Mastech Digital(MHH) - 2025 Q2 - Quarterly Results

Mastech Digital Q2 2025 Earnings Release Financial Highlights The company reported a 2% sequential revenue growth to $49.1 million, though GAAP net income declined significantly due to one-time costs Overall Performance Q2 2025 vs. Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $49.1M | $49.5M | -0.8% | | Gross Profits | $13.8M | $14.0M | -1.4% | | Gross Margin | 28.1% | 28.2% | -10 bps | | GAAP Net Income | $0.1M | $1.4M | -92.8% | | GAAP Diluted EPS | $0.01 | $0.12 | -91.7% | | Non-GAAP Net Income | $1.8M | $2.2M | -18.2% | | Non-GAAP Diluted EPS | $0.15 | $0.19 | -21.1% | Q2 2025 vs. Q1 2025 Performance | Metric | Q2 2025 vs. Q1 2025 | Note | | :--- | :--- | :--- | | Consolidated Revenues | +2% | From $48.3M to $49.1M | | Consolidated Gross Margins | +147 bps | - | | GAAP Diluted EPS | $0.01 | vs. ($0.12) | | Non-GAAP Diluted EPS | $0.15 | vs. $0.06 | - Q2 2025 results included $0.9 million of combined severance and Finance & Accounting transition costs, while Q1 2025 included $1.4 million of severance expense[5] Segment Performance - The IT Staffing Services segment achieved a 3% sequential revenue increase, driven by higher bill rates and disciplined pricing[4][5] - The Data and Analytics Services segment experienced softer activity with order bookings of $5.8 million, reflecting cautious client spending[5][6] Management Commentary and Financial Position Management noted resilient performance and market stabilization while maintaining a strong financial position with no bank debt - CEO Nirav Patel highlighted early signs of market stabilization and the company's strategic focus on becoming a partner for AI-first transformations[7] - The company maintains a strong financial position with $27.9 million in cash, no bank debt, and $22.2 million in borrowing availability[7] - Days Sales Outstanding (DSO) was 53 days, which is within the company's target range[7] Financial Statements This section provides the unaudited condensed consolidated financial statements for the second quarter ended June 30, 2025 Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $27,933 | $27,742 | | Total current assets | $65,659 | $66,205 | | Total assets | $110,392 | $111,484 | | Total current liabilities | $19,718 | $20,577 | | Total liabilities | $22,582 | $24,050 | | Total shareholders' equity | $87,810 | $87,434 | Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months ended June 30, 2025 | Three Months ended June 30, 2024 | | :--- | :--- | :--- | | Revenues | $49,097 | $49,534 | | Gross profit | $13,820 | $13,980 | | Income from operations | $27 | $1,693 | | Net income | $135 | $1,391 | | Diluted EPS | $0.01 | $0.12 | Reconciliation of GAAP to Non-GAAP Measures Q2 2025 GAAP to Non-GAAP Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP Net Income | $135 | | Amortization of acquired intangible assets | $649 | | Stock-based compensation | $714 | | Severance expense | $232 | | Finance and accounting transition expense | $688 | | Income tax adjustments | ($588) | | Non-GAAP Net Income | $1,830 | - Non-GAAP measures exclude items like amortization, stock-based compensation, and one-time expenses to provide a more meaningful comparison of operational performance[11][12][13] Supplemental Financial Information (by Segment) Q2 2025 Segment Revenues (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Data and analytics services | $8,589 | $8,876 | | IT staffing services | $40,508 | $40,658 | | Total revenues | $49,097 | $49,534 | Q2 2025 Segment Gross Margin % | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Data and analytics services | 45.2% | 49.2% | | IT staffing services | 24.5% | 23.6% | | Total gross margin % | 28.1% | 28.2% | Disclosures This section details the rationale for using non-GAAP measures and includes a standard forward-looking statements disclaimer - The company presents non-GAAP measures to supplement GAAP results, believing they offer investors useful information for period-to-period comparisons[9][10] - A cost-cutting initiative to transition finance functions to India is expected to cost $2.0 million and yield annual savings of $1.2 million post-transition[14] - The release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[15]