Mastech Digital Reports Second Quarter 2026 Results
Rhea-AI Summary
Mastech Digital (NYSE American: MHH) reported second quarter 2026 revenues of $41.4 million, down 15.6% year-over-year but up 0.9% sequentially. Data & AI revenues were $13.5 million, down 14.4% year-over-year yet 7.2% higher sequentially, with segment bookings of $13.5 million versus $9.0 million a year ago. Talent revenues were $28.0 million, 16.2% lower year-over-year and 1.9% lower sequentially, impacted by a 22.3% decline in billable consultants as a top-ten client continued insourcing and the company exited lower-margin roles.
Total gross margin rose to 29.0% from 28.1% a year earlier. The company recorded a small GAAP net loss of $0.1 million (loss per diluted share of $0.01) and non-GAAP net income of $1.0 million (non-GAAP diluted EPS of $0.08). As of June 30, 2026, Mastech Digital reported $56.0 million in liquidity, including $35.6 million of cash and no bank debt.
Positive
- Sequential revenue growth of 0.9% to $41.4 million in Q2 2026
- Data & AI revenue up 7.2% sequentially, first growth quarter since 2024
- Data & AI bookings $13.5 million vs. $9.0 million in Q2 2025
- Total gross margin improved to 29.0% from 28.1% year-over-year
- Liquidity of $56.0 million and no bank debt at June 30, 2026
- Average Talent bill rate increased to $92.17 from $88.36 year-over-year
Negative
- Total Q2 2026 revenue down 15.6% year-over-year to $41.4 million
- Data & AI revenue decreased 14.4% year-over-year despite sequential growth
- Talent revenue down 16.2% year-over-year and 1.9% sequentially
- Billable consultants in Talent segment declined 22.3% vs. Q2 2025
- Q2 2026 GAAP net loss of $0.1 million vs. $0.1 million income prior year
- Non-GAAP net income fell to $1.0 million from $1.8 million in Q2 2025
News Explained
A new AI deployment engagement adds customer work, but Data & AI still reported a quarterly operating loss.
The new disclosure is that, during the quarter ended
In the reported segment results, Data & AI posted an operating loss while Talent posted operating income, leaving the quarter’s segment performance divided rather than uniformly profitable.
The company’s non-GAAP measure excludes specified items from GAAP results; for the quarter, those included acquired-intangible amortization, stock-based compensation, and an income-tax adjustment.
AI-generated analysis. How Rhea-AI works. Not financial advice.
Mastech Digital Reports Sequential Revenue Growth and Sustained Bookings Momentum
Second Quarter 2026 Highlights:
MASTECH DIGITAL, INC. | |||||||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||||
(Amounts in thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months ended June 30, | Six Months ended June 30, | ||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||
Revenues: | |||||||||||||||
Data & AI | $ | 13,484 | $ | 15,737 | $ | 26,068 | $ | 31,734 | |||||||
Talent | 27,963 | 33,360 | 56,462 | 65,680 | |||||||||||
Total revenues | $ | 41,447 | $ | 49,097 | $ | 82,530 | $ | 97,414 | |||||||
Gross Margin $: | |||||||||||||||
Data & AI | $ | 5,451 | $ | 6,139 | $ | 10,135 | $ | 12,173 | |||||||
Talent | 6,548 | 7,681 | 12,889 | 14,539 | |||||||||||
Total gross margin $ | $ | 11,999 | $ | 13,820 | $ | 23,024 | $ | 26,712 | |||||||
Gross Margin %: | |||||||||||||||
Data & AI | 40.4 | % | 39.0 | % | 38.9 | % | 38.4 | % | |||||||
Talent | 23.4 | % | 23.0 | % | 22.8 | % | 22.1 | % | |||||||
Total gross margin % | 29.0 | % | 28.1 | % | 27.9 | % | 27.4 | % | |||||||
GAAP Net Income (Loss) | $ | (100) | $ | 135 | $ | 164 | $ | (1,304) | |||||||
GAAP Diluted Earnings (Loss) Per Share | $ | (0.01) | $ | 0.01 | $ | 0.01 | $ | (0.11) | |||||||
Non-GAAP Net Income | $ | 976 | $ | 1,830 | $ | 2,233 | $ | 2,586 | |||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.08 | $ | 0.15 | $ | 0.19 | $ | 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, "Last quarter, we realigned our business into two segments, Talent and Data & AI, positioning us as a full-service, AI-first provider for enterprise customers. We believe that decision is beginning to show results. During the second quarter, we entered into a strategic AI deployment engagement with a leading US convenience store retailer to deploy a production-grade agentic AI foundation to power its consumer applications and store operations. We believe this engagement reflects continued enterprise demand for partners like Mastech Digital that can support AI-first initiatives.
Within our Data & AI segment, deliberate investments in our go-to-market acceleration, AI ready talent, and Data platform partnership scale-ups are now beginning to increase as reflected in our financials for the second quarter of 2026. Bookings for the quarter totaled
As anticipated, insourcing by one of our top ten clients continued to weigh on Talent segment performance, consistent with prior quarters. We continue to monitor the situation closely.
As we move into the second half of the year, our team remains focused and disciplined in executing our transformation plan."
Balance Sheet & Liquidity Update:
As of June 30, 2026, Mastech Digital had liquidity of
Conference Call:
Mastech Digital will host a conference call to discuss the Company's second quarter 2026 financial results on August 6, 2026 at 9:00 a.m. Eastern Time. Those wishing to participate via telephone may dial in at 1-800-715-9871 (
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 Pittsburgh, PA, with offices across the U.S., Canada, Europe, and India. Visit us at www.mastechdigital.com.
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 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.
Investor Relations Contact:
Investors@mastechdigital.com
MASTECH DIGITAL, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Amounts in thousands) | ||||||||
(Unaudited) | ||||||||
June 30, | Dec 31, | |||||||
2026 | 2025 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 35,603 | $ | 36,533 | ||||
Accounts receivable, net | 27,740 | 26,396 | ||||||
Prepaid and other current assets | 5,930 | 5,647 | ||||||
Total current assets | 69,273 | 68,576 | ||||||
Equipment, enterprise software and leasehold improvements, net | 1,246 | 1,557 | ||||||
Operating lease right-of-use assets, net | 2,255 | 2,534 | ||||||
Deferred income taxes | 1,705 | 2,583 | ||||||
Deferred financing costs, net | 47 | 95 | ||||||
Deferred compensation, net | 750 | 1,000 | ||||||
Non-current deposits | 518 | 530 | ||||||
Goodwill, net of impairment | 27,210 | 27,210 | ||||||
Intangible assets, net of amortization | 6,549 | 7,755 | ||||||
Total assets | $ | 109,553 | $ | 111,840 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,139 | $ | 3,451 | ||||
Current portion of operating lease liability | 1,274 | 1,283 | ||||||
Accrued payroll and related costs | 11,734 | 15,391 | ||||||
Other accrued liabilities | 746 | 939 | ||||||
Total current liabilities | 16,893 | 21,064 | ||||||
Long-term liabilities: | ||||||||
Long-term operating lease liability, less current portion | 851 | 1,138 | ||||||
Long-term severance liability | - | 330 | ||||||
Total liabilities | 17,744 | 22,532 | ||||||
Shareholders' equity: | ||||||||
Common stock, par value | 140 | 137 | ||||||
Additional paid-in capital | 45,490 | 42,515 | ||||||
Retained earnings | 56,591 | 56,427 | ||||||
Accumulated other comprehensive income (loss) | (3,281) | (2,640) | ||||||
Treasury stock, at cost | (7,131) | (7,131) | ||||||
Total shareholders' equity | 91,809 | 89,308 | ||||||
Total liabilities and shareholders' equity | $ | 109,553 | $ | 111,840 | ||||
MASTECH DIGITAL, INC. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months ended June 30, | Six Months ended June 30, | |||||||||||
2026 | 2025 | 2026 | 2025 | |||||||||
Revenues | $ | 41,447 | $ | 49,097 | $ | 82,530 | $ | 97,414 | ||||
Cost of revenues | 29,448 | 35,277 | 59,506 | 70,702 | ||||||||
Gross profit | 11,999 | 13,820 | 23,024 | 26,712 | ||||||||
Selling, general and administrative expenses | 12,324 | 13,793 | 23,298 | 28,538 | ||||||||
Income (loss) from operations | (325) | 27 | (274) | (1,826) | ||||||||
Other income/(expense), net | 323 | 183 | 929 | 274 | ||||||||
Income (loss) before income taxes | (2) | 210 | 655 | (1,552) | ||||||||
Income tax expense (benefit) | 98 | 75 | 491 | (248) | ||||||||
Net income (loss) | $ | (100) | $ | 135 | $ | 164 | $ | (1,304) | ||||
Earnings (loss) per share: | ||||||||||||
Basic | $ | (0.01) | $ | 0.01 | $ | 0.01 | $ | (0.11) | ||||
Diluted | $ | (0.01) | $ | 0.01 | $ | 0.01 | $ | (0.11) | ||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 12,011 | 11,767 | 11,919 | 11,760 | ||||||||
Diluted | 12,011 | 11,964 | 11,984 | 11,760 | ||||||||
MASTECH DIGITAL, INC. | ||||||||||||||
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES | ||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months ended June 30, | Six Months ended June 30, | |||||||||||||
2026 | 2025 | 2026 | 2025 | |||||||||||
GAAP Net Income (Loss) | $ | (100) | $ | 135 | $ | 164 | $ | (1,304) | ||||||
Adjustments: | ||||||||||||||
Amortization of acquired intangible assets | 604 | 649 | 1,207 | 1,299 | ||||||||||
Stock-based compensation | 818 | 714 | 1,568 | 1,609 | ||||||||||
Severance expense | - | 232 | - | 1,641 | ||||||||||
Finance and accounting transition expense | - | 688 | - | 688 | ||||||||||
Income tax adjustments | (346) | (588) | (706) | (1,347) | ||||||||||
Non-GAAP Net Income | $ | 976 | $ | 1,830 | $ | 2,233 | $ | 2,586 | ||||||
GAAP Diluted Earnings (Loss) Per Share | $ | (0.01) | $ | 0.01 | $ | 0.01 | $ | (0.11) | ||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.08 | $ | 0.15 | $ | 0.19 | $ | 0.21 | ||||||
Weighted average common shares outstanding: | ||||||||||||||
GAAP Diluted Shares | 12,011 | 11,964 | 11,984 | 11,760 | ||||||||||
Non-GAAP Diluted Shares | 12,086 | 11,964 | 11,984 | 12,084 | ||||||||||
MASTECH DIGITAL, INC. | ||||||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months ended June 30, | Six Months ended June 30, | |||||||||||||
2026 | 2025 | 2026 | 2025 | |||||||||||
Revenues: | ||||||||||||||
Data & AI | $ | 13,484 | $ | 15,737 | $ | 26,068 | $ | 31,734 | ||||||
Talent | 27,963 | 33,360 | 56,462 | 65,680 | ||||||||||
Total revenues | $ | 41,447 | $ | 49,097 | $ | 82,530 | $ | 97,414 | ||||||
Gross Margin %: | ||||||||||||||
Data & AI | 40.4 | % | 39.0 | % | 38.9 | % | 38.4 | |||||||
Talent | 23.4 | % | 23.0 | % | 22.8 | % | 22.1 | |||||||
Total gross margin % | 29.0 | % | 28.1 | % | 27.9 | % | 27.4 | |||||||
Segment Operating Income (Loss): | ||||||||||||||
Data & AI | $ | (481) | $ | 957 | $ | (929) | $ | 1,229 | ||||||
Talent | 760 | 639 | 1,861 | 573 | ||||||||||
Subtotal | 279 | 1,596 | 932 | 1,802 | ||||||||||
Amortization of acquired intangible assets | (604) | (649) | (1,207) | (1,299) | ||||||||||
Severance expense | - | (232) | - | (1,641) | ||||||||||
Finance and accounting transition expense | - | (688) | - | (688) | ||||||||||
Interest income and other, net | 323 | 183 | 930 | 274 | ||||||||||
Income (loss) before income taxes | $ | (2) | $ | 210 | $ | 655 | $ | (1,552) | ||||||
Investor Relations Contact:
Investors@mastechdigital.com
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SOURCE Mastech Digital, Inc.