Mastech Digital | 10-Q: FY2025 Q3 Revenue Misses Estimate at USD 48.5 M

Revenue: As of FY2025 Q3, the actual value is USD 48.5 M, missing the estimate of USD 49.47 M.

EPS: As of FY2025 Q3, the actual value is USD 0.08, beating the estimate of USD 0.055.

EBIT: As of FY2025 Q3, the actual value is USD 969 K.

Data and Analytics Services Segment

• Revenue: $7.9 million for the three months ended September 30, 2025, compared to $9.4 million for the same period in 2024, reflecting a 16% decline.
• Gross Margin: 46.0% for the three months ended September 30, 2025, down from 50.7% in 2024, primarily due to lower utilization rates.
• Operating Income: $313,000 for the three months ended September 30, 2025, compared to $1.1 million in 2024.

IT Staffing Services Segment

• Revenue: $40.6 million for the three months ended September 30, 2025, compared to $42.4 million in 2024, reflecting a 4% decline.
• Gross Margin: 24.8% for the three months ended September 30, 2025, up from 23.6% in 2024, due to higher quality placements and better pricing.
• Operating Income: $3.2 million for the three months ended September 30, 2025, compared to $1.9 million in 2024.

Cash Flow

• Operating Cash Flow: $6.8 million for the nine months ended September 30, 2025, compared to $3.2 million in 2024, driven by a decrease in operating working capital levels.
• Free Cash Flow: Not explicitly stated, but net cash flows from operating activities were positive at $6.8 million.

Future Outlook and Strategy

• Core Business Focus: The company is focusing on aligning its organizational structure with long-term growth objectives, including transitioning finance and accounting functions to India, which is expected to save approximately $1.2 million annually post-transition.
• Non-Core Business: The company recorded $1.1 million in severance charges to streamline leadership responsibilities and enhance operational efficiency.

Outlook

• The company anticipates continued economic uncertainty and conservative client spending behavior, impacting demand for services. However, it remains focused on optimizing its structure for scalability and efficiency.