Mastech Digital Reports First Quarter 2026 Results
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First Quarter 2026 Highlights: |
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Three Months Ended |
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(In thousands, except per share data) |
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2026 |
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2025 |
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2025 |
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Revenues |
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Data & AI Segment |
$ |
12,584 |
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$ |
15,997 |
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$ |
14,409 |
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Talent Segment |
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28,499 |
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32,319 |
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31,052 |
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Consolidated |
$ |
41,083 |
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$ |
48,316 |
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$ |
45,461 |
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Gross Profit |
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Data & AI Segment |
$ |
4,684 |
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$ |
6,034 |
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$ |
5,902 |
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Talent Segment |
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6,341 |
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6,858 |
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6,981 |
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Consolidated |
$ |
11,025 |
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$ |
12,892 |
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$ |
12,883 |
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Gross Margin |
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Data & AI Segment |
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37.2 |
% |
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37.7 |
% |
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41.0 |
% |
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Talent Segment |
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22.3 |
% |
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21.2 |
% |
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22.5 |
% |
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Consolidated |
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26.8 |
% |
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26.7 |
% |
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28.3 |
% |
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GAAP Net Income (Loss) |
$ |
264 |
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$ |
(1,439) |
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$ |
972 |
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GAAP Diluted Earnings (Loss) Per Share |
$ |
0.02 |
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$ |
(0.12) |
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$ |
0.08 |
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Non-GAAP Net Income |
$ |
1,281 |
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$ |
1,101 |
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$ |
2,499 |
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Non-GAAP Diluted Earnings Per Share |
$ |
0.11 |
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$ |
0.06 |
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$ |
0.21 |
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See "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP Measures to Non-GAAP Measures" below.
Total consolidated revenues of
Management Commentary:
We believe geopolitical events and ongoing conflicts have created an environment of compounding uncertainty, and we are seeing enterprises respond with continued caution in their technology spending. While broad-based expansion in discretionary budgets has remained limited, organizations have continued to allocate toward strategic AI initiatives - a reflection that AI investment decisions, while deliberate, remain a priority. We plan to continue monitoring customer spending patterns as the environment evolves.
From the outset, we have been clear that savings had to come ahead of our investments. We are pleased that our transformation initiative, EDGE (Efficiencies Driving Growth and Expansion) announced in the third quarter of 2025, has continued to execute ahead of our expectations."
Re-Segmented Financial Reporting Overview:
Effective
The Data & AI segment consists solely of direct client engagements, including certain clients from the former IT Staffing Services division where we believe the Company has the potential to cross-sell services and increase market share. The offerings in this segment include data management and analytics, digital transformation consulting, AI and Industry Solutions, staffing to direct customers, data engineering and IT services, and managed services.
The Talent segment provides staffing solutions that enable clients to access skilled technology professionals across a broad range of digital and mainstream IT disciplines. These engagements include intermediated arrangements through managed service providers and systems integrators, as well as certain direct client relationships. We have structured this segment to allow clients to scale their technology teams efficiently while maintaining flexibility in response to changing business conditions.
Balance Sheet & Liquidity Update:
As of
Conference Call:
A live audio webcast of the conference call can be accessed through the
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.
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, and projections of and statements regarding the Company's operations, business, segments, 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, segments 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
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Amounts in thousands) |
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(Unaudited) |
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2026 |
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2025 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ 33,550 |
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$ 24,665 |
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Accounts receivable, net |
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27,728 |
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32,146 |
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Prepaid and other current assets |
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5,288 |
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7,652 |
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Total current assets |
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66,566 |
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64,463 |
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Equipment, enterprise software and leasehold improvements, net |
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1,390 |
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1,932 |
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Operating lease right-of-use assets, net |
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2,266 |
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3,514 |
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Deferred income taxes |
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1,941 |
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1,295 |
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Deferred financing costs, net |
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71 |
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165 |
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Deferred compensation, net |
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875 |
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1,375 |
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Non-current deposits |
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523 |
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464 |
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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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7,152 |
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9,658 |
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Total assets |
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$ 107,994 |
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$ 110,076 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ 3,360 |
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$ 3,742 |
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Current portion of operating lease liability |
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1,312 |
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1,291 |
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Accrued payroll and related costs |
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10,453 |
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13,448 |
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Other accrued liabilities |
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888 |
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930 |
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Total current liabilities |
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16,013 |
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19,411 |
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Long-term liabilities: |
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Long-term operating lease liability, less current portion |
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810 |
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2,158 |
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Long-term severance liability |
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110 |
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1,560 |
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Total liabilities |
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16,933 |
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23,129 |
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Shareholders' equity: |
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Common stock, par value |
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140 |
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135 |
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Additional paid-in capital |
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44,562 |
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39,199 |
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Retained earnings |
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56,691 |
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54,378 |
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Accumulated other comprehensive income (loss) |
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(3,201) |
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(1,880) |
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(7,131) |
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(4,885) |
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Total shareholders' equity |
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91,061 |
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86,947 |
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Total liabilities and shareholders' equity |
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$ 107,994 |
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$ 110,076 |
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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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2026 |
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2025 |
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Revenues |
$ 41,083 |
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$ 48,317 |
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Cost of revenues |
30,058 |
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35,425 |
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Gross profit |
11,025 |
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12,892 |
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Selling, general and administrative expenses |
10,974 |
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14,745 |
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Income (loss) from operations |
51 |
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(1,853) |
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Other income/(expense), net |
606 |
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91 |
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Income (loss) before income taxes |
657 |
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(1,762) |
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Income tax expense (benefit) |
393 |
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(323) |
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Net income (loss) |
$ 264 |
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$ (1,439) |
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Earnings (loss) per share: |
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Basic |
$ 0.02 |
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$ (0.12) |
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Diluted |
$ 0.02 |
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$ (0.12) |
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Weighted average common shares |
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Basic |
11,828 |
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11,753 |
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Diluted |
11,894 |
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11,753 |
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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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2026 |
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2025 |
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GAAP Net Income (Loss) |
$ 264 |
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$ (1,439) |
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Adjustments: |
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Amortization of acquired intangible assets |
603 |
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650 |
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Stock-based compensation |
750 |
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895 |
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Severance expense |
- |
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1,409 |
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Income taxes adjustments |
(336) |
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(759) |
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Non-GAAP Net Income |
$ 1,281 |
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$ 756 |
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GAAP Diluted Earnings (Loss) Per Share |
$ 0.02 |
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$ (0.12) |
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Non-GAAP Diluted Earnings Per Share |
$ 0.11 |
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$ 0.06 |
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Weighted average common shares outstanding: |
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GAAP Diluted Shares |
11,828 |
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11,753 |
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Non-GAAP Diluted Shares |
11,894 |
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12,096 |
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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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2026 |
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2025 |
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Revenues: |
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Data & AI |
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$ 12,584 |
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$ 15,997 |
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Talent |
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28,499 |
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32,320 |
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Total revenues |
$ 41,083 |
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$ 48,317 |
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Gross Margin %: |
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Data & AI |
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37.2 % |
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37.7 % |
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Talent |
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22.2 % |
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21.2 % |
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Total gross margin % |
26.8 % |
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26.7 % |
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Segment Operating Income (Loss): |
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Data & AI |
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$ (448) |
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$ 272 |
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Talent |
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1,101 |
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(66) |
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Subtotal |
653 |
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206 |
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Amortization of acquired intangible assets |
(603) |
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(650) |
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Severance expense |
- |
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(1,409) |
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Interest expense and other, net |
607 |
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91 |
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Income (loss) before income taxes |
$ 657 |
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$ (1,762) |
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Investor Relations Contact:
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