Mastech Digital Reports 8% Year-over-Year Revenue Growth and 5% Sequential Revenue Growth for the Third Quarter 2024
Consolidated Gross Margins of 28.5% Set a New
Third Quarter 2024 Highlights:
- Total consolidated revenues increased by
$4.1 million on a year-over-year basis and by$2.3 million on a sequential quarterly basis to$51.8 million and represented our third consecutive quarter of revenue growth; - The Company's Data and Analytics Services segment reported revenues of
$9.4 million , which were 17% higher than revenues in the third quarter of 2023 and 6% higher on a sequential basis from the second quarter of 2024; - The IT Staffing Services segment delivered revenues of
$42.4 million , achieving year-over-year growth of 7% and sequential quarterly growth of 4% when compared to revenues reported in the second quarter of 2024; - Gross margins achieved during the third quarter of 2024 were a Company performance record 28.5%, surpassing our previous gross margin record from the previous quarter;
- GAAP diluted earnings per share was
$0.16 in the third quarter of 2024, versus$0.01 in the third quarter of 2023 and$0.12 in the second quarter of 2024; and - Non-GAAP diluted earnings per share was
$0.23 in the third quarter of 2024, versus$0.11 in the third quarter of 2023 and$0.19 in the second quarter of 2024.
Third Quarter Results:
Revenues for the third quarter of 2024 totaled
Activity levels at the Company's Data and Analytics Services segment continued to be solid in the third quarter of 2024. Order bookings totaled
Commenting on the Company's financial position,
About
Use of Non-GAAP Measures:
This press release contains non-GAAP financial measures to supplement our financial results presented on a GAAP basis. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in the attached financial tables.
We believe that providing non-GAAP net income and non-GAAP diluted earnings per share offers investors useful supplemental information about the financial performance of our business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allows for greater transparency with respect to key metrics used by management in operating our business. Additionally, management uses these non-GAAP financial measures in evaluating the Company's performance.
Specifically, the non-GAAP financial measures contained herein exclude the following expense items:
Amortization of acquired intangible assets: We amortize intangible assets acquired in connection with our
Stock-based compensation expenses: We incur material recurring expenses related to non-cash, stock-based compensation. We exclude these expenses in our non-GAAP financial measures because we believe that it provides investors with meaningful supplemental information regarding operational performance. In particular, because of varying available valuation methodologies, subjective assumptions, and the variety of award types that companies can use under ASC 718, we believe that providing non-GAAP financial measures that exclude these expenses allows investors to make more meaningful comparisons between our operating results and those of other companies within our industry and facilitates comparison of our results with other periods.
Settlement reserve on employment-related claim, net of recoveries: In the second quarter of 2023, we recognized a pre-tax reserve of
Forward-Looking Statements:
Certain statements contained in this release are forward-looking statements based on management's expectations, estimates, projections, and assumptions. Words such as "expects," "anticipates," "plans," "believes," "scheduled," "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of and statements regarding the Company's ability to generate revenues, earnings, and cash flow. These statements are based on information currently available to the Company and it assumes no obligation to update the forward-looking statements as circumstances change. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecasted in forward-looking statements due to a variety of factors, including, without limitation, the level of market demand for the Company's services, the highly competitive market for the types of services offered by the Company, the impact of competitive factors on profit margins, market and general economic conditions that could cause the Company's customers to reduce their spending for its services, the Company's ability to create, acquire and build new lines of business, to attract and retain qualified personnel, reduce costs and conserve cash, the extent to which the Company's business is adversely affected by the impacts of the COVID-19 pandemic or any other pandemics or outbreaks disrupting day-to-day activities and other risks that are described in more detail in the Company's filings with the
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Amounts in thousands) |
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(Unaudited) |
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2024 |
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2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ 23,885 |
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$ 21,147 |
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Accounts receivable, net |
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34,054 |
|
29,815 |
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Prepaid and other current assets |
|
7,876 |
|
5,501 |
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Total current assets |
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65,815 |
|
56,463 |
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Equipment, enterprise software and leasehold improvements, net |
|
2,083 |
|
1,913 |
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Operating lease right-of-use assets, net |
|
4,147 |
|
5,106 |
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Deferred income taxes |
|
607 |
|
793 |
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Deferred financing costs, net |
|
213 |
|
284 |
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Non-current deposits |
|
452 |
|
457 |
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27,210 |
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27,210 |
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Intangible assets, net of amortization |
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10,958 |
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13,001 |
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Total assets |
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$ 1,11,485 |
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$ 1,05,227 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ 4,636 |
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$ 4,659 |
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Current portion of operating lease liability |
|
1,257 |
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1,236 |
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Accrued payroll and related costs |
|
14,717 |
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12,354 |
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Other accrued liabilities |
|
1,491 |
|
1,622 |
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Total current liabilities |
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22,101 |
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19,871 |
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Long-term liabilities: |
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Long-term operating lease liability, less current portion |
|
2,857 |
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3,843 |
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Long-term accrued income taxes |
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- |
|
69 |
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Total liabilities |
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24,958 |
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23,783 |
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Shareholders' equity: |
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Common stock, par value |
|
134 |
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133 |
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Additional paid-in capital |
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37,473 |
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35,345 |
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Retained earnings |
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55,520 |
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52,415 |
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Accumulated other comprehensive income (loss) |
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(1,715) |
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(1,644) |
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(4,885) |
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(4,805) |
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Total shareholders' equity |
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86,527 |
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81,444 |
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Total liabilities and shareholders' equity |
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$ 1,11,485 |
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$ 1,05,227 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Amounts in thousands, except per share data) |
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(Unaudited) |
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Three Months ended |
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Nine Months ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues |
$ 51,839 |
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$ 47,779 |
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$ 1,48,196 |
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$ 1,55,046 |
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Cost of revenues |
37,068 |
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35,213 |
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1,07,314 |
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1,15,354 |
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Gross profit |
14,771 |
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12,566 |
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40,882 |
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39,692 |
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Selling, general and administrative expenses: |
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Operating expenses |
12,332 |
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12,615 |
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37,156 |
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38,937 |
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Employment-related claim, net of recoveries |
- |
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- |
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- |
|
3,100 |
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Total selling, general and administrative expenses |
12,332 |
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12,615 |
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37,156 |
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42,037 |
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Income (loss) from operations |
2,439 |
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(49) |
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3,726 |
# |
(2,345) |
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Other income/(expense), net |
133 |
|
203 |
|
373 |
|
200 |
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Income (loss) before income taxes |
2,572 |
|
154 |
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4,099 |
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(2,145) |
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Income tax expense (benefit) |
697 |
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29 |
|
994 |
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(358) |
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Net income (loss) |
$ 1,875 |
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$ 125 |
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$ 3,105 |
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$ (1,787) |
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Earnings (loss) per share: |
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Basic |
$ 0.16 |
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$ 0.01 |
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$ 0.27 |
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$ (0.15) |
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Diluted |
$ 0.16 |
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$ 0.01 |
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$ 0.26 |
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$ (0.15) |
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Weighted average common shares outstanding: |
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Basic |
11,695 |
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11,597 |
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11,654 |
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11,618 |
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Diluted |
12,011 |
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11,968 |
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11,949 |
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11,618 |
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RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES |
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(Amounts in thousands, except per share data) |
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(Unaudited) |
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Three Months ended |
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Nine Months ended |
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2024 |
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2023 |
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2024 |
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2023 |
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GAAP Net Income (Loss) |
$ 1,875 |
|
$ 125 |
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$ 3,105 |
# |
$ (1,787) |
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Adjustments: |
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Amortization of acquired intangible assets |
657 |
|
693 |
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2,043 |
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2,079 |
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Stock-based compensation |
542 |
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824 |
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1,553 |
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2,501 |
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Employment-related claim, net of recoveries |
- |
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- |
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- |
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3,100 |
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Income tax adjustments |
(305) |
|
(385) |
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(920) |
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(1,944) |
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Non-GAAP Net Income |
$ 2,769 |
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$ 1,257 |
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$ 5,781 |
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$ 3,949 |
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GAAP Diluted Earnings (Loss) Per Share |
$ 0.16 |
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$ 0.01 |
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$ 0.26 |
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$ (0.15) |
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Non-GAAP Diluted Earnings Per Share |
$ 0.23 |
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$ 0.11 |
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$ 0.48 |
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$ 0.33 |
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Weighted average common shares outstanding: |
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GAAP Diluted Shares |
12,011 |
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11,968 |
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11,949 |
|
11,618 |
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Non-GAAP Diluted Shares |
12,011 |
|
11,968 |
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11,949 |
# |
11,998 |
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SUPPLEMENTAL FINANCIAL INFORMATION |
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(Amounts in thousands) |
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(Unaudited) |
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Three Months ended |
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Nine Months ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues: |
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Data and analytics services |
$ 9,398 |
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$ 8,038 |
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$ 26,341 |
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$ 26,206 |
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IT staffing services |
42,441 |
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39,741 |
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1,21,855 |
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1,28,840 |
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Total revenues |
$ 51,839 |
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$ 47,779 |
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$ 1,48,196 |
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$ 1,55,046 |
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Gross Margin %: |
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Data and analytics services |
50.7 % |
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45.8 % |
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48.9 % |
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43.1 % |
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IT staffing services |
23.6 % |
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22.4 % |
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23.0 % |
|
22.0 % |
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Total gross margin % |
28.5 % |
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26.3 % |
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27.6 % |
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25.6 % |
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Segment Operating Income: |
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Data and analytics services |
$ 1,145 |
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$ (832) |
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$ 1,435 |
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$ (2,393) |
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IT staffing services |
1,951 |
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1,476 |
|
4,334 |
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5,227 |
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Subtotal |
3,096 |
|
644 |
|
5,769 |
|
2,834 |
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|
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Amortization of acquired intangible assets |
(657) |
|
(693) |
|
(2,043) |
|
(2,079) |
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Employment-related claim, net of recoveries |
- |
|
- |
|
- |
|
(3,100) |
||
|
Interest income (expense) and other, net |
133 |
|
203 |
|
373 |
|
200 |
||
|
Income before income taxes |
$ 2,572 |
|
$ 154 |
|
$ 4,099 |
|
$ (2,145) |
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