Mastech Digital (NYSE: MHH) posts lower Q1 2026 revenue but returns to profit
Rhea-AI Filing Summary
Mastech Digital, Inc. reported first quarter 2026 results showing lower revenue but improved profitability as it realigns around its new Talent and Data & AI segments. Revenue was $41.1M, down 15% year over year, with Data & AI revenue down 21% and Talent revenue down 11.8%, reflecting cautious client spending and deliberate exits from lower-margin work.
Despite the softer top line, GAAP net income improved to $0.3M, or $0.02 per diluted share, compared with a loss of $1.4M a year earlier. Non-GAAP net income rose to $1.3M, or $0.11 per diluted share, up from $0.06, helped by lower selling, general and administrative expenses and contributions from the EDGE cost-efficiency initiative.
The company completed a business realignment effective January 1, 2026, now reporting under Talent and Data & AI to support its AI-led strategy. Liquidity remained solid, with $54.9M as of March 31, 2026, including cash of $33.6M and $21.3M of undrawn credit, and no bank debt.
Positive
- None.
Negative
- None.
Insights
Revenue declined but margins and earnings improved as Mastech Digital realigned its business.
Mastech Digital posted Q1 2026 revenue of $41.1M, down 15% year over year as both Data & AI and Talent segments saw double-digit declines amid cautious client spending and deliberate exits from lower-margin roles.
However, cost controls were effective. Selling, general and administrative expenses fell from $14.7M to $11.0M, turning a prior-period operating loss into a small operating profit. GAAP net income swung from a $1.4M loss to a $0.3M profit, and non-GAAP diluted EPS rose from $0.06 to $0.11.
Management highlighted its EDGE efficiency initiative and a new two-segment structure focused on Talent and Data & AI. Liquidity of $54.9M and no bank debt as of March 31, 2026 provide flexibility while demand remains pressured by macro and geopolitical uncertainty.
8-K Event Classification
Key Figures
Key Terms
Data & AI segment financial
Talent segment financial
Non-GAAP net income financial
EDGE initiative financial
amortization of acquired intangible assets financial
stock-based compensation financial
Earnings Snapshot
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): |
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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 May 15, 2026, Mastech Digital, Inc. (the “Company”) issued a press release (the “Press Release”) announcing its financial results for the first quarter ended March 31, 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: |
May 15, 2026 |
By: |
/s/ Kannan Sugantharaman |
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Kannan Sugantharaman |
Exhibit 99.1
FOR IMMEDIATE RELEASE:
Mastech Digital Reports First Quarter 2026 Results
Mastech Digital Kicks Off 2026 With Business Realignment
PITTSBURGH, PA – May 15, 2026 - Mastech Digital, Inc. (NYSE American: MHH) (“Mastech Digital”), a leading provider of Digital Transformation IT Services, announced today its financial results for the first quarter ended March 31, 2026.
First Quarter 2026 Highlights:
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Three Months Ended |
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March 31, |
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March 31, |
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December 31, |
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(In thousands, except per share data) |
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2026 |
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2025 |
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2025 |
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Revenues |
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Data & AI Segment |
$ |
12,584 |
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$ |
15,997 |
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$ |
14,409 |
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Talent Segment |
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28,499 |
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32,319 |
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31,052 |
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Consolidated |
$ |
41,083 |
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$ |
48,316 |
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$ |
45,461 |
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Gross Profit |
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Data & AI Segment |
$ |
4,684 |
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$ |
6,034 |
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$ |
5,902 |
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Talent Segment |
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6,341 |
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6,858 |
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6,981 |
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Consolidated |
$ |
11,025 |
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$ |
12,892 |
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$ |
12,883 |
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Gross Margin |
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Data & AI Segment |
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37.2 |
% |
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37.7 |
% |
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41.0 |
% |
Talent Segment |
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22.3 |
% |
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21.2 |
% |
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22.5 |
% |
Consolidated |
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26.8 |
% |
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26.7 |
% |
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28.3 |
% |
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GAAP Net Income (Loss) |
$ |
264 |
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$ |
(1,439) |
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$ |
972 |
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GAAP Diluted Earnings (Loss) Per Share |
$ |
0.02 |
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$ |
(0.12) |
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$ |
0.08 |
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Non-GAAP Net Income |
$ |
1,281 |
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$ |
1,101 |
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$ |
2,499 |
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Non-GAAP Diluted Earnings Per Share |
$ |
0.11 |
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$ |
0.06 |
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$ |
0.21 |
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See “Use of Non-GAAP Financial Measures” and “Reconciliation of GAAP Measures to Non-GAAP Measures” below.
Total consolidated revenues of $41.0 million during the quarter represented a decrease of 15% on a year-over-year basis. Data and AI segment revenues declined 21% during the quarter when compared to the first quarter of 2025, driven by cautious client spending and elongated decision-making cycles for new projects, as headwinds from macro-economic and geopolitical uncertainties have continued in the market. Positive new bookings momentum with TCV value of $7.0 million during the first quarter of 2026, as compared to $3.7 million during the first quarter of 2025. Talent segment revenues declined 11.8% when compared to the first quarter of 2025, driven by a 20.8% decrease in billable consultants as we continued to exit lower-margin and non-strategic positions. Strong average bill rate of $90.91, as compared to $87.82 during the first quarter of 2025 reflected a continued focus on revenue quality.
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 $54.9 million, including cash and cash equivalents of $33.6 million and approximately $21.3 million of borrowing capacity available under its credit facility, with no bank debt.
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 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 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. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Amounts in thousands) |
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(Unaudited) |
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March 31, |
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March 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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$ |
33,550 |
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$ |
24,665 |
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Accounts receivable, net |
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27,728 |
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32,146 |
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Prepaid and other current assets |
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5,288 |
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7,652 |
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Total current assets |
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66,566 |
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64,463 |
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Equipment, enterprise software and leasehold improvements, net |
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1,390 |
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1,932 |
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Operating lease right-of-use assets, net |
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2,266 |
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3,514 |
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Deferred income taxes |
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1,941 |
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1,295 |
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Deferred financing costs, net |
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71 |
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165 |
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Deferred compensation, net |
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875 |
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1,375 |
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Non-current deposits |
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523 |
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464 |
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Goodwill, net of impairment |
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27,210 |
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27,210 |
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Intangible assets, net of amortization |
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7,152 |
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9,658 |
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Total assets |
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$ |
107,994 |
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$ |
110,076 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
3,360 |
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$ |
3,742 |
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Current portion of operating lease liability |
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1,312 |
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1,291 |
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Accrued payroll and related costs |
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10,453 |
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13,448 |
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Other accrued liabilities |
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888 |
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930 |
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Total current liabilities |
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16,013 |
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19,411 |
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Long-term liabilities: |
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Long-term operating lease liability, less current portion |
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810 |
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2,158 |
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Long-term severance liability |
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110 |
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1,560 |
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Total liabilities |
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16,933 |
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23,129 |
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Shareholders' equity: |
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Common stock, par value $0.01 per share |
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140 |
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135 |
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Additional paid-in capital |
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44,562 |
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39,199 |
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Retained earnings |
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56,691 |
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54,378 |
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Accumulated other comprehensive income (loss) |
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(3,201 |
) |
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(1,880 |
) |
Treasury stock, at cost |
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(7,131 |
) |
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(4,885 |
) |
Total shareholders' equity |
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91,061 |
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86,947 |
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Total liabilities and shareholders' equity |
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$ |
107,994 |
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$ |
110,076 |
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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 March 31, |
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2026 |
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2025 |
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Revenues |
$ |
41,083 |
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$ |
48,317 |
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Cost of revenues |
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30,058 |
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35,425 |
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Gross profit |
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11,025 |
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12,892 |
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Selling, general and administrative expenses |
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10,974 |
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14,745 |
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Income (loss) from operations |
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51 |
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(1,853 |
) |
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Other income/(expense), net |
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606 |
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91 |
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Income (loss) before income taxes |
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657 |
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(1,762 |
) |
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Income tax expense (benefit) |
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393 |
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(323 |
) |
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Net income (loss) |
$ |
264 |
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$ |
(1,439 |
) |
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Earnings (loss) per share: |
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Basic |
$ |
0.02 |
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$ |
(0.12 |
) |
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Diluted |
$ |
0.02 |
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$ |
(0.12 |
) |
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Weighted average common shares outstanding: |
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Basic |
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11,828 |
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11,713 |
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Diluted |
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11,894 |
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11,753 |
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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 March 31, |
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2026 |
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2025 |
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GAAP Net Income (Loss) |
$ |
264 |
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|
$ |
(1,439 |
) |
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Adjustments: |
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Amortization of acquired intangible assets |
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603 |
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650 |
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Stock-based compensation |
|
750 |
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|
895 |
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Severance expense |
|
- |
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|
1,409 |
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Income tax adjustments |
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(336 |
) |
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|
(759 |
) |
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Non-GAAP Net Income |
$ |
1,281 |
|
|
$ |
756 |
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|
GAAP Diluted Earnings (Loss) Per Share |
$ |
0.02 |
|
|
$ |
(0.12 |
) |
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|
Non-GAAP Diluted Earnings Per Share |
$ |
0.11 |
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|
$ |
0.06 |
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Weighted average common shares outstanding: |
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||
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|
GAAP Diluted Shares |
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11,828 |
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|
11,753 |
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|
Non-GAAP Diluted Shares |
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11,894 |
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|
12,096 |
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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 March 31, |
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2026 |
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2025 |
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Revenues: |
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Data & AI |
$ |
12,584 |
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|
$ |
15,997 |
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|
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Talent |
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28,499 |
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|
|
32,320 |
|
|
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Total revenues |
$ |
41,083 |
|
|
$ |
48,317 |
|
|
|
Gross Margin %: |
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|
|
|
|
||
|
|
Data & AI |
|
37.2 |
% |
|
|
37.7 |
% |
|
|
Talent |
|
22.2 |
% |
|
|
21.2 |
% |
|
|
Total gross margin %1 |
|
26.8 |
% |
|
|
26.7 |
% |
|
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Segment Operating Income (Loss): |
|
|
|
|
|
||
|
|
Data & AI |
$ |
(448 |
) |
|
$ |
272 |
|
|
|
Talent |
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1,101 |
|
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(66 |
) |
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Subtotal |
|
653 |
|
|
|
206 |
|
|
|
Amortization of acquired intangible assets |
|
(603 |
) |
|
|
(650 |
) |
|
|
Severance expense |
|
- |
|
|
|
(1,409 |
) |
|
|
Interest income and other, net |
|
607 |
|
|
|
91 |
|
|
|
Income (loss) before income taxes |
$ |
657 |
|
|
$ |
(1,762 |
) |
|
|
|
|
|
|
|
|
||
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