Mastech Digital Q3 revenue falls 13% on Talent segment weakness

Overview

• Digital transformation IT services firm's Q3 revenue fell 13% yr/yr but rose sequentially

• Non-GAAP diluted EPS dropped to $0.10 from $0.29 a year earlier

• Talent segment revenue declined 16% yr/yr as a top client insourced services

Outlook

• Mastech expects to continue investing in Data & AI capabilities into 2027

• Company sees enterprises moving past AI experimentation toward production deployments

Result Drivers

• DATA & AI MOMENTUM - Data & AI segment revenue grew 4.7% sequentially, marking a second consecutive quarter of growth, and bookings rose 29% yr/yr, per company

• TALENT SEGMENT WEAKNESS - Talent segment revenue fell 16.4% yr/yr, driven by a 21% drop in billable consultants as a top client continued insourcing and the company exited lower-margin positions

• FOCUS ON HIGH-VALUE WORK - Company said emphasis on high-value Data & AI work lifted segment gross margin by 50 basis points yr/yr to 40.5%

Company press release:

Key Details

Analyst Coverage

• Wall Street's median 12-month price target for Mastech Digital Inc is $12.75, about 101.4% above its October 29 closing price of $6.33

• The stock recently traded at 8 times the next 12-month earnings vs. a P/E of 11 three months ago

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)