Core Insights - Mastech Digital, Inc. reported a revenue growth of 10.2% year-over-year for the fourth quarter of 2024, totaling $50.7 million compared to $46.1 million in the same quarter of 2023 [3][7] - The Data and Analytics Services segment achieved a remarkable revenue growth of 26.2% in the fourth quarter of 2024, generating $10.3 million [4][7] - The company extended its share repurchase program for an additional year through February 8, 2026, with 423,000 shares available for repurchase as of December 31, 2024 [9][10] Fourth Quarter 2024 Highlights - Gross profits for the fourth quarter of 2024 were $14.7 million, up from $11.3 million in the same quarter of 2023 [3][7] - GAAP net income for the fourth quarter was $0.3 million or $0.02 per diluted share, a significant improvement from a loss of $5.4 million or ($0.46) per diluted share in the fourth quarter of 2023 [3][7] - Non-GAAP net income for the fourth quarter was $2.8 million, or $0.23 per diluted share, compared to $1.3 million, or $0.11 per diluted share, in the fourth quarter of 2023 [3][7] Full Year 2024 Results - Total revenues for the full year of 2024 were $198.9 million, slightly down from $201.1 million in 2023 [5] - Gross profits for 2024 were $55.6 million, representing 27.9% of total revenues, compared to $51.0 million or 25.4% in 2023 [5] - 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 [5] Segment Performance - The IT Staffing Services segment reported revenues of $40.5 million in the fourth quarter of 2024, a 6.8% increase from $37.9 million in the same quarter of 2023 [4][7] - The Data and Analytics Services segment's gross margin was 49.5% in the fourth quarter of 2024, up from 44.7% in the fourth quarter of 2023 [26] - The IT Staffing Services segment achieved a gross margin of 23.8% in the fourth quarter of 2024, compared to 20.3% in the same quarter of 2023 [26] Financial Position - As of December 31, 2024, the company had cash balances of $27.7 million and no bank debt, with borrowing availability of approximately $22.6 million under its revolving credit facility [8] - The Days Sales Outstanding (DSO) stood at 52 days, well within the targeted range [8]

Core Viewpoint - Mastech Digital, Inc. is set to discuss its fourth quarter and full year results for 2024 in a conference call scheduled for February 19, 2025 [1] Group 1: Conference Call Details - The conference call will be hosted by CEO Nirav Patel and CFO Jack Cronin [1] - Access to the call will be available via a listen-only dial-in number (877-407-3980) or through a live webcast on the company's website [2] - A replay of the call will be available for 7 days, with specific access numbers provided for domestic and international callers [3] Group 2: Company Overview - Mastech Digital is a leading provider of Digital Transformation IT Services, focusing on Data Management and Analytics Solutions, Digital Learning, and IT Staffing Services [4] - The company operates with a Digital First approach and is a minority-owned enterprise [4] - Mastech Digital is headquartered in Pittsburgh, PA, with offices in the U.S., Canada, Europe, and India [4]

Core Points - Mastech Digital, Inc. has awarded non-qualified stock options to its new President and CEO, Nirav Patel, for up to 702,358 shares of common stock, effective January 6, 2025 [1] - The stock options will vest based on the Company's Quarterly Average Market Capitalization, with specific milestones set at $300 million, $450 million, and $600 million [2] - The options are subject to acceleration and forfeiture based on the termination of Mr. Patel's employment or a 'Change of Control' of the Company [3] Company Overview - Mastech Digital, Inc. is a leading provider of Digital Transformation Services, focusing on delivering technology talent and innovative solutions to drive digital transformation [4] - The company operates globally, with headquarters in Pittsburgh, PA, and delivery centers in North America and India [4]

Core Points - Nirav Patel has been appointed as President and CEO of Mastech Digital, effective January 6, 2025, succeeding Vivek Gupta who has led the company for nine years [2][6] - Patel has over 20 years of experience in technology, previously serving as President and CEO of Bristlecone, where he significantly scaled the business and expanded its workforce [3][4] - The Board of Directors expressed strong support for Patel's appointment, highlighting his expertise in data and AI-driven transformation as aligned with the company's strategic priorities [5][6] Company Transition - Vivek Gupta is stepping down after nine years, during which he transformed Mastech Digital from an IT staffing company to a technology-focused solutions organization [7][8] - Under Gupta's leadership, the company expanded into digital transformation services and improved its revenue quality and gross margin profile [7] - Gupta's last day will be February 28, 2025, marking his nine-year anniversary with the company [9] Company Overview - Mastech Digital, Inc. is a leading provider of Digital Transformation Services, specializing in technology talent and innovative solutions to drive digital transformation [10]

Financial Performance - Revenues for Q3 2024 reached $51,839,000, a 8.6% increase from $47,779,000 in Q3 2023[5] - Gross profit for Q3 2024 was $14,771,000, up 17.6% from $12,566,000 in Q3 2023[5] - Net income for Q3 2024 was $1,875,000, compared to a net income of $125,000 in Q3 2023, representing a significant increase[6] - Basic earnings per share for Q3 2024 was $0.16, compared to $0.01 in Q3 2023[5] - The company reported a total comprehensive income of $1,831,000 for Q3 2024, compared to $37,000 in Q3 2023[6] - Net income for the nine months ended September 30, 2024, was $3,105,000, compared to a net loss of $(1,787,000) for the same period in 2023, indicating a significant turnaround in profitability[11] - For the nine months ended September 30, 2024, net income was $3.1 million, compared to a net loss of $1.8 million for the same period in 2023[5] Revenue Breakdown - Total revenues for the three months ended September 30, 2024, were $51.839 million, an increase from $47.779 million in the same period of 2023, representing a growth of approximately 4.4%[27] - The Data and Analytics Services segment generated $9.398 million in revenue for the three months ended September 30, 2024, compared to $8.038 million in 2023, reflecting a year-over-year increase of 16.9%[27] - The IT Staffing Services segment reported revenues of $42.441 million for the three months ended September 30, 2024, up from $39.741 million in 2023, indicating a growth of 6.8%[27] - Revenues for Q3 2024 totaled $51.8 million, an 8% increase from $47.8 million in Q3 2023, driven by 17% growth in Data and Analytics Services and 7% growth in IT Staffing Services[98] - Data and Analytics Services segment revenues reached $9.4 million in Q3 2024, up 17% from $8.0 million in Q3 2023, attributed to higher activity levels and new assignments[99] - IT Staffing Services segment revenues totaled $42.4 million in Q3 2024, a 7% increase from $39.8 million in Q3 2023, reflecting higher demand for services[100] Assets and Liabilities - Total assets as of September 30, 2024, were $111,485,000, an increase from $105,227,000 as of December 31, 2023[8] - Total current assets increased to $65,815,000 as of September 30, 2024, compared to $56,463,000 at the end of 2023[8] - Total liabilities as of September 30, 2024, were $24,958,000, up from $23,783,000 at the end of 2023[8] - Shareholders' equity increased to $86,527,000 as of September 30, 2024, compared to $81,444,000 at the end of 2023[8] - Cash and cash equivalents increased to $23,885,000 from $21,147,000, reflecting a growth of 12.9%[8] - The total current liabilities increased to $22,101,000 from $19,871,000, representing a rise of 11.6%[8] Operating Expenses - Operating expenses for Q3 2024 were $12,332,000, slightly down from $12,615,000 in Q3 2023[5] - SG&A expenses for the three months ended September 30, 2024 totaled $12.3 million, representing 23.8% of total revenues, a decrease from $12.6 million or 26.4% in the same period of 2023[105] - Total SG&A expenses for the nine months ended September 30, 2024 were $37.2 million, or 25.1% of total revenues, down from $42.0 million or 27.1% in the same period of 2023[117] - General and administrative expenses decreased by $1.8 million in the first nine months of 2024 compared to the same period in 2023, primarily due to staff reductions and lower stock-based compensation[118] Stock and Compensation - Stock-based compensation expense for the nine months ended September 30, 2024, was $1,553 thousand, down from $2,501 thousand in the same period of 2023[11] - Stock-based compensation expense for the three months ended September 30, 2024 was $542,000, down from $824,000 in the same period of 2023, while for the nine months it was $1.6 million compared to $2.5 million in 2023[46] - The Company granted 40,130 restricted share units and 525,000 stock options at an average strike price of $8.41 during the nine months ended September 30, 2024, compared to 19,924 restricted share units and 125,000 stock options at an average strike price of $11.24 in 2023[45] Taxation - Total provision for income taxes for the three months ended September 30, 2024, was $697,000, compared to a benefit of $29,000 in the same period of 2023, reflecting a significant increase[61] - The effective tax rate for the three months ended September 30, 2024 was 27.1%, compared to 18.8% in the same period of 2023, due to higher state income tax rates[108] - The total provision for income taxes for the nine months ended September 30, 2024, was $994,000, while it was $(358,000) for the same period in 2023[63] Market and Strategic Focus - The company continues to focus on digital transformation IT services, targeting large and medium-sized organizations[13] - Mastech Digital's acquisition strategy has enhanced its capabilities in data management and analytics services, particularly through the acquisition of InfoTrellis and AmberLeaf[14] - The company anticipates potential disruptions in global markets due to the ongoing impact of COVID-19 variants[16] - The company anticipates continued economic uncertainty impacting demand for services in 2024, influenced by inflation and geopolitical factors[94] Client Concentration - The Company's top ten clients accounted for approximately 56% of total revenues for the three months ended September 30, 2024, compared to 52% in the same period of 2023[28] - The company had two clients contributing over 10% of total revenues in Q3 2024, with CGI at 14.0% and Allegis at 11.7%[98]

Financial Data and Key Metrics Changes - Revenues for Q3 2024 totaled $51.8 million, an 8% increase year-over-year from $47.8 million in Q3 2023, and a 5% increase sequentially from Q2 2024 [9] - GAAP net income for Q3 2024 was $1.9 million or $0.16 per diluted share, compared to $125,000 or $0.01 per diluted share in Q3 2023 [13] - Non-GAAP net income for Q3 2024 was $2.8 million or $0.23 per diluted share, compared to $1.3 million or $0.11 per diluted share in Q3 2023 [13] - Consolidated gross profit dollars totaled $14.8 million in Q3 2024, an 18% improvement from the corresponding quarter of 2023 [11] Business Line Data and Key Metrics Changes - Data and Analytics Services segment reported revenues of $9.4 million in Q3 2024, a 17% year-over-year increase from $8 million in Q3 2023 [10] - IT Staffing Services segment revenues totaled $42.4 million in Q3 2024, achieving 7% year-over-year growth [11] - Gross profit as a percentage of revenue in Q3 2024 was a record 28.5%, with Data and Analytics Services segment gross margins at 50.7% and IT Staffing Services segment margins at 23.6% [12] Market Data and Key Metrics Changes - The company reported a 13% year-to-date increase in billable consultant headcount over December 31, 2023, with a 4% increase in Q3 2024 [20] - The average bill rate in the IT Staffing Services segment was $82.80, slightly up from a little less than $81 in the comparable quarter last year [36] Company Strategy and Development Direction - The company aims to capitalize on M&A opportunities as a key component of its growth strategy, supported by a strong balance sheet and cash position [23] - Operational improvements made in 2024 are believed to have played a key role in the overall performance, with a focus on enhancing service delivery and client engagement [17] Management Comments on Operating Environment and Future Outlook - Management noted that macroeconomic headwinds have subsided, leading to increased confidence among market participants [17] - The company anticipates that the macroeconomic environment will improve following the recent elections, potentially leading to increased customer decision-making [31] Other Important Information - The company had $23.9 million in cash balances on hand as of September 30, 2024, with no outstanding bank debt [15] - SG&A expenses as a percentage of revenues decreased to 23.8% in Q3 2024 from 26.4% in Q3 2023 [22] Q&A Session Summary Question: Is free cash flow a measurement that the company tracks? - The company tracks free cash flow but does not consider it a key measurement compared to capital-intensive industries [25] Question: What is the return on equity (ROI) for the company? - The return on equity for Q3 is 13%, and it could increase significantly if the company undertakes an accretive acquisition financed with debt [27][28] Question: What are the expectations for bookings and growth in Q4? - Management indicated that Q4 typically has fewer working days due to holidays, making it hard to predict growth, but there is potential for growth due to increased headcount [29][30] Question: Are there specific industries leading project prioritization? - The company has acquired new customers across various industries, including retail, healthcare, and manufacturing, with a focus on data analytics and GenAI projects [37][38] Question: What was the revenue growth cadence through the quarter? - Revenue growth was steady throughout Q3, evenly spread over the three months [40]

Revenue Growth - Total consolidated revenues for Q3 2024 increased by $4.1 million year-over-year to $51.8 million, marking the third consecutive quarter of revenue growth [2]. - The Data and Analytics Services segment reported revenues of $9.4 million, a 17% increase compared to Q3 2023, and a 6% increase sequentially from Q2 2024 [2]. - The IT Staffing Services segment achieved revenues of $42.4 million, reflecting a 7% year-over-year growth and a 4% sequential growth from Q2 2024 [2]. - Total revenues for the three months ended September 30, 2024, were $51,839,000, an increase from $47,779,000 in the same period of 2023, representing a growth of 4.4% [17]. - Data and analytics services revenue increased to $9,398,000 for the three months ended September 30, 2024, compared to $8,038,000 in 2023, reflecting a growth of 16.9% [17]. - IT staffing services revenue rose to $42,441,000 for the three months ended September 30, 2024, up from $39,741,000 in 2023, marking a growth of 6.8% [17]. Profitability - Gross margins reached a record 28.5% in Q3 2024, up from 26.3% in Q3 2023 [3]. - Non-GAAP net income for the three months ended September 30, 2024, was $2,769,000, compared to $1,257,000 in the same period of 2023, an increase of 120.1% [16]. - GAAP net income for the three months ended September 30, 2024, was $1,875,000, compared to a loss of $125,000 in 2023 [16]. - Income before income taxes for the three months ended September 30, 2024, was $2,572,000, significantly higher than $154,000 in the same period of 2023 [17]. Earnings Per Share - GAAP diluted earnings per share were $0.16 in Q3 2024, compared to $0.01 in Q3 2023 and $0.12 in Q2 2024 [2]. - Non-GAAP diluted earnings per share increased to $0.23 in Q3 2024, up from $0.11 in Q3 2023 [3]. - Non-GAAP diluted earnings per share for the three months ended September 30, 2024, was $0.23, up from $0.11 in the same period of 2023 [16]. Cash Flow and Financial Position - Cash balances on hand as of September 30, 2024, were $23.9 million, with no bank debt and approximately $25 million available under the revolving credit facility [5]. - Free cash flow for the first nine months of 2024 totaled $2.3 million, including $4.3 million in investments to support revenue growth [5]. Operational Metrics - Order bookings in the Data and Analytics Services segment totaled $11.1 million, exceeding Q3 2023 bookings by $6 million [4]. - The company experienced a 13% increase in its billable consultant base over the first nine months of 2024 [4]. - Segment operating income for data and analytics services was $1,145,000 for the three months ended September 30, 2024, compared to a loss of $832,000 in 2023 [17]. - The company reported a gross margin of 50.7% for data and analytics services in the three months ended September 30, 2024, compared to 45.8% in 2023 [17].

Consolidated Gross Margins of 28.5% Set a New Mastech Digital Record for the QuarterPITTSBURGH, Nov. 6, 2024 /PRNewswire/ -- Mastech Digital, Inc. (NYSE AMERICAN: MHH), a leading provider of Digital Transformation IT Services, announced today its financial results for the third quarter ended September 30, 2024.  Third Quarter 2024 Highlights: Total consolidated revenues increased by $4.1 million on a year-over-year basis and by $2.3 million on a sequential quarterly basis to $51.8 million and represented ou ...

PITTSBURGH, Oct. 30, 2024 /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 third quarter ended September 30, 2024. The conference call will occur on Wednesday, November 6th at 9:00 a.m. Eastern Time and will be hosted by Mr. Vivek Gupta, CEO, and Mr. Jack Cronin, CFO. The conference call can be accessed through a listen-only dial-in number or through a live webcast. To listen t ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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 For the quarterly period ended June 30, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-34099 | --- | --- | |------------------------------------------------------------------------------------------------------------------------------- ...