• Consolidated Revenue: $50.7 million in Q4 2024, a 10.2% year-over-year increase.
• Data and Analytics Services Revenue: $10.3 million in Q4 2024, up 26.2% year-over-year and 9.4% sequentially.
• IT Staffing Services Revenue: $40.5 million in Q4 2024, a 6.8% year-over-year increase.
• Consolidated Gross Profit: $14.7 million in Q4 2024, a 30% increase from the previous year.
• Gross Margin: Record 29% in Q4 2024.
• Data and Analytics Services Gross Margin: 49.5% in Q4 2024, up 480 basis points from Q4 2023.
• IT Staffing Services Gross Margin: Increased by 350 basis points in Q4 2024 compared to Q4 2023.
• GAAP Net Income: $0.3 million or $0.02 per diluted share in Q4 2024, compared to a net loss of $5.4 million in Q4 2023.
• Non-GAAP Net Income: $2.8 million or $0.23 per diluted share in Q4 2024, compared to $1.3 million in Q4 2023.
• Full Year 2024 Revenue: $198.9 million, in line with 2023.
• Full Year 2024 Gross Margin: 27.9%, up from 25.4% in 2023.
• Liquidity: $27.7 million in cash, no bank debt, and $22.6 million available under revolving credit facility as of December 31, 2024.

• Warning! GuruFocus has detected 3 Warning Signs with TRUE.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Mastech Digital Inc (MHH) reported a 10.2% year-over-year increase in consolidated revenues for Q4 2024, totaling $50.7 million.
• The data and analytics services segment saw a significant revenue increase of 26.2% year-over-year, indicating strong growth in this area.
• Gross profit dollars increased by 30% compared to Q4 2023, driven by higher revenue volumes and improved gross margins.
• The company achieved a record gross margin of 29% in Q4 2024, with both business segments showing significant margin expansion.
• Mastech Digital Inc (MHH) ended 2024 with a strong financial position, having no bank debt and $27.7 million in cash balances.

Negative Points

• Order bookings in Q4 2024 totaled $11 million, which was below expectations, indicating potential challenges in securing new business.
• The global consultant base declined by 63 consultants in Q4 2024, which may impact Q1 2025 revenue results.
• There is uncertainty in the marketplace, leading to project delays and slower decision-making by clients.
• The company experienced extended blackout periods that affected its ability to repurchase shares under its share buyback program.
• Mastech Digital Inc (MHH) is facing a changing macro environment with uncertainties related to interest rates, liquidity, and market conditions.

Q & A Highlights

Q: Could you talk about your approach to increasing staffing and data and analytics (DNA) services, and any strategy changes besides incorporating AI into your offerings? A: Nirav Patel, President and CEO, stated that he is taking a structured approach to defining the long-term strategy. His immediate priority is to learn about the business and engage with teams, customers, and partners. The focus will be on accelerating growth, driving excellence, and enhancing offerings, with more specific details to be shared later in the year.

Q: Do you see any opportunities in government efficiency, particularly in data modernization? A: Jack Cronin, CFO, confirmed that government opportunities, especially in DNA, are being considered and are indeed a focus area for the company.

Q: How many employees did you end the year with, and what are your thoughts on spending this year? A: Jack Cronin, CFO, reported ending the year with 1,816 employees, up from 1,648 in 2023. The objective is to maintain SG&A expenses at the same percentage as in 2024, though there may be some hiring related to a new growth strategy. Capital expenditures are expected to remain under a million dollars.

Q: Can you provide insights into the bookings during the fourth quarter and any changes in demand? A: Jack Cronin, CFO, noted that bookings were below expectations due to project delays and market uncertainty. Clients are taking longer to finalize deals, possibly due to inflation or political concerns, affecting the sales cycle.

Q: What are your thoughts on the share repurchase program extension and potential uses of cash, including acquisitions? A: Jack Cronin, CFO, explained that the board extended the share repurchase program due to previous blackout periods. Nirav Patel, CEO, mentioned that M&A is part of the growth strategy, but decisions will be made after refining the company's long-term strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.