Revenue Performance - Total revenues for the three months ended March 31, 2025, were $48.317 million, an increase of 3.2% from $46.823 million in the same period of 2024[42] - The Data and Analytics Services segment generated $8.960 million in revenue for the three months ended March 31, 2025, up 11.1% from $8.067 million in 2024[42] - The IT Staffing Services segment reported revenue of $39.357 million for the three months ended March 31, 2025, compared to $38.756 million in 2024, reflecting a growth of 1.5%[42] - Revenue from the United States was $47.752 million for the three months ended March 31, 2025, compared to $46.116 million in 2024[44] - Revenues for Q1 2025 totaled $48.3 million, a 3% increase from $46.8 million in Q1 2024, driven by 11% growth in Data and Analytics Services and 2% growth in IT Staffing Services[103] Client Concentration - The top ten clients accounted for approximately 56% of total revenues in Q1 2025, compared to 51% in Q1 2024[43] - The company’s revenues are highly concentrated among a limited number of clients, which may impact operational results[100] Profitability and Expenses - Gross profit for Data and Analytics Services was $3,947,000 in Q1 2025, compared to $3,745,000 in Q1 2024, resulting in a gross margin of 44.1%[83] - Total gross profit increased to $12,892,000 in Q1 2025 from $12,131,000 in Q1 2024, with a total gross margin of 26.7%[83] - SG&A expenses increased to $14.7 million in Q1 2025, representing 30.4% of total revenues, compared to $12.5 million or 26.7% in Q1 2024[109] - Stock-based compensation expense for Q1 2025 was $895,000, up 62.73% from $550,000 in Q1 2024[61] Goodwill and Impairment - Goodwill related to the IT Staffing Services segment remained unchanged at $8.427 million as of March 31, 2025[47] - The Company recorded a goodwill impairment of $5.3 million related to the Data and Analytics Services segment in 2023[45] Tax and Losses - The Company reported a loss before income taxes of $1,762,000 for Q1 2025, compared to a loss of $282,000 in Q1 2024[73] - The total provision for income taxes for Q1 2025 was a benefit of $323,000, compared to a benefit of $121,000 in Q1 2024[74] - The company reported an effective tax benefit of ($323,000) for Q1 2025, compared to ($121,000) in Q1 2024, reflecting a significant change in tax strategy[113] Cash Flow and Assets - Cash used in operating activities for Q1 2025 was ($3.0 million), compared to ($1.3 million) in Q1 2024, with a net loss of ($1.4 million) in 2025[117] - As of March 31, 2025, the company had cash balances of $24.7 million and no bank debt outstanding, with $23.7 million of borrowing capacity available[114] - Total assets decreased to $110,076,000 as of March 31, 2025, from $111,484,000 as of December 31, 2024[84] Future Outlook and Costs - The company expects to incur additional costs of $500,000 to $750,000 during the transition of finance and accounting functions to India, with anticipated annual savings of approximately $1,200,000 post-transition[94] - Economic conditions in North America improved in 2024, but uncertainty remains for 2025 due to potential changes in administration policies[99] Stock Incentive Plans - The Company granted 22,140 restricted share units and 702,358 stock options at a strike price of $15.41 during Q1 2025[60] - As of March 31, 2025, there were 430,000 shares available for grant under the Stock Incentive Plan and 798,000 shares under the 2024 Inducement Stock Incentive Plan[60] - The 2024 Inducement Stock Incentive Plan was terminated effective May 14, 2025, ceasing further grants under this plan[60] - The Company has 432,059 shares available for purchase under the Employee Stock Purchase Plan as of March 31, 2025[65] New Business and Demand - New bookings in Q1 2025 totaled $11.7 million, up from $9.6 million in Q1 2024, indicating strong demand for services[104]
Mastech Digital(MHH) - 2025 Q1 - Quarterly Report