Mastech Digital Reports First Quarter 2026 Results
Rhea-AI Summary
Mastech Digital (NYSE American:MHH) reported first quarter 2026 revenues of $41.1 million, down 15% year-over-year, with consolidated gross margin at 26.8%.
GAAP net income was $0.3 million ($0.02 per diluted share), while non-GAAP net income reached $1.3 million ($0.11 per diluted share). Liquidity totaled $54.9 million with no bank debt.
AI-generated analysis. Not financial advice.
Positive
- GAAP net income of $0.3 million versus prior-year loss of $1.4 million
- Non-GAAP net income increased to $1.3 million from $1.1 million year-over-year
- Total bookings TCV rose to $7.0 million from $3.7 million year-over-year
- Average bill rate increased to $90.91 from $87.82 year-over-year
- Total liquidity of $54.9 million, including $33.6 million cash and no bank debt
Negative
- Consolidated revenues declined 15% year-over-year to $41.1 million
- Data & AI segment revenues decreased 21% year-over-year
- Talent segment revenues declined 11.8% year-over-year
- Billable consultants in Talent segment fell 20.8% year-over-year
Key Figures
Market Reality Check
Peers on Argus
Staffing peers showed mixed moves: HQI +6.54%, ATLN +4.39%, TBI -3.42%, HSON -0.25%, while BGSF was flat. Momentum scanner only flagged NIXX (+5.17%) from the broader group, reinforcing a stock-specific focus for MHH.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Nov 12 | Quarterly earnings | Positive | +5.4% | Reported Q3 2025 results with solid non-GAAP profit and strong staffing margins. |
| Nov 03 | Earnings call notice | Neutral | +3.6% | Announced date and details for Q3 2025 earnings release and conference call. |
| Jul 31 | Earnings call notice | Neutral | +1.6% | Scheduled Q2 2025 earnings call with access via dial-in and webcast. |
| May 16 | Quarterly earnings | Negative | -4.8% | Q1 2025 revenue grew but GAAP net loss widened amid severance expenses. |
| May 07 | Earnings call notice | Neutral | +1.0% | Announced Q1 2025 earnings call logistics for investors and analysts. |
Earnings-related headlines have generally produced modest, mostly positive price moves, with one notable negative reaction when Q1 2025 results combined revenue growth with a GAAP loss.
Over the past year, Mastech Digital has issued 5 earnings-related press releases, including Q1 and Q3 2025 results and multiple earnings call announcements. Q3 2025 featured $48.5M revenue and solid non-GAAP profitability, while Q1 2025 showed 3% revenue growth but a GAAP net loss. Liquidity remained strong across periods. Today’s Q1 2026 report continues this theme of balancing transformation, segment mix, and profitability under challenging demand conditions.
Historical Comparison
In the past year, MHH issued 5 earnings-related releases with an average move of 1.36%. The Q1 2026 results continue the pattern of measured reactions to earnings and transformation updates.
Earnings updates have tracked Mastech’s transition from IT Staffing and Data & Analytics toward an AI-led model, with Q1 2025 showing growth but losses, and Q3 2025 highlighting improving margins and non-GAAP profitability ahead of today’s new Talent and Data & AI segmentation.
Market Pulse Summary
This announcement details Q1 2026 results, highlighting a 15% revenue decline but improved GAAP and non‑GAAP profitability, along with strong liquidity of $54.9M and no bank debt. The new Talent and Data & AI segmentation reflects an AI-led strategy amid cautious client spending. Investors may focus on segment revenue trends, bill rates, bookings TCV growth, and execution of the EDGE efficiency program in upcoming quarters.
Key Terms
non-gaap financial
liquidity financial
credit facility financial
tcv financial
AI-generated analysis. Not financial advice.
Mastech Digital Kicks Off 2026 With Business Realignment
First Quarter 2026 Highlights: | |||||||||||
Three Months Ended | |||||||||||
March 31, | March 31, | December 31, | |||||||||
(In thousands, except per share data) | 2026 | 2025 | 2025 | ||||||||
Revenues | |||||||||||
Data & AI Segment | $ | 12,584 | $ | 15,997 | $ | 14,409 | |||||
Talent Segment | 28,499 | 32,319 | 31,052 | ||||||||
Consolidated | $ | 41,083 | $ | 48,316 | $ | 45,461 | |||||
Gross Profit | |||||||||||
Data & AI Segment | $ | 4,684 | $ | 6,034 | $ | 5,902 | |||||
Talent Segment | 6,341 | 6,858 | 6,981 | ||||||||
Consolidated | $ | 11,025 | $ | 12,892 | $ | 12,883 | |||||
Gross Margin | |||||||||||
Data & AI Segment | 37.2 | % | 37.7 | % | 41.0 | % | |||||
Talent Segment | 22.3 | % | 21.2 | % | 22.5 | % | |||||
Consolidated | 26.8 | % | 26.7 | % | 28.3 | % | |||||
GAAP Net Income (Loss) | $ | 264 | $ | (1,439) | $ | 972 | |||||
GAAP Diluted Earnings (Loss) Per Share | $ | 0.02 | $ | (0.12) | $ | 0.08 | |||||
Non-GAAP Net Income | $ | 1,281 | $ | 1,101 | $ | 2,499 | |||||
Non-GAAP Diluted Earnings Per Share | $ | 0.11 | $ | 0.06 | $ | 0.21 | |||||
See "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP Measures to Non-GAAP Measures" below.
Total consolidated revenues of
Management Commentary:
Nirav Patel, Mastech Digital's President and Chief Executive Officer, stated, "We continued to make progress during the first quarter against our transformation plan. A critical step in that journey was the realignment of our business into two new segments: Talent and Data & AI. As part of this effort, we have realigned certain clients more closely with our Data & AI business, a move we believe strengthens our integrated offerings and reinforces our position as a full-service provider. We believe this structure better reflects how we serve our clients and how we intend to create long-term value.
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 January 1, 2026, Mastech Digital realigned its former IT Staffing Services and Data and Analytics Services operating segments to reflect its AI-led operating strategy and resource allocation priorities. The new reportable segments are Talent and Data & AI. These changes did not impact our previously reported consolidated results.
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 March 31, 2026, Mastech Digital had liquidity of
Conference Call:
Mastech Digital will host a conference call to discuss the Company's first quarter 2026 financial results on May 15, 2026 at 9:00 a.m. Eastern Time. To join the call telephonically, please register at https://register-conf.media-server.com/register/BI12042dae45f94ede9096dd99c2bed8f6. Once registered, participants will receive the dial-in information and a unique PIN to access the call. The dial-in information and unique PIN will be sent to the email used to register for the call. The unique PIN is exclusive to the registrant and can only be used by one person at a time.
A live audio webcast of the conference call can be accessed through the Mastech Digital investor relations website at https://investors.mastechdigital.com, and a webcast replay will be accessible for a limited time following the scheduled call.
About Mastech Digital, Inc.:
Mastech Digital (NYSE American: MHH) is a leading provider of Digital Transformation IT Services. The Company offers Data Management, Analytics & AI Solutions, and IT Staffing Services with a digital-first approach. A minority-owned enterprise, Mastech Digital is headquartered in
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 June 2015 acquisition of Hudson IT, our July 2017 acquisition of the services division of InfoTrellis, Inc. and our October 2020 acquisition of AmberLeaf Partners. We exclude these amortization expenses in our non-GAAP financial measures because we believe it allows investors to make more meaningful comparisons between our operating results and those of other companies within our industry and facilitates a helpful comparison of our results with other periods.
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 December 31, 2025.
MASTECH DIGITAL, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(Amounts in thousands) | ||||
(Unaudited) | ||||
March 31, | March 31, | |||
2026 | 2025 | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 33,550 | $ 24,665 | ||
Accounts receivable, net | 27,728 | 32,146 | ||
Prepaid and other current assets | 5,288 | 7,652 | ||
Total current assets | 66,566 | 64,463 | ||
Equipment, enterprise software and leasehold improvements, net | 1,390 | 1,932 | ||
Operating lease right-of-use assets, net | 2,266 | 3,514 | ||
Deferred income taxes | 1,941 | 1,295 | ||
Deferred financing costs, net | 71 | 165 | ||
Deferred compensation, net | 875 | 1,375 | ||
Non-current deposits | 523 | 464 | ||
Goodwill, net of impairment | 27,210 | 27,210 | ||
Intangible assets, net of amortization | 7,152 | 9,658 | ||
Total assets | $ 107,994 | $ 110,076 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 3,360 | $ 3,742 | ||
Current portion of operating lease liability | 1,312 | 1,291 | ||
Accrued payroll and related costs | 10,453 | 13,448 | ||
Other accrued liabilities | 888 | 930 | ||
Total current liabilities | 16,013 | 19,411 | ||
Long-term liabilities: | ||||
Long-term operating lease liability, less current portion | 810 | 2,158 | ||
Long-term severance liability | 110 | 1,560 | ||
Total liabilities | 16,933 | 23,129 | ||
Shareholders' equity: | ||||
Common stock, par value | 140 | 135 | ||
Additional paid-in capital | 44,562 | 39,199 | ||
Retained earnings | 56,691 | 54,378 | ||
Accumulated other comprehensive income (loss) | (3,201) | (1,880) | ||
Treasury stock, at cost | (7,131) | (4,885) | ||
Total shareholders' equity | 91,061 | 86,947 | ||
Total liabilities and shareholders' equity | $ 107,994 | $ 110,076 | ||
MASTECH DIGITAL, INC. | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(Amounts in thousands, except per share data) | ||||
(Unaudited) | ||||
Three Months ended March 31, | ||||
2026 | 2025 | |||
Revenues | $ 41,083 | $ 48,317 | ||
Cost of revenues | 30,058 | 35,425 | ||
Gross profit | 11,025 | 12,892 | ||
Selling, general and administrative expenses | 10,974 | 14,745 | ||
Income (loss) from operations | 51 | (1,853) | ||
Other income/(expense), net | 606 | 91 | ||
Income (loss) before income taxes | 657 | (1,762) | ||
Income tax expense (benefit) | 393 | (323) | ||
Net income (loss) | $ 264 | $ (1,439) | ||
Earnings (loss) per share: | ||||
Basic | $ 0.02 | $ (0.12) | ||
Diluted | $ 0.02 | $ (0.12) | ||
Weighted average common shares | ||||
Basic | 11,828 | 11,753 | ||
Diluted | 11,894 | 11,753 | ||
MASTECH DIGITAL, INC. | |||||
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES | |||||
(Amounts in thousands, except per share data) | |||||
(Unaudited) | |||||
Three Months ended March 31, | |||||
2026 | 2025 | ||||
GAAP Net Income (Loss) | $ 264 | $ (1,439) | |||
Adjustments: | |||||
Amortization of acquired intangible assets | 603 | 650 | |||
Stock-based compensation | 750 | 895 | |||
Severance expense | - | 1,409 | |||
Income taxes adjustments | (336) | (759) | |||
Non-GAAP Net Income | $ 1,281 | $ 756 | |||
GAAP Diluted Earnings (Loss) Per Share | $ 0.02 | $ (0.12) | |||
Non-GAAP Diluted Earnings Per Share | $ 0.11 | $ 0.06 | |||
Weighted average common shares outstanding: | |||||
GAAP Diluted Shares | 11,828 | 11,753 | |||
Non-GAAP Diluted Shares | 11,894 | 12,096 | |||
MASTECH DIGITAL, INC. | |||||
SUPPLEMENTAL FINANCIAL INFORMATION | |||||
(Amounts in thousands) | |||||
(Unaudited) | |||||
Three Months ended March 31, | |||||
2026 | 2025 | ||||
Revenues: | |||||
Data & AI | $ 12,584 | $ 15,997 | |||
Talent | 28,499 | 32,320 | |||
Total revenues | $ 41,083 | $ 48,317 | |||
Gross Margin %: | |||||
Data & AI | 37.2 % | 37.7 % | |||
Talent | 22.2 % | 21.2 % | |||
Total gross margin % | 26.8 % | 26.7 % | |||
Segment Operating Income (Loss): | |||||
Data & AI | $ (448) | $ 272 | |||
Talent | 1,101 | (66) | |||
Subtotal | 653 | 206 | |||
Amortization of acquired intangible assets | (603) | (650) | |||
Severance expense | - | (1,409) | |||
Interest expense and other, net | 607 | 91 | |||
Income (loss) before income taxes | $ 657 | $ (1,762) | |||
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SOURCE Mastech Digital, Inc.