Overview

• US digital transformation IT services firm's Q1 revenue fell 15% yr/yr

• Non-GAAP net income for Q1 rose compared to prior year

• Company cites cautious client spending and elongated decision cycles due to macro uncertainties

Outlook

• Company says enterprises remain cautious in technology spending due to macro-economic and geopolitical uncertainties

• Company notes organizations continue to allocate toward strategic AI initiatives despite limited discretionary budgets

• Company plans to monitor customer spending patterns as the environment evolves

Result Drivers

• DATA & AI SLOWDOWN - Data & AI segment revenue fell 21% yr/yr, driven by cautious client spending and longer decision cycles amid macro and geopolitical uncertainty

• TALENT SEGMENT CONTRACTION - Talent segment revenue dropped 11.8% yr/yr, reflecting a 20.8% decrease in billable consultants as company exited lower-margin and non-strategic positions

• HIGHER BILL RATES - Average bill rate in Talent segment rose to $90.91 from $87.82 yr/yr, reflecting focus on revenue quality

Company press release: ID:nPn6L5Mjja

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 Revenue	Miss	$41.08 mln	$44.39 mln (2 Analysts)
Q1 Net Income		$264,000
Q1 Gross Profit		$11.03 mln
Q1 Income from Operations		$51,000
Q1 Pretax Profit		$657,000

Analyst Coverage

• Wall Street's median 12-month price target for Mastech Digital Inc is $12.50, about 76.3% above its May 14 closing price of $7.09

• The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 7 three months ago

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