Mastech Digital Reports Fourth Quarter and Full-Year 2025 Results
Continued Strong Progress Against Transformation Plan Driving Operational Improvements; Board of Directors Approves a
Fourth Quarter 2025 Financial Highlights:
- Total consolidated revenues of
$45.5 million , reflecting a decrease of 10.4% on a year-over-year basis, and a decrease of 6.3% on a sequential basis from the third quarter of 2025. - Data and Analytics Services segment revenues of
$7.8 million , compared to$10.3 million in the fourth quarter of 2024, as cautious client spending and elongated decision-making cycles continued. - IT Staffing Services segment revenues of
$37.7 million , compared to$40.5 million in the fourth quarter of 2024, due to a decrease in billable consultants. - Gross profits of
$12.9 million , compared to$14.7 million in the fourth quarter of 2024 and$13.5 million in the third quarter of 2025. - Gross margins of 28.3% decreased by 70-basis points on a year-on-year basis and increased by 50-basis points on a sequential basis from the third quarter of 2025.
- GAAP net income of
$1.0 million , compared to$0.3 million in the fourth quarter of 2024 and$0.9 million in the third quarter of 2025. Non-GAAP net income of$2.5 million , compared to$2.8 million in the fourth quarter of 2024 and$3.5 million in the third quarter of 2025. Results for the fourth quarter of 2025 included$0.7 million of severance and Finance & Accounting transition costs, while the third quarter of 2025 included$2.0 million of severance and Finance & Accounting transition costs. The fourth quarter of 2024 included$2.1 million of severance costs. - GAAP diluted earnings (loss) per share of
$0.08 , compared to$0.02 per share in the fourth quarter of 2024 and$0.08 per share in the third quarter of 2025. - Non-GAAP diluted earnings per share of
$0.21 , compared to$0.23 per share in the fourth quarter of 2024 and$0.29 per share in the third quarter of 2025. - During the fourth quarter, the Company repurchased 90,900 shares of Mastech Digital common stock under the previously announced share repurchase program authorized by our Board of Directors, for a total investment of approximately
$0.7 million .
Full-Year 2025 Financial Highlights:
- Total consolidated revenues of
$191.4 million , compared to$198.9 million for the full year of 2024, reflecting a decrease of 3.8% on a year-over-year basis. - Data and Analytics Services segment revenues of
$33.3 million for the full year of 2025, compared to$36.6 million for the full year of 2024, reflecting a decrease of 9.1% on a year-over-year basis. - IT Staffing Services segment revenues of
$158.1 million for the full year of 2025, compared to$162.3 million for the full year of 2024, reflecting a decrease of 2.6% on a year-over-year basis. - Gross profits of
$53.1 million or 27.9% of total revenue, compared to$55.6 million or 27.9% of revenue for 2024. - GAAP net income of
$0.6 million for 2025, compared to$3.4 million for 2024. Non-GAAP net income of$8.6 million for 2025, compared to$8.6 million for 2024. - GAAP diluted earnings per share of
$0.05 for 2025, compared to$0.28 per share for 2024. - Non-GAAP diluted earnings per share of
$0.72 for 2025, compared to$0.71 per share for 2024. - During the full-year 2025, the Company repurchased 299,523 shares of
Mastech Digital common stock under the previously announced share repurchase program authorized by our Board of Directors, for a total investment of approximately$2.2 million .
2025 was a year of transition for us. We have mobilized our organization towards a new direction while delivering meaningful improvement in our operational efficiency and financial rigor, the fruits of which we believe are already reflected in our earnings. As we look ahead, we view 2026 to be a year of execution. We believe the strategic actions we took last year have established a solid foundation and have put us in a position of strength as we implement our transformation agenda. We plan to continue accelerating our investments in strategic growth priorities including Data and AI."
Share Repurchase Authorization
The share repurchase program is currently in effect and repurchases may occur from time to time through privately negotiated transactions, through block purchases, or by any combination of such methods, and may be modified, suspended or terminated at any time at the discretion of the Company's Board of Directors. The timing and actual number of shares repurchased (if any) will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations.
Conference Call:
A live audio webcast of the conference call can be accessed through the Investors section of
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. During the third quarter of 2025, we recorded severance charges associated with strategic initiatives we undertook to better align our organizational structure with our long-term growth objectives. During the third quarter of 2025, the Company recognized
Finance and accounting transition expense: During the first quarter of 2025, the Company's Board of Directors made the decision to implement a long-term cost-cutting initiative to transition the Company's finance and accounting functions to India. During 2025, the Company expects to incur additional costs related to the duplication of resources and travel expenses during the training and knowledge transfer process. Additionally, the Company expects to pay severance expense related to this initiative. The Company estimates total transition and severance expenses to approximate
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, statements regarding the terms, timing, logistics and conditions of the Company's share repurchase program, and projections of and statements regarding the Company's operations, business, expected financial results, performance, prospects, opportunities, priorities, ongoing objectives, strategies and outlook (including the timing, effectiveness and anticipated results of the Company's EDGE initiative and other Company initiatives, strategies, business plans and models). 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 Company's strategies, initiatives and expectations concerning its operations and operating results, 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 Securities and Exchange Commission, including its Form 10-K for the year ended
For more information, contact:
Investors@mastechdigital.com
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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 |
|
|
2024 |
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|
|
|
|
|
|
|
ASSETS |
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|
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|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ 36,533 |
|
|
$ 27,742 |
|
Accounts receivable, net |
|
26,396 |
|
|
31,443 |
|
Prepaid and other current assets |
|
5,647 |
|
|
7,020 |
|
Total current assets |
|
68,576 |
|
|
66,205 |
|
|
|
|
|
|
|
|
Equipment, enterprise software and leasehold improvements, net |
|
1,557 |
|
|
1,998 |
|
|
|
|
|
|
|
|
Operating lease right-of-use assets, net |
|
2,534 |
|
|
3,832 |
|
Deferred income taxes |
|
2,583 |
|
|
1,298 |
|
Deferred financing costs, net |
|
95 |
|
|
189 |
|
Deferred compensation, net |
|
1,000 |
|
|
- |
|
Non-current deposits |
|
530 |
|
|
444 |
|
|
|
27,210 |
|
|
27,210 |
|
|
|
|
|
|
|
|
Intangible assets, net of amortization |
|
7,755 |
|
|
10,308 |
|
Total assets |
|
$ 111,840 |
|
|
$ 111,484 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
|
$ 3,451 |
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|
$ 4,683 |
|
Current portion of operating lease liability |
|
1,283 |
|
|
1,265 |
|
Accrued payroll and related costs |
|
15,391 |
|
|
13,750 |
|
Other accrued liabilities |
|
939 |
|
|
879 |
|
Total current liabilities |
|
21,064 |
|
|
20,577 |
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|
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Long-term liabilities: |
|
|
|
|
|
|
Long-term operating lease liability, less current portion |
|
1,138 |
|
|
2,486 |
|
Long-term severance liability |
|
330 |
|
|
987 |
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Total liabilities |
|
22,532 |
|
|
24,050 |
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|
|
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Shareholders' equity: |
|
|
|
|
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Common stock, par value |
|
137 |
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|
135 |
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Additional paid-in capital |
|
42,515 |
|
|
38,277 |
|
Retained earnings |
|
56,427 |
|
|
55,817 |
|
Accumulated other comprehensive income (loss) |
|
(2,640) |
|
|
(1,910) |
|
|
|
(7,131) |
|
|
(4,885) |
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Total shareholders' equity |
|
89,308 |
|
|
87,434 |
|
Total liabilities and shareholders' equity |
|
$ 111,840 |
|
|
$ 111,484 |
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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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Year-ended |
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2025 |
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2024 |
|
2025 |
|
2024 |
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Revenues |
$ 45,461 |
|
$ 50,747 |
|
$ 191,371 |
|
$ 198,943 |
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|
|
|
|
|
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Cost of revenues |
32,578 |
|
36,032 |
|
138,315 |
|
143,346 |
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|
|
|
|
|
|
|
|
|
Gross profit |
12,883 |
|
14,715 |
|
53,056 |
|
55,597 |
|
|
|
|
|
|
|
|
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|
Selling, general and administrative expenses |
11,876 |
|
14,650 |
|
53,055 |
|
51,806 |
|
|
|
|
|
|
|
|
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|
Income (loss) from operations |
1,007 |
|
65 |
|
1 |
|
3,791 |
|
|
|
|
|
|
|
|
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Other income/(expense), net |
372 |
|
260 |
|
1,061 |
|
633 |
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
1,379 |
|
325 |
|
1,062 |
|
4,424 |
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
407 |
|
28 |
|
453 |
|
1,022 |
|
Net income (loss) |
$ 972 |
|
$ 297 |
|
$ 609 |
|
$ 3,402 |
|
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Earnings (loss) per share: |
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|
|
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Basic |
$ 0.08 |
|
$ 0.03 |
|
$ 0.05 |
|
$ 0.29 |
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Diluted |
$ 0.08 |
|
$ 0.02 |
|
$ 0.05 |
|
$ 0.28 |
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Weighted average common shares outstanding: |
|
|
|
|
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|
|
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Basic |
11,705 |
|
11,713 |
|
11,747 |
|
11,669 |
|
Diluted |
11,823 |
|
12,191 |
|
11,950 |
|
12,014 |
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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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Year-ended |
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2025 |
|
2024 |
|
2025 |
|
2024 |
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|
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|
GAAP Net Income (Loss) |
$ 972 |
|
$ 297 |
|
$ 609 |
|
$ 3,402 |
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Adjustments: |
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|
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Amortization of acquired intangible assets |
604 |
|
650 |
|
2,553 |
|
2,693 |
|
|
|
|
Stock-based compensation |
780 |
|
647 |
|
3,118 |
|
2,200 |
|
|
|
|
Severance expense |
370 |
|
2,083 |
|
3,095 |
|
2,083 |
|
|
|
|
Finance and accounting transition expense |
299 |
|
- |
|
1,924 |
|
- |
|
|
|
|
Income tax adjustments |
(526) |
|
(875) |
|
(2,747) |
|
(1,795) |
|
|
|
Non-GAAP Net Income |
$ 2,499 |
|
$ 2,802 |
|
$ 8,552 |
|
$ 8,583 |
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|
GAAP Diluted Earnings (Loss) Per Share |
$ 0.08 |
|
$ 0.02 |
|
$ 0.05 |
|
$ 0.28 |
|
|
|
|
Non-GAAP Diluted Earnings Per Share |
$ 0.21 |
|
$ 0.23 |
|
$ 0.72 |
|
$ 0.71 |
|
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|
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|
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|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Shares |
11,823 |
|
12,191 |
|
11,950 |
|
12,014 |
|
|
|
|
Non-GAAP Diluted Shares |
11,823 |
|
12,191 |
|
11,950 |
|
12,014 |
|
|
|
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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 |
|
Year-ended |
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|
2025 |
|
2024 |
|
2025 |
|
2024 |
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|
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|
Revenues: |
|
|
|
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|
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|
|
Data and analytics services |
$ 7,816 |
|
$ 10,284 |
|
$ 33,275 |
|
$ 36,625 |
|
|
|
IT staffing services |
37,645 |
|
40,463 |
|
158,096 |
|
162,318 |
|
|
|
|
Total revenues |
$ 45,461 |
|
$ 50,747 |
|
$ 191,371 |
|
$ 198,943 |
|
|
|
|
|
|
|
|
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|
Gross Margin %: |
|
|
|
|
|
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|
||
|
|
Data and analytics services |
49.8 % |
|
49.5 % |
|
46.2 % |
|
49.1 % |
|
|
|
IT staffing services |
23.9 % |
|
23.8 % |
|
24.0 % |
|
23.2 % |
|
|
|
|
Total gross margin % 1 |
28.3 % |
|
29.0 % |
|
27.9 % |
|
27.9 % |
|
|
|
|
|
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|
|
|
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Segment Operating Income (Loss): |
|
|
|
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|
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||
|
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Data and analytics services |
$ (252) |
|
$ 1,809 |
|
$ (221) |
|
$ 3,244 |
|
|
|
IT staffing services |
2,532 |
|
989 |
|
7,794 |
|
5,323 |
|
|
|
|
Subtotal |
2,280 |
|
2,798 |
|
7,573 |
|
8,567 |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets |
(604) |
|
(650) |
|
(2,553) |
|
(2,693) |
||
|
Severance expense |
(370) |
|
(2,083) |
|
(3,095) |
|
(2,083) |
||
|
Finance and accounting transition expense |
(299) |
|
- |
|
(1,924) |
|
- |
||
|
Interest income and other, net |
372 |
|
260 |
|
1,061 |
|
633 |
||
|
Income (loss) before income taxes |
$ 1,379 |
|
$ 325 |
|
$ 1,062 |
|
$ 4,424 |
||
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(1) Gross margin differences between the supplemental segment and consolidated results primarily reflect non-allocated |
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