Pittsburgh, October 30 (Reuters/ PRNewswire ) – Mastech Digital , Inc . (New York Stock Exchange American Market Code: MHH , hereinafter referred to as “ Mastech ”) announced its financial results for the third quarter ending September 30, 2026, today. The company is a digital transformation IT service provider.
Key Points of the Third Quarter of 2026:
The company reminds that the following content should be read in conjunction with "Usage of Non-GAAP Financial Indicators" at the end of the document and the "Adjustment Table of GAAP Indicators and Non-GAAP Indicators".
Total consolidated revenue for this quarter was $42 million, a year-on-year decrease of 13.4%, but there was a 1.3% quarter-on-quarter increase compared to the second quarter of 2026. Data and AI business revenues decreased by 6.8% year-on-year, but there was a 4.7% quarter-on-quarter increase, marking the second consecutive quarter of growth since 2024. The order volume for this business this quarter was $10.8 million, compared to $8.4 million in the third quarter of 2025. Talent business revenues decreased by 16.4% year-on-year and fell by 0.4% quarter-on-quarter from the second quarter of 2026. The company stated that this was mainly due to a 21.0% reduction in the number of billable consultants compared to the third quarter of 2025, as one of its top ten clients continued to outsource the services provided by the company in this business segment, and at the same time, the company continued to discontinue low-margin and non-strategic positions. The average billing rate was $92.37, higher than $89.65 in the third quarter of 2025, reflecting the company's ongoing focus on revenue quality.
Management Commentary:
Mastech, President and CEO, Nirav Patel stated: "This quarter is an important milestone as we have launched a new Mastech brand as well as the vision of being a 'knowledge-first enterprise.' We believe that companies need to encode the knowledge held by their employees, customers, and partners in order to transform through AI. We see that businesses are gradually moving beyond the AI trial phase, and now they wish to deploy their data and knowledge into production environments. This has driven us to focus on building a trustworthy data foundation, application-oriented AI solutions, as well as the expertise required for customers to achieve AI results on a large scale."
We are delighted to share that Data and AI have achieved quarter-on-quarter revenue growth for the second consecutive quarter. The revenue from this business increased by 4.7% compared to the second quarter of 2026, with orders totaling 10.8 million US dollars, representing a 29.0% increase from 8.4 million US dollars in the same period last year. In our Data and AI businesses, we focused on high-value work, which resulted in a year-over-year increase in gross margin of 50 basis points to 40.5% this quarter, excluding the GAAP metric.
Our differentiating advantage lies in our ability to transform customers' own data and knowledge into actionable, result-driven application-oriented AI solutions. This quarter, we enhanced our delivery capability for application-oriented AI and obtained certifications as well as advanced partner status, including identities with Microsoft AI Cloud Partner Program such as Solutions Partner, for, Cloud, and, and AI Platform. These relationships and qualifications will help us provide skilled delivery personnel and technical resources when customers scale up the implementation of AI. We intend to continue investing in these forward-looking capabilities until 2027, as we believe they will continue to drive growth and contribute to the progress of our ongoing AI engineering talent development and modern data platform initiatives.
Balance Sheet and Liquidity Update:
As of September 30, 2026, the liquidity of Mastech was $56.2 million, which includes $37.9 million in cash and cash equivalents, as well as an available borrowing capacity of approximately $18.3 million under the credit line, with no bank debts.
Teleconference:
Mastech will hold a teleconference on October 30, 2026, at 9:00 a.m. Eastern Time to discuss the company's financial results for the third quarter of 2026. Please register to participate via https :// register-conf.media-server.com / register / BI4057cc455c3848bf9bfdb0cf25216dc7. After registration, participants will receive dial-in information and a unique PIN code to join the meeting. The dial-in information and the unique PIN code will be sent to the email address used during registration. This unique PIN code is for the exclusive use of the registered person only, and it can only be used by one person at a time. The live audio broadcast of the teleconference can be listened to through Mastech on the Investor Relations website at https :// investors.mastech.com. A replay of the meeting will be available for a limited period after the event.
Regarding Mastech Digital, Inc:
Mastech was founded in 1986 to help companies transform their unique organizational knowledge into a competitive advantage and unleash the value inherent in their employees, operations, data, and systems. Leveraging its expertise in AI, data modernization, cloud and data platforms, and professional technical talent, the company assists businesses in innovating more rapidly, making smarter decisions, and achieving meaningful business outcomes. By combining a reliable data foundation with AI-driven solutions, modern platforms, and professional expertise, the company helps clients accelerate their transformation and remain competitive in a constantly changing business environment. Headquartered in Pittsburgh, Pennsylvania, Mastech serves over 250 corporate clients worldwide, providing data foundations, AI-driven solutions, and professional talent to help modern, future-oriented organizations thrive in their next phase of development.
Use of indicators that are not GAAP:
This press release contains non-GAAP financial indicators, which are provided to complement the financial results presented in accordance with the GAAP framework. The presentation of these financial indicators is not intended for use alone, nor should they be considered as a substitute for or superior to the financial information prepared and presented in accordance with the GAAP criteria. Investors should be aware that there are significant limitations to using non-GAAP financial indicators as analysis tools. A reconciliation table between the non-GAAP indicators and the corresponding GAAP indicators is included in the attached financial statements.
The company believes that providing non-GAAP net profit and non-GAAP diluted earnings per share can provide investors with useful supplementary information regarding the financial performance of the business, facilitating the comparison of financial results over different periods (as some items may change independently of business performance), and enhancing the transparency of key indicators used by management in operating the business. In addition, management also utilizes these non-GAAP financial indicators when evaluating the company's performance.
Specifically, the financial indicators listed in this document that are not GAAP do not include the following expense items:
- Amortization of intangible assets acquired: The company has provided for the amortization of intangible assets acquired in June 2015 (Hudson IT), July 2017 (InfoTrellis and Inc), as well as in October 2020 (AmberLeaf Partners). The company excludes such amortization expenses from its non-GAAP financial indicators, as it believes this helps investors to more meaningfully compare its operating results with those of other companies in the industry and facilitates comparison with results from previous periods.
- Equity incentive expenses: The company incurs significant recurring expenses related to non-cash equity incentives. The company excludes such expenses from its GAAP financial indicators, as it believes this provides investors with meaningful supplementary information regarding operational performance. Especially due to differences in valuation methods, subjective assumptions, and the variety of incentive types adopted by the company under ASC 718, the company feels that presenting financial indicators without these expenses helps investors to more meaningfully compare its operating results with those of other companies within the industry, as well as to facilitate comparisons with results from previous periods.
- Layoff costs: The company occasionally incurs layoff costs due to the termination of employment relationships with management and other key personnel. For the three months and nine months ending September 30, 2026, the company recognized approximately $200,000 in layoff costs, of which about $100,000 was recorded as part of cost of sales. During the same period in 2025, the company recognized $1.1 million and $2.7 million in layoff costs respectively, with $300,000 of those costs being recorded as part of cost of sales in the third quarter. The figures for 2025 reflect the departure of the former Chief Financial Officer and other management changes, as well as strategic measures taken to align the organizational structure with long-term growth objectives. The amounts recorded as cost of sales were not allocated to reportable segments, which can lead to differences in gross profit margins between the segment results and the consolidated financial results. The company believes that excluding such non-GAAP financial indicators helps investors to more meaningfully compare its operating results with those of other companies in the industry and facilitates comparison with results from previous periods.
- Financial and accounting function transfer costs: In the first quarter of 2025, the company's board of directors decided to implement a long-term cost reduction measure by transferring the company's financial and accounting functions to India. During the three months ending September 30, 2025, and within those nine months, the company incurred costs of $900,000 and $1.6 million respectively for severance, reconfiguration of resources, training, and travel expenses related to knowledge transfer. The transfer was completed by December 31, 2025, and no such costs occurred in 2026. The company believes that excluding these non-GAAP financial indicators helps investors to compare its operating results more meaningfully with those of other companies in the industry and facilitates comparison with results from other periods.
Forward-looking Statements:
Certain statements in this press release are forward-looking statements that are based on management's expectations, estimates, projections, and assumptions. Words such as "expected," "estimated," "planned," "believes," "arranges," "estimates," and their variations, as well as similar expressions, are intended to identify these forward-looking statements. These statements include, but are not limited to: forecasts and statements regarding the company's ability to generate revenue, profit, and cash flow, as well as forecasts and statements regarding the company's operations, business, segments, expected financial results, performance, prospects, opportunities, priorities, ongoing objectives, strategies, and outlooks (including the timing, effectiveness, and expected results of the company's initiatives, strategies, business plans, and models). These statements are based on information currently available to the company, and the company does not assume any obligation to update forward-looking statements due to changes in circumstances. These statements do not guarantee future performance and involve certain risks and uncertainties that are difficult to predict. Therefore, actual future results and trends may differ significantly from those projected in the forward-looking statements due to various factors, including but not limited to: market demand for the company's services, the highly competitive nature of the markets in which the company provides its services, the impact of competitive factors on profit margins, market and overall economic conditions that may lead to customers reducing service expenditures, the company's ability to create, acquire, and expand new business lines, the ability to attract and retain qualified personnel, the ability to reduce costs and retain cash, the company's strategies, initiatives, and expectations regarding its operations, segments, and operating results, as well as other risks described in more detail in the documents submitted by the company to the U.S. Securities and Exchange Commission, including the 10-K form for the year ending December 31, 2025.
Investor Relations Contact:
Investor Relations Contact:
