Mastech Digital Reports First Quarter 2025 Revenue Growth of 3%
Consolidated Gross Profits increased by 6% over the First Quarter of 2024
First Quarter 2025 Highlights:
- Total consolidated revenues increased by 3% to
$48.3 million , compared to revenues of$46.8 million in the first quarter of 2024; - Consolidated gross margins increased by 80-basis points, compared to gross margins achieved in the first quarter of 2024;
- The Company's Data and Analytics Services segment reported revenues of
$9.0 million , or 11% higher than revenues of$8.1 million reported in the first quarter of 2024; - The IT Staffing Services segment achieved a 2% increase in its revenues during the first quarter of 2025, compared to the corresponding quarter of 2024;
- GAAP diluted (loss) per share was (
$0.12 ) in the first quarter of 2025, versus a diluted (loss) per share of ($0.01 ) in the first quarter of 2024. Earnings in the first quarter of 2025 included$1.4 million of severance expense, compared to no severance expense in the first quarter of 2024; and - Non-GAAP diluted earnings per share was
$0.06 in the first quarter of 2025, which was in-line with our non-GAAP diluted earnings per share in the first quarter of 2024.
First Quarter Results:
Revenues for the first quarter of 2025 totaled
Activity levels at the Company's Data and Analytics Services segment were in line with our expectations for the first quarter of 2025, with order bookings totaling
Commenting on the Company's financial position, Kannan Sugantharaman,
About
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
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. 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 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
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Amounts in thousands) |
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(Unaudited) |
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2025 |
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2024 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ 24,665 |
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$ 27,742 |
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Accounts receivable, net |
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32,146 |
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31,443 |
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Prepaid and other current assets |
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7,652 |
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7,020 |
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Total current assets |
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64,463 |
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66,205 |
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Equipment, enterprise software and leasehold improvements, net |
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1,932 |
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1,998 |
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Operating lease right-of-use assets, net |
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3,514 |
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3,832 |
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Deferred income taxes |
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1,295 |
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1,298 |
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Deferred financing costs, net |
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165 |
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189 |
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Deferred compensation, net |
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1,375 |
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- |
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Non-current deposits |
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464 |
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444 |
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27,210 |
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27,210 |
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Intangible assets, net of amortization |
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9,658 |
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10,308 |
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Total assets |
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$ 1,10,076 |
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$ 1,11,484 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ 3,742 |
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$ 4,683 |
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Current portion of operating lease liability |
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1,291 |
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1,265 |
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Accrued payroll and related costs |
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13,448 |
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13,750 |
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Other accrued liabilities |
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930 |
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879 |
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Total current liabilities |
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19,411 |
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20,577 |
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Long-term liabilities: |
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Long-term operating lease liability, less current portion |
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2,158 |
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2,486 |
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Long-term severance liability |
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1,560 |
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987 |
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Total liabilities |
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23,129 |
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24,050 |
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Shareholders' equity: |
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Common stock, par value |
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135 |
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135 |
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Additional paid-in capital |
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39,199 |
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38,277 |
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Retained earnings |
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54,378 |
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55,817 |
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Accumulated other comprehensive income (loss) |
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(1,880) |
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(1,910) |
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(4,885) |
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(4,885) |
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Total shareholders' equity |
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86,947 |
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87,434 |
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Total liabilities and shareholders' equity |
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$ 1,10,076 |
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$ 1,11,484 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Amounts in thousands, except per share data) |
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(Unaudited) |
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Three Months ended |
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2025 |
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2024 |
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Revenues |
$ 48,317 |
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$ 46,823 |
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Cost of revenues |
35,425 |
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34,692 |
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Gross profit |
12,892 |
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12,131 |
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Selling, general and administrative expenses |
14,745 |
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12,537 |
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Income (loss) from operations |
(1,853) |
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(406) |
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Other income/(expense), net |
91 |
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124 |
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Income (loss) before income taxes |
(1,762) |
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(282) |
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Income tax expense (benefit) |
(323) |
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(121) |
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Net income (loss) |
$ (1,439) |
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$ (161) |
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Earnings (loss) per share: |
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Basic |
$ (0.12) |
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$ (0.01) |
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Diluted |
$ (0.12) |
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$ (0.01) |
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Weighted average common shares outstanding: |
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Basic |
11,753 |
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11,615 |
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Diluted |
11,753 |
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11,615 |
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RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES |
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(Amounts in thousands, except per share data) |
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(Unaudited) |
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Three Months ended |
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2025 |
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2024 |
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GAAP Net Income (Loss) |
$ (1,439) |
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$ (161) |
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Adjustments: |
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Amortization of acquired intangible assets |
650 |
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693 |
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Stock-based compensation |
895 |
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550 |
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Severance expense |
1,409 |
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- |
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Income taxes adjustments |
(759) |
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(319) |
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Non-GAAP Net Income |
$ 756 |
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$ 763 |
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GAAP Diluted Earnings (Loss) Per Share |
$ (0.12) |
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$ (0.01) |
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Non-GAAP Diluted Earnings Per Share |
$ 0.06 |
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$ 0.06 |
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Weighted average common shares outstanding: |
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GAAP Diluted Shares |
11,753 |
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11,615 |
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Non-GAAP Diluted Shares |
12,096 |
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11,909 |
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SUPPLEMENTAL FINANCIAL INFORMATION |
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(Amounts in thousands) |
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(Unaudited) |
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Three Months ended |
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2025 |
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2024 |
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Revenues: |
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Data and analytics services |
$ 8,960 |
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$ 8,067 |
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IT staffing services |
39,357 |
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38,756 |
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Total revenues |
$ 48,317 |
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$ 46,823 |
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Gross Margin %: |
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Data and analytics services |
44.1 % |
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46.4 % |
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IT staffing services |
22.7 % |
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21.6 % |
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Total gross margin % |
26.7 % |
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25.9 % |
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Segment Operating Income (Loss): |
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Data and analytics services |
$ (128) |
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$ (454) |
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IT staffing services |
334 |
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741 |
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Subtotal |
206 |
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287 |
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Amortization of acquired intangible assets |
(650) |
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(693) |
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Severance expense |
(1,409) |
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- |
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Interest expense and other, net |
91 |
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124 |
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Income (loss) before income taxes |
$ (1,762) |
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$ (282) |
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