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Mastech Digital Inc (MHH) Q2 2025 Earnings Call Highlights: Navigating Challenges with ...
Consolidated Revenue: $49.1 million, a year-over-year decrease of 0.9% compared to Q2 2024.
Data and Analytics Services Revenue: $8.6 million, a 3.2% decrease from Q2 2024.
IT Staffing Services Revenue: $40.5 million, a 0.4% decrease from Q2 2024.
Order Booking in Data and Analytics: $5.8 million, down from $9.2 million in Q2 2024.
Consolidated Gross Profit: Decreased by 1.1% compared to Q2 2024.
Consolidated Gross Margins: Dropped by 7 basis points over Q2 2024.
GAAP Net Income: $0.1 million or $0.01 per diluted share, compared to $1.4 million or $0.12 per diluted share in Q2 2024.
Non-GAAP Net Income: $1.8 million or $0.15 per diluted share, compared to $2.2 million or $0.19 per diluted share in Q2 2024.
Cash Balance: $27.9 million as of June 30, 2025.
Cash Availability: $22.2 million on revolving credit facilities.
Days Sales Outstanding: 53 days as of June 30, 2025.
Warning! GuruFocus has detected 3 Warning Sign with MHH.
Release Date: August 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Mastech Digital Inc (MHH) reported continued year-over-year growth in both IT staffing and data analytics business segments, demonstrating the strength of their portfolio.
The company achieved its highest gross margin to date in the second quarter, focusing on revenue quality, particularly among financial services clients.
Mastech Digital Inc (MHH) has made significant progress on strategic initiatives, including the transition of finance and accounting functions to India, which is expected to enhance process agility and alignment.
The company maintains a solid financial position with a cash balance of $27.9 million and no bank debt, providing flexibility for future investments.
Mastech Digital Inc (MHH) is actively pursuing partnerships, such as with Informatica, to build differentiated offerings and enhance client solutions.
Negative Points
Consolidated revenue for the second quarter of 2025 decreased by 0.9% year-over-year, reflecting a cautious market environment.
The data and analytics services segment experienced a 3.2% decline in revenue compared to the second quarter of 2024, driven by slower decision-making on capital programs.
Order bookings in the data and analytics segment were lower than expected, totaling $5.8 million compared to $9.2 million in the previous year.
GAAP net income for the second quarter of 2025 was significantly lower at $0.1 million, compared to $1.4 million in the second quarter of 2024.
The billable consultant base in the IT staffing services segment declined by 11 consultants, indicating potential challenges in maintaining workforce levels.
Q & A Highlights
Q: Is the transition of finance and accounting functions to India complete, and are there any more one-time expenses expected? A: Kannan Sugantharaman, CFO, stated that the transition is on track and expected to be completed by Q4 2025. Early gains have been seen in cost, process agility, and team alignment. No additional one-time expenses are expected beyond what has been disclosed.
Q: What is the progress on the partnership with Informatica? A: Nirav Patel, CEO, mentioned that the partnership with Informatica is progressing well. They are creating joint solution offerings and building capabilities to serve clients better. The partnership is part of a broader strategy to differentiate their offerings.
Q: CGI's revenue is down by $2 million. Will this trend continue, or will there be a base level of business maintained? A: Kannan Sugantharaman, CFO, indicated that they do not expect a drastic change in the relationship with CGI. Client engagement remains strong, and no major deviations are anticipated.
Q: Can you discuss the revenue mix and average bill rate changes? A: Kannan Sugantharaman, CFO, explained that bill rates have increased due to a focus on revenue quality and specialized talent demand. The current bill rate is approximately $85-$86, up from $81-$82 last year, reflecting improved revenue quality.
Q: What are the plans for cash usage and potential acquisitions? A: Kannan Sugantharaman, CFO, stated that they are evaluating cash usage, including a buyback program and targeted investments aligned with long-term growth priorities. They are open to acquisitions that enhance capabilities and service areas.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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