MHH: Revenue and net income declined, but liquidity and cash flow remain strong amid restructuring

Continued Execution of Strategic Initiatives to Position the Organization to Reaccelerate Growth

PITTSBURGH, Nov. 12, 2025 /PRNewswire/ — Mastech Digital, Inc. (NYSE American: MHH) ("Mastech Digital"), a leading provider of Digital Transformation IT Services, announced today its financial results for the third quarter ended September 30, 2025.

Third Quarter 2025 Financial Highlights:

• Total consolidated revenues of $48.5 million, reflecting a decrease of 6.4% on a year-over-year basis, and a decrease of 1% on a sequential basis from the second quarter of 2025.
• Data and Analytics Services segment revenues of $7.9 million, compared to $9.4 million in the third quarter of 2024, as cautious client spending and elongated decision-making cycles continued.
• IT Staffing Services segment revenues of $40.6 million, compared to $42.4 million in the third quarter of 2024, due to a decrease in billable consultants.
• Gross profits of $13.5 million, compared to $14.8 million in the third quarter of 2024 and $13.8 million in the second quarter of 2025.
• Gross margins of 27.8% decreased by 70-basis points on a year-on-year basis and decreased by 30-basis points on a sequential basis from the second quarter of 2025.
• GAAP net income of $0.9 million, compared to $1.9 million in the third quarter of 2024 and $0.1 million in the second quarter of 2025. Non-GAAP net income of $3.5 million, compared to $2.8 million in the third quarter of 2024 and $1.8 million in the second quarter of 2025. Results for the third quarter of 2025 included $2.0 million of severance and Finance & Accounting transition costs, while the second quarter of 2025 included $0.9 million of severance and Finance & Accounting transition costs. There were no comparable costs during the third quarter of 2024.
• GAAP diluted earnings (loss) per share of $0.08, compared to $0.16 in the third quarter of 2024 and $0.01 in the second quarter of 2025.
• Non-GAAP diluted earnings per share of $0.29, compared to $0.23 in the third quarter of 2024 and $0.15 in the second quarter of 2025.
• During the third quarter, the Company repurchased 192,112 shares of Mastech Digital common stock under the previously announced share repurchase program authorized by our Board of Directors, for a total investment of approximately $1.5 million.

Nirav Patel, Mastech Digital's President and Chief Executive Officer, stated, "Our third quarter results were impacted by ongoing macroeconomic and geopolitical uncertainties, which affected client activity and decision-making across the enterprise. Amid ongoing market challenges, we remain focused on controlling what we can and positioning the Company for long-term growth. To that end, we have launched EDGE — Efficiencies Driving Growth and Expansion — a structured transformation initiative aimed at optimizing our organization and operating model. EDGE focuses on driving higher revenue quality, process simplification and automation, and disciplined spend management to unlock capacity for reinvestment in strategic growth areas. We have seen these actions already yield improved operational efficiency and sharper resource alignment. By channeling these gains into capability building and market expansion, we believe EDGE will strengthen our competitive position and fuel sustainable value creation. We are pleased with our positive progress, and we look forward to providing further updates in the days ahead.

Our IT Staffing Services segment revenues declined 4.4% year-over-year. Our continued focus on disciplined pricing and emphasis on higher-value engagements delivered Company-record gross margins of 24.8% and a Company all-time high average bill rate of $86.60, despite our billable consultant headcount reducing by 11.6% year-over-year. While overall client activity continues to trend below prior-year levels, consistent with what we are seeing in broader market conditions, we believe our margin performance underscores the effectiveness of our execution strategy and operational rigor in a measured demand environment.

Our Data and Analytics Services segment revenues declined 15.8% year-over-year, reflecting a challenging comparison against strong results in the second half of 2024. New bookings activity during the quarter remained subdued at $6.1 million. While near-term visibility remains limited, we continue to believe that long-term demand drivers underpinning this segment remain firmly intact. Mastech Digital is focused on aligning its delivery capabilities and go-to-market approach to capture growth opportunities as client spending patterns normalize."

Commenting on the Company's financial position, Kannan Sugantharaman, Mastech Digital's Chief Financial and Operations Officer, stated, "On September 30, 2025, we had $32.7 million of cash balances on hand, no bank debt, and borrowing availability of $20.8 million under our revolving credit facility. Our Days Sales Outstanding (DSO) measurement stood at 55-days on September 30, 2025, which is well within our targeted range."

Conference Call:

Mastech Digital will host a conference call to discuss the Company's third quarter 2025 financial results on November 12, 2025 at 9:00 a.m. Eastern Time. To listen to the conference call, please dial 1-877-269-7756 (domestic) or 1-201-689-7817 (international). The conference call will also be accessible via a live webcast on the Investor Relations section of the Mastech Digital website at mastechdigital.com. A replay will be available on this website following the call.

About Mastech Digital, Inc.:

Mastech Digital (NYSE American: MHH) is a leading provider of Digital Transformation IT Services. The Company offers Data Management and Analytics Solutions, Digital Learning, and IT Staffing Services with a Digital First approach. A minority-owned enterprise, Mastech Digital is headquartered in Pittsburgh, PA, with offices across the U.S., Canada, Europe, and India. Visit us at www.mastechdigital.com.

Use of Non-GAAP Measures:

This press release contains non-GAAP financial measures to supplement our financial results presented on a GAAP basis. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in the attached financial tables.

We believe that providing non-GAAP net income and non-GAAP diluted earnings per share offers investors useful supplemental information about the financial performance of our business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allows for greater transparency with respect to key metrics used by management in operating our business. Additionally, management uses these non-GAAP financial measures in evaluating the Company's performance.

Specifically, the non-GAAP financial measures contained herein exclude the following expense items:

Amortization of acquired intangible assets: We amortize intangible assets acquired in connection with our June 2015 acquisition of Hudson IT, our July 2017 acquisition of the services division of InfoTrellis, Inc. and our October 2020 acquisition of AmberLeaf Partners. We exclude these amortization expenses in our non-GAAP financial measures because we believe it allows investors to make more meaningful comparisons between our operating results and those of other companies within our industry and facilitates a helpful comparison of our results with other periods.

Stock-based compensation expenses: We incur material recurring expenses related to non-cash, stock-based compensation. We exclude these expenses from our non-GAAP financial measures because we believe that it provides investors with meaningful supplemental information regarding operational performance. In particular, because of varying available valuation methodologies, subjective assumptions, and the variety of award types that companies can use under ASC 718, we believe that providing non-GAAP financial measures that exclude these expenses allows investors to make more meaningful comparisons between our operating results and those of other companies within our industry and facilitate comparisons of our results with other periods.

Severance charges: From time to time, we incur severance expenses related to the termination by the Company of leadership and other key personnel. During the third quarter of 2025, we recorded severance charges associated with strategic initiatives we undertook to better align our organizational structure with our long-term growth objectives. During the third quarter of 2025, the Company recognized $0.3 million of severance expense within cost of goods sold. As this amount was not allocated to the reportable segments, the non-allocated charge contributed to a gross margin variance between the supplemental segment presentation and the consolidated financial results. We believe that providing non-GAAP financial measures that exclude these expenses allows investors to make more meaningful comparisons between our operating results and those of other companies within our industry and facilitates comparison of our results with other periods.

Finance and accounting transition expense: During the first quarter of 2025, the Company's Board of Directors made the decision to implement a long-term cost-cutting initiative to transition the Company's finance and accounting functions to India. During 2025, the Company expects to incur additional costs related to the duplication of resources and travel expenses during the training and knowledge transfer process. Additionally, the Company expects to pay severance expense related to this initiative. The Company estimates total transition and severance expenses to approximate $2.0 million. Post-transition cost savings are expected to approximate $1.2 million per annum. We believe that providing non-GAAP financial measures that exclude these expenses allows investors to make more meaningful comparisons between our operating results and those of other companies within our industry and facilitates comparison of our results with other periods.

Forward-Looking Statements:

Certain statements contained in this release are forward-looking statements based on management's expectations, estimates, projections, and assumptions. Words such as "expects," "anticipates," "plans," "believes," "scheduled," "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of and statements regarding the Company's ability to generate revenues, earnings, and cash flow. These statements are based on information currently available to the Company and it assumes no obligation to update the forward-looking statements as circumstances change. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecasted in forward-looking statements due to a variety of factors, including, without limitation, the level of market demand for the Company's services, the highly competitive market for the types of services offered by the Company, the impact of competitive factors on profit margins, market and general economic conditions that could cause the Company's customers to reduce their spending for its services, the Company's ability to create, acquire and build new lines of business, to attract and retain qualified personnel, reduce costs and conserve cash, the Company's strategies, initiatives and expectations concerning its operations and operating results, the extent to which the Company's business is adversely affected by the impacts of the COVID-19 pandemic or any other health epidemics or other outbreaks that disrupt day-to-day activities and other risks that are described in more detail in the Company's filings with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2024.

 
 
                               MASTECH DIGITAL, INC. 
                        CONDENSED CONSOLIDATED BALANCE SHEETS 
                               (Amounts in thousands) 
                                     (Unaudited) 
 
                                  September 30,                 December 31, 
                                       2025                         2024 
                           ----------------------------  --------------------------- 
 
         ASSETS 
Current assets: 
    Cash and cash 
     equivalents           $                     32,747  $                    27,742 
    Accounts receivable, 
     net                                         28,863                       31,443 
    Prepaid and other 
     current assets                               7,680                        7,020 
                           ----------------------------  --------------------------- 
          Total current 
           assets                                69,290                       66,205 
 
Equipment, enterprise 
 software and leasehold 
 improvements, net                                1,740                        1,998 
 
Operating lease 
 right-of-use assets, 
 net                                              2,865                        3,832 
Deferred income taxes                             1,464                        1,298 
Deferred financing costs, 
 net                                                118                          189 
Deferred compensation, 
 net                                              1,125                            - 
Non-current deposits                                446                          444 
Goodwill, net of 
 impairment                                      27,210                       27,210 
 
Intangible assets, net of 
 amortization                                     8,359                       10,308 
                           ----------------------------  --------------------------- 
          Total assets        $                1,12,617     $               1,11,484 
                           ============================  =========================== 
 
    LIABILITIES AND 
  SHAREHOLDERS' EQUITY 
Current liabilities: 
    Accounts payable                 $            3,412            $           4,683 
    Current portion of 
     operating lease 
     liability                                    1,287                        1,265 
    Accrued payroll and 
     related costs                               16,872                       13,750 
    Other accrued 
     liabilities                                  1,001                          879 
                           ----------------------------  --------------------------- 
          Total current 
           liabilities                           22,572                       20,577 
 
Long-term liabilities: 
   Long-term operating 
    lease liability, less 
    current portion                               1,466                        2,486 
   Long-term severance 
    liability                                       572                          987 
          Total 
           liabilities                           24,610                       24,050 
 
Shareholders' equity: 
    Common stock, par 
     value $0.01 per 
     share                                          136                          135 
    Additional paid-in 
     capital                                     41,215                       38,277 
    Retained earnings                            55,454                       55,817 
    Accumulated other 
     comprehensive income 
     (loss)                                     (2,321)                      (1,910) 
    Treasury stock, at 
     cost                                       (6,477)                      (4,885) 
                           ----------------------------  --------------------------- 
         Total 
          shareholders' 
          equity                                 88,007                       87,434 
                           ----------------------------  --------------------------- 
          Total 
           liabilities 
           and 
           shareholders' 
           equity             $                1,12,617     $               1,11,484 
                           ============================  =========================== 
 
 
                                                                      MASTECH DIGITAL, INC. 
                                                         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
                                                          (Amounts in thousands, except per share data) 
                                                                           (Unaudited) 
 
                                       Three Months ended September 30,                                        Nine Months ended September 30, 
                    ----------------------------------------------------------------------  --------------------------------------------------------------------- 
                                   2025                                2024                                2025                                2024 
                    -----------------------------------  ---------------------------------  -----------------------------------  -------------------------------- 
 
Revenues              $                          48,496   $                         51,839     $                       1,45,910   $                      1,48,196 
 
Cost of revenues                                 35,035                             37,068                             1,05,737                          1,07,314 
                    -----------------------------------  ---------------------------------  -----------------------------------  -------------------------------- 
 
Gross profit                                     13,461                             14,771                               40,173                            40,882 
 
Selling, general 
 and 
 administrative 
 expenses                                        12,641                             12,332                               41,179                            37,156 
                    ----------------------------------- 
 
Income (loss) from 
 operations                                         820                              2,439                              (1,006)                             3,726 
 
Other 
 income/(expense), 
 net                                                415                                133                                  689                               373 
                    -----------------------------------  ---------------------------------  -----------------------------------  -------------------------------- 
 
Income (loss) 
 before income 
 taxes                                            1,235                              2,572                                (317)                             4,099 
 
Income tax expense 
 (benefit)                                          294                                697                                   46                               994 

Q2 2025 saw flat revenue at $49.1M and net income drop to $135K, with Data and Analytics margins declining and IT Staffing margins improving. Market uncertainty and client concentration remain key risks, while cost-saving initiatives and a CEO transition marked significant developments.

Original document: Mastech Digital, Inc [MHH] SEC 10-Q Quarterly Report — Aug. 13 2025

Q2 2025 saw 2% sequential revenue growth, margin improvement, and strong cash position, despite year-over-year declines in net income and Data & Analytics activity. Transition costs impacted GAAP results, but non-GAAP EPS rebounded sequentially.

Original document: Mastech Digital, Inc [MHH] SEC 8-K Current Report — Aug. 13 2025