Mastech Reports Third Quarter 2026 Results

Data & AI bookings increased while Talent's consultant count declined as a top-ten client continued insourcing services.

Rhea-AI Summary

Mastech Digital (MHH) reported third-quarter 2026 revenue of $42.0 million, with sequential growth but a decline from a year earlier. Revenue fell 13.4% year over year and rose 1.3% from the second quarter. GAAP net income dropped to $7,000 from $941,000, with diluted earnings per share of $0.00 versus $0.08.

Data & AI revenue fell 6.8% year over year but grew 4.7% sequentially; bookings increased to $10.8 million from $8.4 million. Talent revenue declined 16.4% year over year and 0.4% sequentially as billable consultants decreased 21.0%. Segment gross margins improved year over year. Non-GAAP net income fell to $1.222 million from $3.467 million. At September 30, liquidity was $56.2 million, including $37.9 million in cash and approximately $18.3 million of available borrowing capacity, with no bank debt. Mastech expects to continue capability investments into 2027.

13 points · 0 major

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0 major · 14 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Moderate pointData & AI bookings increased to $10.8 million in Q3 2026 from $8.4 million a year earlier.
• Moderate pointNine-month GAAP net income improved to $171,000 from a $363,000 loss; diluted EPS reached $0.01 versus $(0.03).
• Moderate pointNine-month operating loss narrowed to $261,000 from $1.006 million a year earlier.
• Moderate pointFinance and accounting transition costs were zero in 2026, versus $1.625 million in the first nine months of 2025. 2.1% of market cap
• Minor pointData & AI gross margin increased to 40.5% in Q3 2026 from 40.0% a year earlier.

8 minor points

• Minor pointTalent gross margin increased to 23.1% in Q3 2026 from 23.0% a year earlier.
• Minor pointTalent average bill rate rose to $92.37 in Q3 2026 from $89.65 a year earlier.
• Minor pointSelling, general and administrative expenses fell to $12.036 million in Q3 2026 from $12.641 million.
• Minor pointCash increased to $37.939 million at September 30, 2026, from $36.533 million at December 31, 2025.
• Minor pointAvailable borrowing capacity was approximately $18.3 million at September 30, 2026, with no bank debt.
• Minor pointNine-month Data & AI gross margin increased to 39.4% from 38.9% a year earlier.
• Minor pointNine-month Talent gross margin increased to 22.9% from 22.4% a year earlier.
• Minor point. Forward-looking: it has not happened yet and may not happen.Mastech expects to continue investing in capabilities into 2027.

Negative

• Moderate pointQ3 2026 revenue of $42.0 million fell 13.4% year over year, despite 1.3% sequential growth.
• Moderate pointQ3 GAAP net income fell to $7,000 from $941,000; diluted EPS declined to $0.00 from $0.08.
• Moderate pointData & AI Q3 revenue fell 6.8% year over year to $14.122 million, despite 4.7% sequential growth.
• Moderate pointTalent Q3 revenue fell 16.4% year over year to $27.865 million and declined 0.4% sequentially.
• Moderate pointTalent billable consultants decreased 21.0% since Q3 2025 as a top-ten client continued insourcing services.
• Moderate pointQ3 consolidated gross profit declined to $12.049 million from $13.461 million a year earlier.
• Moderate pointQ3 operating income declined to $13,000 from $820,000 a year earlier.
• Moderate pointQ3 non-GAAP net income fell to $1.222 million from $3.467 million; diluted EPS fell to $0.10 from $0.29.
• Moderate pointNine-month revenue declined to $124.517 million from $145.910 million a year earlier.
• Moderate pointNine-month Data & AI revenue declined to $40.190 million from $46.894 million a year earlier.
• Moderate pointNine-month Talent revenue declined to $84.327 million from $99.016 million a year earlier.
• Moderate pointNine-month consolidated gross profit declined to $35.073 million from $40.173 million a year earlier.
• Moderate pointNine-month non-GAAP net income fell to $3.448 million from $6.053 million; diluted EPS fell to $0.29 from $0.50.
• Minor pointNine-month income tax expense increased to $734,000 from $46,000 a year earlier.

Key Figures

Total revenue: $41.987 million Sequential revenue change: +1.3% Data & AI bookings: $10.8 million vs. $8.4 million +5 more

Total revenue

$41.987 million

Q3 2026; down 13.4% year over year

Sequential revenue change

+1.3%

Q3 2026 versus Q2 2026

Data & AI bookings

$10.8 million vs. $8.4 million

Q3 2026 versus Q3 2025; up 29.0%

Data & AI gross margin

40.5%; up 50 basis points year over year

Q3 2026, Non-GAAP basis

Talent revenue change

-16.4%

Q3 2026 year over year

Non-GAAP diluted EPS

$0.10 vs. $0.29

Q3 2026 versus Q3 2025

GAAP net income

$7 thousand vs. $941 thousand

Q3 2026 versus Q3 2025

Liquidity

$56.2 million

As of September 30, 2026; includes $37.9 million cash and no bank debt

Previous Earnings Reports

1 past event · Latest: Aug 06

Same Type 1 event

1. Aug 06

   Q2 earnings

   24h Move

   +1.4%

   Data & AI revenue grew sequentially and bookings rose, despite lower year-over-year consolidated revenue.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

non-gaap financial measures, credit facility, basis points

3 terms

non-gaap financial measures financial

"This press release contains non-GAAP financial measures"

Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.

credit facility financial

"borrowing capacity available under its credit facility"

A credit facility is a flexible loan arrangement that allows a borrower to access funds up to a set limit whenever needed, similar to a company having an overdraft option on a bank account. It matters to investors because it indicates how easily a business can secure cash when required, affecting its ability to manage expenses, invest, or respond to financial challenges.

basis points financial

"increased gross margins this quarter by 50 basis points"

Basis points are a way to measure small changes in interest rates or percentages, where one basis point equals 0.01%. For example, if a loan's interest rate increases by 50 basis points, it's gone up by 0.50%. They help people understand tiny differences in rates that can add up over time, making financial comparisons clearer.

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Second Consecutive Quarter of Sequential Revenue Growth Led by Continued Data & AI Momentum 

PITTSBURGH, Oct. 30, 2026 /PRNewswire/ -- Mastech Digital, Inc. (NYSE American: MHH) ("Mastech"), a leading provider of Digital Transformation IT Services, announced today its financial results for the third quarter ended September 30, 2026. 

Third Quarter 2026 Highlights:

MASTECH DIGITAL, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Amounts in thousands)
(Unaudited)
	Three Months ended September 30,								Nine Months ended September 30,
	2026				2025				2026				2025
Revenues:
Data & AI	$	14,122			$	15,160			$	40,190			$	46,894
Talent		27,865				33,336				84,327				99,016
Total revenues	$	41,987			$	48,496			$	124,517			$	145,910
Gross Margin $(1):
Data & AI	$	5,719			$	6,057			$	15,854			$	18,230
Talent		6,446				7,658				19,335				22,197
Total gross margin $	$	12,165			$	13,715			$	35,189			$	40,427
Gross Margin %(1):
Data & AI		40.5	%			40.0	%			39.4	%			38.9	%
Talent		23.1	%			23.0	%			22.9	%			22.4	%
Total gross margin %		29.0	%			28.3	%			28.3	%			27.7	%
GAAP Net Income (Loss)	$	7			$	941			$	171			$	(363)
GAAP Diluted Earnings (Loss) Per Share	$	0.00			$	0.08			$	0.01			$	(0.03)
Non-GAAP Net Income	$	1,222			$	3,467			$	3,448			$	6,053
Non-GAAP Diluted Earnings Per Share	$	0.10			$	0.29			$	0.29			$	0.50
(1) Gross margin difference between the supplemental segment and consolidated results primarily reflects non-allocated severance expense of $0.1 million and $0.3 million recorded in cost of goods sold during the third quarter of 2026 and 2025, respectively.

 

See "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP Measures to Non-GAAP Measures" below.

Total consolidated revenues of $42.0 million during the quarter represented a decrease of 13.4% on a year-over-year basis, but an increase of 1.3% on a sequential basis from the second quarter of 2026. Data and AI segment revenues declined 6.8% on a year-over-year basis but increased 4.7% on a sequential basis from the second quarter of 2026, the second consecutive quarter of sequential growth since 2024. Data & AI segment reported bookings of $10.8 million during the quarter when compared to $8.4 million in the third quarter of 2025. Talent segment revenues declined 16.4% on a year-over-year basis, and a decrease of 0.4% on a sequential basis from the second quarter of 2026, driven by a 21.0% decrease in billable consultants since the third quarter of 2025, as a top ten client continued insourcing services we provide in this segment and we continued to exit lower-margin and non-strategic positions. Strong average bill rate of $92.37, as compared to $89.65 during the third quarter of 2025 reflected a continued focus on revenue quality.  

Management Commentary: 

Nirav Patel, Mastech's President and Chief Executive Officer, stated, "This quarter marks a significant milestone, as we launched the new Mastech brand and our vision of the Knowledge-first Enterprise. We believe enterprises need to codify the knowledge held by their people, customers, and clients to transform with AI. We are seeing enterprises move past AI experimentation. They now want to put their own data and knowledge to work in production, and that is driving our focus on building trusted data foundations, Applied AI solutions, and the specialized talent that our clients need to deliver AI outcomes at scale."

"We are pleased to share that our Data & AI segment delivered a second consecutive quarter of sequential revenue growth. Segment revenues grew 4.7% from the second quarter of 2026, and bookings were $10.8 million, up 29.0% from $8.4 million in the same quarter last year. Our focus on high-value work in the Data & AI segment increased gross margins this quarter by 50 basis points year-over-year to 40.5% on a Non-GAAP basis." 

"Our differentiator is the ability to turn a client's own data and knowledge into practical, Applied AI solutions that deliver outcomes. This quarter, we advanced our Applied AI delivery capabilities, supported by our certified and advanced partner designations, including Solutions Partner for Cloud and AI Platform status in the Microsoft AI Cloud Partner Program. These relationships and designations help us provide our customers access to skilled delivery talent and technical resources as they put AI to work at scale. We expect to continue investing in forward-leaning capabilities into 2027, as we believe they continue to enable growth and progress towards the AI engineering talent and modern data platform practices we have been building."

Balance Sheet & Liquidity Update: 

As of September 30, 2026, Mastech had liquidity of $56.2 million, including cash and cash equivalents of $37.9 million and approximately $18.3 million of borrowing capacity available under its credit facility, with no bank debt.

Conference Call: 

Mastech will host a conference call to discuss the Company's third quarter 2026 financial results on October 30, 2026 at 9:00 a.m. Eastern Time. Please register at https://register-conf.media-server.com/register/BI4057cc455c3848bf9bfdb0cf25216dc7 to join telephonically. 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 investor relations website at https://investors.mastech.com, and a webcast replay will be accessible for a limited time following the scheduled call.

About Mastech Digital, Inc.:

Founded in 1986, Mastech (NYSE American: MHH) helps organizations transform their unique enterprise knowledge into business advantage by unlocking the value embedded across their people, operations, data, and systems. Through our expertise in AI, data modernization, cloud and data platforms, and specialized technology talent, we enable enterprises to innovate faster, make smarter decisions, and achieve meaningful business outcomes. By combining trusted data foundations, AI-powered solutions, modern platforms, and expert talent, we help organizations accelerate transformation and thrive in a constantly evolving business environment. Headquartered in Pittsburgh, Pennsylvania, Mastech serves more than 250 enterprise customers globally, delivering the data foundations, AI-powered solutions, and specialized talent needed to help modern, future-ready organizations Thrive on What's Next.

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.

Severance expense: From time to time, we incur severance expenses related to the termination by the Company of leadership and other key personnel. During the three and nine months ended September 30, 2026, the Company recorded severance expense of approximately $0.2 million, of which approximately $0.1 million was recognized within cost of goods sold. During the three and nine months ended September 30, 2025, the Company recorded severance expense of $1.1 million and $2.7 million, respectively, of which $0.3 million was recognized within cost of goods sold during the third quarter of 2025. The 2025 amounts reflect the departure of our former Chief Financial Officer and other leadership changes, and strategic initiatives undertaken to better align our organizational structure with our long-term growth objectives. Amounts recognized within cost of goods sold were not allocated to the reportable segments and therefore contribute to a gross margin variance between the supplemental segment presentation and the consolidated financial results. 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.

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 the three and nine months ended September 30, 2025, the Company incurred $0.9 million and $1.6 million, respectively, of severance and costs related to the duplication of resources and travel during the training and knowledge transfer process. The transition was completed as of December 31, 2025, and no such costs were incurred in 2026. 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, 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, 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)
		September 30,				Dec 31,
		2026				2025
ASSETS
Current assets:
Cash and cash equivalents		$	37,939			$	36,533
Accounts receivable, net			25,634				26,396
Prepaid and other current assets			6,959				5,647
Total current assets			70,532				68,576
Equipment, enterprise software and leasehold improvements, net			1,248				1,557
Operating lease right-of-use assets, net			2,880				2,534
Deferred income taxes			1,675				2,583
Deferred financing costs, net			24				95
Deferred compensation, net			625				1,000
Non-current deposits			511				530
Goodwill, net of impairment			27,210				27,210
Intangible assets, net of amortization			5,945				7,755
Total assets		$	110,650			$	111,840
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	3,142			$	3,451
Current portion of operating lease liability			1,151				1,283
Accrued payroll and related costs			11,459				15,391
Other accrued liabilities			774				939
Total current liabilities			16,526				21,064
Long-term liabilities:
Long-term operating lease liability, less current portion			1,601				1,138
Long-term severance liability			-				330
Total liabilities			18,127				22,532
Shareholders' equity:
Common stock, par value $0.01 per share			140				137
Additional paid-in capital			46,381				42,515
Retained earnings			56,598				56,427
Accumulated other comprehensive income (loss)			(3,465)				(2,640)
Treasury stock, at cost			(7,131)				(7,131)
Total shareholders' equity			92,523				89,308
Total liabilities and shareholders' equity		$	110,650			$	111,840

 

	MASTECH DIGITAL, INC.
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	(Amounts in thousands, except per share data)
	(Unaudited)
		Three Months ended September 30,							Nine Months ended September 30,
		2026			2025				2026			2025
	Revenues	$	41,987		$	48,496			$	124,517		$	145,910
	Cost of revenues		29,938			35,035				89,444			105,737
	Gross profit		12,049			13,461				35,073			40,173
	Selling, general and administrative expenses		12,036			12,641				35,334			41,179
	Income (loss) from operations		13			820				(261)			(1,006)
	Other income/(expense), net		237			415				1,166			689
	Income (loss) before income taxes		250			1,235				905			(317)
	Income tax expense (benefit)		243			294				734			46
	Net income (loss)	$	7		$	941			$	171		$	(363)
	Earnings (loss) per share:
	Basic	$	0.00		$	0.08			$	0.01		$	(0.03)
	Diluted	$	0.00		$	0.08			$	0.01		$	(0.03)
	Weighted average common shares outstanding:
	Basic		12,029			11,762				11,956			11,761
	Diluted		12,166			11,945				12,063			11,761

 

		MASTECH DIGITAL, INC.
		RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
		(Amounts in thousands, except per share data)
		(Unaudited)
			Three Months ended September 30,								Nine Months ended September 30,
			2026				2025				2026				2025
		GAAP Net Income (Loss)	$	7			$	941			$	171			$	(363)
		Adjustments:
		Amortization of acquired intangible assets		604				650				1,811				1,949
		Stock-based compensation		861				729				2,429				2,338
		Severance expense		150				1,084				150				2,725
		Finance and accounting transition expense		-				937				-				1,625
		Income tax adjustments		(400)				(874)				(1,113)				(2,221)
		Non-GAAP Net Income	$	1,222			$	3,467			$	3,448			$	6,053
		GAAP Diluted Earnings (Loss) Per Share	$	0.00			$	0.08			$	0.01			$	(0.03)
		Non-GAAP Diluted Earnings Per Share	$	0.10			$	0.29			$	0.29			$	0.50
		Weighted average common shares outstanding:
		GAAP Diluted Shares		12,166				11,945				12,063				11,761
		Non-GAAP Diluted Shares		12,166				11,945				12,063				12,032

 

		MASTECH DIGITAL, INC.
		SUPPLEMENTAL FINANCIAL INFORMATION
		(Amounts in thousands)
		(Unaudited)
			Three Months ended September 30,								Nine Months ended September 30,
			2026				2025				2026				2025
		Revenues:
		Data & AI	$	14,122			$	15,160			$	40,190			$	46,894
		Talent		27,865				33,336				84,327				99,016
		Total revenues	$	41,987			$	48,496			$	124,517			$	145,910
		Gross Margin %:
		Data & AI		40.5	%			40.0	%			39.4	%			38.9	%
		Talent		23.1	%			23.0	%			22.9	%			22.4	%
		Total gross margin %		29.0	%			28.3	%			28.3	%			27.7	%
		Segment Operating Income (Loss):
		Data & AI	$	150			$	1,637			$	(779)			$	2,866
		Talent		617				1,854				2,478				2,427
		Subtotal		767				3,491				1,699				5,293
		Amortization of acquired intangible assets		(604)				(650)				(1,811)				(1,949)
		Severance expense		(150)				(1,084)				(150)				(2,725)
		Finance and accounting transition expense		-				(937)				-				(1,625)
		Interest income and other, net		237				415				1,167				689
		Income (loss) before income taxes	$	250			$	1,235			$	905			$	(317)
		(1) Gross margin difference between the supplemental segment and consolidated results primarily reflects non-allocated severance expense of $0.1 million and $0.3 million recorded in cost of goods sold during the third quarter of 2026 and 2025, respectively.

 

Investor Relations Contact:

Investors@mastechdigital.com

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SOURCE Mastech Digital, Inc.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Mastech Digital's third-quarter 2026 revenue and earnings?

Mastech Digital reported $42.0 million in revenue and GAAP net income of $7,000 for the third quarter of 2026. Revenue fell 13.4% year over year but increased 1.3% sequentially. GAAP diluted earnings per share were $0.00, compared with $0.08 a year earlier.

How did Mastech Digital's Data & AI business perform in Q3 2026?

Data & AI revenue declined 6.8% year over year but increased 4.7% sequentially in Q3 2026. Bookings reached $10.8 million, compared with $8.4 million a year earlier. Segment gross margin increased to 40.5% from 40.0%.

What does Mastech Digital exclude from its non-GAAP earnings?

Mastech Digital's non-GAAP earnings exclude acquired-intangible amortization, stock-based compensation, severance and finance and accounting transition expenses, with related income tax adjustments. Q3 2026 adjustments included $604,000 of amortization, $861,000 of stock-based compensation and $150,000 of severance. No finance and accounting transition expense was incurred in 2026.