Mastech Digital, Inc.
For the period ended Mar 31, 2026. Filed May 15, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 15, 2026
MHH$6.31-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-13.
0001193125-25-279079
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001193125-26-225593
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 95 previous paragraphs and 68 current paragraphs.
34 unchanged; 24 reworded; 10 added; 29 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
On January 12, 2024, the Company entered into a consulting services agreement with Primentor, Inc. (“Primentor”) under which Primentor provides to the Company strategic advisory and management consulting services, as well as other business and organizational strategy services as requested by the Company’s Board of Directors. The initial term of the agreement is three years, commencing on January 12, 2024. The Company may elect to renew the agreement for successive one-year terms, subject to mutual agreement with Primentor regarding the scope of services and related fees.
Current report
Effective January 1, 2026, we realigned our reporting structure and now operate through two reportable segments: Talent and Data & AI. This change reflects how management evaluates performance and allocates resources across our core offerings. Prior-period information has been recast to conform to the current presentation.
Current report
Our Data & AI segment is focused on delivering consulting and managed services engagements that help clients design, build, and optimize their data and digital platforms. These offerings are typically delivered on a project or managed services basis and leverage a combination of on-site and offshore delivery capabilities. Our Data & AI capabilities have been developed both organically and through acquisitions, including InfoTrellis in 2017, which expanded our data and analytics expertise, and AmberLeaf in 2020, which strengthened our customer experience and managed services offerings.
Current report
Our Talent segment provides staffing solutions that enable clients to access skilled technology professionals across a broad range of digital and mainstream IT disciplines. These engagements include both direct client relationships and intermediated arrangements through managed service providers and systems integrators. This segment allows clients to scale their technology teams efficiently while maintaining flexibility in response to changing business conditions.
Current report
Across both segments, we serve a diversified set of industries, including financial services, government, healthcare, manufacturing, retail, technology, telecommunications, and transportation. Our client base includes organizations with ongoing technology investment needs, as well as those undertaking discrete digital transformation initiatives.
Current report
Data & AI Segment:
Current report
Our business outlook is influenced by general economic conditions in North America and globally. Demand for our services, particularly within the Talent segment, is closely tied to employment levels, corporate spending, and overall economic activity. Periods of economic expansion typically lead to increased demand for our services, while periods of economic uncertainty or contraction may result in reduced client spending. In recent periods, economic conditions have been characterized by ongoing uncertainty, including inflationary pressures, interest rate volatility, and evolving trade and immigration policies. These dynamics have contributed to longer client decision-making cycles and more cautious spending patterns.
Current report
A significant portion of our revenues is generated from a limited number of clients. As a result, our operating results may be impacted by the financial condition and spending patterns of these clients, which may cause our performance to differ from broader market trends.
Current report
Within the Talent segment, a meaningful portion of revenues is generated through relationships with systems integrators and managed service providers (“MSPs”). These arrangements may exert pressure on pricing and margins over time.
Current report
Cash (used in) investing activities was ($0.1) million in both the three months ended March 31, 2026 and 2025. Investing activities in both periods consisted primarily of capital expenditures and changes in non-current deposits.
Removed paragraphs (29)
Previous report
Additionally, the Company expects to pay approximately $1.3 million of severance expense related to this initiative. As of September 30, 2025, the Company has incurred approximately $1.1 million in severance. Post-transition cost savings are expected to approximate $1.2 million per annum.
Previous report
Structural Optimization Costs
Previous report
During the third quarter of 2025, the Company recorded $1.1 million of severance charges associated with strategic initiatives undertaken to better align our organizational structure with our long-term growth objectives. These initiatives were designed to streamline leadership responsibilities, enhance operational efficiency, and position the Company for improved scalability across our business segments.
Previous report
Our portfolio of offerings includes data management and analytics services, other digital transformation services, such as digital learning services, and IT Staffing Services.
Previous report
We operate in two reporting segments – Data and Analytics Services and IT Staffing Services. Our data and analytics services are marketed on a global basis under the brand “Mastech InfoTrellis” and are delivered largely on a project basis with on-site and off-shore resources. These data and analytics capabilities and expertise were acquired through our acquisition of InfoTrellis and enhanced and expanded subsequent to the acquisition. In October 2020, we acquired AmberLeaf Partners, Inc. (“AmberLeaf”), a Chicago-based customer experience consulting firm. This acquisition enhanced our capabilities in customer experience strategy and managed services offerings for a variety of Cloud-based enterprise applications across sales, marketing and customer services organizations. Our IT staffing business combines technical expertise with business process experience to deliver a broad range of staffing services in digital and mainstream technologies, as well as other digital transformation services.
Previous report
Both business segments provide their services across various industry verticals, including financial services, government, healthcare, manufacturing, retail, technology telecommunications and transportation. In our Data and Analytics Services segment, we evaluate our revenues and gross profits largely by service line. In our IT Staffing Services segment, we evaluate our revenues and gross profits largely by sales channel responsibility. This analysis within both our reporting segments is multi-purposed and includes technologies employed, client relationships, and geographic locations.
Previous report
Data and Analytics:
Previous report
Generally, our business outlook is highly correlated to general North American economic conditions, particularly with respect to our IT Staffing Services segment. During periods of increasing employment and economic expansion, demand for our services tends to increase. Conversely, during periods of contracting employment and / or a slowing global economy, demand for our services tends to decline. With economic expansion in 2010 through 2019 activity levels improved. However, as economic conditions strengthened, we experienced increased tightness in the supply side (skilled IT professionals) of our businesses. These supply-side challenges pressured resource costs and, to some extent, gross margins. As we entered 2020, we were encouraged by continued growth in the domestic job markets and expanding U.S. and global economies. However, with the COVID-19 pandemic surfacing in the first quarter of 2020, we realized that economic growth would quickly turn into recessionary conditions, which had a material impact on activity levels in both of our business segments. In 2021, we were encouraged by the global rollout of vaccination programs and signs of economic improvement, however, the proliferation of COVID-19 variants had caused some uncertainty and disruption in the global markets. In 2022 and 2023, COVID-19-related concerns seemed to subside; however, increased inflation, challenges in the financial sector related to increasing interest rates, and concerns about a possible recession created much uncertainty and impacted demand for our services in the second half of 2022 and for the entire year of 2023. In 2024, economic conditions in North American improved over the course of the year as job growth and inflationary outlooks showed positive signs of improvement. However, as we move towards the end of 2025, uncertainty and caution continues to persist in the marketplace, driven in part by lingering questions around the direction and implementation of immigration, trade and other policies under the new administration (including the implementation of tariffs and other trade measures). These evolving dynamics have contributed to extended decision-making cycles and conservative spending behavior among clients. Given these and other factors, it remains difficult to reliably forecast how market conditions will develop for the remainder of 2025 or during 2026 and beyond.
Previous report
In addition to tracking general economic conditions in the markets that we service, a large portion of our revenues is generated from a limited number of clients (see Item 1A, the Risk Factor entitled “Our revenues are highly concentrated, and the loss of a significant client would adversely affect our business and revenues” in our Annual Report on Form 10-K for the year ended December 31, 2024). Accordingly, our trends and outlook are additionally impacted by the prospects and well-being of these specific clients. This “account concentration” factor may result in our results of operations deviating from the prevailing economic trends from time to time.
Previous report
Within our IT Staffing Services segment, a larger portion of our revenues has come from strategic relationships with systems integrators. Additionally, many large end users of IT staffing services are employing MSP’s to manage their contractor spending. Both of these dynamics may pressure our IT staffing gross margins in the future.
Previous report
Severance expense included in SG&A was $0.8 million in the 2025 period, compared to no expense in the third quarter of 2024. The expense related to a strategic initiative undertaken to better align the organizational structure with the Company's long-term growth objectives.
Previous report
Finance and accounting transition expense was $0.9 million in the 2025 period, compared to no expense in the third quarter of 2024. The expense relates to the Company’s decision to transition the Company’s finance and accounting functions to India and includes severance and additional costs related to the duplication of resources and travel expenses during the training and knowledge transfer process.
Previous report
Results of Operations for the Nine Months Ended September 30, 2025 as Compared to the Nine Months Ended September 30, 2024:
Previous report
Revenues:
Previous report
Revenues from our Data and Analytics Services segment totaled $25.4 million during the nine months ended September 30, 2025, compared to $26.3 million in the corresponding nine-month period last year. The 3% year-over-year decrease was primarily driven by continued softness in client demand and slower decision-making cycles for new projects, compared to the corresponding 2024 period. Order bookings for the first nine months of 2025 totaled approximately $23.5 million, compared to bookings of $30.0 million for the first nine months of 2024.
Previous report
Revenues from our IT Staffing Services segment totaled $120.5 million in the nine months ended September 30, 2025, compared to $121.9 million during the corresponding 2024 period. This 1% decrease largely reflected a lower level of billable consultants, partially offset by an increase in average bill rate due to higher quality of placements in the 2025 period. At September 30, 2025 billable consultants totaled 947-consultants compared to 1,071-consultants at September 30, 2024.
Previous report
Gross Margins:
Previous report
Gross profits in the nine months ended September 30, 2025 totaled $40.2 million compared to $40.9 million in the corresponding period last year. Excluding the $0.3 million of severance expense, gross profit as a percentage of revenue was 27.7% for the nine-month period ended September 30, 2025, compared to 27.6% during the same period of 2024. This 10-basis point increase largely reflected improvements in our IT Staffing Services segment, offset by lower margins in our Data and Analytics Services segment.
Previous report
Gross margins from our Data and Analytics Services segment, excluding severance expense of $0.3 million were 45.1% of revenues during the nine-month period ended September 30, 2025, compared to 48.9% in the corresponding period of 2024. This gross margin decrease reflected lower utilization rates during the first nine months of 2025. Including the $0.3 million of severance expense, gross margins were 44.1% for the Data and Analytics Services segment for the nine-month period ended September 30, 2025.
Previous report
Gross margins from our IT Staffing Services segment were 24.0% in the nine months ended September 30, 2025, compared to 23.0% during the corresponding period of 2024. This 100-basis point increase was due to higher margins and bill rates on new assignments in 2025.
Previous report
Sales expense decreased by $1.4 million in the 2025 period compared to the corresponding 2024 period. Sales expense decreased by $0.9 million in our Data and Analytics Services segment and by $0.5 million in our IT Staffing Services segment due to staff reductions and lower marketing spend.
Previous report
Operations expense decreased by $0.7 million in the 2025 period compared to the corresponding 2024 period. The entire decline occurred in our IT Staffing Services segment due to staff reductions.
Previous report
General and administrative expense increased by $2.1 million in the 2025 period compared to the corresponding 2024 period. In our Data and Analytics Services segment, general and administrative expense increased by $0.9 million and by $1.2 million in our IT Staffing Services segment due to executive compensation, including stock based compensation, as well as executive recruiting costs and bad debt expense.
Previous report
Amortization of acquired intangible assets was $0.1 million lower in the 2025 period compared to the corresponding 2024 period, as a portion of our intangible assets became fully amortized in 2025.
Previous report
Finance and accounting transition expense was $1.6 million in the 2025 period, compared to no expense in the 2024 period. The expense relates to the Company’s decision to transition the Company’s finance and accounting functions to India and includes severance and additional costs related to the duplication of resources and travel expenses during the training and knowledge transfer process.
Previous report
Other Income / (Expense) Components:
Previous report
Income Tax Expense:
Previous report
Income tax expense for the nine months ended September 30, 2025 totaled $46,000 representing an effective tax rate on pre-tax losses of (14.5%) compared to $994,000 for the nine months ended September 30, 2024, which represented a 24.2% effective tax rate on pre-tax income. The main driver for the tax rate in the 2025 period is the shortfall in the expected benefit from stock options, as well as state and foreign tax impacts. The 2024 period was also impacted by the utilization of Singapore tax benefits from our worthless stock deductions.
Previous report
Cash (used in) investing activities for the nine months ended September 30, 2025, was ($369,000) compared to ($825,000) for the nine months ended September 30, 2024. In 2025 investing activities included capital expenditures of ($351,000), and office lease deposits of ($18,000). In 2024, investing activities consisted primarily of capital expenditures.
Reworded paragraphs (24)
Previous wording
Please refer to Note 1 “Summary of Significant Accounting Policies” of the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024 for a more detailed discussion of our significant accounting policies and critical accounting estimates. There were no material changes to these critical accounting policies during the nine months ended September 30, 2025.
Current wording
Please refer to Note 1 “Summary of Significant Accounting Policies” of the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2025 for a more detailed discussion of our significant accounting policies and critical accounting estimates. There were no material changes to these critical accounting policies during the three months ended March 31, 2026.
Previous wording
On January 12, 2024, we entered into a consulting services agreement with Primentor, Inc. (“Primentor”) to provide the Company with strategic advisory and management consulting services, as well as any other business and organizational strategy services as the Board of Directors of the Company may reasonably request from time to time. The initial term of the consulting services agreement is for a three-year period that commenced on January 12, 2024, and the Company may request to renew the term for additional successive one-year terms, in which case Primentor and the Company will negotiate to agree upon the scope of the additional services and the amount of additional consulting fees. During 2024, the Company incurred consulting expenses of approximately $1.1 million related to these services. In 2025 and 2026, the Company expects to pay Primentor approximately $270,000 and $120,000, respectively, plus reimbursement of any reasonable and documented out-of-pocket expenses incurred by Primentor in rendering such services.
Current wording
During 2024 and 2025, the Company incurred consulting expenses of approximately $1.1 million and $0.3 million, respectively. The Company expects to incur approximately $0.2 million in consulting expenses during 2026, plus reimbursement of reasonable and documented out-of-pocket expenses incurred by Primentor in rendering such services.
Previous wording
During the first quarter of 2025, the Company’s Board of Directors made the decision to implement a long-term cost-cutting initiative to transition the Company’s finance and accounting functions to India. During 2025, the Company expects to incur additional costs related to the duplication of resources and travel expenses during the training and knowledge transfer process. As of September 30, 2025, the Company has incurred approximately $500,000 of additional costs and estimates total expenses to range from $500,000 to $750,000 for the transition period.
Current wording
During the first quarter of 2025, the Company’s Board of Directors made the decision to implement a long-term cost-cutting initiative to transition the Company’s finance and accounting functions to India. During 2025, the Company incurred $1.2 million of severance costs and $0.7 million of costs related to the duplication of resources and travel expenses during the training and knowledge transfer process. The transition was completed as of December 31, 2025.
Previous wording
We are a provider of Digital Transformation IT Services to mostly large and medium-sized organizations.
Current wording
We are a provider of digital transformation IT services to primarily large and medium-sized organizations. Our portfolio combines project-based professional services with flexible staffing solutions to support our clients’ evolving digital and technology needs.
Previous wording
We provide information regarding our new bookings in our Data and Analytics Services segment, which represents the estimated value of client engagements, including those acquired through acquisitions, as well as renewals and extensions to existing contracts, because we believe doing so provides useful trend information regarding changes in the volume of our new business over time. New bookings can vary significantly quarter to quarter, depending, in part, on the timing of the signing of a small number of large engagements. Among other factors, the types of services and solutions to be delivered, the duration of the engagement and the pace and level of client spending impact the timing of the conversion of new bookings to revenues. In addition, substantially all of our contracts are terminable by the client on short notice, with little or no termination penalties. Information regarding our new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time. New bookings involve estimates and judgments. There are no third-party standards or requirements governing the calculation of bookings. We do not update our new bookings for material subsequent terminations or reductions related to bookings originally provided in prior periods.
Current wording
We provide information regarding new bookings within our Data & AI segment, which represents the estimated value of client engagements, including renewals and extensions of existing contracts. We believe this metric provides useful insight into trends in the volume of new business over time. New bookings can vary significantly from period to period due to the timing of contract awards, particularly for larger engagements. The conversion of bookings into revenue is influenced by several factors, including the nature and scope of services, contract duration, and the pace of client spending. Additionally, substantially all of our client contracts are terminable by the client on short notice, with little or no termination penalties. New bookings involve estimates and judgments, and there are no third-party standards governing their calculation. Accordingly, bookings should not be considered a substitute for, or comparable to, revenue measures. We do not update previously reported bookings for subsequent contract modifications, terminations, or reductions.
Previous wording
Revenues for the three months ended September 30, 2025 totaled $48.5 million, compared to $51.8 million for the corresponding three-month period in 2024. This 6% year-over-year revenue decrease reflected a 4% revenue decrease in our IT Staffing Services segment and a 16% decline in our Data and Analytics Services segment. For the three months ended September 30, 2025, the Company had three clients that each had revenues in excess of 10% of total revenues (Fidelity 18.1%, Populus = 12.7% and CGI = 10.4%). For the three months ended September 30, 2024, the Company had two clients that each had revenues in excess of 10% of total revenues (CGI = 14.0% and Allegis = 11.7%). The Company’s top ten clients represented approximately 59% and 56% of total revenues for the three months ended September 30, 2025 and 2024, respectively.
Current wording
Revenues for the three months ended March 31, 2026 totaled $41.1 million, compared to $48.3 million for the corresponding three-month period in 2025. This 15% year-over-year revenue decrease reflected a 12% revenue decrease in our Talent segment and a 21% decline in our Data & AI segment. For the three months ended March 31, 2026, the Company had one client that had revenues in excess of 10% of total revenues (Fidelity 24.5%). For the three months ended March 31, 2025, the Company had three clients that each had revenues in excess of 10% of total revenues (Fidelity = 12.9%, CGI = 11.9% and Populus = 11.7%). The Company’s top ten clients represented approximately 60% and 56% of total revenues for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
Revenues from our Data and Analytics Services segment totaled $7.9 million in the three months ended September 30, 2025, which is lower compared to $9.4 million in the corresponding period last year. The year-over-year decrease in revenues primarily reflects softer demand and slower client decision making cycles for new projects in 2025. New bookings in the third quarter of 2025 totaled approximately $6.1 million, compared to bookings of $11.1 million in the third quarter of 2024, as we saw clients maintaining a cautious approach to discretionary spending amid macroeconomic uncertainty.
Current wording
Revenues from our Data & AI segment totaled $12.6 million in the three months ended March 31, 2026, which decreased compared to $16.0 million in the corresponding period last year. The year-over-year decrease in revenues primarily reflects softer demand and slower client decision-making cycles for new projects in 2026. New bookings in the first quarter of 2026 totaled approximately $13.6 million, compared to bookings of $15.3 million in the first quarter of 2025, reflecting continued caution among clients with respect to discretionary spending amid macroeconomic uncertainty.
Previous wording
Revenues from our IT Staffing Services segment totaled $40.6 million in the three months ended September 30, 2025, compared to $42.4 million during the corresponding 2024 period. The year-over-year decline in revenue primarily reflects lower demand for our services in 2025. Billable consultants at September 30, 2025 totaled 947-consultants compared to 1,071-consultants one year earlier. Our average bill rate during the third quarter of 2025 was $86.60 per hour compared to $82.80 per hour in the corresponding 2024 quarter. The increase in average bill rate was due to higher quality of revenues in the new assignments during the third quarter of 2025 and was reflective of the types of skill sets that we deployed to clients. Permanent placement / fee revenues were approximately $0.3 million during both the third quarter of 2025 and the comparable 2024 quarter.
Current wording
Revenues from our Talent segment totaled $28.5 million in the three months ended March 31, 2026, compared to $32.3 million during the corresponding 2025 period. The year-over-year decline in revenue primarily reflects lower billable consultants in 2026. Billable consultants at March 31, 2026 totaled 619-consultants compared to 782-consultants one year earlier. Our average bill rate during the first quarter of 2026 was $90.91 per hour compared to $87.82 per hour in the corresponding 2025 quarter. The increase in average bill rate was due to higher value assignments during the first quarter of 2026 and was reflective of the types of skill sets that we deployed to clients.
Previous wording
Gross profits in the third quarter of 2025 totaled $13.5 million, which was $1.3 million lower than the third quarter of 2024 gross profits. Excluding the $0.3 million of severance expense, gross profit as a percentage of revenue was 28.3% for the three-month period ended September 30, 2025, compared to 28.5% during the same period of 2024. This 20-basis point reduction in gross margins reflected higher margins in our IT Staffing Services business segment, offset by lower margins from our Data and Analytics Services segment during the current quarter. Including the $0.3 million of severance expense, gross margin was 27.8% for the three-month period ended September 30, 2025.
Current wording
Gross profits in the first quarter of 2026 totaled $11.0 million, which was $1.9 million lower than the first quarter of 2025 gross profits. Gross profit as a percentage of revenue was 26.8% for the three-month period ended March 31, 2026, compared to 26.7% during the same period of 2025. This 10-basis point reduction in gross margins reflected higher margins in our Talent segment, offset by lower margins from our Data & AI segment during the current quarter.
Previous wording
Gross margins from our Data and Analytics Services segment, excluding severance expense of $0.3 million were 46.0% of revenues during the third quarter of 2025, which represented a decrease of 470-basis points compared to 50.7% of revenues during the third quarter of 2024. The margin reduction was primarily the result of a lower utilization rate in the 2025 quarter compared to the third quarter of 2024. Including the $0.3 million of severance expense, gross margin was 42.8% for the Data and Analytics Services segment for the three-month period ended September 30, 2025.
Current wording
Gross margins from our Data & AI segment were 37.2% of revenues during the first quarter of 2026, which represented a decrease of 50-basis points compared to 37.7% of revenues during the first quarter of 2025. The margin reduction was primarily the result of a lower utilization rate in the 2026 quarter compared to the first quarter of 2025.
Previous wording
Gross margins from our IT Staffing Services segment were 24.8% in the third quarter of 2025 compared to 23.6% during the corresponding quarter of 2024. This 120-basis point increase was due to higher quality placements and better pricing on new assignments in 2025.
Current wording
Gross margins from our Talent segment were 22.2% in the first quarter of 2026 compared to 21.2% during the corresponding quarter of 2025. This 100-basis point increase was due to higher quality placements and better pricing on new assignments in 2026.
Previous wording
SG&A expenses for the three months ended September 30, 2025, totaled $12.6 million or 26.1% of total revenues, compared to $12.3 million or 23.8% of total revenues for the three months ended September 30, 2024. Excluding the severance expense and finance and accounting transition expense in the 2025 period and the amortization of acquired intangible assets in both periods, SG&A expense as a percentage of total revenues would have been 20.5% and 22.5%, respectively.
Current wording
SG&A expenses for the three months ended March 31, 2026, totaled $11.0 million or 26.8% of total revenues, compared to $14.7 million or 30.4% of total revenues for the three months ended March 31, 2025. Excluding the severance expense in the 2025 period and the amortization of acquired intangible assets in both periods, SG&A expense as a percentage of total revenues would have been 25.3% and 26.3%, respectively.
Previous wording
Fluctuations within SG&A expense components during the third quarter of 2025, compared to the third quarter of 2024, included the following:
Current wording
Fluctuations within SG&A expense components during the first quarter of 2026, compared to the first quarter of 2025, included the following:
Previous wording
Sales expense was $1.3 million lower in the 2025 period compared to the corresponding 2024 period. Sales expense in our Data and Analytics Services segment decreased by $0.5 million, which decrease was driven primarily by lower payroll and related costs. Sales expense in our IT Staffing Services segment decreased by $0.8 million, resulting from lower payroll and related costs, as well as reduced marketing spend.
Current wording
Sales and marketing expense was $1.5 million lower in the 2026 period compared to the corresponding 2025 period. Sales and marketing expense in our Data & AI segment decreased by $0.6 million, driven primarily by lower payroll and related costs. Sales and marketing expense in our Talent segment decreased by $0.9 million, resulting from lower payroll and related costs, as well as reduced marketing spend.
Previous wording
Operations expenses decreased by $0.5 million in the 2025 period compared to the corresponding 2024 period. Operations expense decreased by $0.1 million in our Data and Analytics Services segment and by $0.4 million in our IT Staffing Services segment due to staff reductions.
Current wording
Operations expenses decreased by $0.4 million in the 2026 period compared to the corresponding 2025 period. Operations expense increased by $0.3 million in our Data & AI segment due to AI related personnel investments and decreased by $0.7 million in our Talent segment due to staff reductions.
Previous wording
General and administrative expenses increased by $0.3 million in the 2025 period compared to the corresponding 2024 period. General and administrative expenses in our Data and Analytics Services segment increased by $0.3 million primarily due to executive leadership hires and higher stock-based compensation expense in the 2025 period. In our IT Staffing Services segment, general and administrative expenses remained flat.
Current wording
General and administrative expenses decreased by $0.4 million in the 2026 period compared to the corresponding 2025 period. General and administrative expenses in our Data & AI segment decreased by $0.4 million primarily due to lower payroll and related costs in the 2026 period. In our Talent segment, general and administrative expenses remained flat.
Previous wording
Amortization of acquired intangible assets was $0.7 million in the 2025 period, compared to $0.6 million in the corresponding 2024 period.
Current wording
Amortization of acquired intangible assets was $0.6 million in both the 2026 period and the corresponding 2025 period.
Previous wording
Severance expense was $2.5 million in the 2025 period, compared to no expense in the 2024 period. The expense related to the Company’s exiting Chief Financial Officer, IT Staffing Sales Management and the Structural Optimization Costs described above.
Current wording
Severance expense included in SG&A was $1.4 million in the 2025 period, compared to no severance expense in the first quarter of 2026. The expense related to the Company's exiting Chief Financial Officer.
Previous wording
Other Income / (Expense) for the three months ended September 30, 2025, consisted of interest income of $266,000 and foreign exchange gains of $149,000. For the three months ended September 30, 2024, Other Income / (Expense) consisted of interest income of $163,000 and foreign exchange losses of ($30,000). The higher level of interest income was reflective of higher cash balances in the 2025 period.
Current wording
Other Income / (Expense) for the three months ended March 31, 2026, consisted of interest income of $288,000 and foreign exchange gains of $319,000. For the three months ended March 31, 2025, Other Income / (Expense) consisted of interest income of $115,000 and foreign exchange losses of ($24,000). The higher level of interest income was reflective of higher cash balances in the 2026 period.
Previous wording
Income tax expense for the three months ended September 30, 2025, totaled $294,000, representing an effective tax rate on pre-tax income of 23.8%, compared to $697,000 expense for the three months ended September 30, 2024, which represented an effective tax rate on pre-tax income of 27.1%. The main driver for the lower tax rate in the 2025 period is the shortfall in the expected benefit from stock options, offset by state and foreign tax impacts.
Current wording
Income tax expense for the three months ended March 31, 2026, totaled $393,000, representing an effective tax rate on pre-tax income of 59.8%, compared to ($323,000) benefit for the three months ended March 31, 2025, which represented an effective tax rate on a pre-tax loss of 18.3%. The main driver for the higher tax rate in the 2026 period is the shortfall in the expected benefit from stock options, and disallowed executive compensation.
Previous wording
As of September 30, 2025, we had no bank debt, cash balances on hand of $32.7 million and approximately $20.8 million of borrowing capacity under our existing credit facility.
Current wording
As of March 31, 2026, we had no bank debt, cash balances on hand of $33.6 million and approximately $21.3 million of borrowing capacity under our existing credit facility.
Previous wording
Historically, we have funded our organic business needs with cash generated from operating activities. Controlling our operating working capital levels by closely managing our accounts receivable balance is an important element of cash generation. As of September 30, 2025, our accounts receivable “days sales outstanding” (“DSOs”) measurement increased to 55-days, which was the level reported at September 30, 2024.
Current wording
Historically, we have funded our organic business needs with cash generated from operating activities. Controlling our operating working capital levels by closely managing our accounts receivable balance is an important element of cash generation. As of March 31, 2026, our accounts receivable “days sales outstanding” (“DSOs”) increased to 60-days, compared to 56-days reported at March 31, 2025.
Previous wording
Cash provided by operating activities for the nine months ended September 30, 2025, totaled $6.8 million compared to $3.2 million during the nine months ended September 30, 2024. Elements of cash flow during the 2025 period were a net (loss) of ($0.4) million, non-cash charges of $2.8 million and a decrease in operating working capital levels of $4.4 million. Elements of cash flow during the corresponding 2024 period were a net income of $3.1 million, non-cash charges of $4.4 million and an increase in operating working capital levels of ($4.3 million). Operating working capital decreased in 2025 due to lower accounts receivable and an increase in accrued payroll liabilities.
Current wording
Cash (used in) operating activities for the three months ended March 31, 2026, totaled ($3.2) million compared to ($2.9) million during the three months ended March 31, 2025. Operating cash flows for the 2026 period were driven by net income of $0.3 million, non-cash charges of $2.3 million, and a ($5.7) million use of cash from changes in operating working capital. The use of cash from working capital was primarily attributable to a decrease in accrued payroll and related costs, reflecting the timing of annual bonus payments, as well as an increase in accounts receivable. In the prior year period, cash (used in) operating activities reflected a net loss of ($1.4) million, non-cash charges of $2.0 million, and a ($3.5) million use of cash from changes in operating working capital. Working capital changes in 2025 were similarly driven by higher accounts receivable and the timing of compensation-related payments.
Previous wording
Cash provided by (used in) financing activities for the nine months ended September 30, 2025, totaled ($992,000) and consisted of proceeds from the exercise of stock options of $530,000, the issuance of common shares related to our Employee Stock Purchase Plan of $70,000, offset by the purchase of treasury shares of ($1,592,000). Cash provided by financing activities for the nine months ended September 30, 2024, totaled $496,000 and consisted of proceeds from the exercise of stock options of $440,000, the issuance of common shares related to our Employee Stock Purchase Plan of $136,000, partially offset by the purchase of treasury shares of ($80,000).
Current wording
Cash provided by financing activities for the three months ended March 31, 2026 totaled $0.7 million and consisted primarily of proceeds from the exercise of stock options. Cash provided by financing activities for the three months ended March 31, 2025, was minimal and consisted of proceeds from the issuance of common shares.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
Revenues for the nine months ended September 30, 2025, totaled $145.9 million, compared to $148.2 million for the corresponding nine-month period in 2024. This 2% year-over-year revenue decrease reflected a 3% decrease in our Data and Analytics Services segment and a 1% decrease in our IT Staffing Services segment. For the nine months ended September 30, 2025, the Company had three clients that each had revenues in excess of 10% of total revenues (Fidelity = 15.4%, Populus = 12.3% and CGI = 11.1%). For the nine months ended September 30, 2024, the Company had two clients that each had revenues in excess of 10% of total revenues (CGI = 15.4% and Allegis = 10.6%). The Company’s top ten clients represented approximately 58% and 54% of total revenues for the nine months ended September 30, 2025 and 2024, respectively.
Previous report — wording carried elsewhere
Below is a tabular presentation of revenues by reportable segment for the nine months ended September 30, 2025 and 2024, respectively:
Previous report — wording carried elsewhere
Below is a tabular presentation of gross margin by reporting segment for the nine months ended September 30, 2025 and 2024, respectively:
Previous report — wording carried elsewhere
Selling, General and Administrative (“SG&A”) Expenses:
Previous report — wording carried elsewhere
Below is a tabular presentation of operating expenses by expense category for the nine months ended September 30, 2025, and 2024, respectively:
Previous report — wording carried elsewhere
SG&A expenses for the nine months ended September 30, 2025, totaled $41.2 million or 28.2% of total revenues, compared to $37.2 million or 25.1% of total revenues for the nine months ended September 30, 2024. Excluding the severance expense and finance and accounting transition expense in the 2025 period and the amortization of acquired intangible assets in both periods, SG&A expense as a percentage of total revenues would have been 24.1% and 23.7%, respectively.
Previous report — wording carried elsewhere
Fluctuations within SG&A expense components during the first nine months of 2025, compared to the first nine months of 2024, included the following:
Previous report — wording carried elsewhere
Other Income / (Expense) for the nine months ended September 30, 2025, consisted of net interest income of $571,000 and foreign exchange gains of $118,000. For the nine months ended September 30, 2024, Other Income / (Expense) consisted of interest income of $447,000 and foreign exchange losses of ($74,000). The higher level of interest income was reflective of higher cash balances on hand in the 2025 period.