Mastech Digital(US:MHH)2025-11-13 13:20Revenue Performance - For the three months ended September 30, 2025, total revenues were $48.5 million, a decrease of 6.5% compared to $51.8 million for the same period in 2024[38]. - The Data and Analytics Services segment generated $7.9 million in revenue for the three months ended September 30, 2025, down 15.7% from $9.4 million in 2024[38]. - The IT Staffing Services segment reported $40.6 million in revenue for the three months ended September 30, 2025, a decrease of 4.0% from $42.4 million in 2024[38]. - For the three months ended September 30, 2025, total revenues were $48,496,000, a decrease of 6.8% from $51,839,000 in the same period of 2024[80]. - The Data and Analytics Services segment generated revenues of $7,910,000, down 15.8% from $9,398,000 year-over-year[80]. - The IT Staffing Services segment reported revenues of $40,586,000, a decline of 4.3% compared to $42,441,000 in the prior year[80]. - Total revenues for the nine months ended September 30, 2025, were $145,910,000, a decrease of 1.9% compared to $148,196,000 for the same period in 2024[82]. - The Canadian subsidiary reported revenues of $112,000 for the three months ended September 30, 2025, down 43.4% from $198,000 in 2024[82]. - The Indian and Other segment generated $306,000 in revenue for the three months ended September 30, 2025, a decline of 48.9% from $598,000 in 2024[82]. Client Concentration - The top ten clients accounted for approximately 59% of total revenues for the three months ended September 30, 2025, compared to 56% in 2024[40]. Goodwill and Impairment - Goodwill related to the IT Staffing Services segment remained unchanged at $8.4 million as of September 30, 2025[41]. - The Company recorded a goodwill impairment of $5.3 million related to the Data and Analytics Services segment in 2023[41]. Operating Expenses and Income - Total gross profit for the three months ended September 30, 2025, was $13,715,000, representing a gross margin of 28.3%, slightly down from 28.5% in the same quarter of 2024[80]. - The IT Staffing Services segment's operating income for the three months ended September 30, 2025, was $3,178,000, compared to $1,951,000 in the same period of 2024[81]. - The company’s total operating expenses for the three months ended September 30, 2025, were $1,932,000, down from $2,442,000 in the prior year[81]. Taxation - The total provision for income taxes for the three months ended September 30, 2025, was $294,000, with an effective tax rate of 23.8%[71]. - The company’s total current provision for income taxes was $84,000 for the three months ended September 30, 2025, compared to $644,000 in the same period of 2024[70]. - The company’s valuation allowance against deferred tax assets totaled $452,000 as of September 30, 2025[71]. Stock and Compensation - Stock-based compensation expense for the three months ended September 30, 2025 was $729,000, up from $542,000 in 2024; for the nine months, it increased to $2.3 million from $1.6 million[55]. - The Company granted 327,000 stock options at an average strike price of $7.45 during the nine months ended September 30, 2025, compared to 525,000 stock options at an average strike price of $8.41 in 2024[54]. - As of September 30, 2025, there were 975,000 shares of Common Stock available for grants under the Stock Incentive Plan[54]. - The Company issued 11,483 shares under the Employee Stock Purchase Plan during the nine months ended September 30, 2025, at a share price of $6.09, compared to 21,329 shares at $6.38 in 2024[60]. Lease and Rental Expenses - The Company utilized approximately 94,000 square feet of office space as of September 30, 2025, under noncancelable operating leases[45]. - The present value of operating lease liabilities as of September 30, 2025, was $2.753 million, with a weighted average discount rate of 5.7%[46]. - Rental expense for the three and nine months ended September 30, 2025 totaled $0.4 million and $1.2 million, respectively, compared to $0.4 million and $1.1 million for the same periods in 2024[47]. - Total cash paid for lease liabilities for the three and nine months ended September 30, 2025 was $0.4 million and $1.1 million, consistent with the amounts for the same periods in 2024[48]. - The Company has no new leases entered into during the three and nine months ended September 30, 2025 and 2024, indicating a stable leasing strategy[48]. Financial Position - Total assets as of September 30, 2025, amounted to $112,617,000, a slight increase from $111,484,000 on December 31, 2024[82]. - The Company had outstanding borrowings under the Revolver totaling zero dollars as of September 30, 2025, with unused borrowing capacity of approximately $20.8 million[68]. - The company had no outstanding borrowings under the Credit Agreements as of September 30, 2025[144]. Currency and Accounting Standards - The functional currency for the Canadian subsidiary is the U.S. dollar, while Indian and European subsidiaries operate in their local currencies[145]. - A hypothetical 10% increase or decrease in foreign currency rates would not have had a material impact on the consolidated financial statements[145]. - The company does not expect the recently issued ASUs to have a material impact on its financial statements[84][86]. - The company is currently evaluating the impact of ASU 2025-05 but does not expect it to have a material effect on its consolidated financial statements[86].