Mastech Digital Q3 2026 net income falls to $7K
Data & AI bookings were $10.8 million, while Talent revenue and both GAAP and non-GAAP net income were below year-earlier levels.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Mastech Digital, Inc. reported third-quarter 2026 revenue of $42.0 million, down 13.4% year over year and up 1.3% sequentially. GAAP net income was $7,000, compared with $941,000 a year earlier; non-GAAP net income was $1.222 million versus $3.467 million.
Data & AI revenue was $14.122 million, down 6.8% year over year but up 4.7% sequentially for a second consecutive quarter; segment bookings were $10.8 million versus $8.4 million. Talent revenue was $27.865 million, down 16.4% year over year and 0.4% sequentially. Mastech attributed the segment's year-over-year decline to a 21.0% decrease in billable consultants, continued insourcing by a top ten client, and its exit from lower-margin and non-strategic positions. The average bill rate was $92.37, versus $89.65 a year earlier.
At September 30, 2026, liquidity was $56.2 million, including $37.9 million in cash and cash equivalents and approximately $18.3 million of available borrowing capacity; Mastech reported no bank debt. Management said it expects to continue investing in forward-leaning capabilities into 2027.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- None.
Negative
- Moderate pointThird-quarter revenue declined 13.4% year over year to $42.0 million.
- Moderate pointGAAP net income fell to $7,000 from $941,000 year over year.
- Minor pointNon-GAAP net income was $1.222 million, down from $3.467 million.
Insights
Analyzing...
8-K Event Classification
Key Figures
Key Terms
Non-GAAP financial measures financial
billable consultants technical
borrowing capacity financial
credit facility financial
Earnings Snapshot
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were MHH's Q3 2026 revenue and earnings?
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AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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(Address of Principal Executive Offices) |
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Registrant’s Telephone Number, Including Area Code: |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition. |
On October 30, 2026, Mastech Digital, Inc. (the “Company”) issued a press release (the “Press Release”) announcing its financial results for the third quarter ended September 30, 2026. A copy of the Press Release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Item 2.02 and in Exhibit 99.1 shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit |
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Description |
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99.1 |
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Press Release |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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MASTECH DIGITAL, INC. |
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Date: |
October 30, 2026 |
By: |
/s/ Kannan Sugantharaman |
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Kannan Sugantharaman |
Exhibit 99.1
FOR IMMEDIATE RELEASE:
Mastech Reports Third Quarter 2026 Results
Second Consecutive Quarter of Sequential Revenue Growth Led by Continued Data & AI Momentum
PITTSBURGH, PA – October 30, 2026 - 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. |
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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 September 30, |
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Nine Months ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues: |
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Data & AI |
$ |
14,122 |
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$ |
15,160 |
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$ |
40,190 |
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$ |
46,894 |
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Talent |
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27,865 |
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33,336 |
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84,327 |
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99,016 |
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Total revenues |
$ |
41,987 |
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$ |
48,496 |
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$ |
124,517 |
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$ |
145,910 |
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Gross Margin $ (1): |
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Data & AI |
$ |
5,719 |
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$ |
6,057 |
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$ |
15,854 |
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$ |
18,230 |
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Talent |
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6,446 |
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7,658 |
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19,335 |
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22,197 |
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Total gross margin $ |
$ |
12,165 |
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$ |
13,715 |
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$ |
35,189 |
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$ |
40,427 |
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Gross Margin % (1): |
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Data & AI |
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40.5 |
% |
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40.0 |
% |
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39.4 |
% |
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38.9 |
% |
Talent |
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23.1 |
% |
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23.0 |
% |
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22.9 |
% |
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22.4 |
% |
Total gross margin % |
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29.0 |
% |
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28.3 |
% |
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28.3 |
% |
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27.7 |
% |
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GAAP Net Income (Loss) |
$ |
7 |
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$ |
941 |
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$ |
171 |
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$ |
(363 |
) |
GAAP Diluted Earnings (Loss) Per Share |
$ |
0.00 |
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$ |
0.08 |
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$ |
0.01 |
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$ |
(0.03 |
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Non-GAAP Net Income |
$ |
1,222 |
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$ |
3,467 |
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$ |
3,448 |
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$ |
6,053 |
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Non-GAAP Diluted Earnings Per Share |
$ |
0.10 |
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$ |
0.29 |
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$ |
0.29 |
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$ |
0.50 |
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(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. |
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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 $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, 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. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Amounts in thousands) |
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|||||||
(Unaudited) |
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September 30, |
|
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December 31, |
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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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$ |
37,939 |
|
|
$ |
36,533 |
|
Accounts receivable, net |
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|
25,634 |
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|
26,396 |
|
Prepaid and other current assets |
|
|
6,959 |
|
|
|
5,647 |
|
Total current assets |
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|
70,532 |
|
|
|
68,576 |
|
Equipment, enterprise software and leasehold improvements, net |
|
|
1,248 |
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|
|
1,557 |
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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 |
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|
27,210 |
|
Intangible assets, net of amortization |
|
|
5,945 |
|
|
|
7,755 |
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Total assets |
|
$ |
110,650 |
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|
$ |
111,840 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
3,142 |
|
|
$ |
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 |
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|
16,526 |
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|
|
21,064 |
|
Long-term liabilities: |
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Long-term operating lease liability, less current portion |
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1,601 |
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|
1,138 |
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Long-term severance liability |
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|
- |
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|
|
330 |
|
Total liabilities |
|
|
18,127 |
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|
|
22,532 |
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Shareholders' equity: |
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|
|
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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 |
) |
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|
(2,640 |
) |
Treasury stock, at cost |
|
|
(7,131 |
) |
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|
(7,131 |
) |
Total shareholders' equity |
|
|
92,523 |
|
|
|
89,308 |
|
Total liabilities and shareholders' equity |
|
$ |
110,650 |
|
|
$ |
111,840 |
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MASTECH DIGITAL, INC. |
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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 September 30, |
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Nine Months ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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||||
|
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. |
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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 September 30, |
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Nine Months ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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GAAP Net Income (Loss) |
$ |
7 |
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$ |
941 |
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$ |
171 |
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$ |
(363 |
) |
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Adjustments: |
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Amortization of acquired intangible assets |
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604 |
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650 |
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1,811 |
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1,949 |
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Stock-based compensation |
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861 |
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729 |
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2,429 |
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2,338 |
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Severance expense |
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150 |
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1,084 |
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150 |
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2,725 |
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Finance and accounting transition expense |
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- |
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937 |
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- |
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1,625 |
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Income tax adjustments |
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(400 |
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(874 |
) |
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(1,113 |
) |
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(2,221 |
) |
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Non-GAAP Net Income |
$ |
1,222 |
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$ |
3,467 |
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$ |
3,448 |
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$ |
6,053 |
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GAAP Diluted Earnings (Loss) Per Share |
$ |
0.00 |
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$ |
0.08 |
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$ |
0.01 |
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$ |
(0.03 |
) |
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Non-GAAP Diluted Earnings Per Share |
$ |
0.10 |
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$ |
0.29 |
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$ |
0.29 |
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$ |
0.50 |
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Weighted average common shares outstanding: |
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GAAP Diluted Shares |
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12,166 |
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11,945 |
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12,063 |
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11,761 |
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Non-GAAP Diluted Shares |
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12,166 |
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11,945 |
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12,063 |
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12,032 |
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MASTECH DIGITAL, INC. |
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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 September 30, |
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Nine Months ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues: |
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Data & AI |
$ |
14,122 |
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$ |
15,160 |
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$ |
40,190 |
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$ |
46,894 |
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Talent |
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27,865 |
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33,336 |
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84,327 |
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99,016 |
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Total revenues |
$ |
41,987 |
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$ |
48,496 |
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$ |
124,517 |
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$ |
145,910 |
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Gross Margin %: |
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Data & AI |
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40.5 |
% |
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40.0 |
% |
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39.4 |
% |
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38.9 |
% |
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Talent |
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23.1 |
% |
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23.0 |
% |
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22.9 |
% |
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22.4 |
% |
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Total gross margin %(1) |
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29.0 |
% |
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28.3 |
% |
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28.3 |
% |
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27.7 |
% |
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Segment Operating Income (Loss): |
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Data & AI |
$ |
150 |
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$ |
1,637 |
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$ |
(779 |
) |
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$ |
2,866 |
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Talent |
|
617 |
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1,854 |
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2,478 |
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2,427 |
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Subtotal |
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767 |
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3,491 |
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|
1,699 |
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5,293 |
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Amortization of acquired intangible assets |
|
(604 |
) |
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|
(650 |
) |
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|
(1,811 |
) |
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|
(1,949 |
) |
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Severance expense |
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(150 |
) |
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(1,084 |
) |
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(150 |
) |
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(2,725 |
) |
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Finance and accounting transition expense |
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- |
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(937 |
) |
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- |
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(1,625 |
) |
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Interest income and other, net |
|
237 |
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|
415 |
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1,167 |
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|
689 |
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Income (loss) before income taxes |
$ |
250 |
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$ |
1,235 |
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$ |
905 |
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$ |
(317 |
) |
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(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. |
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Investor Relations Contact:
Investors@mastechdigital.com