Mastech Digital(MHH) - 2024 Q3 - Quarterly Report

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]