Mastech Digital, Inc. Q4 FY2025 earnings call

• CEO Nirav Patel set 3 transformation priorities in 2025: mobilizing leadership team, establishing clarity on direction, moving organization towards that direction, and made meaningful progress. - Market backdrop was challenging in 2025 with clients cautious on technology budgets but pushing modernization. Company delivered stable margins in Q4 and full year due to pricing discipline, operational controls, and focus on revenue quality. - Expanded data platform build and scale - up, established industry solutions practice for AI - powered workflows. - CFO Kannan Sugantharaman discussed financial results, EDGE initiative reshaping cost structure, maintained positive momentum on EDGE in Q4, and financial position remained solid with cash balances, no bank debt, etc.

IT Staffing Services segment: Fourth quarter 2025 revenue was $37.7 million, down 7% year - over - year. Average bill rates reached an all - time high of $87.32, but billable consultant base declined by 168 consultants (16.7% decline). Data and Analytics Services segment: Fourth quarter 2025 revenue was $7.8 million, down 24% year - over - year. However, fourth quarter bookings were up nearly 37% year - over - year driven by strong renewals.

Management has elected to not provide guidance during this call nor in any subsequent one - on - one meetings or calls.

There are risks and uncertainties that could cause actual events to differ materially from forward - looking statements, including those listed in the company's 2024 annual report on Form 10 - K filed with the Securities and Exchange Commission, such as macroeconomic and geopolitical factors impacting enterprise decision - making and client spending behaviors.

Q: What did you end the quarter with how many consultants?

A: Billable headcount in IT staffing services was 840 as of December '25.

Q: How many employees do you have in total now?

A: 1,488 as of December '25.

Q: Are we done with onetime expenses and severance or no?

A: Finance and accounting transition is complete, most severances from reorg are done, no significant future onetime expenses expected.

Q: How much more do you think you're going to be saving in 2026 versus what you spent in 2025, excluding all the onetime stuff?

A: EDGE initiative has efficiencies to free capacity and growth to reinvest, with multiple levers in transformation journey.

Q: Given the environment out there for using IT consulting and staffing, can you grow this year?

A: Macro backdrop is volatile, but near - term visibility limited, underlying demand drivers haven't weakened, and well positioned to help clients move forward.

Q: Touch on consultant count reduction and SG&A levels.

A: EDGE program has achieved efficiencies, Q4 SG&A is reasonable, with EDGE having efficiency and investment parts.

Q: Talk about bill rate improvements.

A: Focus on quality of revenue, choosing better margin projects with higher bill rates led to average bill rate up to $87.32.

Q: Talk about booking trends versus a year ago period and client verticals.

A: Q4 bookings north of $11 million vs 8.2 million prior year, demand broad - based with inroads in health care, financial services, consumer clients.

Q: Talk about cash usage prioritization beyond EDGE and M&A appetite.

A: Strong cash flows from solid operating cash generation, low capital expenditures, looking to optimally use cash for strategic priorities including share repurchase and potential acquisitive opportunities.