Mastech Digital Reports 3% Revenue Growth to $48.3 Million in Q1 2025

Mastech Digital, Inc. reported a revenue increase of 3% for the first quarter of 2025, totaling $48.3 million compared to $46.8 million in the same period of 2024. The growth was driven by an 11% rise in the Data and Analytics Services segment, which generated $9.0 million, up from $8.1 million. The IT Staffing Services segment also saw a modest increase of 2%, reaching $39.3 million, attributed to a higher average billable rate of $84.97 per hour, compared to $79.30 in the previous year. However, the company recorded a net loss of $1.4 million for the quarter, a significant decline from the loss of $161,000 reported in the prior year.

In terms of operational metrics, Mastech Digital's total comprehensive loss for the quarter was $1.4 million, compared to a loss of $189,000 in the first quarter of 2024. The company’s gross profit increased to $12.9 million, reflecting a gross margin of 26.7%, up from 25.9% in the previous year. The gross margin for the Data and Analytics Services segment decreased to 44.1%, down from 46.4%, primarily due to lower utilization rates and adjustments on fixed-price projects. Conversely, the IT Staffing Services segment improved its gross margin to 22.7%, up from 21.6%, benefiting from higher margins on new contracts.

Mastech Digital's balance sheet as of March 31, 2025, showed total assets of $110.1 million, a slight decrease from $111.5 million at the end of 2024. The company maintained a cash balance of $24.7 million and had no outstanding bank debt, with approximately $23.7 million available under its credit facility. The company’s accounts receivable days sales outstanding (DSOs) remained stable at 56 days, consistent with the previous year. The total employee headcount was not disclosed, but the company noted a reduction in sales staff, which contributed to lower sales expenses in the Data and Analytics Services segment.

Strategically, Mastech Digital is transitioning its finance and accounting functions to India as part of a cost-cutting initiative, which is expected to incur additional costs of $500,000 to $750,000 during the transition period. The company anticipates annual savings of approximately $1.2 million post-transition. Additionally, Mastech Digital has extended its share repurchase program through February 2026, with 423,000 shares available for repurchase as of March 31, 2025. The company’s outlook remains cautious due to economic uncertainties and the concentration of revenues among a limited number of clients, which could impact future performance.