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Mastech Holdings reported its Q2 2025 earnings, surpassing expectations with an EPS of $0.15 versus a forecast of $0.12, marking a 25% surprise. Revenue also exceeded projections, reaching $49.1 million against an expected $47.93 million. According to InvestingPro data, the company maintains strong financial health with more cash than debt on its balance sheet. Despite these positive results, the stock showed no immediate pre-market movement, remaining at $7.29. InvestingPro analysis suggests the stock is currently undervalued, with analysts setting price targets between $12.40 and $15.00.
Key Takeaways
- Mastech Holdings reported a 25% EPS surprise in Q2 2025.
- Revenue exceeded forecasts by 2.44%, reaching $49.1 million.
- The stock remained unchanged pre-market at $7.29.
- The company announced a partnership with Informatica to enhance its AI offerings.
Company Performance
Mastech Holdings experienced a slight decline in consolidated revenue, down 0.9% year-over-year. The company maintained strong performance in its IT Staffing and Data Analytics segments, despite a cautious market environment. InvestingPro data reveals impressive financial metrics, including a healthy current ratio of 3.32 and robust gross profit margins of 28.12%. The firm increased its bill rates, reflecting a focus on high-value solutions and maintaining competitive positioning. For deeper insights into Mastech’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Financial Highlights
- Revenue: $49.1 million, a 0.9% decrease YoY.
- EPS: $0.15, surpassing the forecast of $0.12.
- GAAP Net Income: $100,000, or $0.01 per diluted share.
- Non-GAAP Net Income: $1.8 million, or $0.15 per diluted share.
- Cash balance: $27.9 million, with no outstanding bank debt.
Earnings vs. Forecast
Mastech reported an EPS of $0.15, exceeding the forecast of $0.12, resulting in a 25% surprise. Revenue also surpassed expectations, reaching $49.1 million compared to the forecasted $47.93 million, marking a 2.44% surprise. This performance indicates a positive deviation from previous quarters, where the company faced challenges in meeting market expectations.
Market Reaction
Despite the earnings beat, Mastech’s stock price remained unchanged in pre-market trading at $7.29. The stock has faced significant pressure, declining 43% over the past six months, yet InvestingPro analysis indicates substantial upside potential. The stock is positioned within its 52-week range, with a high of $16 and a low of $6.2. The lack of immediate movement suggests that investors may be adopting a wait-and-see approach, possibly influenced by broader market trends. InvestingPro subscribers have access to 8 additional key insights about Mastech’s valuation and growth prospects.
Outlook & Guidance
While Mastech did not provide specific future guidance, the company expects its consultant count to remain stable and continues to explore strategic partnerships and investments. No significant increase in capital expenditures is anticipated by year-end, indicating a focus on maintaining operational efficiency.
Executive Commentary
CEO Niraj Patel stated, "We believe we delivered a solid quarter in a measured and cautious market." The company is focused on building a differentiated offering, leveraging its partnership with Informatica to enhance its AI capabilities. CFO Kanan Siventharaman emphasized the strategic deployment of capital to accelerate growth.
Risks and Challenges
- Market volatility and cautious client spending could impact future growth.
- Competition in the IT Staffing and Data Analytics sectors remains intense.
- Economic uncertainties may affect client investment decisions.
- Maintaining consultant numbers amidst market fluctuations poses a challenge.
Q&A
During the earnings call, analysts inquired about the progress of the Informatica partnership and the stability of the CGI client relationship. Executives clarified that both areas are progressing positively and discussed potential strategies for cash usage, including buybacks and targeted investments.
Full transcript - Mastech Holdings (MHH) Q2 2025:
Conference Operator: Greetings, and welcome to the Mastech Digital Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jenna Lacey, Manager of Legal Affairs.
Thank you. You may begin.
Jenna Lacey, Manager of Legal Affairs, Mastech Digital: Thank you, operator, and welcome to MasTec Digital’s second quarter twenty twenty five conference call. If you have not yet received a copy of our earnings announcement, it can be obtained from our website at www.mastecdigital.com. With me on the call today are Niraj Patel, MasTec Digital’s Chief Executive Officer and Kanan Siventharaman, our Chief Financial Operations Officer. I would like to remind everyone that statements made during this call that are not historical facts are forward looking statements. These forward looking statements include our financial growth and liquidity projections as well as statements about our plans, strategies, intentions and beliefs concerning the business, cash flows, costs and the markets in which we operate.
Without limiting the foregoing, the words believe, anticipates, plans, expects and similar expressions are intended to identify certain forward looking statements. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward looking statements, including those listed in the company’s 2024 annual report on Form 10 ks filed with the Securities and Exchange Commission and available on its website at www.sec.gov. Additionally, management has elected to provide certain non GAAP financial measures to supplement our financial results presented on a GAAP basis. Specifically, we will not provide we will provide non GAAP net income and non GAAP diluted earnings per share data, which we believe will provide greater transparency with respect to the key metrics used by management in operating the business.
Reconciliations of these non GAAP financial measures to their comparable GAAP measures included in our earnings announcement, which can be obtained from our website at www.mastechdigital.com. As a reminder, we will not be providing guidance during this call nor will we provide guidance in any subsequent one on one meeting this call. I will now turn the call over to Meera for his comments.
Niraj Patel, Chief Executive Officer, Mastech Digital: Thanks, Jenna, and good morning, everyone. We entered the second quarter in a market that remained cautious, but are now beginning to see early signs of stabilization, particularly in North America, where trade related uncertainties appear to have become the new normal. Across industries, we are seeing clients continue to remain cautious, prioritizing investments that deliver clear business value, while managing budgets prudently. Hiring decisions and project commitments also remain measured. Against an uncertain macroeconomic environment, I’m pleased with our performance in the first half of the year, marked by continued year over year growth across both our IT Staffing and Data and Analytics business segments.
We believe this performance demonstrates the strength of our portfolio and our disciplined execution. In our IT Staffing Services segment, we saw steady demand for high value work as clients focused on flexible, cost efficient and value generating workforce strategies. While activity levels were lower than the prior year, we are seeing encouraging signs as macroeconomic conditions improve. I’m particularly pleased with our gross margin performance. We achieved our highest gross margin to date in second quarter through our focus on revenue quality, particularly among our financial services clients.
Our Data and Analytics Services segment also showed positive year over year growth, while our bookings came in lower than expected, driven primarily by slower decisions on capital programs by our top customers. Beyond our financial performance, we have made good progress this quarter on our strategic initiatives and have been methodical in preparing the organization for internal alignment and execution readiness. As part of this process, we have mobilized teams and started organizing our structure to help position the company for the future. We’ve also focused on driving initiatives designed to unlock efficiency across the organization, starting with the recent transition of our finance and accounting function to India. We believe this implementation of our strategic initiatives will energize our teams, deepen client relationships and reinforce our position as a trusted partner for enterprises navigating an AI first world.
In summary, we believe we delivered a solid quarter in a measured and cautious market, demonstrating the resilience of our business and the relevance of our offering. We remain focused on executing against our priorities and preparing the company to see future opportunities. I would like to thank our employees, clients and partners for their continued trust and support as we move forward with the implementation of our new strategic initiatives. With that, I will hand it over to Chandan for a deeper look at the quarter’s results. Thanks, Eirav, and good morning, everyone.
Our second quarter results reflect disciplined execution in a cautious but stabilizing market. Year to date, we have delivered revenue growth across both segments. IT Staffing Services remained stable on a year on year basis, supported by continued demand for high value, flexible workforce solutions. In our Data and Analytics Services segment, we saw a modest decline this year, consistent with the more measured decisions on capital programs that Nirav highlighted earlier. Order bookings in our Data and Analytics segment was lower, reflecting the slower decision making environment.
We remain confident in our ability to deliver value as we move forward with implementing our strategic initiatives. Consolidated revenue during the 2025 totaled 49,100,000.0, a year over year decrease of 0.9% compared to the corresponding quarter of 2024. Our Data and Analytics Services segment reported revenue of 8,600,000.0 in 2025, which was 3.2% lower than Q2 twenty twenty four. Additionally, second quarter twenty twenty five order bookings totaled 5,800,000.0, which was below last year’s Q2 performance of 9,200,000.0. Second quarter twenty twenty five revenue in our IT Staffing Services segment totaled 500,000.0 or 0.4% lower than revenue achieved during the 2024.
Our focus on revenue quality resulted in higher bill rates and higher gross margins in this segment, though our billable consultant base declined by 11 consultants. Consolidated gross profit dollars decreased by 1.1% in 2025 compared to corresponding 2024. Consolidated gross margins dropped by seven basis points over the 2024, largely driven by the decrease in our Data and Analytics Services segment. GAAP net income for the 2025 totaled $100,000 or $01 per diluted share compared to a net income of $1,400,000 or $0.12 per diluted share in the 2024. Non GAAP net income for Q2 twenty twenty five was 1,800,000.0 or $0.15 per diluted share compared to 2,200,000.0 or $0.19 per diluted share in twenty twenty four second quarter.
However, our Q2 twenty twenty five performance was an improvement from Q1 twenty twenty five, where non GAAP net income was $800,000 or $06 per diluted share. SG and A expense items not included in non GAAP financial measures, net of tax benefits, are detailed in our second quarter twenty twenty five earnings release for all periods presented, which are available on our website. On the financial position during the 2025, Our liquidity and overall financial position remained solid. On 06/30/2025, we had 27,900,000.0 cash balance on hand, no bank debt outstanding and cash availability of 22,200,000.0 under our revolving credit facility. Our day sales outstanding measurement on June 2025, totaled to fifty three days, which is well within our target range and in line with our DSO measurement a year ago.
Operator, this concludes our prepared remarks. You can take questions now.
Conference Operator: Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Lisa Thompson with DAX Investment Research. Please proceed with your question.
Good morning. I have a number of questions because we got so much action going on. My first question is is fine our finance and accounting fully moved? Are there any more onetime expenses there?
Niraj Patel, Chief Executive Officer, Mastech Digital: Hello, Lisa. This is Tanan here. Thanks for that question. Yes, we are on track with the transition of our finance and accounting functions to India. And we are facing well against the target outlined in our prior disclosure.
We will be completing most of it by sometime by the fourth quarter of this year. We are seeing early gains, which have been encouraging, not just from a cost standpoint, but also in terms of process agility, turnaround time and better alignment across teams. So that is how we see this. It’s going as per the plan, and we hope that by 2025, we should be complete with our transition.
Conference Operator: So are there any more onetime expenses gonna be booked?
Niraj Patel, Chief Executive Officer, Mastech Digital: We don’t expect any other than that, which is already been disclosed, Lisa.
Conference Operator: Okay. Great. And as far as Informatica, where what’s the progress on that and what’s happening there?
Niraj Patel, Chief Executive Officer, Mastech Digital: Lisa, if I can understand the question, you’re just asking the partnership on our Informatica that we announced a few months ago? Yes. Yeah. So I think, look, we we are continuing to accelerate position on trying to build what I call a very differentiated offering in our portfolio. And among the many partnerships that we have been pursuing, one that we announced recently was with Informatica.
And I’m I’m very pleased with the initial progress that we have made. We have really started to create joint solution offerings where we are creating what we call an impact offering that really allows us to set up a lab that we are actually building our core capabilities around and sort of bringing the sense of our current capabilities and and and market leading positioning for Informatica to jointly serve our clients. And I think we see pretty good with the progress that we have made, and we are continuing to really broadly assess many more such partnerships that we think are going to really allow us to build what I call a truly differentiated offering in a portfolio for for our clients.
Conference Operator: Okay. Interesting. So I wanna compliment you. I’m so excited to be able to get 10 q the same time you report. And in that, I saw that CGI is down another 2,000,000 in revenues from last year.
Is that number gonna go to zero, or is there gonna be some base that they still are gonna deal with you?
Niraj Patel, Chief Executive Officer, Mastech Digital: Lisa, we do not expect drastic a change to that position. We are still working with that client. There is good client interaction that continues to happen. And our client engagement has been good with that particular client of ours. So at this point in time, we do not expect any major deviation to the current position that we are carrying with CBO from a relationship standpoint.
Conference Operator: Great. Thank you. That’s my questions for now. Thank you.
Niraj Patel, Chief Executive Officer, Mastech Digital: Thank you.
Conference Operator: Our next question comes from the line of Mark Riddick with Sidoti. Please proceed with your question.
Niraj Patel, Chief Executive Officer, Mastech Digital: Hey. Good morning. Hey. Good morning, Mark. Good morning.
Mark Riddick, Analyst, Sidoti: Wanted to touch a little bit on the the commentary around the the revenue mix and average bill rate. Maybe you could talk a little bit about the new assignments and the revenue mix there and maybe how that may differentiate it from prior year and how that you know, affects your views going forward?
Niraj Patel, Chief Executive Officer, Mastech Digital: Sure, Mark. I’ll take that. This is Kanan here. As of as you would have seen as of 2025, our bill rates have increased to approximately 85 to $86, which is up from last quarter of 84 to 85, but way above the same time last year at about 81 to 82. This is because and it does reflect the combination of factors, including more deliberate efforts that we have put towards improvement in the quality of revenue across our portfolio.
It is also supported by the clients who are prioritizing on the specialized talent for long term transformation projects. And we do believe that this trend is a positive indicator of our positioning and is being valued in the current environment by our customers. Mark? Okay.
Mark Riddick, Analyst, Sidoti: Great. And then the I believe the consultant count sort of
Niraj Patel, Chief Executive Officer, Mastech Digital: where we are currently.
Mark Riddick, Analyst, Sidoti: Can you share any thoughts or views as to where that make up between now and the end of the year? Or do you expect that it’ll be relatively flat from from end of end of quarter levels?
Niraj Patel, Chief Executive Officer, Mastech Digital: Yeah. So at June, we were at 980. In July, we are at 982. So we do expect it to be about the same level. By the end of the year, we are hoping that that would continue showing a trend, which is going to be relatively flattish.
Mark Riddick, Analyst, Sidoti: Okay.
Niraj Patel, Chief Executive Officer, Mastech Digital: And then maybe if you
Mark Riddick, Analyst, Sidoti: could switch gears and and and talk a little bit about cash build approaching about $28,000,000 I guess, at the end of the quarter with
Niraj Patel, Chief Executive Officer, Mastech Digital: a very extended debt balance sheet.
Mark Riddick, Analyst, Sidoti: I was wondering if could talk a little bit about cash usage prioritization and maybe you know, some of the things that that you might be thinking as far as priorities, but not only that, if if there are any thoughts as to potential for for acquisitions and and maybe what that pipeline might look like?
Niraj Patel, Chief Executive Officer, Mastech Digital: Sure, Mark. And the fact that we had a very good cash position was also because of the efficiencies we are driving overall with respect to cash management and DSO. But we are evaluating potential uses of the 28,000,000 in cash right now. One part is of course the buyback program. But beyond that, we are very open to making targeted investments that align with the long term growth priorities, whether that is in capabilities, in talent or adjacent service areas.
We do believe our strong balance sheet gives us that flexibility. And we do intend to deploy the capital in ways that accelerate our strategic intent. We continue to be thoughtful and deliberate in how we allocate these reserves. And we’ll continue doing so. We are being very programmatic about the way we approach these opportunities, Mark.
And as we build these initiatives, we do believe that that will be a good usage for the cash in the days to come. Okay. And
Mark Riddick, Analyst, Sidoti: then I guess sort of similar or kind general,
Niraj Patel, Chief Executive Officer, Mastech Digital: I guess,
Mark Riddick, Analyst, Sidoti: CapEx through the first half of the year is down from the prior year. Maybe you could talk a little bit about where you might see that shaping up by the end of the year and if there are any projects or CapEx needs that we should be thinking about between now and the
Niraj Patel, Chief Executive Officer, Mastech Digital: end of the year. We do not expect a significant increase with respect to CapEx at this point in time. We do have plans to have these investments eventually coming in when it comes to supporting the growth and supporting the initiatives that we are putting together. But by the end of the year, we do not expect it to be significantly higher And, you know, pretty much would be in line with what we have spent in the past. And that’s the view that we are taking right now, Mark.
Okay. Great. Thank you very much. Thank you, Mark.
Jenna Lacey, Manager of Legal Affairs, Mastech Digital: Thank you. We have reached the end of
Conference Operator: the question and answer session. Mr. Patel, I’d like to turn the call back over to you for closing comments.
Niraj Patel, Chief Executive Officer, Mastech Digital: Thank you, operator. If there are no further questions, I would like to thank you for joining our call today. And we look forward to sharing our third quarter twenty twenty five results with you in early November.
Conference Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
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