Mastech Digital, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total consolidated revenues were $42.0 million for the three months ended September 30, 2026, representing a 13.4% decrease year-over-year (YoY) from $48.5 million in 2025, but a 1.3% increase sequentially from the second quarter of 2026.
• For the nine months ended September 30, 2026, total revenues were $124.5 million, down from $145.9 million in the same period of 2025.
• GAAP Net Income for the quarter was $7 thousand, compared to $941 thousand in 2025; for the nine months, GAAP Net Income was $171 thousand versus a loss of $363 thousand in 2025.
• GAAP Diluted Earnings Per Share (EPS) were $0.00 for the quarter and $0.01 for the nine months, compared to $0.08 and $(0.03) respectively in 2025.
• Non-GAAP Net Income was $1.2 million for the quarter (down from $3.5 million in 2025) and $3.4 million for the nine months (down from $6.1 million in 2025).
• Non-GAAP Diluted EPS was $0.10 for the quarter and $0.29 for the nine months, compared to $0.29 and $0.50 respectively in 2025.
• Total gross margin percentage was 29.0% for the quarter (up from 28.3% in 2025) and 28.3% for the nine months (up from 27.7% in 2025).
• Data & AI segment gross margin was 40.5% for the quarter (up from 40.0% in 2025) and 39.4% for the nine months (up from 38.9% in 2025).
• Talent segment gross margin was 23.1% for the quarter (up from 23.0% in 2025) and 22.9% for the nine months (up from 22.4% in 2025).
• As of September 30, 2026, the company held $56.2 million in liquidity, including $37.9 million in cash and cash equivalents and $18.3 million in available borrowing capacity under its credit facility, with no bank debt.

Guidance and Future Outlook:

• Management expects to continue investing in forward-leaning capabilities into 2027 to enable growth and progress toward AI engineering talent and modern data platform practices.
• The company anticipates continued enterprise demand for putting their own data and knowledge to work in production, moving past AI experimentation.

Business Segments and Product Lines:

• Data & AI Segment: Revenues were $14.1 million for the quarter, a 6.8% YoY decline but a 4.7% sequential increase, marking the second consecutive quarter of sequential growth since 2024. Bookings for the quarter were $10.8 million, up 29.0% from $8.4 million in the third quarter of 2025.
• Talent Segment: Revenues were $27.9 million for the quarter, a 16.4% YoY decline and a 0.4% sequential decrease. This was driven by a 21.0% decrease in billable consultants since the third quarter of 2025, attributed to a top-ten client insourcing services and the exit of lower-margin and non-strategic positions.
• The Talent segment maintained a strong average bill rate of $92.37, up from $89.65 in the third quarter of 2025.
• The company launched a new Mastech brand and its "Knowledge-first Enterprise" vision, focusing on codifying knowledge held by people, customers, and clients to transform with AI.
• Mastech advanced its Applied AI delivery capabilities, supported by certified partner designations including Solutions Partner for Cloud and AI Platform status in the Microsoft AI Cloud Partner Program.

Market and Competitive Landscape:

• The company serves more than 250 enterprise customers globally.
• Market trends indicate enterprises are moving past AI experimentation to demand practical, Applied AI solutions that deliver outcomes using their own data.
• The company differentiates itself by turning client data and knowledge into practical solutions, leveraging trusted data foundations and specialized talent.

Risks and Challenges:

• The Talent segment faced headwinds from a top-ten client insourcing services previously provided by Mastech.
• The company continues to exit lower-margin and non-strategic positions.
• Forward-looking statements note risks including market demand levels, highly competitive markets, impact of competitive factors on profit margins, general economic conditions affecting customer spending, and the ability to attract and retain qualified personnel.

Management Commentary and Tone:

• Nirav Patel, President and CEO, described the quarter as a "significant milestone" due to the new brand launch and vision.
• Management expressed pleasure regarding the Data & AI segment's second consecutive quarter of sequential revenue growth and the 50 basis point YoY increase in gross margins for that segment.
• The tone reflects confidence in the shift toward production AI and the company's ability to provide skilled delivery talent and technical resources through strategic partnerships.

Other Key Points:

• The company recorded approximately $0.2 million in severance expense during the three and nine months ended September 30, 2026, compared to $1.1 million and $2.7 million respectively in 2025.
• Finance and accounting transition expenses, related to the transition of functions to India, were $0.9 million and $1.6 million in 2025 but were not incurred in 2026 as the transition was completed on December 31, 2025.
• Non-GAAP financial measures exclude amortization of acquired intangible assets, stock-based compensation, severance expenses, and finance/accounting transition expenses.
• A conference call to discuss results was scheduled for October 30, 2026, at 9:00 a.m. Eastern Time.