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What changed in Mastech Digital, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Mastech Digital, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+233 added−253 removedSource: 10-K (2026-03-18) vs 10-K (2025-03-14)

Top changes in Mastech Digital, Inc.'s 2025 10-K

233 paragraphs added · 253 removed · 165 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeReportable Financial Segments The Company has two reportable segments in accordance with Accounting Standards Codification (“ASC”) Topic 280 “Disclosures about Segments of an Enterprise and Related Information”. Refer to Note 16 “Business Segments and Geographic Information” to our Consolidated Financial Statements included in Item 8 herein for information about our two reportable segments.
Biggest changeRefer to Note 16 “Business Segments and Geographic Information” to our Consolidated Financial Statements included in Item 8 herein for information about our two reportable segments. Government Regulation We recruit IT professionals on a global basis from time to time and, therefore, must comply with the immigration laws in the countries in which we operate.
Recruiting We operate several small recruiting centers located in the U.S. and one significantly larger facility in NOIDA, India, that deliver a full range of recruiting and sourcing services. Our centers employ approximately 175 recruiters and sourcers who focus on recruiting U.S.-based candidates to service a geographically diverse client base in the U.S.
Recruiting We operate several small recruiting centers located in the U.S. and one significantly larger facility in NOIDA, India, that deliver a full range of recruiting and sourcing services. Our centers employ approximately 89 recruiters and sourcers who focus on recruiting U.S.-based candidates to service a geographically diverse client base in the U.S.
We recruit for both segments through global recruitment centers largely located in India that deliver a full range of recruiting and sourcing services. Our centers employ approximately 175 recruiters and sourcers that focus on recruiting U.S.-based candidates to service a geographically-diverse client base in the U.S.
We recruit for both segments through global recruitment centers largely located in India that deliver a full range of recruiting and sourcing services. Our centers employ approximately 89 recruiters and sourcers that focus on recruiting U.S.-based candidates to service a geographically-diverse client base in the U.S.
We must be able to do this efficiently to provide speed to market with pricing that is competitive and represents value to our clients. The principal competitive factors in 9 Table of Contents attracting qualified personnel are compensation, availability, location, quality of projects and schedule flexibility.
We must be able to do this efficiently to provide speed to market with pricing that is competitive and represents value to 7 Table of Contents our clients. The principal competitive factors in attracting qualified personnel are compensation, availability, location, quality of projects and schedule flexibility.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other Securities and Exchange Commission (the “SEC”) filings, including any amendments to the foregoing reports, are available free of charge by accessing the Investors page of the Company’s website as soon as reasonably practical after such reports are filed with, or furnished to, the SEC. 11 Table of Contents
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other Securities and Exchange Commission (the “SEC”) filings, including any amendments to the foregoing reports, are available free of charge by accessing the Investors page of the Company’s website as soon as reasonably practical after such reports are filed with, or furnished to, the SEC.
Our geographical 8 Table of Contents concentration tends to track major client locations, such as California, Texas, Pennsylvania and Virginia, and in large metropolitan areas such as Chicago and New York City. We provide these services across a broad spectrum of industry verticals, including: financial services, government, healthcare, retail, technology and telecommunications.
Our geographical concentration tends to track major client locations, such as California, Texas, Pennsylvania and Virginia, and in large metropolitan areas such as Chicago and New York City. We provide these services across a broad spectrum of industry verticals, including: financial services, government, healthcare, retail, technology and telecommunications.
The combination of our offshore recruiting capabilities, investment in sourcing and recruiting processes, expanded search coverage, around-the-clock sourcing, and extensive candidate pools, gives us the ability to deliver high-quality candidates to our clients in a timely fashion. We continue to invest in leading technologies and recruitment tools to enhance efficiencies.
The combination of our offshore recruiting capabilities, investment in sourcing and recruiting processes, expanded search coverage, around-the-clock sourcing, and extensive candidate pools, gives us the ability to deliver high-quality candidates to our clients in a timely fashion. 5 Table of Contents We continue to invest in leading technologies and recruitment tools to enhance efficiencies.
ITEM 1. BUSINESS Overview Mastech Digital, Inc. (referred to in this report as “Mastech Digital”, “Mastech”, the “Company”, “us”, “our” or “we”) is a provider of Digital Transformation IT Services. The Company offers data and analytics solutions; digital learning; and IT staffing services for both digital and mainstream technologies.
ITEM 1. BUS INESS Overview Mastech Digital, Inc. (referred to in this report as “Mastech Digital”, “Mastech”, the “Company”, “us”, “our” or “we”) is a provider of Digital Transformation IT Services. The Company offers data and analytics solutions; digital learning; and IT staffing services for both digital and mainstream technologies.
Our IT professionals help design, develop, integrate, maintain and support mainstream technologies in the following areas: • Mainframes • Databases • Middleware • Enterprise Systems • SoA and Web Services • Verification and Validation • Project Management • Open Source (JAVA) • Data Warehousing • Microsoft (C, .NET, SQL) • IT Administration • IT Helpdesk and Support • Business Analysis Digital Learning Services Our digital learning practice provides custom training programs for different organizational needs.
Our IT professionals help design, develop, integrate, maintain and support mainstream technologies in the following areas: • Mainframes • Databases • Middleware • Enterprise Systems • SoA and Web Services • Verification and Validation • Project Management • Open Source (JAVA) • Data Warehousing • Microsoft (C, .NET, SQL) • IT Administration • IT Helpdesk and Support • Business Analysis 6 Table of Contents Digital Learning Services Our digital learning practice provides custom training programs for different organizational needs.
In our Data and Analytics Services segment, we primarily compete with Cognizant, Tata Consultancy Services, Deloitte, Accenture, as well as with smaller boutique data and analytics firms. Many competitors are significantly larger and have greater financial resources in comparison to us.
In our Data and Analytics Services segment, we primarily compete with Cognizant, Tata Consultancy Services, Capgemini, as well as with smaller boutique data and analytics firms. Many competitors are significantly larger and have greater financial resources in comparison to us.
Employees At December 31, 2024, we had 902 North American employees and 623 employees offshore, in addition to 291 subcontracted professionals. None of our employees are subject to collective bargaining agreements governing their employment with our Company. We employ our consultants on both an hourly and salary basis. A large portion of our salaried employees are H1-B visa holders.
Employees At December 31, 2025, we had 752 North American employees and 536 employees offshore, in addition to 200 subcontracted professionals. None of our employees are subject to collective bargaining agreements governing their employment with our Company. We employ our consultants on both an hourly and salary basis. A large portion of our salaried employees are H1-B visa holders.
Analytics, AI, and Data Sciences: We drive informed decision-making with modern statistical techniques and analytics with a strong focus on: • Domain expertise: With cutting-edge techniques and industry knowledge, we derive valuable insights, predictions, and actionable strategies from client data. 5 Table of Contents • Holistic data strategy: We develop data strategies that encompass governance, acquisition, quality, and integration, laying a foundation for effective data-driven decision-making. • Scalable and efficient: Leveraging scalable technologies and architectures, we handle increasing data volumes and evolving needs while providing high-performance and timely insights. • ROI and business impact: Our data-driven strategies align with client key performance indicators and help unlock cost savings, impact revenue growth, and increase process efficiencies.
Analytics, AI, and Data Sciences: We drive informed decision-making with modern statistical techniques and analytics with a strong focus on: • Domain expertise: With cutting-edge techniques and industry knowledge, we derive valuable insights, predictions, and actionable strategies from client data. • Holistic data strategy: We develop data strategies that encompass governance, acquisition, quality, and integration, laying a foundation for effective data-driven decision-making. • Scalable and efficient: Leveraging scalable technologies and architectures, we handle increasing data volumes and evolving needs while providing high-performance and timely insights. • ROI and business impact: Our data-driven strategies align with client key performance indicators and help unlock cost savings, impact revenue growth, and increase process efficiencies. 4 Table of Contents Geographic and Vertical Focus The Data and Analytics Services segment primarily serves customers located in North America, with additional customers in Europe and the Asia-Pacific region.
Our ability to respond to client requests from our offshore recruiting centers, with their expanded search coverage, round-the-clock sourcing, and extensive pool of candidates, gives us the ability to deliver high-quality candidates to our clients in a timely fashion. History and Developments Historically, we operated as the former Professional Services segment of iGATE Corporation (“iGATE”). Mastech Digital, Inc.
Our ability to respond to client requests from our offshore recruiting centers, with their expanded search coverage, round-the-clock sourcing, and extensive pool of candidates, gives us the ability to deliver high-quality candidates to our clients in a timely fashion. History and Developments Mastech Digital, Inc.
Below is a breakdown of our IT Staffing Services revenues for the year ended December 31, 2024: Financial Services 54 % Telecom 5 % Government 8 % Retail 5 % Technology 7 % Other 14 % Healthcare 7 % Mastech Digital, Inc.
Below is a breakdown of our IT Staffing Services revenues for the year ended December 31, 2025: Financial Services 60 % Retail 5 % Technology 8 % Telecom 4 % Government 6 % Other 13 % Healthcare 5 % Mastech Digital, Inc.
We then master and manage our clients’ data and develop data products and deploy purpose-built advanced analytics, machine learning, and artificial intelligence, to deliver greater business velocity, significant cost reduction, and greater corporate resilience. Our Practices Mastech InfoTrellis builds a strong data foundation that delivers significant business value. Our expertise and technology practice stretches across four key domain areas.
We then master and manage our clients’ data and develop data products and deploy purpose-built advanced analytics, machine learning, and artificial intelligence, to deliver greater business velocity, significant cost reduction, and greater corporate resilience. 3 Table of Contents Our Practices Mastech InfoTrellis builds a strong data foundation that delivers significant business value.
(f/k/a Mastech Holdings, Inc.) was incorporated in Pennsylvania as a wholly-owned subsidiary of iGATE on June 6, 2008, in anticipation of our spin-off from iGATE. On September 30, 2008, the Company was spun-off from iGATE and began operating as an independent public company.
(formerly Mastech Holdings, Inc.) was incorporated in Pennsylvania on June 6, 2008 as a wholly-owned subsidiary of iGATE Corporation (“iGATE”) in anticipation of a spin-off of iGATE’s professional services business. On September 30, 2008, the Company was separated from iGATE and began operating as an independent public company.
We believe that this balanced mix allows us to access a broader candidate pool than our primary competition. 7 Table of Contents Technology and Client Focus of our IT Staffing and Digital Transformation Services Our staffing delivery teams, spread across the U.S. and India, are segmented by 1) technologies, allowing us to reach deep and wide in our understanding of technology domains; and 2) client relationships which gives us a keen understanding of our clients’ needs and preferences.
Technology and Client Focus of our IT Staffing and Digital Transformation Services Our staffing delivery teams, spread across the U.S. and India, are segmented by 1) technologies, allowing us to reach deep and wide in our understanding of technology domains; and 2) client relationships which gives us a keen understanding of our clients’ needs and preferences.
Details related to these two businesses are discussed separately below, while information about our employees, differentiators, intellectual property rights and various other aspects of our business is shown in the aggregate for Mastech Digital, Inc. 3 Table of Contents Data and Analytics Services Our Data and Analytics Services segment began with the acquisition of InfoTrellis, Inc.’s service business in July 2017.
Details related to these two businesses are discussed separately below, while information about our employees, differentiators, intellectual property rights and various other aspects of our business is shown in the aggregate for Mastech Digital, Inc.
We work to increase our engagements with our existing client relationships as well as continually developing new clients. Most of our strategic relationships are established at the vice president / sales director level. Selling is conducted through account executives utilizing a sales model which is desirable to our clients’ needs.
Most of our strategic relationships are established at the vice president / sales director level. Selling is conducted through account executives utilizing a sales model which is desirable to our clients’ needs.
In addition to the above, our Partner / Alliance Relationships (such as those we have with IBM, Informatica and Oracle, among others) also provide us with a significant pipeline of opportunities and new business opportunities.
In addition to the above, our Partner / Alliance Relationships (such as those we have with IBM, Informatica and Oracle, among others) also provide us with a significant pipeline of opportunities and new business opportunities. Furthermore, prospective clients reach us through referrals from our existing client base, our reputation in the data & analytics domain, and through our industry partners.
Statutory law limits the number of new H1-B petitions that may be approved in a fiscal year to enter the U.S. Legislation could be enacted limiting H1-B visa holders’ employment with staffing companies.
As of December 31, 2025, approximately 49% of our employee workforce was working under Mastech Digital sponsored H1-B temporary work visa. Statutory law limits the number of new H1-B petitions that may be approved in a fiscal year to enter the U.S. Legislation could be enacted limiting H1-B visa holders’ employment with staffing companies.
Additionally, we have considerable industry experience by serving some of the world’s most-respected brands in financial services, manufacturing, retail and healthcare. In our IT Staffing Services segment, we have substantial expertise in certain advanced technology IT skills, including: cloud, mobile, data & analytics, social media, artificial intelligence/machine learning and digital learning.
In our IT Staffing Services segment, we have substantial expertise in certain advanced technology IT skills, including: cloud, mobile, data & analytics, social media, artificial intelligence/machine learning and digital learning.
We also have the capacity in both of our business segments to take advantage of our technical expertise in these high demand growth areas, as we are well positioned in terms of scale, capabilities, and a blue-chip client base.
We also have the capacity in both of our business segments to take advantage of our technical expertise in these high demand growth areas, as we are well positioned in terms of scale, capabilities, and a blue-chip client base. 8 Table of Contents Reportable Financial Segments The Company has two reportable segments in accordance with Accounting Standards Codification (“ASC”) Topic 280 “Disclosures about Segments of an Enterprise and Related Information”.
Our blue-chip client base has resulted in high quality accounts receivable and a strong and predictable cash flow conversion metric.
Our blue-chip client base has resulted in high quality accounts receivable and a strong and predictable cash flow conversion metric. Additionally, we have an existing credit facility to support our organic and inorganic growth aspirations.
Additionally, we have an existing credit facility to support our organic and inorganic growth aspirations. 10 Table of Contents Expertise in high-demand Digital Transformation IT skills In our Data and Analytics Services segment, we have strong expertise in data management, data engineering, analytics and customer experience consulting — both in North America as well as offshore.
Expertise in high-demand Digital Transformation IT skills In our Data and Analytics Services segment, we have strong expertise in data management, data engineering, analytics and customer experience consulting — both in North America as well as offshore. Additionally, we have considerable industry experience by serving some of the world’s most-respected brands in financial services, manufacturing, retail and healthcare.
In late 2023, we expanded our staffing services to include an engineering service offering. In 2024, engineering revenues were less than 5% of IT staffing services revenues. 6 Table of Contents Sales and Marketing We target much of our marketing efforts toward businesses and institutions with significant budgets, recurring IT staffing and Digital Transformation needs, or new transformation efforts.
Sales and Marketing We target much of our marketing efforts toward businesses and institutions with significant budgets, recurring IT staffing and Digital Transformation needs, or new transformation efforts. We work to increase our engagements with our existing client relationships as well as continually developing new clients.
Operating Segments Our revenues are generated from two business segments: Data and Analytics Services and IT Staffing Services.
In 2024, the Company launched a ServiceNow practice and increased its focus on artificial intelligence-related technologies and applications across its businesses. Operating Segments Our revenues are generated from two business segments: Data and Analytics Services and IT Staffing Services.
Furthermore, prospective clients reach us through referrals from our existing client base, our reputation in the data & analytics domain, and through our industry partners. 4 Table of Contents Once engaged with a prospect, our approach to value-delivery starts with the definition of a discrete business problem.
Once engaged with a prospect, our approach to value-delivery starts with the definition of a discrete business problem.
Also in 2020, we completed the acquisition of AmberLeaf Partners, Inc., (“AmberLeaf”), which enhanced our Data and Analytics Services segment’s capabilities with its expertise in customer experience consulting and managed services. In 2021, we added cloud service capabilities to our Data and Analytics Services segment and expanded our IT Staffing Services segment’s MAS-REMOTE offering to include offshore staffing services.
(“AmberLeaf”), enhancing the Company's customer experience consulting and managed services capabilities within the Data and Analytics Services segment. In 2021, the Company expanded its cloud service capabilities and broadened its remote staffing offerings to include offshore staffing services. In 2022, the Company established a subsidiary in Noida, India to support these operations.
In 2018 and 2019, we significantly expanded our service offerings and capabilities within our Data and Analytics Services segment. In 2020, we launched a new service offering in our IT Staffing Services segment branded as MAS-REMOTE.
In 2017, the Company expanded into data management and analytics consulting through the acquisition of the services division of InfoTrellis, Inc. (“InfoTrellis”). The Company further expanded these capabilities in 2018 and 2019. 2 Table of Contents In 2020, the Company launched its MAS-REMOTE service offering within the IT Staffing Services segment and acquired AmberLeaf Partners, Inc.
Additionally, as part of the Hudson IT acquisition, we acquired a digital learning services practice which became one of our technology practices. In 2016, we changed our name to Mastech Digital, Inc. The name change was part of our rebranding initiative that reflects our transformation into a digital technologies company.
On June 15, 2015, the Company acquired Hudson Global Resources Management, Inc.’s U.S. IT staffing business (“Hudson IT”), which expanded the Company's domestic IT staffing operations and added a digital learning services practice. In 2016, the Company changed its name to Mastech Digital, Inc. as part of a broader rebranding initiative.
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Together with our operating subsidiaries, we have over 37 years of history as a reliable provider of IT staffing services. 2 Table of Contents Established in 1986, our business model focused on importing global IT talent to the U.S. to meet the growing demand for IT professionals.
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Through its operating subsidiaries, the Company has over 37 years of experience providing IT staffing services. Founded in 1986, the Company initially focused on recruiting global IT talent to support client demand in the United States and subsequently transitioned to a domestic recruiting model supported by an offshore recruitment center established in 2003.
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In the early 2000s, the demand for IT professionals declined, and the supply of IT resources quickly exceeded a declining demand. No longer was there a need to recruit abroad for technology talent, as supply was abundant in the U.S. Accordingly, we retooled our recruiting model to focus on the recruitment of U.S.-based IT talent.
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Data and Analytics Services Our Data and Analytics Services segment was established through the July 2017 acquisition of the services business of InfoTrellis, Inc. and expanded through the October 2020 acquisition of AmberLeaf Partners, Inc. This segment provides consulting and managed services focused on data management, analytics, customer experience, and related digital technology initiatives.
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Given our extensive experience with the H1-B visa process, part of our recruiting efforts focused on attracting H1-B visa holders present in the U.S. at the time. This approach gave us access to a larger and differentiated recruiting pool when compared to many of our competitors.
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The segment’s service offerings include data modernization, master data management, data governance, data integration, analytics, and customer experience solutions. These services support clients’ efforts to migrate from legacy data platforms to cloud-based and enterprise data architectures and to improve the use of data in business decision-making.
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In 2003, we launched our offshore global recruitment center model in an effort to meet an increase in industry demand with lower cost recruiting resources. Over the last twenty years, we have made significant investments in our offshore center to improve infrastructure, processes and effectiveness. On June 15, 2015, we completed the acquisition of Hudson Global Resources Management, Inc.’s U.S.
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We maintain delivery capabilities in both North America and India, including an offshore delivery center in Chennai, India, which supports project delivery and managed services engagements. We partner with selected technology providers to implement and support enterprise data and analytics platforms. Our clients range from mid-sized businesses to large enterprises across multiple industries.
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IT staffing business (“Hudson IT”). Hudson IT was a domestic IT staffing business with offices in Chicago, Boston, Tampa and Orlando. Hudson IT deployed a branch service business model that targeted clients that are direct end-users of IT staffing services.
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Our expertise and technology practice stretches across four key domain areas.
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The rebranding also included a logo change and a refreshed corporate website. In 2017, we added specialized capabilities in delivering data management and analytics services to a global customer-base through the acquisition of the services division of InfoTrellis, Inc. (“InfoTrellis”), a project-based consulting services company with specialized capabilities in data management and analytics.
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The segment’s client base consists largely of large enterprises, including Fortune 500 organizations. Typical engagements range from approximately $0.3 million to $2.5 million, depending on scope and duration. Customers operate across multiple industry verticals, with financial services, retail, healthcare, manufacturing and government representing significant industries served.
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This new offering allows clients to transcend beyond self-imposed geographical boundaries to gain access to top talent in the U.S. and Canada and reflects learnings from the COVID-19 pandemic that remote workers can be equally or more effective.
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The table below presents customer revenue percentages by industry vertical for 2025: Financial Services 28 % Retail 18 % Healthcare 28 % Other 8 % Manufacturing 18 % IT Staffing Services The IT Staffing Services segment provides contract-based technology professionals to clients to support project initiatives and ongoing operational needs.
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In 2022, we established a new subsidiary in NOIDA, India to support our offshore staffing services business. In late 2023, we expanded our services offerings to include engineering staffing services. In 2024, we started a ServiceNow practice and focused on artificial intelligence technologies and applications across all of our businesses.
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Services are typically delivered under master service agreements, statements of work, or standard service agreements, with pricing generally based on hourly bill rates. Clients typically engage multiple staffing providers, and assignments are awarded based on qualifications, availability, and pricing.
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InfoTrellis, Inc. was founded by the engineering principals behind IBM’s Master Data Management (“MDM”) products and Informatica’s Customer 360 code-base. This acquisition provided Mastech InfoTrellis with a solid foundation upon which to build, as we acquired a business with one of the largest concentrations of technology-agnostic data management expertise in the marketplace.
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The Company invoices clients on a weekly, bi-weekly, or monthly basis in accordance with contractual terms, with payment terms generally ranging from 30 to 45 days. In addition to contract staffing, the Company provides permanent placement services on an opportunistic basis. Permanent placement revenues have historically represented approximately 1% of total revenues.
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With our October 2020 acquisition of AmberLeaf, we gained complementary capabilities in customer experience consulting and managed services, as well as a roster of existing clients. Today, professional service firms have increasingly focused their efforts on partnering with their clients on enterprise-wide Digital Transformation.
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We believe that this balanced mix allows us to access a broader candidate pool than our primary competition.
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Organizations that are not digitally-native are facing increased pressure to modernize the way they operate to remain competitive within their industry. The landscape of Digital Transformation providers is constantly changing with new entrants. There is constant positioning and re-positioning of existing providers to claim new and niche spaces within the transformation arena.
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Additionally, the components of “Digital Transformation” are open to interpretation.
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While there continues to be large scale discussion and a lack of consensus on what constitutes Digital Transformation, there is a general view that, at the core of the transformation is Data Modernization — migration from legacy platforms, processes and strategies to new, dynamic, cloud-based approaches that focus on solving business problems and driving business outcomes.
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Data Modernization is the core focus of our Data and Analytics Services segment. We have partnered with industry leaders in this space and intend to continue to broaden our reach with new partners in the future.
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With our recent investments, our world class delivery center in Chennai, India provides us with the ability to increase capacity to nearly 500 concurrent team members, while providing white glove access to upwards of a dozen additional clients in their own dedicated “clean rooms”.
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We are also re-aligning ourselves to be a more dynamic, globally integrated organization across our traditional services offerings and to support our goal of expanding beyond niche services and providing full Data Modernization support to a wide range of organizations — from a $10 million start up to a Fortune 500 enterprise.
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Our mission is a simple one — we help clients put data in front of the people and machines where prudent decisions are made.
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Geographic and Vertical Focus Mastech InfoTrellis’ primary customer geographies are in North America; however, we have customers and prospects in Europe and the Asia-Pacific region. Our target clients are largely corporations with revenues exceeding $1 billion and include Fortune 500 organizations.
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Our typical project size, excluding our multi-year Center of Excellence contracts, is in the $500,000 to $2.5 million range depending on the scope and duration of the engagement. Our Center of Excellence contracts generally range from $4 million to $8 million.
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From a vertical perspective, customers in the financial services, retail, healthcare, manufacturing and government segments are significant users of our services.
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Below is a breakdown of customer revenue percentages for each industry vertical in 2024: Financial Services 29 % Retail 13 % Healthcare 27 % Other 8 % Manufacturing 23 % IT Staffing Services In our IT Staffing Services business, we typically negotiate our business relationship by using one of three methods to gain agreement on the services to be provided.
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We either establish our relationship based on a simple standard term sheet; create a Statement of Work (“SOW”) specific to a project; or enter into a master service agreement with a client that describes the framework of our relationship.
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In each case, a client will submit to us positions and / or requirements that they plan on satisfying by using temporary contractors. We propose consultants to the client that we believe satisfy their needs and propose an hourly bill rate for each consultant submitted.
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The client will select our consultant or a competing firm’s consultant based on their view of quality, fit and pricing. Consultant specific contractual details, such as billable rates, are documented as an annex to the agreement type that is chosen by the client.
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While we have the ability to deliver our Digital Transformation services on a managed solutions basis, the vast majority of our assignments have been delivered as staffing assignments. We generally do not enjoy exclusivity with respect to a client’s contractor needs. Most of our clients use multiple suppliers to satisfy their requirements and to ensure a competitive environment.
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Our success with any particular client is determined by (a) the quality and fit of our consultant; (b) our ability to deliver a quality consultant on a timely basis; and (c) pricing considerations. We invoice our clients on a weekly, bi-weekly or monthly basis, in accordance with the terms of our agreement.
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Typical credit terms require our invoices to be paid within 30 to 45 days of receipt by the client. While our primary focus is on contract IT staffing and Digital Transformation services, we also provide permanent placement services for our clients when opportunities arise. Permanent placement revenues have historically represented approximately 1% of our total revenues.
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Government Regulation We recruit IT professionals on a global basis from time to time and, therefore, must comply with the immigration laws in the countries in which we operate. As of December 31, 2024, approximately 40% of our employee workforce was working under Mastech Digital sponsored H1-B temporary work visa.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn recent years, the vast majority of our H1-B hires were not subject to the annual quota limiting H1-B visas because they were already in the U.S. under H1-B visa status with other employers. As a result, the negative 20 Table of Contents impact on recruiting due to the exhaustion of recent H1-B quotas was not substantial.
Biggest changeAdditionally, legislation could be enacted limiting H1-B visa holders’ employment with staffing and data analytics companies, which could result in reduced revenues and/or a higher cost of recruiting. 16 Table of Contents In recent years, the vast majority of our H1-B hires were not subject to the annual quota limiting H1-B visas because they were already in the U.S. under H1-B visa status with other employers.
We may face data protection, data security, and privacy risks in connection with privacy regulation. Strict data privacy laws regulating the collection, transmission, storage and use of employee data and consumers’ personally identifying information are evolving in the U.S. and other jurisdictions in which we operate.
We may face data protection, data security, and privacy risks in connection with privacy regulation. Strict data privacy laws regulating the collection, transmission, storage and use of employee data and consumers’ personally identifying information are evolving in the U.S, India and other jurisdictions in which we operate.
The market price of our common stock may be highly volatile and may fluctuate substantially due to many factors, including: • actual or anticipated fluctuations in our results of operations; • variance in our financial performance from the expectations of market analysts; • conditions and trends in the end markets we serve, and changes in the estimation of the size and growth rate of these markets; 24 Table of Contents • our ability to integrate acquisitions; • announcements of significant contracts by us or our competitors; • changes in our pricing policies or the pricing policies of our competitors; • restatements of historical financial results and changes in financial forecasts; • loss of one or more of our significant customers; • legislation; • changes in market valuation or earnings of our competitors; • the trading volume of our common stock; • the trading of our common stock on multiple trading markets, which takes place in different currencies and at different times; and • general economic conditions.
The market price of our common stock may be highly volatile and may fluctuate substantially due to many factors, including: • actual or anticipated fluctuations in our results of operations; • variance in our financial performance from the expectations of market analysts; • conditions and trends in the end markets we serve, and changes in the estimation of the size and growth rate of these markets; • our ability to integrate acquisitions; • announcements of significant contracts by us or our competitors; • changes in our pricing policies or the pricing policies of our competitors; • restatements of historical financial results and changes in financial forecasts; • loss of one or more of our significant customers; • legislation; • changes in market valuation or earnings of our competitors; • the trading volume of our common stock; • the trading of our common stock on multiple trading markets, which takes place in different currencies and at different times; and • general economic conditions.
If we cannot maintain and execute adequate internal control over financial reporting or implement necessary new or improved controls that provide reasonable assurance of the reliability of our financial reporting and preparation of our financial statements for external use, we could suffer harm of our reputation, fail to meet our public reporting requirements on a timely basis, be unable to properly report our financial results, or be required to restate our financial statements, which could result in the loss of investor confidence and may adversely impact our stock price. 26 Table of Contents
If we cannot maintain and execute adequate internal control over financial reporting or implement necessary new or improved controls that provide reasonable assurance of the reliability of our financial reporting and preparation of our financial statements for external use, we could suffer harm of our reputation, fail to meet our public reporting requirements on a timely basis, be unable to properly report our financial results, or be required to restate our financial statements, which could result in the loss of investor confidence and may adversely impact our stock price.
Our ownership is highly concentrated in two individuals and the interests of those individual shareholders may not coincide with yours. Sunil Wadhwani and Ashok Trivedi, co-founders of the Company, beneficially own approximately 58% of Mastech Digital’s outstanding common stock as of December 31, 2024. Accordingly, Messrs.
Our ownership is highly concentrated in two individuals and the interests of those individual shareholders may not coincide with yours. Sunil Wadhwani and Ashok Trivedi, co-founders of the Company, beneficially own approximately 58% of Mastech Digital’s outstanding common stock as of December 31, 2025. Accordingly, Messrs.
Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changing conditions. Because of 25 Table of Contents these limitations, internal control over financial reporting might not prevent or detect all misstatements or fraud.
Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changing conditions. Because of these limitations, internal control over financial reporting might not prevent or detect all misstatements or 20 Table of Contents fraud.
A disaster or pandemic, on a significant scale or affecting certain of our key operating areas within or across regions, or our inability to successfully recover should we experience a disaster, pandemic or other business continuity problem, could materially interrupt our business operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or legal liability.
A disaster or pandemic, on a significant scale or affecting certain of our key operating areas within or across regions, or our inability to successfully recover should we experience a disaster, pandemic or other business continuity problem, could materially interrupt our business operations and cause material 15 Table of Contents financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or legal liability.
As of December 31, 2024, approximately 15% of our workforce were independent contractors. Heightened state and federal scrutiny of independent contractor relationships could adversely affect us given that we utilize independent contractors to perform certain services.
As of December 31, 2025, approximately 15% of our workforce were independent contractors. Heightened state and federal scrutiny of independent contractor relationships could adversely affect us given that we utilize independent contractors to perform certain services.
These covenants and limitations may limit our ability to, among other things: • create, incur or assume liens; • make investments and loans; • create, incur, assume or guarantee additional indebtedness; 15 Table of Contents • engage in mergers, acquisitions, consolidations, sale-leasebacks and other similar transactions; • pay dividends, or redeem or repurchase our capital stock; • alter the business that we conduct; • engage in certain transactions with officers, directors and affiliates; • prepay, redeem or purchase other indebtedness; • enter into certain agreements; and • make material changes to accounting and reporting practices.
These covenants and limitations may limit our ability to, among other things: • create, incur or assume liens; • make investments and loans; • create, incur, assume or guarantee additional indebtedness; • engage in mergers, acquisitions, consolidations, sale-leasebacks and other similar transactions; • pay dividends, or redeem or repurchase our capital stock; • alter the business that we conduct; • engage in certain transactions with officers, directors and affiliates; • prepay, redeem or purchase other indebtedness; • enter into certain agreements; and • make material changes to accounting and reporting practices.
The application of these principles require us to make estimates and assumptions about certain items and future events that may affect our reported financial statements and our accompanying disclosure with respect to, among other things, revenue recognition, purchase accounting fair value measurements, contingent consideration and taxation related items.
The application of these principles require us to make estimates and assumptions about certain items and future events that may affect our reported financial statements and our accompanying disclosure with respect to, among other things, revenue recognition, purchase accounting 18 Table of Contents fair value measurements, contingent consideration and taxation related items.
Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. Our revenues are highly concentrated, and the loss of a significant client would adversely affect our business and revenues. Our revenues are highly dependent on clients located in North America, as well as clients concentrated in certain industries.
Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. 11 Table of Contents Our revenues are highly concentrated, and the loss of a significant client would adversely affect our business and revenues. Our revenues are highly dependent on clients located in North America, as well as clients concentrated in certain industries.
The loss of any significant client or major project, or an unanticipated termination of a major project, could result in the loss of substantial anticipated revenues. 14 Table of Contents Our leverage could materially and adversely affect our financial condition or operating flexibility and prevent us from fulfilling our obligations under our Credit Agreement.
The loss of any significant client or major project, or an unanticipated termination of a major project, could result in the loss of substantial anticipated revenues. Our leverage could materially and adversely affect our financial condition or operating flexibility and prevent us from fulfilling our obligations under our Credit Agreement.
Generally, climate risks and opportunities for companies and their investors fall into four categories: • Physical risk from climate change; • Regulatory risks and opportunities related to existing or proposed greenhouse gas (“GHG”) emissions limits; 19 Table of Contents • Indirect regulatory risks and opportunities related to products or services from high emitting companies; and • Litigation risks for emitters of greenhouse gases.
Generally, climate risks and opportunities for companies and their investors fall into four categories: • Physical risk from climate change; • Regulatory risks and opportunities related to existing or proposed greenhouse gas (“GHG”) emissions limits; • Indirect regulatory risks and opportunities related to products or services from high emitting companies; and • Litigation risks for emitters of greenhouse gases.
A significant number of organizations is attempting to migrate their IT business applications to advanced technologies, such as artificial intelligence, cloud services, data science-based solution, mobility, and social analytics. As a result, our ability to remain competitive depends on several factors, including our ability to develop, train and hire employees with skills in advanced technologies.
A significant number of organizations are choosing to migrate their IT business applications to advanced technologies, such as artificial intelligence, cloud services, data science-based solution, mobility, and social analytics. As a result, our ability to remain competitive depends on several factors, including our ability to develop, train and hire employees with skills in advanced technologies.
In the ordinary course of business, we have, and in the future, may become the subject of various claims, lawsuits, and administrative proceedings 18 Table of Contents seeking damages or other remedies concerning our operations, products, services, employees and other matters.
In the ordinary course of business, we have, and in the future, may become the subject of various claims, lawsuits, and administrative proceedings seeking damages or other remedies concerning our operations, products, services, employees and other matters.
It is difficult to predict the political and economic events that could affect immigration laws, or the restrictive impact they could have on obtaining or renewing work visas for our professionals. Immigration change continues to attract significant attention in the public arena and in the current U.S. administration and Congress.
It is difficult to predict the political and economic events that could affect immigration laws, or the restrictive impact they could have on obtaining or renewing work visas for our professionals. Immigration change and the enforcement of immigration laws continue to attract significant attention in the public arena and in the current U.S. administration and Congress.
Economic slowdowns, changes in law and other restrictions or factors that affect the economic health of these industries may affect our business. For the year ended December 31, 2024, approximately 54% of our revenues were derived from our top ten clients and approximately 49% of revenues came from financial services clients.
Economic slowdowns, changes in law and other restrictions or factors that affect the economic health of these industries may affect our business. For the year ended December 31, 2025, approximately 58% of our revenues were derived from our top ten clients and approximately 54% of revenues came from financial services clients.
In the past years, certain of our existing and potential customers started to use low-cost offshore outsourcing centers to perform technology-related work. Should this shift towards moving technology-related work to offshore outsourcing centers continue, our business, operating results and financial condition could be adversely affected. We may be subject to liability to clients arising from our engagements.
Certain of our existing and potential customers have started to use low-cost offshore outsourcing centers to perform technology-related work. Should this shift towards moving technology-related work to offshore outsourcing centers continue, our business, operating results and financial condition could be adversely affected. We may be subject to liability to clients arising from our engagements.
If our estimates or 22 Table of Contents the assumptions underlying such estimates are incorrect, actual results may differ materially from our estimates and we may need to, among other things, revise revenues or recognize additional charges that could adversely impact our results of operations and our financial condition.
If our estimates or the assumptions underlying such estimates are incorrect, actual results may differ materially from our estimates and we may need to, among other things, revise revenues or recognize additional charges that could adversely affect our results of operations and our financial condition.
In addition, if large users of staffing services continue to employ MSPs, the relationship between us and those large users may be primarily conducted through MSPs, in which case we may have difficulty maintaining those client relationships because the MSP model uses the MSP as an intermediary between the staffing service provider and the end-user, and reduces our direct contact with the end-user.
In addition, if large users of staffing services continue to employ MSPs or set up their own GCCs, the relationship between us and those large users may be primarily conducted through MSPs and/or GCC, in which case we may have difficulty maintaining those client relationships because the MSP and GCC model uses the MSP or GCC as an intermediary between the staffing service provider and the end-user, and reduces our direct contact with the end-user.
Any significant employee attrition will increase expenses necessary to replace and retrain our professionals and could decrease our revenues if we are not able to provide sufficient numbers of these resources to our clients. We may have difficulty maintaining client relationships if the trend towards utilizing Managed Service Providers (“MSPs”) continues.
Any significant employee attrition will increase expenses necessary to replace and retrain our professionals and could decrease our revenues if we are not able to provide sufficient numbers of these resources to our clients. We may have difficulty maintaining client relationships if the trend towards utilizing Managed Service Providers (“MSPs”) or setting up Global Capability Centers (GCC's) continues.
Our information systems may not perform as expected and are vulnerable to damage or interruption including natural disasters, fire or casualty theft, technical failures, terrorist acts, cybersecurity breaches, power outages, telecommunications failures, physical or software intrusions, computer viruses, employee errors or other events.
We depend on the proper functioning of our information systems. Our information systems may not perform as expected and are vulnerable to damage or interruption including natural disasters, fire or casualty theft, technical failures, terrorist acts, cybersecurity breaches, power outages, telecommunications failures, physical or software intrusions, computer viruses, employee errors or other events.
At December 31, 2024, we had no outstanding borrowings under our Credit Agreement with PNC Bank and certain other lenders (the “Credit Agreement”) and unused borrowing capacity of $22.6 million under the revolving credit facility established by the Credit Agreement.
At December 31, 2025, we had no outstanding borrowings under our Credit Agreement with PNC Bank and certain other lenders (the “Credit Agreement”) and unused borrowing capacity of $19.9 million under the revolving credit facility established by the Credit Agreement.
Risks Related to the Company’s Business and Operation Lack of success in recruitment and retention of IT and data and analytics professionals may decrease our revenues and increase the costs needed to maintain our workforce. Our business involves the delivery of professional services and is labor-intensive.
Risks Related to the Company’s Business and Operation Lack of success in recruitment and retention of IT and data and analytics professionals may decrease our revenues, impair our ability to service clients and pursue opportunities in the market and increase the costs needed to maintain our workforce. Our business involves the delivery of professional services and is labor-intensive.
As of December 31, 2024, approximately 40% of our employee workforce was working under Mastech Digital sponsored H1-B temporary work visas.
As of December 31, 2025, approximately 48% of our employee workforce was working under Mastech Digital sponsored H1-B temporary work visas.
Our revenues and operating results have historically been subject to significant variations from quarter to quarter depending on a number of factors, including the timing and number of client projects commenced and completed during the quarter, the number of working days in a quarter, employee hiring and attrition, and utilization rates during the quarter.
Our revenues and operating results have historically been subject to significant variations from quarter to quarter depending on a number of factors, including the timing and number of client projects commenced and completed during the quarter, our client's evaluation of our work progress, the availability and / rescheduling of our client's allocation budgets, the number of working days in a quarter, employee hiring and attrition, and utilization rates during the quarter.
If we are in default under the Credit Agreement due to our inability to make the required payments, or if we otherwise fail to comply with the financial and other covenants contained therein, all of our debt thereunder could be accelerated and the lenders under our Credit Agreement could be permitted to foreclose on our assets securing such debt.
If we are in default under the Credit Agreement due to our inability to make the required payments, or if we otherwise fail to comply with the financial and other covenants contained therein, all of our debt thereunder could be accelerated and the lenders under our Credit Agreement could be permitted to foreclose on our assets securing such debt. 12 Table of Contents The covenants in our Credit Agreement impose restrictions that may limit our operating and financial flexibility.
However, wage increases in India may prevent us from sustaining this competitive advantage and may negatively affect our operating margins. We may need to increase the levels of our employee compensation more rapidly than in the past to retain talent.
However, wage increases in India, including those resulting from inflationary pressures and/or due to revised regulatory requirements may prevent us from sustaining this competitive advantage and may negatively affect our operating margins. We may need to increase the levels of our employee compensation more rapidly than in the past to retain talent.
If a new or revised H1-B visa program is implemented, there could be elements of the new/revised H1-B visa program that may not be advantageous to our business model thus adversely impacting our business, operating results or financial condition.
If a new or revised H1-B visa program is implemented, or there are changes to the rules regarding the existing H1-B visa program, there could be elements of the H1-B visa program that may not be advantageous to our business model and could adversely impact our business, operating results or financial condition.
Our strategy of expansion through the acquisition of additional companies may not be successful and may result in slower growth of our business and reduced operating margins. We plan to gradually expand our operations through the acquisition of, or investment in, additional businesses and companies. We may be unable to identify businesses that complement our strategy for growth.
We plan to gradually expand our operations through the acquisition of, or investment in, additional businesses and companies. We may be unable to identify businesses that complement our strategy for growth.
Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.
Significant uninsured liabilities could have a material adverse effect on our business, financial condition and results of operations. Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.
The risks inherent in our Indian business activities include: • unexpected changes in regulatory environments; • foreign currency fluctuations; • tariffs and other trade barriers; 12 Table of Contents • difficulties in managing international operations; and • the burden of complying with a wide variety of foreign laws and regulations.
There can be no assurance that our Indian operations will support our growth strategy. The risks inherent in our Indian business activities include: • unexpected changes in regulatory environments; • foreign currency fluctuations; • tariffs and other trade barriers; • difficulties in managing international operations; and • the burden of complying with a wide variety of foreign laws and regulations.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations and the services we provide to customers, damage our reputation, and cause a loss of confidence in our services, which could adversely affect our operating results and competitive position.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations and the services we provide to customers, damage our reputation, and cause a loss of confidence in our services, which could adversely affect our operating results and competitive position. 14 Table of Contents We maintain cyber risk insurance, but this insurance may not be sufficient to cover all of our losses from any breaches of our networks.
While we adopted certain remedial measures as a result of this incident, our information technology and infrastructure may still be vulnerable to security breaches and other disruptions, including attacks by hackers, or breaches due to employee error, malfeasance or other disruptions.
While we have implemented security measures to address risks of security breaches and adopted certain network strengthening measures, our information technology and infrastructure may still be vulnerable to security breaches and other disruptions, including attacks by hackers, or breaches due to employee error, malfeasance or other disruptions.
We are subject to periodic federal, state and local tax audits for various tax years. We also need to comply with new, evolving or revised tax laws and regulations.
Adverse results in tax audits or interpretations of tax laws could have an adverse impact on our business. We are subject to periodic federal, state and local tax audits for various tax years. We also need to comply with new, evolving or revised tax laws and regulations.
The general impact of this shift towards the MSP model has been to lower our gross margins. Should this trend towards utilizing the MSP model continue, it is likely that our gross margins will be pressured in the future.
Should this trend towards utilizing the MSP and GCC model continue, it is likely that our gross margins will be further pressured in the future.
Additional provisions of the ACA and the compliance of such may result in higher overall costs for the Company, which could have a negative impact on our operating results, cash flows and financial condition .
We provide healthcare coverage to our U.S.-based employees that are subject to the Affordable Care Act (“ACA”). Additional provisions of the ACA and the compliance of such may result in higher overall costs for the Company, which could have a negative impact on our operating results, cash flows and financial condition .
In addition, the failure to be designated as a preferred vendor, or the loss of such status, may preclude us from providing services to existing or potential clients, except as a subcontractor, which could have a material adverse effect on the volume of business obtained from such clients. 16 Table of Contents Our success depends upon the maintenance and protection of our intellectual property rights and processes, and any substantial costs incurred protecting such rights and processes may decrease our operating margins.
In addition, the 13 Table of Contents failure to be designated as a preferred vendor, or the loss of such status, may preclude us from providing services to existing or potential clients, except as a subcontractor, which could have a material adverse effect on the volume of business obtained from such clients.
Also, if the enforcement of immigration laws by governmental authorities is unjustified or discriminatory, such enforcement could have the effect of disrupting our workforce. The U.S. Congress, the current administration, or any new administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business. In 2017, the U.S.
Also, if the enforcement of immigration laws by governmental authorities is unjustified or discriminatory, such enforcement could have the effect of disrupting our workforce. U.S. federal policy changes may adversely affect our business.
While these engagements provide opportunities to partner with and deeply understand a client’s data management and analytics longer-term objectives, these contracts generally can be early terminated by the client with a short-term notice. Should a client terminate an engagement early, this termination could materially impact our backlog of orders and adversely affect our business and future revenues.
While these engagements provide opportunities to partner with and deeply understand a client’s data management and analytics longer-term objectives, these contracts generally can be early terminated by the client with a short-term notice.
However, the subject of H1-B visas has recently become a political discussion point and the entire H1-B visa program could be significantly overhauled.
As a result, the negative impact on recruiting due to the exhaustion of recent H1-B quotas was not substantial. However, the subject of H1-B visas has recently become a political discussion point and the entire H1-B visa program could be significantly overhauled.
Our success depends in part upon certain methodologies and tools we use in designing, developing and implementing application systems and other proprietary intellectual property rights.
Our success depends upon the maintenance and protection of our intellectual property rights and processes, and any substantial costs incurred protecting such rights and processes may decrease our operating margins. Our success depends in part upon certain methodologies and tools we use in designing, developing and implementing application systems and other proprietary intellectual property rights.
There can be no assurance that these qualified professionals will be available to us in sufficient numbers, or that we will be successful in retaining current or future employees. Failure to attract and retain qualified professionals in sufficient numbers may have a material adverse effect on our business, operating results and financial condition.
There can be no assurance that these qualified professionals will be available to us in sufficient numbers, or that we will be successful in retaining current or future employees.
Within our IT Staffing Services segment, many large users of staffing services are employing MSP’s to manage their contractor expenses in an effort to drive down overall costs. MSP clients represented approximately 36% of our IT Staffing Services Segment’s 2024 revenues and increased marginally in recent years.
Within our IT Staffing Services segment, many large users of staffing services are employing MSP’s or have started utilizing GCC's outside the United States, to manage their contractor expenses in an effort to drive down overall costs. MSP clients that have 9 Table of Contents their own GCC's represented approximately 30% of our IT Staffing Services Segment’s 2025 revenues.
Although we attempt to comply with all taxing authority regulations, adverse findings or assessments made by taxing authorities as the result of an audit could have a material adverse effect on our business, results of operations and financial condition.
Although we attempt to comply with all taxing authority regulations, adverse findings or assessments made by taxing authorities as the result of an audit could have a material adverse effect on our business, results of operations and financial condition. 17 Table of Contents Requirements of the Affordable Care Act may continue to increase our employee benefits costs and could negatively affect our operating results, cash flows and financial condition if such costs aren’t recovered with increases in client bill rates.
Consequently, if our clients reduce or postpone their spending significantly, this may lower the demand for our services and negatively affect our revenues and profitability. Further, any significant decrease in the rate of economic growth may reduce the demand for our services and negatively affect our revenues and profitability.
A reduction or postponement in spending by our clients may also reduce our ability to invest in growth and innovation, impact our long-term market relevance and negatively affect our revenues and profitability. Further, any significant decrease in the rate of economic growth may reduce the demand for our services and negatively affect our revenues and profitability.
Even if we are able to complete one or more acquisitions, there can be no assurance that those completed acquisitions will result in successful growth, and the costs of completing an acquisition may reduce our margins. 13 Table of Contents We have made in the past, and may make in the future, acquisitions which could require significant management attention, disrupt our existing business, result in dilution to our shareholders, deplete our cash reserves, increase our debt levels and adversely affect our financial results.
We may in the future complete, acquisitions that could require significant management attention, disrupt our existing business, result in dilution to our shareholders, deplete our cash reserves, increase our debt levels and adversely affect our financial results.
If we are unable to acquire and invest in attractive businesses, our strategy for growth may be impaired.
If we are unable to acquire and invest in attractive businesses, our strategy for growth may be impaired. Even if we are able to complete one or more acquisitions, there can be no assurance that those completed acquisitions will result in successful growth, and the costs of completing an acquisition may reduce our margins.
Unless we are able to continue to increase the efficiency and productivity of our employees, wage increases in the long term may reduce our overall margins. 23 Table of Contents Negative economic or business conditions brought on by a global health pandemic, epidemic or outbreak may adversely affect demand for our services.
Unless we are able to continue to increase the efficiency and productivity of our employees, wage increases in the long term may reduce our overall margins. Our use of artificial intelligence ("AI") technologies may not be successful and may present business, financial, legal and reputational risk.
Removed
There can be no assurance that our Indian operations will support our growth strategy.
Added
Failure to attract and retain qualified professionals in sufficient numbers may have a material adverse effect on our business, operating results and financial condition, and could also result in us being unable to meet the demand for our services and materialize opportunities in the market.
Removed
The covenants in our Credit Agreement impose restrictions that may limit our operating and financial flexibility.
Added
The general impact of this shift towards the MSP and GCC model has been to lower our gross margins and create delivery inefficiencies. This shift has also affected our client satisfaction and retention, resulted in a loss of business opportunities and delayed our ramp-up of GCC operations.
Removed
Despite having implemented security measures to address risks of security breaches, we experienced a cybersecurity breach in 2022 involving a single employee email account and which indirectly impacted two Mastech InfoTrellis clients. 17 Table of Contents We incurred an expense charge of $450,000 in 2022 related to this event, which included the cost of engaging external advisors.
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Should a client terminate an engagement early, this termination could materially impact our backlog of orders and adversely affect our business and future revenues. 10 Table of Contents Our strategy of expansion through the acquisition of additional companies may not be successful and may result in slower growth of our business and reduced operating margins.
Removed
We maintain cyber risk insurance, but this insurance may not be sufficient to cover all of our losses from any breaches of our networks. We depend on the proper functioning of our information systems. We are dependent on the proper functioning of information systems in operating our business.
Added
Consequently, if our clients reduce or postpone their spending significantly, this may lower the demand for our services, cause operational disruptions and workforce underutilization, impact delivery efficiency, reduce our pricing leverage and bargaining power in future engagements and create negative investor perception.
Removed
Critical information systems are used in every aspect of our daily operations, perhaps most significantly, in the identification and matching of staffing resources to client assignments and in the client billing and consultant or vendor payment functions.
Added
Our success is dependent in large part, on our ability to attract and develop future leaders, and keep our senior leadership and key operating employees motivated and aligned with our strategic vision.
Removed
Significant uninsured liabilities could have a material adverse effect on our business, financial condition and results of operations. Any disruption in the supply of power, IT infrastructure and telecommunications lines to our facilities could disrupt our business process or subject us to additional costs.
Added
We must also continue to maintain a senior leadership that, among other things, is effective in executing on our strategic goals and materializing opportunities to grow our service capabilities.
Removed
Any disruption in basic infrastructure, including the supply of power, could negatively impact our ability to provide timely or adequate services to our clients. We rely on a number of telecommunication services and other infrastructure providers to maintain communications between our various facilities and clients.
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The loss of senior executives, or the failure to attract, integrate and retain new senior executives to meet the needs of our business , could have a material adverse effect on our business and results of operations.
Removed
Telecommunications networks are subject to failures and periods of service disruption which can adversely affect our ability to maintain active voice and data communications among our facilities and with our clients. This could disrupt our business process or subject us to additional costs, materially adversely affecting our business, results of operations and financial condition.
Added
Changes in U.S. federal fiscal, tax, trade, immigration, healthcare, and regulatory policies—whether resulting from legislative action, executive action, or administrative rulemaking—could affect the U.S. and global economy and create uncertainty for our customers and end markets.
Removed
We are highly dependent on our management team and expect that our success will depend largely upon their efforts, expertise and abilities.
Added
Such changes may influence corporate spending and hiring decisions, inflation and interest rates, international trade conditions, and regulatory compliance requirements, any of which could reduce demand for our services or increase our operating costs. Federal policy priorities and implementation can change over time, and the timing and scope of future policy actions are difficult to predict.
Removed
Over the last several years, we have experienced turnover in the leadership of our businesses, and the loss of the services of any of our key executives for any reason could have a material adverse effect on our business.
Added
As a result, we may be required to adapt our business practices, incur additional compliance costs, or experience changes in client demand. We cannot predict the ultimate impact of future policy changes on our business or whether such changes will benefit or adversely affect our results of operations and financial condition.
Removed
Additionally, legislation could be enacted limiting H1-B visa holders’ employment with staffing and data analytics companies, which could result in reduced revenues and/or a higher cost of recruiting.
Added
Pandemics, epidemics or other outbreaks of diseases have had and may in the future have a material adverse impact upon our business, liquidity, results of operations and financial condition.
Removed
Congress and the then-current administration made substantial changes to U.S. policies, which included comprehensive corporate and individual tax reform. In addition, the administration called for significant changes to U.S. trade, healthcare, immigration and government regulatory policy. With the transition to the Biden administration in early 2021, changes to U.
Added
Any pandemic, epidemic or other outbreak of disease may have widespread, rapidly evolving and unpredictable impacts on global society, economies, financial markets and business practices by, among other things, causing significant loss of life, curtailing congregation of people and disrupting communications and travel.
Removed
S. policy have occurred and, since the start of the current administration in 2025, U.S. policy changes have been implemented at a rapid pace and additional changes are likely. Changes to U.S. policy implemented by the U.S.
Added
Such events may have a material adverse impact upon, our business, liquidity, results of operations and financial condition, including as a result of reduced client demand for our services, closures of our clients' facilities that materially impair our ability to deliver services to our clients and satisfy contractually agreed upon service levels and increased strain on employees and management.
Removed
Congress, the current administration or any new administration have impacted and may impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business.
Added
Climate change, extreme weather and risks arising from the transition to a lower-carbon economy may impact our business. There are inherent climate and weather-related risks everywhere we conduct our business.
Removed
Until we know what policy changes are made and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit or be negatively affected by them. 21 Table of Contents Adverse results in tax audits or interpretations of tax laws could have an adverse impact on our business.
Added
Developments related to regulatory, social or market dynamics, stakeholder expectations, national and international climate change policies, the actual or perceived frequency or intensity of extreme weather events or the availability and functionality of critical infrastructure and resources, in addition to other factors resulting from such developments or that may not otherwise be known to or anticipated by us, could significantly disrupt our supply chain, our clients' operations and our ability to deliver services.
Removed
Requirements of the Affordable Care Act may continue to increase our employee benefits costs and could negatively affect our operating results, cash flows and financial condition if such costs aren’t recovered with increases in client bill rates. We provide healthcare coverage to our U.S.-based employees that are subject to the Affordable Care Act (“ACA”).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+0 added−4 removed15 unchanged
Biggest changeFurthermore, we do not believe that any risks we have identified since our 2022 cybersecurity incident have materially affected us or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Biggest changeRisks from Cybersecurity Threats During 2025, we did not identify any cybersecurity threats that have materially affected, or are reasonably likely to materially affect the Company, including the Company's business strategy, results of operations, or financial condition Governance The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
Bourdon brings a wealth of expertise to his role as the Company’s CIO / CISO. His background includes extensive experience as an enterprise CISO and is well-recognized within the industry. His in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies.
Siva brings a wealth of expertise to his role as the Company's CIO / CISO. His background includes extensive experience as an enterprise CISO and is well-recognized within the industry. His in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Mastech Digital, Inc. recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.
ITEM 1C. CYBE RSECURITY Risk Management and Strategy Mastech Digital, Inc. recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.
The Board has established robust oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the significance of these threats to our operational integrity and stakeholder confidence. Board of Directors Oversight The Audit Committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain.
The Board has established robust oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the significance of these threats to our operational integrity and stakeholder confidence. 21 Table of Contents Board of Directors Oversight The Audit Committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain.
This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents. The CIO / CISO implements and oversees processes for the regular monitoring of our information systems. This includes the 28 Table of Contents deployment of advanced security measures and regular system audits to identify potential vulnerabilities.
This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents. The CIO / CISO implements and oversees processes for the regular monitoring of our information systems. This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities.
This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework. Risk Management Personnel Primary responsibility for assessing, monitoring, and managing our cybersecurity risks rests with our CIO / CISO, Mr. Philippe Bourdon. With over 20 years of experience in the field of cybersecurity, Mr.
This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework. Risk Management Personnel Primary responsibility for assessing, monitoring, and managing our cybersecurity risks rests with our CIO / CISO, Mr. Siva Perubotla. With over 20 years of experience in the field of Cloud, Infrastructure & Cybersecurity, Mr.
Cybersecurity Threats / Incidents Effect on the Company Business Strategy Results of Operations and Financial Position Cybersecurity is a business risk that the Company takes seriously. Since our 2022 cybersecurity incident, we have improved our processes; upgraded cybersecurity leadership and supporting personnel; and have committed significant investment dollars to cybersecurity risk mitigation efforts.
Cybersecurity Threats / Incidents Effect on the Company Business Strategy Results of Operations and Financial Position Cybersecurity is a business risk that the Company takes seriously. Over the last several years, we have improved our processes; upgraded cybersecurity leadership and supporting personnel; and have committed significant investment dollars to cybersecurity risk mitigation efforts.
Additional information on cybersecurity risks we face can be found in Item 1A “Risk Factors” under the heading “Risks Related to the Company’s Business and Operation,” which should be read in conjunction with the foregoing information. 29 Table of Contents
Additional information on cybersecurity risks we face can be found in Item IA "Risk Factors" under the heading "Risks Related to the Company's Business and Operation," which should be read in conjunction with the foregoing information.
Despite our cybersecurity risk mitigation efforts, however, there can be no guarantee that we will not be the subject of future successful attacks, threats or incidents.
These investments have had an impact on our results of operations in 2024 and 2025, as disclosed further in the "Results of Operations" section of Item 7 of this Form 10-K. Despite our cybersecurity risk mitigation efforts, there can be no 22 Table of Contents guarantee that we will not be the subject of future successful attacks, threats or incidents.
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Risks from Cybersecurity Threats During 2022, we experienced a cybersecurity breach involving a single employee email account which indirectly impacted two Mastech InfoTrellis clients. Our security team identified the point of entry, decommissioned the affected laptop and email address, and changed email logins and passcodes for this email account.
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As a result of this incident, we engaged external advisors to validate our findings and remedial action steps. As part of this engagement, these advisors assisted us with a forensic analysis to determine whether any personally identifiable information (“PII”) was compromised as a result of this breach.
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For any such PII data determined to have been compromised, our advisors assisted us in determining the appropriate compliance steps. 27 Table of Contents Governance The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
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These investments have had an impact on our results of operations in 2023 and 2024, as disclosed further in the “Results of Operations” section of Item 7 of this Form 10-K. However, our business objectives and strategic priorities have not been materially altered by the risk of cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES Information regarding the principal properties leased by us and our subsidiaries as of December 31, 2024 is set forth below: Location Principal Use Occupying Business Segment Approximate Square Footage Moon Township, Pennsylvania Corporate headquarters, executive, human resources, sales, recruiting, marketing and finance IT Staffing 11,500 Chicago, Illinois Executive, sales and recruiting IT Staffing 2,300 Toronto, Canada Human resources, sales, marketing and delivery Data and Analytics 3,800 NOIDA, India Sales and recruiting office IT Staffing 39,900 Chennai, India Sales and delivery center Data and Analytics 35,400
Biggest changePRO PERTIES Information regarding the principal properties leased by us and our subsidiaries as of December 31, 2025 is set forth below: Location Principal Use Occupying Business Segment Approximate Square Footage Moon Township, Pennsylvania Corporate headquarters, executive, human resources, sales, recruiting, marketing and finance IT Staffing 11,500 Chicago, Illinois Executive, sales and recruiting IT Staffing 2,300 Toronto, Canada Human resources, sales, marketing and delivery Data and Analytics 3,800 NOIDA, India Sales and recruiting office IT Staffing 39,900 Chennai, India Sales and delivery center Data and Analytics 35,400

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the year ended December 31, 2024, the Company repurchased 9,222 shares of common stock at an average price of $8.70 per share under this program. On February 19, 2025, the Company announced that the Board of Directors had authorized an extension of its previously announced share repurchase program for an additional year through February 8, 2026.
Biggest changeOn February 19, 2025, the Company announced that the Board of Directors had authorized an extension of its previously announced share repurchase program for an additional year through February 8, 2026. Common shares available for share repurchase under this program totaled 123,556 on December 31, 2025. On February 8, 2026, this share repurchase program expired by its terms.
Repurchases under the program may occur from time to time in the open market, through privately negotiated transactions, through block purchases or other purchase techniques, or by any combination of such methods, and the program may be modified, suspended or terminated at any time at the discretion of the Board of Directors.
Repurchases under the program may occur from time to time in the open market, through privately negotiated transactions, through block purchases or other purchase techniques, or by any combination of such methods, and the program may be modified, suspended or terminated at any time at the discretion of the Company’s Board of Directors.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NYSE American under the symbol “MHH”. We began trading “regular way” on the former American Stock Exchange (“AMEX”) on October 1, 2008.
ITEM 5. MARK ET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NYSE American under the symbol “MHH”. We began trading “regular way” on the former American Stock Exchange (“AMEX”) on October 1, 2008.
On March 1, 2025, we had 80 registered holders of record of our common stock. This figure excludes an estimate of the indeterminate number of beneficial holders whose shares may be held by brokerage firms and clearing agencies. We currently do not pay recurring dividends on our common stock.
On March 1, 2026, we had 70 registered holders of record of our common stock. This figure excludes an estimate of the indeterminate number of beneficial holders whose shares may be held by brokerage firms and clearing agencies. We currently do not pay recurring dividends on our common stock.
A summary of our common stock repurchased during the quarter ended December 31, 2024 is set forth in the following table: Period Total Number of Shares Purchased (1) Average Price per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under this Plan or Programs (1) October 1, 2024 — October 31, 2024 — $ — — 423,079 November 1, 2024 — November 30, 2024 — $ — — 423,079 December 1, 2024 — December 31, 2024 — $ — — 423,079 Total — $ — — 423,079 (1) The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2024.
A summary of our common stock repurchased during the quarter ended December 31, 2025 is set forth in the following table: Period Total Number of Shares Purchased (1) Average Price per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under this Plan or Programs (1) October 1, 2025 — October 31, 2025 — $ — — 214,456 November 1, 2025 — November 30, 2025 — $ — — 214,456 December 1, 2025 — December 31, 2025 90,900 $ 7.20 90,900 123,556 Total — $ — — 123,556 (1) The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2025, other than through this publicly announced repurchase program.
For the year ended December 31, 2024 and December 31, 2023, stock purchases under the Stock Purchase Plan totaled 34,860 and 25,646 shares at an average purchase price of $6.40 and $8.03, respectively. At December 31, 2024, there were 432,059 shares available for purchases under the Plan. 31 Table of Contents ITEM 6. RESERVED
For the year ended December 31, 2025 and December 31, 2024, stock purchases under the Stock Purchase Plan totaled 15,114 and 34,860 shares at an average purchase price of $6.06 and $6.40, respectively. At December 31, 2025, there were 416,945 shares available for purchases under the Plan.
Common shares available for share repurchase under this program totaled 423,079 on December 31, 2024. Additionally, we do, from time to time, purchase shares to enable employees to satisfy their tax obligations related to the vesting of restricted stock, in accordance with the provisions of the Company’s Stock Incentive Plan, as amended.
The authorization became effective on February 16, 2026. Additionally, we do, from time to time, purchase shares to enable employees to satisfy their tax obligations related to the vesting of restricted stock, in accordance with the provisions of the Company’s Stock Incentive Plan, as amended. During 2025, the Company did not purchase any shares to satisfy such employee tax obligations.
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During 2024, the Company did not purchase any shares to satisfy such employee tax obligations.
Added
Repurchases under the program could occur from time to time in the open market, through privately negotiated transactions, through block purchases or other purchase techniques, or by any combination of such methods. During the year ended December 31, 2025, the Company repurchased 299,523 shares of common stock at an average price of $7.49 per share under this program.
Added
On February 16, 2026, the Company’s Board of Directors authorized a new share repurchase program pursuant to which the Company may repurchase up to $5.0 million of its common stock.
Added
On February 16, 2026, the Company's Board of Directors approved the termination of the Company’s Employee Stock Purchase Plan. The termination will become effective on July 1, 2026, following 24 Table of Contents completion of the current offering period ending June 30, 2026.
Added
Shares issuable under the current offering period will be issued in accordance with the terms of the plan, and no additional offering periods will commence thereafter. 25 Table of Contents ITEM 6. RESE RVED

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeBelow is a tabular presentation of revenues and gross profit margins by segment for the periods discussed: Revenues & Gross Margin by Segment (Revenues in millions) Years Ended December 31, Revenues 2024 2023 2022 Data and Analytics Services $ 36.6 $ 34.4 $ 40.6 IT Staffing Services 162.3 166.7 201.6 Total Revenues $ 198.9 $ 201.1 $ 242.2 Gross Margin % Data and Analytics Services 49.1 % 43.5 % 41.5 % IT Staffing Services 23.2 % 21.6 % 23.0 % Total Gross Margin % 27.9 % 25.4 % 26.1 % 33 Table of Contents Below is a tabular presentation of operating expenses by sales and marketing, operations, general and administrative, amortization of acquired intangible assets, employment-related claim, net of recoveries, goodwill impairment, severance expense and a cybersecurity breach for the periods discussed: Selling, General & Administrative (“SG&A”) Expense Details (Amounts in millions) Years Ended December 31, Selling, General & Administrative Expenses 2024 2023 2022 Data and Analytics Services Segment Sales and Marketing $ 7.3 $ 6.5 $ 5.9 Operations 0.7 1.3 2.3 General & Administrative 6.7 8.9 5.4 Subtotal Data and Analytics Services $ 14.7 $ 16.7 $ 13.6 IT Staffing Services Segment Sales and Marketing $ 9.1 $ 8.3 $ 9.5 Operations 8.8 8.6 11.0 General & Administrative 14.4 13.1 12.5 Subtotal IT Staffing Services $ 32.3 $ 30.0 $ 33.0 Amortization of Acquired Intangible Assets $ 2.7 $ 2.8 $ 3.0 Employment-related Claim, net of Recoveries — 3.1 — Goodwill Impairment — 5.3 — Severance Expense 2.1 2.4 1.0 Cybersecurity Breach — — 0.4 Total SG&A Expenses $ 51.8 $ 60.3 $ 51.0 2024 Compared to 2023 Revenues Revenues for the year ended December 31, 2024 totaled $198.9 million, compared to $201.1 million for the year ended December 31, 2023.
Biggest changeBelow is a tabular presentation of operating expenses by sales and marketing, operations, general and administrative, amortization of acquired intangible assets, employment-related claim, net of recoveries, goodwill impairment, severance expense and finance and accounting transition for the periods discussed: 27 Table of Contents Selling, General & Administrative (“SG&A”) Expense Details (Amounts in millions) Years Ended December 31, Selling, General & Administrative Expenses 2025 2024 2023 Data and Analytics Services Segment Sales and Marketing $ 6.8 $ 7.3 $ 6.5 Operations 0.6 0.7 1.3 General & Administrative 8.2 6.7 8.9 Subtotal Data and Analytics Services 15.6 14.7 16.7 IT Staffing Services Segment Sales and Marketing 7.4 9.1 8.3 Operations 7.0 8.8 8.6 General & Administrative 15.8 14.4 13.1 Subtotal IT Staffing Services 30.2 32.3 30.0 Amortization of Acquired Intangible Assets $ 2.6 $ 2.7 $ 2.8 Employment-related Claim, net of Recoveries — — 3.1 Goodwill Impairment — — 5.3 Severance Expense 2.8 2.1 2.4 Finance and Accounting Transition Expense 1.9 — — Total SG&A Expenses $ 53.1 $ 51.8 $ 60.3 2025 Compared to 2024 Revenues Revenues for the year ended December 31, 2025 totaled $191.4 million, compared to $198.9 million for the year ended December 31, 2024.
Financing Activities In 2024, cash provided by financing activities totaled $0.7 million and included $0.2 million of proceeds from the issuance of common shares under our employee stock purchase plan and $0.5 million of proceeds from the exercise of stock options, partially offset by the repurchase of common stock under the Company’s share repurchase program.
In 2024, cash provided by financing activities totaled $0.7 million and included $0.2 million of proceeds from the issuance of common shares under our employee stock purchase plan and $0.5 million of proceeds from the exercise of stock options, partially offset by the repurchase of common stock under the Company’s share repurchase program.
In 2024, 2023 and 2022, we performed quantitative impairment tests related to our IT Staffing Services segment, which includes our June 2015 acquisition of Hudson Global Resources Management, Inc.’s U.S. IT staffing business (“Hudson IT”). The results of each of these testing’s indicated no impairment associated with the carrying amount of goodwill.
In 2025, 2024 and 2023, we performed quantitative impairment tests related to our IT Staffing Services segment, which includes our June 2015 acquisition of Hudson Global Resources Management, Inc.’s U.S. IT staffing business (“Hudson IT”). The results of each of these testing’s indicated no impairment associated with the carrying amount of goodwill.
Additionally in 2024, 2023 and 2022, we performed quantitative impairment tests related to our Data and Analytics Services segment which includes the July 2017 acquisition of InfoTrellis and the October 2020 acquisition of AmberLeaf. The results of the 2024 and 2022 testing’s indicated no impairment associated with the carrying amount of goodwill.
Additionally in 2025, 2024 and 2023, we performed quantitative impairment tests related to our Data and Analytics Services segment which includes the July 2017 acquisition of InfoTrellis and the October 2020 acquisition of AmberLeaf. The results of the 2025 and 2024 testing’s indicated no impairment associated with the carrying amount of goodwill.
As of December 31, 2024 and 2023, there were no uncertain tax positions for which a reserve or liability is necessary. Foreign Currency Translation The reporting currency of the Company and its subsidiaries is the U.S. dollar.
As of December 31, 2025 and 2024, there were no uncertain tax positions for which a reserve or liability is necessary. Foreign Currency Translation The reporting currency of the Company and its subsidiaries is the U.S. dollar.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management’s Discussion and Analysis should be read in conjunction with our Consolidated Financial Statements and accompanying Notes included in this Annual Report on Form 10-K.
ITEM 7. MAN AGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management’s Discussion and Analysis should be read in conjunction with our Consolidated Financial Statements and accompanying Notes included in this Annual Report on Form 10-K.
Accordingly, this goodwill impairment charge is reflected in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations in Item 8, herein. Leases Operating leases right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
Accordingly, this goodwill impairment charge is reflected in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations in Item 8, herein. 34 Table of Contents Leases Operating leases right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
The guidance further provides that: (1) in-process research and development will be recorded at fair value as an 42 Table of Contents indefinite-lived intangible asset; (2) acquisition-related transaction costs will generally be expensed as incurred; (3) restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and (4) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.
The guidance further provides that: (1) in-process research and development will be recorded at fair value as an indefinite-lived intangible asset; (2) acquisition-related transaction costs will generally be expensed as incurred; (3) restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and (4) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.
During the third quarter of 2023, the Company settled this claim for $3.1 million, net of recoveries, under the terms of a confidential settlement agreement. In addition to the settlement amount, we incurred approximately $0.9 million in professional services fees related to this matter during 2023.
During the third quarter of 2023, the Company settled this claim for $3.1 million, net of recoveries, under the terms of a confidential settlement agreement. In addition to the settlement amount, we incurred 32 Table of Contents approximately $0.9 million in professional services fees related to this matter during 2023.
Recently Issued Accounting Standards Recent accounting pronouncements are described in Note 1 to the Consolidated Financial Statements contained in Item 8, herein. 44 Table of Contents
Recently Issued Accounting Standards Recent accounting pronouncements are described in Note 1 to the Consolidated Financial Statements contained in Item 8, herein. 36 Table of Contents
In 2025 and 2026, the Company expects to pay Primentor approximately $0.4 million and $0.2 million, respectively. 2023 Employment-Related Claims Against the Company As disclosed in Note 8 “Commitment and Contingencies” to the Notes to the Consolidated Financial Statements, included in Item 8 herein, a former employee who resigned from his employment with the Company in November 2022 asserted various employment-related claims against the Company.
For 2026, the Company expects to pay Primentor approximately $0.2 million. 2023 Employment-Related Claims Against the Company As disclosed in Note 8 “Commitment and Contingencies” to the Notes to the Consolidated Financial Statements, included in Item 8 herein, a former employee who resigned from his employment with the Company in November 2022 asserted various employment-related claims against the Company.
Operations expense in our IT Staffing Services segment increased $0.2 million in 2024, due to higher commission expenses largely during the second half of the year. • General & administrative expenses decreased by $0.9 million in 2024 compared to 2023.
Operations expense in our IT Staffing Services segment increased $0.2 million in 2024, due to higher commission expenses largely during the second half of the year. 30 Table of Contents • General & administrative expenses decreased by $0.9 million in 2024 compared to 2023.
In 2023, cash (used in) financing activities totaled ($1.6 million) and included ($1.1 million) of debt repayments, ($0.6 million) of common stock repurchases, partially offset by proceeds from our issuance of common shares under our employee stock purchase plan.
In 2023, cash (used in) financing activities totaled ($1.6 million) and included ($1.1 million) of debt repayments, ($0.6 million) of common stock repurchases, partially offset by proceeds from our issuance of common shares under our employee stock purchase plan. 2024 Primentor, Inc.
Gains and losses resulting from foreign currency transactions are included as a component of other income (expense), net in the Consolidated Statements of Operations. Foreign exchange gains / (losses) in 2024 totaled $27,000; in 2023 we incurred losses of ($75,000) and we incurred $650,000 foreign exchange gains in 2022.
Gains and losses resulting from foreign currency transactions are included as a component of other income (expense), net in the Consolidated Statements of Operations. Foreign exchange gains / (losses) in 2025 totaled $217,000; 2024 totaled $27,000; in 2023 we incurred losses of ($75,000).
As of December 31, 2024 and 2023, the Company provided a valuation allowance of $452,000 and $628,000, respectively, related to the uncertainty of the realization of foreign net operating losses (“NOL”).
As of December 31, 2025 and 2024, the Company provided a valuation allowance of $435,000 and $452,000, respectively, related to the uncertainty of the realization of foreign net operating losses (“NOL”).
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 addition to general economic conditions in the markets we serve, a significant portion of our revenue is derived 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”).
Our average IT staffing bill rate for 2024 totaled $82.77 per hour compared to $78.84 per hour in 2023. This bill rate increase was due to higher rates on new assignments and was reflective of the type of skill sets that we deployed.
Our average IT staffing bill rate for 2024 totaled $82.77 per hour compared to $78.84 per hour in 2023. This bill rate increase was due to higher rates on new assignments and was reflective of the type of skill sets that we deployed. Permanent placement / fee revenues totaled $0.9 million in 2024, compared to $0.8 million in 2023.
Controlling our operating working capital levels by closely managing our accounts receivable balance is an important element of cash preservation. Our accounts receivable “days sales outstanding” measurement (“DSO”) at year-end 2024 improved to 52-days compared to 53-days at year-end 2023.
Controlling our operating working capital levels by closely managing our accounts receivable balance is an important element of cash preservation. Our accounts receivable “days sales outstanding” measurement (“DSO”) at year-end 2025 increased slightly to 54-days compared to 52-days at year-end 2024.
Below is a tabular presentation of cash flow activities for the periods discussed: Years Ended December 31, Cash Flows Activities 2024 2023 2022 (Amounts in millions) Operating activities $ 7.2 $ 16.0 $ 12.6 Investing activities (0.9 ) (0.2 ) (0.8 ) Financing activities 0.7 (1.6 ) (10.4 ) Operating Activities Cash provided by (used in) operating activities for the years ended December 31, 2024, 2023 and 2022 totaled $7.2 million, $16.0 million and $12.6 million, respectively.
Below is a tabular presentation of cash flow activities for the periods discussed: Years Ended December 31, Cash Flows Activities 2025 2024 2023 (Amounts in millions) Operating activities $ 11.1 $ 7.2 $ 16.0 Investing activities (0.5 ) (0.9 ) (0.2 ) Financing activities (1.1 ) 0.7 (1.6 ) 31 Table of Contents Operating Activities Cash provided by (used in) operating activities for the years ended December 31, 2025, 2024 and 2023 totaled $11.1 million, $7.2 million, and $16.0 million, respectively.
The Company evaluates its deferred tax assets and records a valuation allowance when, in management’s opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The effect of a change in tax rates on deferred taxes is recognized in the period that the change is enacted. The Company evaluates its deferred tax assets and records a valuation allowance when, in management’s opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Identifiable intangible assets related to acquisitions consisted of client relationships, covenants not-to-compete, trade names and technology, which are being amortized using the straight-line method over their estimated useful lives ranging from three years to twelve years, as more fully described in Note 3 “Goodwill and Other Intangible Assets, net” to the Notes to the Consolidated Financial Statements. 41 Table of Contents Excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired are recorded as goodwill.
Identifiable intangible assets related to acquisitions consisted of client relationships, covenants not-to-compete, trade names and technology, which are being amortized using the straight-line method over their estimated useful lives ranging from three years to twelve years, as more fully described in Note 3 “Goodwill and Other Intangible Assets, net” to the Notes to the Consolidated Financial Statements.
In 2024, cash flows from operating activities included net income of $3.4 million, non-cash charges of $6.1 million and an increase in operating working capital of ($2.3 million). In 2023, cash flows from operating activities included a net (loss) of ($7.1 million), non-cash charges of $10.6 million and decreases in operating working capital of $12.5 million.
In 2023, cash flows from operating activities included a net (loss) of ($7.1 million), non-cash charges of $10.6 million and decreases in operating working capital of $12.5 million.
Revenue recognition is negatively impacted by holidays and consultant vacation and sick days. The Company recognizes revenue on fixed price contracts over time as services are rendered and uses a cost-based input method to measure progress. Determining a measure of progress requires management to make judgments that affect the timing of revenue recognized.
The Company recognizes revenue on fixed price contracts over time as services are rendered and uses a cost-based input method to measure progress. Determining a measure of progress requires management to make judgments that affect the timing of revenue recognized.
Prior to recording a gain, the acquiring entity must reassess whether all acquired assets and assumed liabilities have been identified and must perform re-measurements to verify that the consideration paid, assets acquired and liabilities assumed have all been properly valued.
Prior to recording a gain, the acquiring entity must reassess whether all acquired assets and assumed liabilities have been identified and must perform re-measurements to verify that the consideration paid, assets acquired and liabilities assumed have all been properly valued. Stock-Based Compensation In 2008, the Company adopted a Stock Incentive Plan.
Severance in both years largely related to executive leadership departures. 35 Table of Contents • An employment-related claim expense, net of recoveries, totaled $3.1 million in 2023, compared to no expense in 2024. • A goodwill impairment charge totaled $5.3 million in 2023, compared to no impairment charge in 2024.
Severance in both years largely related to executive leadership departures. • An employment-related claim expense, net of recoveries, totaled $3.1 million in 2023, compared to no expense in 2024. • A goodwill impairment charge totaled $5.3 million in 2023, compared to no impairment charge in 2024. The 2023 charge pertained to our Data and Analytics Services segment.
See the Notes to the Consolidated Financial Statements, contained in Item 8, of this Annual Report on Form 10-K for a complete description of our significant accounting policies. 40 Table of Contents Revenue Recognition The Company recognizes revenue on time-and-material contracts over time as services are performed and expenses are incurred.
See the Notes to the Consolidated Financial Statements, contained in Item 8, of this Annual Report on Form 10-K for a complete description of our significant accounting policies. Revenue Recognition The Company recognizes revenue on time-and-material contracts over time as services are performed and expenses are incurred. Time-and-material contracts typically bill at an agreed-upon hourly rate, plus out-of-pocket expense reimbursement.
Cash provided by operating activities, our cash and cash equivalent balances on hand at December 31, 2024 and current availability under our existing credit facility are expected to be adequate to fund our business needs over the next 12 months, including our share repurchase program, which was extended by our Board of Directors through February 8, 2026, but excluding any major acquisition-related activities.
Cash provided by operating activities, our cash and cash equivalent balances on hand at December 31, 2025 and current availability under our existing credit facility are expected to be adequate to fund our business needs over the next 12 months, including potential repurchases under the $5.0 million share repurchase authorization approved by our Board of Directors on February 16, 2026, but excluding any significant acquisition-related activities.
Gross Margin Gross profit increased to $55.6 million in 2024, compared to $51.0 million in 2023, an increase of 8.9% on a year-over-basis. Gross profit as a percentage of revenue totaled 27.9% in 2024, compared to 25.4% in 2023.
Additionally, our largest industry vertical, financial services, represented approximately 49% of total revenues in 2024, compared to approximately 50% in 2023. Gross Margin Gross profit increased to $55.6 million in 2024, compared to $51.0 million in 2023, an increase of 8.9% on a year-over-basis. Gross profit as a percentage of revenue totaled 27.9% in 2024, compared to 25.4% in 2023.
Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the client. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods or services to the customer. Estimated losses are recognized immediately in the period in which current estimates indicate a loss.
Incurred cost represents work performed, which corresponds with, and thereby best 33 Table of Contents depicts, the transfer of control to the client. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods or services to the customer.
The 2023 charge pertained to our Data and Analytics Services segment. Other Income / (Expense) Components In 2024, other income / (expense) consisted of net interest income of $606,000 and foreign exchange gains of $27,000. In 2023, other income / (expense) consisted of interest income of $319,000 and foreign exchange losses of ($75,000).
Other Income / (Expense) Components In 2024, other income / (expense) consisted of net interest income of $606,000 and foreign exchange gains of $27,000. In 2023, other income / (expense) consisted of interest income of $319,000 and foreign exchange losses of ($75,000).
During 2024, the Company incurred consulting expenses of approximately $1.1 million related to these services.
During 2025 and 2024, the Company incurred consulting expenses of approximately $0.5 million and $0.4 million related to these services.
Time-and-material contracts typically bill at an agreed-upon hourly rate, plus out-of-pocket expense reimbursement. Out-of-pocket expense reimbursement amounts vary by assignment, but historically on average represent less than 2% of the total contract revenues. Revenue is earned on a per transaction or labor hour basis, as that amount directly corresponds to the value of the Company’s performance.
Out-of-pocket expense reimbursement amounts vary by assignment, but historically on average represent less than 2% of the total contract revenues. Revenue is earned on a per transaction or labor hour basis, as that amount directly corresponds to the value of the Company’s performance. Revenue recognition is negatively impacted by holidays and consultant vacation and sick days.
Goodwill is not amortized but is tested for impairment at least on an annual basis. If impairment is indicated, a write-down to fair value is recorded based on the excess of the carrying value of the reporting unit over its fair market value.
If impairment is indicated, a write-down to fair value is recorded based on the excess of the carrying value of the reporting unit over its fair market value.
The Company accounts for stock-based compensation expense in accordance with ASC Topic 718 “ Share-based Payments ” which requires us to measure all share-based payments based on their estimated fair value and recognize compensation expense over the requisite service period.
Shares issuable under the current offering period will be issued in accordance with the terms of the plan, and no additional offering periods will commence thereafter. 35 Table of Contents The Company accounts for stock-based compensation expense in accordance with ASC Topic 718 “ Share-based Payments ” which requires us to measure all share-based payments based on their estimated fair value and recognize compensation expense over the requisite service period.
Selling, General and Administrative (“SG&A”) Expenses SG&A expenses in 2023 totaled $60.3 million and represented 30.0% of total revenues, compared to $51.0 million or 21.1% of revenues in 2022.
Selling, General and Administrative (“SG&A”) Expenses SG&A expenses in 2025 totaled $53.1 million and represented 27.7% of total revenues, compared to $51.8 million or 26.0% of revenues in 2024.
Stock options are granted at an exercise price equal to the closing share price of the Company’s common stock at the grant date and generally vest over a three to five-year period. In October 2018, the Board of Directors of the Company approved the Mastech Digital, Inc. 2019 Employee Stock Purchase Plan (the “Stock Purchase Plan”).
The Plan is administered by the Compensation Committee of the Board of Directors. Stock options are granted at an exercise price equal to the closing share price of the Company’s common stock at the grant date and generally vest over a three to five-year period.
In 2023, cash (used in) investing activities consisted of ($0.3 million) of capital expenditures and a $0.1 million recovery of non-current office lease deposits. In 2022, cash (used in) investing activities consisted of ($0.8 million) of capital expenditures, primarily related to system upgrade expenditures.
In 2024, cash (used in) investing activities consisted entirely of capital expenditures totaling ($0.9) million, largely related to computer equipment and cyber-security investments. In 2023, cash (used in) investing activities consisted of ($0.3) million of capital expenditures and a $0.1 million recovery of non-current office lease deposits.
This bill rate decline was due to lower rates on new assignments and was reflective of the type of skill sets that we deployed. Permanent placement / fee revenues totaled $0.8 million in 2023, compared to $2.1 million a year ago.
Our average IT staffing bill rate for 2025 totaled $86.10 per hour compared to $82.77 per hour in 2024. This bill rate increase was due to higher rates on new assignments and was reflective of the type of skill sets that we deployed. Permanent placement / fee revenues totaled $0.8 million in 2025, compared to $0.9 million a year ago.
The increase in SG&A as a percentage of revenues, excluding these items mentioned above, was largely due to higher sales and executive staff expenses in the Data and Analytics Services segment, offset by lower variable expenses in our IT Staffing Services segment.
The increase in SG&A as a percentage of revenues, excluding these items mentioned above, was largely due to higher general and administrative expenses in both business segments, partially offset by lower sales and operations expenses.
Income Tax Expense Income tax expense (benefit) for 2023 was ($1.9 million) and represented an effective tax rate on pre-tax (loss) of (21.0%), compared to $3.8 million in 2022, which represented an effective tax rate on pre-tax income of 30.3%.
Income Tax Expense Income tax expense for 2025 was $0.5 million and represented an effective tax rate on pre-tax income of 42.7%, compared to $1.0 million in 2024, which represented an effective tax rate on pre-tax income of 23.1%.
In 2022, cash (used in) financing activities totaled ($10.4 million) and included debt repayments of ($12.0 million) partially offset by proceeds from the exercise of stock options and the issuance of common stock related to the Company’s employee stock purchase plan of $1.6 million. 2024 Primentor, Inc.
Financing Activities In 2025, cash (used in) financing activities totaled ($1.1 million) and included ($2.2 million) for the repurchase of common stock under the Company’s share repurchase program, partially offset by $1 million of proceeds from the exercise of stock options and $0.1 million of proceeds from the issuance of common shares under our employee stock purchase plan.
The unfavorable 2023 effective tax rate was largely due to shortfalls in expected tax benefits on stock options and state income taxes. Liquidity and Capital Resources Financial Conditions and Liquidity On December 31, 2024, we had cash balances on hand of $27.7 million, no bank debt outstanding and approximately $22.6 million of borrowing capacity under our existing credit facility.
The 2024 effective tax rate compared to 2023 reflected a worthless stock deduction recognized on the dissolution of our Singapore entity in 2024. Liquidity and Capital Resources Financial Conditions and Liquidity On December 31, 2025, we had cash balances on hand of $36.5 million, no bank debt outstanding and approximately $19.9 million of borrowing capacity under our existing credit facility.
In both 2023 and 2022, we had one client that exceeded 10% of total revenues (CGI = 22.5% in 2023 and 22.2% in 2022, respectively). Our top ten clients represented 53% of total revenues in both 2023 and 2022. Additionally, our largest industry vertical, financial services, represented approximately 50% of total revenues in 2023 and 2022.
In 2024, we had two clients that exceeded 10% of total revenues (CGI = 14.5% and Populus = 10.7%). In 2023, we had one client that exceeded 10% of total revenues (CGI = 22.5%). Our top ten clients represented 54% of total revenues in 2024 and 53% of total revenues in 2023.
When excluding the amortization of acquired intangible assets, employment-related claim, net of recoveries, goodwill impairment and severance expenses in 2023, and the amortization of acquired intangible assets, the cybersecurity breach and severance expenses in 2022, the adjusted SG&A expenses related to operations, as a percentage of revenues was 23.2% in 2023 versus 19.2% in 2022.
When excluding the amortization of acquired intangible assets, severance expenses and finance and accounting transition expense in 2025, and the amortization of acquired intangible assets and severance expenses in 2024, the adjusted SG&A expenses related to operations as a percentage of revenues was 23.9% in 2025 versus 23.6% in 2024.
We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which may be refundable. The Company’s time-and-material and fixed price revenue streams are recognized over time as the customer receives and consumes the benefits of the Company’s performance as the work is performed.
The Company’s time-and-material and fixed price revenue streams are recognized over time as the customer receives and consumes the benefits of the Company’s performance as the work is performed.
Investing Activities Cash (used in) investing activities for the years ended December 31, 2024, 2023 and 2022 totaled ($0.9 million), ($0.2 million) and ($0.8 million), respectively. In 2024, cash (used in) investing activities consisted entirely of capital expenditures – largely computer equipment and cyber-security related expenditures.
Investing Activities Cash (used in) investing activities for the years ended December 31, 2025, 2024 and 2023 totaled $(0.5) million, $(0.9) million and $(0.2) million, respectively. In 2025, cash (used in) investing activities was primarily comprised of capital expenditures totaling ($0.4) million and payments of ($0.1) million for non-current deposits.
In 2022, cash flows from operating activities included net income of $8.7 million, non-cash charges of $6.8 million and increases in operating working capital of ($2.9 million). The 2024 increase in operating working capital reflected higher activities levels as accounts receivable and prepaid expenses increased.
In 2025, cash flows from operating activities included net income of $0.6 million, non-cash charges of $3.2 million and a decrease in operating working capital of $7.4 million. In 2024, cash flows from operating activities included net income of $3.4 million, non-cash charges of $6.1 million and an increase in operating working capital of ($2.3 million).
Fluctuations within SG&A expense components during 2023 compared to 2022 included the following: • Sales expense was $0.6 million lower in 2023 compared to the previous year. In the Data and Analytics Services segment, sales expense increased by $0.6 million due to an increase in sales staff and higher compensation expense in 2023.
Fluctuations within SG&A expense components during 2025 compared to 2024 included the following: • Sales expense was $2.2 million lower in 2025 compared to the previous year. In our IT Staffing Services segment, sales expense decreased by $1.7 million due to lower compensation expenses resulting from headcount reductions and lower marketing spend.
Our top ten clients represented 54% of total revenues in 2024 and 53% of total revenues in 2023. Additionally, our largest industry vertical, financial services, represented approximately 49% of total revenues in 2024, compared to approximately 50% in 2023.
Additionally, our largest industry vertical, financial services, represented approximately 54% of total revenues in 2025, compared to approximately 49% in 2024. Gross Margin Gross profit decreased to $53.1 million in 2025, compared to $55.6 million in 2024, a decrease of 4.6% on a year-over-basis.
The decline in interest expense and increase in interest income was largely due to no outstanding borrowings in 2023 and a higher balance of cash on hand in 2023. Net foreign exchange gains (losses) in 2023 compared to 2022 reflected exchange rate variations between the Indian rupee and the Canadian dollar compared to the U.S. dollar.
Net foreign exchange gains in 2025 compared to 2024 reflected exchange rate variations between the Indian rupee and the Canadian dollar compared to the U.S. dollar.
This analysis within both our reporting segments is multi-purposed and includes technologies employed, client relationships, and geographic locations. Economic Trends and Outlook 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.
Economic Trends and Outlook Our business, particularly within our IT Staffing Services segment, is closely correlated with general North American economic conditions and employment levels. Demand for our services typically increases during periods of economic expansion and strengthening labor markets, and declines during periods of economic contraction or reduced hiring activity.
During the first quarter of 2025, the 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.
During the first quarter of 2025, the Board of Directors approved a long-term cost optimization initiative to transition the Company’s finance and accounting functions from the United States to India. The transition was completed as of December 31, 2025.
We incurred a pre-tax charge of $450,000 in the third quarter 2022 related to this event, which includes the cost of engaging these external advisors and losses relating to the breach. This expense is included in selling, general and administrative expenses in the Consolidated Statements of Operations. 2025 Finance and Accounting Functions to be Transitioned to India from the U.S.
The settlement amount and the professional fees are included in selling, general and administrative expenses in the Consolidated Statements of Operations. 2025 Finance and Accounting Functions to be Transitioned to India from the U.S.
IT staffing sales expense decreased by $1.2 million and related to lower variable compensation and other variable expense items due to declining activity levels. • Operations expense decreased by $3.4 million compared to 2022. In our Data and Analytics Services segment, operations expense decreased by $1.0 million due to lower staff headcount.
In the Data and Analytics Services segment, sales expense decreased by $0.5 million due to a decrease in marketing and event expenses and lower compensation expenses resulting from headcount reductions. • Operations expense decreased by $1.9 million compared to 2024.
Operations expense in our IT Staffing Services segment decreased by $2.4 million in 2023, due to recruitment staff reductions and lower compensation and other variable expenses — both reflective of lower activity levels in 2023. • General & administrative expenses increased by $4.1 million in 2023 compared to 2022.
Operations expenses in our Data and Analytics Services segment decreased by $0.1 million in 2025, due to lower recruiting and travel costs. • General and administrative expenses increased by $2.9 million in 2025 compared to 2024.
This estimated additional expense is expected to range from $500,000 to $750,000 during the transition period. Additionally, the Company expects to pay approximately $1.3 million of severance expense related to this matter. Post-transition cost savings are expected to be approximately $1.2 million annually. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
The Company expects this initiative to generate annualized cost savings of approximately $1.2 million beginning in 2026. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
This 17% decline in total revenues reflected a decrease in revenue of 15% in our Data and Analytics Services segment and a 17% revenue decrease in our IT Staffing Services segment. Both segments were impacted by economic uncertainty during the year.
This 3.8% decline in total revenues reflected a decrease in revenues of 9.1% in our Data and Analytics Services segment and a 2.6% revenue decrease in our IT Staffing Services segment. Our Data and Analytics Services segment’s 2025 revenues decreased to $33.3 million from $36.6 million in 2024.
Gross profit as a percentage of revenue totaled 25.4% in 2023, compared to 26.1% in 2022. 36 Table of Contents Gross margins from our Data and Analytics Services segment were 43.5%, which was 200-basis points higher than the 41.5% gross margins that we experienced in 2022. The increase largely reflected higher utilization in the 2023 period.
Gross margins from our Data and Analytics Services segment in 2025 were 46.2%, which was 290-basis points lower than the 49.1% gross margins that we achieved in 2024. The decrease reflected lower utilization rates through 2025 when compared to 2024, as well as a few key project ends.
The 2024 effective tax rate compared to 2023 reflected a worthless stock deduction recognized on the dissolution of our Singapore entity in 2024. 2023 Compared to 2022 Revenues Revenues for the year ended December 31, 2023 totaled $201.1 million, compared to $242.2 million for the year ended December 31, 2022.
See additional information in Note 11. 29 Table of Contents 2024 Compared to 2023 Revenues Revenues for the year ended December 31, 2024 totaled $198.9 million, compared to $201.1 million for the year ended December 31, 2023.
The 2023 reduction in operating working capital was due to lower accounts receivable, reflecting significant revenue declines during the year. The 2022 increase in operating capital largely reflected a $2.3 million repayment of the COVID-19 payroll tax deferment program. 38 Table of Contents We would expect operating working capital levels to increase should revenue grow in 2025.
The 2024 increase in operating working capital reflected higher activities levels as accounts receivable and prepaid expenses increased. The 2023 reduction in operating working capital was due to lower accounts receivable, reflecting significant revenue declines during the year. Operating working capital levels are generally correlated with revenue trends.
Accordingly, an increase in operating working capital would result in a reduction in cash generated from operating activities.
If revenue levels increase in future periods, we would expect operating working capital requirements to increase accordingly, which could reduce cash generated from operating activities. Conversely, sustained lower revenue levels may result in reduced working capital requirements.
Permanent placement / fee revenues totaled $0.9 million in 2024, compared to $0.8 million a year ago. 34 Table of Contents In 2024, we had two clients that exceeded 10% of total revenues (CGI = 14.5% and Allegis = 10.7%). In 2023, we had one client that exceeded 10% of total revenues (CGI = 22.5%).
In 2025, we had three clients that exceeded 10% of total revenues (Fidelity = 16.7%, Populus = 12.1% and CGI = 10.8%). In 2024, we had two client that exceeded 10% of total revenues (CGI = 14.5% and Populas = 10.7%). Our top ten clients represented 58% of total revenues in 2025 and 54% of total revenues in 2024.
However, supply side challenges have proven to be acute with respect to many of these technologies. Results of Operations We operate and report our business in two reporting segments — Data and Analytics Services and IT Staffing Services.
In addition, the availability of qualified professionals in certain specialized areas remains limited, which can affect fulfillment rates, compensation levels, and margins. Results of Operations We operate and report our business in two reporting segments — Data and Analytics Services and IT Staffing Services.
Removed
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.
Added
This analysis within both our reporting segments is multi-purposed and includes technologies employed, client relationships, and geographic locations. Beginning in the 2026 fiscal year, the Company plans to revise its segment structure to align with changes in how the Chief Operating Decision Maker (“CODM”) will be evaluating operating performance and allocating resources.
Removed
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.
Added
These changes are driven by the Company’s operating strategy, which aligns the organization around account-centric management, industry-focused leadership, and an integrated approach to Talent and Services offerings. Under the revised structure, the Company intends to transition from its current reportable segments of Data and Analytics and IT Staffing Services to the newly formed Talent and Services segments.
Removed
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.
Added
The revised segment structure is expected to be effective for external reporting beginning in the 2026 fiscal year pending finalization of the Company’s analysis under ASC 280. Any changes to the Company’s segment reporting in future periods will include recasting prior period segment information in accordance with ASC 280.
Removed
In 2021, we were encouraged by the global roll-out of vaccination programs and signs of economic improvement, however, the proliferation of COVID-19 variants caused some uncertainty and disruption in the global markets.
Added
During 2025, hiring activity across certain technology and professional services sectors remained cautious, as clients continued to evaluate discretionary spending and workforce needs in light of broader economic uncertainty and elevated interest rates. These conditions contributed to reduced demand for our staffing and related services, resulting in lower revenue in both of our business segments compared to the prior year.
Removed
In 2022 and 2023, COVID-19-related concerns seemed to subside, however, increased inflation, challenges in the 32 Table of Contents 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 the entire year of 2023.
Added
Although overall labor market conditions have eased compared to prior years, compensation levels for certain specialized IT roles remain elevated. In a softer demand environment, competitive pricing conditions also affected our gross margins. Looking ahead, demand for our services is expected to remain influenced by overall economic growth, corporate hiring trends, and client confidence levels.
Removed
In 2024, economic conditions in North America improved over the course of the year as job market growth and inflationary outlooks showed positive signs of improvement.
Added
Continued macroeconomic uncertainty or reduced business investment could further impact project 26 Table of Contents activity and staffing demand in future periods.
Removed
As we enter 2025, a new level of uncertainty and caution has returned to the marketplace, largely related to unknowns with respect to the incoming administration and the impact of the policies it is adopting. Currently, it is difficult to predict how market conditions are going to unfold over the course of 2025 and beyond.
Added
As a result, our operating results may be materially influenced by the financial performance, hiring activity, and business priorities of these clients. Changes in spending levels or project activity by one or more significant clients may cause our results to vary from broader economic trends in a given period.
Removed
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. Within our IT Staffing Services segment, a larger portion of our revenues has come from strategic relationships with systems integrators.
Added
Within our IT Staffing Services segment, a meaningful portion of revenue is generated through strategic relationships with systems integrators. In addition, many large end users utilize managed service providers (“MSPs”) to oversee contractor engagement and pricing. These intermediated delivery models may reduce pricing flexibility and could continue to exert pressure on our gross margins.
Removed
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. Recent growth in advanced technologies (social, cloud, data, analytics, mobility, automation) is providing opportunities within our IT Staffing Services segment.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed3 unchanged
Biggest changeAs our international operations grow, we will continue to evaluate and reassess our approach to managing the risks relating to fluctuations in currency rates. 45 Table of Contents
Biggest changeAs our international operations grow, we will continue to evaluate and reassess our approach to managing the risks relating to fluctuations in currency rates.
Interest Rates At December 31, 2024, we had no outstanding borrowings under our Credit Agreement with PNC Bank and certain other financial institution lenders (the “Credit Agreement”) — Refer to Note 5 — “Credit Facility” in the Notes to Consolidated Financial Statements, included in Item 8 herein.
Interest Rates At December 31, 2025, we had no outstanding borrowings under our Credit Agreement with PNC Bank and certain other financial institution lenders (the “Credit Agreement”) — Refer to Note 5 — “Credit Facility” in the Notes to Consolidated Financial Statements, included in Item 8 herein.
Gains and losses resulting from foreign currency transactions are included as a component of other income (expense), net in the Consolidated Statements of Operations. A hypothetical 10% increase or decrease in overall foreign currency rates in 2024 would not have a material impact on our consolidated financial statements.
Gains and losses resulting from foreign currency transactions are included as a component of other income (expense), net in the Consolidated Statements of Operations. A hypothetical 10% increase or decrease in overall foreign currency rates in 2025 would not have a material impact on our consolidated financial statements.
A hypothetical 10% increase in interest rates would have no impact on our annual interest expense. As of December 31, 2024, the Company has no interest-rate hedge vehicles outstanding. Currency Fluctuations The reporting currency of the Company and its subsidiaries is the U.S. dollar.
A hypothetical 10% increase in interest rates would have no impact on our annual interest expense. As of December 31, 2025, the Company has no interest-rate hedge vehicles outstanding. Currency Fluctuations The reporting currency of the Company and its subsidiaries is the U.S. dollar.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In addition to the inherent operational risks, the Company is exposed to certain market risks, primarily related to changes in interest rates and currency fluctuations.
ITEM 7A. QUANT ITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In addition to the inherent operational risks, the Company is exposed to certain market risks, primarily related to changes in interest rates and currency fluctuations.

Other MHH 10-K year-over-year comparisons