Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mastech Digital Inc (MHH, Financial) achieved a record gross margin of 28.2% in Q2 2024, an improvement from 26.1% in Q2 2023.
- The Data and Analytics Services segment reported a 10% sequential revenue growth, driven by expanded client accounts and new client acquisitions.
- The IT staffing services segment saw a 5% sequential revenue growth, primarily from increased contract spending by existing large clients.
- The company reported a GAAP net income of $1.4 million in Q2 2024, compared to a net loss of $2.2 million in Q2 2023.
- Mastech Digital Inc (MHH) maintained a strong financial position with $20.6 million in cash and no bank debt as of June 30, 2024.
Negative Points
- Consolidated revenues for Q2 2024 were $49.5 million, down from $52.2 million in Q2 2023, indicating a year-over-year decline.
- The IT staffing services segment experienced a year-over-year revenue decrease from $43.4 million in Q2 2023 to $40.7 million in Q2 2024.
- The company did not repurchase any shares during Q2 2024 due to an extended blackout period related to confidential corporate matters.
- Mastech Digital Inc (MHH) continues to face challenges in maintaining consistent revenue growth, despite improvements in certain segments.
- The company did not provide any guidance for future quarters, which may create uncertainty for investors.
Q & A Highlights
Q: What was the total number of consultants at the end of the quarter?
A: Vivek Gupta, President and CEO, confirmed that they added 31 consultants in the quarter, bringing the total number to 1,035 for their staffing business.
Q: How is the trend going this quarter in terms of headcount?
A: Vivek Gupta mentioned that July was good, with an increase in headcount, indicating a positive trend.
Q: Has there been any change in SG&A expenses, and are consultants involved in streamlining the business?
A: Vivek Gupta explained that SG&A expenses are not related to consultants but rather to sales, marketing, and general administration. They have tightened SG&A expenses by eliminating unnecessary costs and aim to reduce SG&A as a percentage of revenue over time.
Q: What are the expectations for gross margins going forward?
A: Vivek Gupta stated that the intention is to maintain gross margins at the 28% level. While some factors like medical claim experience are uncontrollable, they are focusing on controllable aspects to sustain this level.
Q: Can you discuss the improvement in utilization rates and revenue mix benefits?
A: Vivek Gupta highlighted that better resource utilization, bench management, and project delivery have contributed to improved gross margins in their Data and Analytics business.
Q: Are there any changes in client activity or differentiation in industry verticals?
A: Vivek Gupta noted that clients are more comfortable with the economic environment, leading to increased spending. Mastech Digital's industry-focused solutions and AI integration are being well-received by clients.
Q: Was there any share repurchase activity during the quarter, and what are the future plans for cash use?
A: Jack Cronin, CFO, stated that no shares were repurchased in Q2 due to an extended blackout period. They are keen on the share repurchase program and plan to resume once the blackout period ends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
