On August 7, 2024, Mastech Digital Inc (MHH, Financial) released its 8-K filing detailing the financial results for the second quarter ended June 30, 2024. Mastech Digital Inc is a provider of Digital Transformation IT Services, offering data & analytics solutions and IT staffing services for both digital and mainstream technologies. The company operates in two segments: Data & Analytics Services and IT Staffing Services, with the majority of its revenue generated from IT staffing services in the United States.
Performance Overview
Mastech Digital Inc reported revenues of $49.5 million for Q2 2024, surpassing the analyst estimate of $48.10 million. This represents a sequential growth of 6% from the previous quarter, although it is a decline from $52.2 million in the same quarter of 2023. The company's gross profit for the quarter was $14.0 million, up from $13.6 million in Q2 2023, with gross profit margins reaching a record 28.2%, compared to 26.1% in the same period last year.
Financial Achievements
GAAP net income for Q2 2024 was $1.4 million, or $0.12 per diluted share, a significant improvement from a loss of $2.2 million, or ($0.19) per diluted share, in Q2 2023. Non-GAAP net income was $2.2 million, or $0.19 per diluted share, compared to $1.3 million, or $0.11 per diluted share, in the same quarter last year. These results highlight the company's ability to enhance profitability despite a slight decline in revenue.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $49.5 million | $52.2 million |
| Gross Profit | $14.0 million | $13.6 million |
| Gross Profit Margin | 28.2% | 26.1% |
| GAAP Net Income | $1.4 million | ($2.2 million) |
| Non-GAAP Net Income | $2.2 million | $1.3 million |
| GAAP EPS | $0.12 | ($0.19) |
| Non-GAAP EPS | $0.19 | $0.11 |
Segment Performance
The Data & Analytics Services segment reported revenues of $8.9 million, slightly up from $8.8 million in Q2 2023, with a gross margin of 49.2%, compared to 45.6% in the same period last year. The IT Staffing Services segment generated $40.7 million in revenue, down from $43.4 million in Q2 2023, but with an improved gross margin of 23.6%, up from 22.2%.
Commentary and Analysis
"The second quarter of 2024 was a continuation of market improvements experienced during the first quarter of 2024, as many of our clients appear to have shifted their spending patterns in a positive direction. Additionally, our gross profit margins improved to a Company quarterly performance record 28.2% during the quarter due to strong project delivery, higher consultant utilization and lower employee benefit costs. In summary, I feel good about our second quarter performance, with notable improvements in both top-line revenues and bottom-line operating profits." - Vivek Gupta, President and CEO
Jack Cronin, CFO, added, "On June 30, 2024, we had $20.6 million of cash balances on hand, no bank debt, and borrowing availability of $23.8 million under our revolving credit facility. Our Days Sales Outstanding (DSO) measurement was a healthy 53 days on June 30, 2024, which is an improvement of 3 days when compared to a year ago."
Conclusion
Mastech Digital Inc's Q2 2024 results demonstrate the company's resilience and ability to improve profitability despite revenue challenges. The record gross profit margins and strong cash position highlight the company's operational efficiency and financial stability. These factors are crucial for value investors considering Mastech Digital Inc as a potential investment in the Business Services sector.
Explore the complete 8-K earnings release (here) from Mastech Digital Inc for further details.
