 1.7 million shares in its treasury at a cost of approximately $4.9 million as of December 31, 2024[372]

Financial Data and Key Metrics Changes - Consolidated revenues for Q4 2024 totaled $50.7 million, a year-over-year increase of 10.2% compared to Q4 2023 [22] - GAAP net income for Q4 2024 was $0.3 million or $0.02 per diluted share, compared to a net loss of $5.4 million or a negative $0.46 per share in Q4 2023 [25] - Non-GAAP net income for Q4 2024 was $2.8 million or $0.23 per diluted share, compared to $1.3 million or $0.11 per diluted share in Q4 2023 [25] - Full year 2024 revenues were $198.9 million, largely in line with full year 2023 revenues [26] - Gross margins in 2024 totaled 27.9%, compared to 25.4% in 2023 [26] Business Line Data and Key Metrics Changes - Data and Analytics Services segment reported revenues of $10.3 million in Q4 2024, a 26.2% increase year-over-year and 9.4% sequentially [22] - IT Staffing Services segment had revenues of $40.5 million in Q4 2024, achieving year-over-year revenue growth of 6.8% [23] - Billable consultant base declined by 63 consultants during the quarter, consistent with previous years due to seasonal assignment ends [23] - Q4 2024 gross margin percent was a company record 29%, with significant margin expansion in both business segments [24] Market Data and Key Metrics Changes - Order bookings in Q4 2024 totaled $11 million, somewhat below expectations, with project delays noted in the Data and Analytics segment [22][54] - Clients exhibited greater caution in decision-making, leading to longer sales cycles and delayed bookings [54][55] Company Strategy and Development Direction - The company is at an inflection point due to the AI revolution, requiring sharper execution focus and a founder's mindset for growth [11] - The strategy for 2025 includes leading with urgency, building a compelling portfolio of offerings, and executing with discipline [16][18][19] - The company aims to refine its strategy and create a growth story that is uniquely its own [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the uncertainties in the macro environment affecting technology investments, but remains confident in the strong appetite for AI-driven solutions [12][14] - The company plans to accelerate growth and enhance offerings while taking a structured approach to defining its long-term strategy [33] Other Important Information - The liquidity position remains solid with no bank debt outstanding and $27.7 million in cash balances [28] - The share repurchase program has been extended to February 2026, with 423,000 shares remaining [61] Q&A Session Summary Question: Approach to increasing staffing and D&A - Management is taking a structured approach to defining long-term strategy, focusing on growth and enhancing offerings [32][33] Question: Opportunities in government efficiency - Management sees government opportunities, especially in Data and Analytics [35] Question: Employee count at year-end - The company ended the year with 1,816 employees, up from 1,648 in 2023 [37] Question: Spending plans for the year - SG&A expenses are expected to maintain the same percentage as in 2024, with some increases in the first half due to hiring [44][45] Question: Tax rate expectations - The tax rate is influenced by stock compensation true-ups, with a recent rate lower than 25% [49] Question: Commentary on bookings during the quarter - Bookings were affected by project delays and uncertainty in the marketplace, leading to a longer sales cycle [54][55] Question: Thoughts on share repurchase program extension - The Board decided to extend the share repurchase program due to fewer blackout periods expected in 2025 [61] Question: Potential acquisitions and cash uses - M&A remains part of the growth strategy, but clarity on the direction is needed before executing transactions [66]

Financial Performance - Consolidated revenues for Q4 2024 increased by 10.2% to $50.7 million, compared to $46.1 million in Q4 2023[3] - Gross profits for Q4 2024 were $14.7 million, up from $11.3 million in Q4 2023, with gross margins reaching a record 29.0%[5] - Revenues for Q4 2024 reached $50,747 thousand, a 10.8% increase from $46,052 thousand in Q4 2023[23] - Gross profit for Q4 2024 was $14,715 thousand, up 29.5% from $11,344 thousand in Q4 2023[23] - Total revenues for the year ended December 31, 2024 were $198,943 thousand, a slight decrease from $201,098 thousand in 2023[23] Segment Performance - The Data and Analytics Services segment reported revenues of $10.3 million, a 26.2% increase year-over-year[5] - Data and analytics services revenue for Q4 2024 was $10,284 thousand, a 26.1% increase from $8,152 thousand in Q4 2023[27] - IT Staffing Services segment revenues rose by 6.8% to $40.5 million compared to $37.9 million in Q4 2023[5] - IT staffing services revenue for Q4 2024 was $40,463 thousand, up from $37,900 thousand in Q4 2023, representing a 6.8% increase[27] Profitability - GAAP net income for 2024 was $3.4 million, or $0.28 per diluted share, compared to a loss of $7.1 million, or ($0.61) per diluted share in 2023[6] - Non-GAAP net income for 2024 totaled $8.6 million, or $0.71 per diluted share, compared to $5.3 million, or $0.44 per diluted share in 2023[6] - Net income for Q4 2024 was $297 thousand, compared to a net loss of $5,351 thousand in Q4 2023[25] - Non-GAAP net income for Q4 2024 increased to $2,802 thousand from $1,326 thousand in Q4 2023[25] - Basic earnings per share for Q4 2024 was $0.03, compared to a loss of $0.46 per share in Q4 2023[25] Cash and Debt Management - Cash balances increased by $6.6 million during 2024, reaching $27.7 million as of December 31, 2024, with no bank debt[7] - The Board of Directors extended the share repurchase program for an additional year through February 8, 2026, with 423,000 shares available for repurchase[8] Operational Metrics - The company experienced a decline of 63 billable consultants in the IT Staffing Services segment during Q4 2024, consistent with seasonal trends[4] - Days Sales Outstanding (DSO) stood at 52 days as of December 31, 2024, within the targeted range[7] - The company reported a total operating income of $65 thousand in Q4 2024, a significant recovery from an operating loss of $6,930 thousand in Q4 2023[23] - Total gross margin percentage improved to 29.0% in Q4 2024 from 24.6% in Q4 2023[27]