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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-34099

MASTECH DIGITAL, INC.

(Exact name of registrant as specified in its charter)

     PENNSYLVANIA

     26-2753540

     (State or other jurisdiction of
incorporation or organization)

     (I.R.S. Employer
Identification No.)

     1305 Cherrington Parkway, Building 210, Suite 400
Moon Township, Pennsylvania

     15108

     (Address of principal executive offices)

     (Zip Code)

Registrant’s telephone number, including area code: (412) 787-2100

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange
on which registered

     Common Stock, par value $.01 per share

     MHH

     NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock, par value $.01 per share, outstanding as of October 31, 2025 was 11,697,331.

Table of Contents

MASTECH DIGITAL, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2025

TABLE OF CONTENTS


			Page
PART 1	FINANCIAL INFORMATION		3

Item 1.	Financial Statements:		3

	(a)	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024	3

	(b)	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024	4

	(c)	Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2025 and December 31, 2024	5

	(d)	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024	7

	(e)	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2025 and 2024	8

	(f)	Notes to Condensed Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29

Item 4.	Controls and Procedures		29

PART II	OTHER INFORMATION		30

Item 1.	Legal Proceedings		30

Item 1A.	Risk Factors		30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30

Item 5.	Other Information		30

Item 6.	Exhibits		31

	SIGNATURES		32

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MASTECH DIGITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025		2024			2025			2024
Revenues	$	48,496	$	51,839		$	145,910		$	148,196
Cost of revenues		35,035		37,068			105,737			107,314
Gross profit		13,461		14,771			40,173			40,882
Selling, general and administrative expenses		12,641		12,332			41,179			37,156
Income (loss) from operations		820		2,439			(1,006	)		3,726
Interest income (expense), net		266		163			571			447
Other income (expense), net		149		(30	)		118			(74	)
Income (loss) before income taxes		1,235		2,572			(317	)		4,099
Income tax expense (benefit)		294		697			46			994
Net income (loss)	$	941	$	1,875		$	(363	)	$	3,105
Earnings (loss) per share:
Basic	$	.08	$	.16		$	(.03	)	$	.27
Diluted	$	.08	$	.16		$	(.03	)	$	.26
Weighted average common shares outstanding:
Basic		11,762		11,695			11,761			11,654
Diluted		11,945		12,011			11,761			11,949

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

MASTECH DIGITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Net income (loss)	$	941		$	1,875		$	(363	)	$	3,105
Other comprehensive income (loss):
Foreign currency translation adjustments		(418	)		(44	)		(411	)		(71	)
Total other comprehensive income (loss), net of taxes		(418	)		(44	)		(411	)		(71	)
Total comprehensive income (loss)	$	523		$	1,831		$	(774	)	$	3,034

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

MASTECH DIGITAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

(Unaudited)


	September 30, 2025			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	32,747		$	27,742
Accounts receivable, net of allowance for credit losses of $275 in 2025 and $311 in 2024		20,560			23,845
Unbilled receivables		8,303			7,598
Prepaid and other current assets		7,680			7,020
Total current assets		69,290			66,205
Equipment, enterprise software, and leasehold improvements, at cost:
Equipment		3,822			3,671
Enterprise software		4,185			4,185
Leasehold improvements		739			742
		8,746			8,598
Less – accumulated depreciation and amortization		(7,006	)		(6,600	)
Net equipment, enterprise software, and leasehold improvements		1,740			1,998
Operating lease right-of-use assets, net		2,865			3,832
Deferred income taxes		1,464			1,298
Deferred financing costs, net		118			189
Deferred compensation, net		1,125			—
Non-current deposits		446			444
Goodwill, net of impairment		27,210			27,210
Intangible assets, net of amortization		8,359			10,308
Total assets	$	112,617		$	111,484
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		3,412			4,683
Accrued payroll and related costs		16,872			13,750
Current portion of operating lease liability		1,287			1,265
Other accrued liabilities		693			550
Deferred revenue		308			329
Total current liabilities		22,572			20,577
Long-term liabilities:
Long-term operating lease liability, less current portion		1,466			2,486
Long-term severance liability		572			987
Total liabilities		24,610			24,050
Commitments and contingent liabilities (Note 5)
Shareholders’ equity:
Preferred Stock, no par value; 20,000,000 shares authorized; none outstanding		—			—
Common Stock, par value $.01; 100,000,000 shares authorized and 13,595,248 shares issued as of September 30, 2025 and 13,444,712 shares issued as of December 31, 2024		136			135
Additional paid-in-capital		41,215			38,277
Retained earnings		55,454			55,817
Accumulated other comprehensive income (loss)		(2,321	)		(1,910	)
Treasury stock, at cost; 1,931,964 shares as of September 30, 2025 and 1,723,341 shares as of December 31, 2024		(6,477	)		(4,885	)
Total shareholders’ equity		88,007			87,434
Total liabilities and shareholders’ equity	$	112,617		$	111,484

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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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MASTECH DIGITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands)

(Unaudited)


	Common Stock		Additional Paid-in Capital		Accumulated Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balances, December 31, 2024	$	135	$	38,277	$	55,817		$	(4,885	)	$	(1,910	)	$	87,434
Net (loss)		—		—		(1,439	)		—			—			(1,439	)
Other comprehensive gain, net of taxes		—		—		—			—			30			30
Stock-based compensation expense		—		895		—			—			—			895
Stock options exercised		—		27		—			—			—			27
Balances, March 31, 2025	$	135	$	39,199	$	54,378		$	(4,885	)	$	(1,880	)	$	86,947
Net income		—		—		135			—			—			135
Employee common stock purchases		—		70		—			—			—			70
Other comprehensive (loss), net of taxes		—		—		—			—			(23	)		(23	)
Stock-based compensation expense		—		714		—			—			—			714
Stock options exercised		—		81		—			—			—			81
Shares repurchased		—		—		—			(114	)		—			(114	)
Balances, June 30, 2025	$	135	$	40,064	$	54,513		$	(4,999	)	$	(1,903	)	$	87,810
Net income		—		—		941			—			—			941
Other comprehensive (loss), net of tax		—		—		—			—			(418	)		(418	)
Stock-based compensation expense		—		729		—			—			—			729
Stock options exercised		1		422		—			—			—			423
Purchase of treasury stock		—		—		—			(1,478	)		—			(1,478	)
Balances, September 30, 2025	$	136	$	41,215	$	55,454		$	(6,477	)	$	(2,321	)	$	88,007


	Common Stock		Additional Paid-in Capital		Accumulated Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balances, December 31, 2023	$	133	$	35,345	$	52,415		$	(4,805	)	$	(1,644	)	$	81,444
Net (loss)		—		—		(161	)		—			—			(161	)
Other comprehensive (loss), net of taxes		—		—		—			—			(28	)		(28	)
Stock-based compensation expense		—		550		—			—			—			550
Shares repurchased		—		—		—			(80	)		—			(80	)
Balances, March 31, 2024	$	133	$	35,895	$	52,254		$	(4,885	)	$	(1,672	)	$	81,725
Net income		—		—		1,391			—			—			1,391
Employee common stock purchases		—		136		—			—			—			136
Other comprehensive gain, net of taxes		—		—		—			—			1			1
Stock-based compensation expense		—		461		—			—			—			461
Stock options exercised		1		321		—			—			—			322
Balances, June 30, 2024	$	134	$	36,813	$	53,645		$	(4,885	)	$	(1,671	)	$	84,036
Net income		—		—		1,875			—			—			1,875
Other comprehensive (loss), net of tax		—		—		—			—			(44	)		(44	)
Stock-based compensation expense		—		542		—			—			—			542
Stock options exercised		—		118		—			—			—			118
Balances, September 30, 2024	$	134	$	37,473	$	55,520		$	(4,885	)	$	(1,715	)	$	86,527

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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MASTECH DIGITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2025			2024
OPERATING ACTIVITIES:
Net income (loss)	$	(363	)	$	3,105
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		2,521			2,670
Bad debt expense		36			(92	)
Interest amortization of deferred financing costs		71			71
Stock-based compensation expense		2,338			1,553
Deferred income taxes, net		(170	)		185
Operating lease assets and liabilities, net		31			27
Amortization of deferred compensation		375			—
Long-term severance liability		(415	)		—
Payment of deferred compensation		(2,000	)		—
Loss on disposition of fixed assets		4			21
Long term accrued income taxes		—			(69	)
Working capital items:
Accounts receivable and unbilled receivables		2,543			(4,147	)
Prepaid and other current assets		(276	)		(2,399	)
Accounts payable		(1,257	)		(18	)
Accrued payroll and related costs		3,211			2,377
Other accrued liabilities		149			(305	)
Deferred revenue		(21	)		175
Net cash flows provided by (used in) operating activities		6,777			3,154
INVESTING ACTIVITIES:
Recovery of (payment for) non-current deposits		(18	)		1
Capital expenditures		(351	)		(826	)
Net cash flows (used in) investing activities		(369	)		(825	)
FINANCING ACTIVITIES:
Proceeds from the issuance of common shares		70			136
Purchase of treasury stock		(1,592	)		(80	)
Proceeds from the exercise of stock options		530			440
Net cash flows provided by (used in) financing activities		(992	)		496
Effect of exchange rate changes on cash and cash equivalents		(411	)		(87	)
Net change in cash and cash equivalents		5,005			2,738
Cash and cash equivalents, beginning of period		27,742			21,147
Cash and cash equivalents, end of period	$	32,747		$	23,885

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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MASTECH DIGITAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

(Unaudited)

Description of Business and Basis of Presentation:

Basis of Presentation

References in this Quarterly Report on Form 10-Q to “we”, “our”, “Mastech Digital”, “Mastech” or “the Company” refer collectively to Mastech Digital, Inc. and its wholly owned operating subsidiaries, which are included in these Condensed Consolidated Financial Statements (the “Financial Statements”).

Description of Business

We are a provider of Digital Transformation IT Services to mostly large and medium-sized organizations.

Our portfolio of offerings includes data management and analytics services, digital learning services and IT staffing services.

With our 2017 acquisition of the services division of Canada-based InfoTrellis, Inc. (“InfoTrellis”), we added specialized capabilities in delivering data and analytics services to our customers, which became our Data and Analytics Services segment. This segment offers project-based consulting services in the areas of data management, data engineering and data science, with such services delivered using on-site and offshore resources. In October 2020, we acquired AmberLeaf Partners, Inc. (“AmberLeaf”), a Chicago-based customer experience consulting firm. This acquisition expanded our Data and Analytics Services segment’s capabilities in customer experience strategy and managed services offering for a variety of Cloud-based enterprise applications across sales, marketing and customer services organizations.

Our IT staffing services segment combines technical expertise with business process experience to deliver a broad range of staffing services in digital and mainstream technologies. Our digital technologies include data management, analytics, cloud, mobility, social and artificial intelligence. We work with businesses and institutions with significant IT spending and recurring staffing service needs. We also support smaller organizations with their “project focused” temporary IT staffing requirements.

Accounting Principles

The accompanying Financial Statements have been prepared by management in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting principally of normal recurring adjustments, considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Financial Statements and the accompanying notes. Actual results could differ from these estimates. These Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the year ended December 31, 2024, included in our Annual Report on Form 10-K filed with the SEC on March 14, 2025. Additionally, our operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results that can be expected for the year ending December 31, 2025 or for any other period.

Principles of Consolidation

The Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Critical Accounting Policies

Please refer to Note 1 “Summary of Significant Accounting Policies” of the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024, for a more detailed discussion of our significant accounting policies and critical accounting estimates. There were no material changes to these critical accounting policies during the nine months ended September 30, 2025.

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Segment Reporting

The Company has two reportable segments, in accordance with Accounting Standards Committee (“ASC”) Topic 280 “Disclosures About Segments of an Enterprise and Related Information”: Data and Analytics Services and IT Staffing Services.

Revenue from Contracts with Customers

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. Out-of-pocket expense reimbursement amounts vary by assignment, but 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.

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. Under the cost-based input method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. The Company has determined that the cost-based input method provides a fair 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. 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.

In certain situations related to client direct hire assignments, where the Company’s fee is contingent upon the hired resources continued employment with the client, revenue is not fully recognized until such employment conditions are satisfied.

We do not sell, lease or otherwise market computer software or hardware, and, essentially, 100% of our revenue is derived from the sale of data and analytics, IT staffing and digital transformation services. We expense sales commissions in the same period in which revenues are realized. These costs are recorded within sales, general and administrative expenses.

Each contract the Company enters into is assessed to determine the promised services to be performed and includes identification of the performance obligations required by the contract. In substantially all of our contracts, we have identified a single performance obligation for each contract either because the promised services are distinct, or the promised services are highly interrelated and interdependent and therefore represent a combined single performance obligation.

Our Data and Analytics Services segment provides specialized capabilities in delivering data management and analytics services to its customers globally. This business offers project-based consulting services in the areas of Master Data Management, Enterprise Data Integration, Big Data, Analytics and Digital Transformation, which can be delivered using onsite and offshore resources.

Our IT Staffing Services segment combines technical expertise with business process experience to deliver a broad range of services in digital and mainstream technologies. Our digital technology stack includes data management and analytics, cloud, mobility, social and automation. Our mainstream technologies include business intelligence / data warehousing; web services; enterprise resource planning & customer resource management; and e-Business solutions. We work with businesses and institutions with significant IT spend and recurring staffing needs. We also support smaller organizations with their “project focused” temporary IT staffing requirements. In late 2023, we expanded our service offerings to include engineering staffing services. Substantially all of our revenue is recognized over time.

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The following table depicts the disaggregation of our revenues by contract type and operating segment:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
	(Amounts in thousands)
Data and Analytics Services Segment
Time-and-material Contracts	$	7,715	$	6,123	$	21,190	$	18,417
Fixed-price Contracts		195		3,275		4,269		7,924
Subtotal Data and Analytics Services	$	7,910	$	9,398	$	25,459	$	26,341
IT Staffing Services Segment
Time-and-material Contracts	$	40,586	$	42,374	$	120,451	$	121,788
Fixed-price Contracts		—		67		—		67
Subtotal IT Staffing Services	$	40,586	$	42,441	$	120,451	$	121,855
Total Revenues	$	48,496	$	51,839	$	145,910	$	148,196

For the three months ended September 30, 2025, the Company had three clients (Fidelity = 18.1%, Populus = 12.7% and CGI = 10.4%) that each exceeded 10% of total revenues. For the nine months ended September 30, 2025, the Company had the same three clients (Fidelity = 15.4%, Populus = 12.3% and CGI = 11.1%) that each exceeded 10% of total revenues. For the three months ended September 30, 2024, the Company had two clients (CGI = 14.0% and Allegis = 11.7%) that each exceeded 10% of total revenues. For the nine months ended September 30, 2024, the Company had the same two clients (CGI = 15.4% and Allegis = 10.6%) that each exceeded 10% of total revenues.

The Company’s top ten clients represented approximately 59% and 56% of total revenues for the three months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025 and 2024, the Company’s top ten clients represented approximately 58% and 54% of total revenues, respectively.

The following table presents our revenue from external customers disaggregated by geography, based on the work location of our customers:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
	(Amounts in thousands)
United States	$	48,078	$	51,043	$	144,412	$	145,674
Canada		112		198		388		800
India and Other		306		598		1,110		1,722
Total revenues	$	48,496	$	51,839	$	145,910	$	148,196

Goodwill and Other Intangible Assets, net

Goodwill of $8.4 million related to our IT Staffing Services segment resulted from the 2015 acquisition of Hudson Global Resources Management’s U.S. IT staffing business. Goodwill related to our Data and Analytics Services segment includes our 2017 acquisition of the services division of InfoTrellis, which totaled $27.4 million, and our 2020 acquisition of AmberLeaf, which totaled $6.4 million. The Company recorded a $5.3 million goodwill impairment related to the Data and Analytics Services segment in 2023 and a $9.7 million goodwill impairment in 2018. The impairments were primarily attributable to declines in revenue levels and lower future revenue projections.

A continued decline in our Data and Analytics Services segment may potentially affect the implied fair value of Goodwill. Should this type of trend persist, there is the risk that a goodwill impairment charge may be required in a future reporting period.

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A reconciliation of the beginning and ending amounts of goodwill by operating segment for the periods ended September 30, 2025 and December 31, 2024 is as follows:


	Nine Months Ended September 30, 2025		Twelve Months Ended December 31, 2024
	(in thousands)
IT Staffing Services:
Beginning balance	$	8,427	$	8,427
Goodwill recorded	—		—
Impairment	—		—
Ending Balance	$	8,427	$	8,427


	Nine Months Ended September 30, 2025		Twelve Months Ended December 31, 2024
	(in thousands)
Data and Analytics Services:
Beginning balance	$	18,783	$	18,783
Goodwill recorded	—		—
Impairment	—			—
Ending Balance	$	18,783	$	18,783

The Company is amortizing the identifiable intangible assets on a straight-line basis over estimated average lives ranging from 3 to 12 years. Identifiable intangible assets were comprised of the following as of September 30, 2025 and December 31, 2024:


	As of September 30, 2025
(Amounts in thousands)	Amortization Period (In Years)		Gross Carrying Value		Accumulative Amortization		Net Carrying Value
IT Staffing Services:
Client relationships		12	$	7,999	$	6,861	$	1,138
Covenant-not-to-compete		5		319		319		—
Trade name		3		249		249		—
Data and Analytics Services:
Client relationships		12		19,641		12,639		7,002
Covenant-not-to-compete		5		1,201		1,201		—
Trade name		5		1,711		1,711		—
Technology		7		1,979		1,760		219
Total Intangible Assets			$	33,099	$	24,740	$	8,359


	As of December 31, 2024
(Amounts in thousands)	Amortization Period (In Years)		Gross Carrying Value		Accumulative Amortization		Net Carrying Value
IT Staffing Services:
Client relationships		12	$	7,999	$	6,361	$	1,638
Covenant-not-to-compete		5		319		319		0
Trade name		3		249		249		0
Data and Analytics Services:
Client relationships		12		19,641		11,413		8,228
Covenant-not-to-compete		5		1,201		1,135		66
Trade name		5		1,711		1,637		74
Technology		7		1,979		1,677		302
Total Intangible Assets			$	33,099	$	22,791	$	10,308

Amortization expense for the three and nine-month periods ended September 30, 2025 totaled $650,000 and $1.9 million, respectively and is included in selling, general and administrative expenses in the Consolidated Statement of Operations. For the three and nine-month periods ended September 30, 2024, amortization expense was $657,000 and $2.0 million, respectively.

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The estimated aggregate amortization expense for intangible assets for the years ending December 31, 2025 through 2029 is as follows:


	Years Ended December 31,
	2025		2026		2027		2028		2029
	(Amounts in thousands)
Amortization expense	$	2,553	$	2,413	$	2,025	$	1,637	$	1,000

Leases

The Company rents certain office facilities and equipment under noncancelable operating leases. As of September 30, 2025, approximately 94,000 square feet of office space is utilized for our sales and recruiting offices, delivery centers, and corporate headquarters. All of our leases are classified as operating leases. The average initial lease term is 3.9 years. Several leases have an option to renew, at our sole discretion, for an additional term. Our present lease terms range from less than one year to 4.0 years with a weighted average of 2.5 years. Leases with an initial term of twelve months or less are not recorded on the balance sheet.

The following table summarizes the balance sheet classification of the lease assets and related lease liabilities:


	September 30, 2025		December 31, 2024
	(in thousands)
Assets:
Long-term operating lease right-of-use assets	$	2,865	$	3,832
Liabilities:
Short-term operating lease liability	$	1,287	$	1,265
Long-term operating lease liability		1,466		2,486
Total Liabilities	$	2,753	$	3,751

Future minimum rental payments for office facilities and equipment under the Company’s noncancelable operating leases are as follows:


	Amount as of September 30, 2025
	(in thousands)
2025 (for remainder of year)	$	353
2026		1,401
2027		757
2028		259
2029		196
Thereafter		—
Total	$	2,966
Less: Imputed interest		(213	)
Present value of operating lease liabilities	$	2,753

The weighted average discount rate used to calculate the present value of future lease payments was 5.7%.

We recognize rent expense for these leases on a straight-line basis over the lease term. Rental expense for the three and nine months ended September 30, 2025 totaled $0.4 million and $1.2 million, respectively. Rental expense for the three and nine months ended September 30, 2024 totaled $0.4 million and $1.1 million, respectively.

Total cash paid for lease liabilities for the three and nine months ended September 30, 2025 totaled $0.4 million and $1.1 million, respectively. Total cash paid for lease liabilities for the three and nine months ended September 30, 2024 totaled $0.4 million and $1.1 million, respectively.

There were no new leases entered into during the three and nine months ended September 30, 2025 and 2024. New leases are considered non-cash transactions.

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Commitments and Contingencies

In the ordinary course of our business, the Company is involved in a number of lawsuits and administrative proceedings. While uncertainties are inherent in the final outcome of these matters, the Company’s management believes, after consultation with legal counsel, that the disposition of these proceedings should not have a material adverse effect on our financial position, results of operations or cash flows.

Employee Benefit Plan

The Company provides an Employee Retirement Savings Plan (the “Retirement Plan”) under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), that covers substantially all U.S. based salaried and W-2 hourly employees. Employees may contribute a percentage of eligible compensation to the Retirement Plan, subject to certain limits under the Code. The Company did not provide for any matching contributions for the three and nine months ended September 30, 2025 and 2024.

Stock-Based Compensation

In 2008, the Company adopted a Stock Incentive Plan. This stock incentive plan was amended and restated effective as of May 14, 2024 and further amended on May 14, 2025 (as amended from time to time, the “Plan”). The Plan provides that up to 6,200,000 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) shall be allocated for issuance to directors, officers, employees and consultants of the Company. Grants under the Plan may be made in the form of stock options, stock appreciation rights, performance share awards, restricted stock awards or stock awards.

On December 10, 2024, the Board approved and adopted the 2024 Inducement Stock Incentive Plan and reserved 1,500,000 shares of Common Stock for issuance of awards under the 2024 Inducement Stock Incentive Plan. The 2024 Inducement Stock Incentive Plan was approved and adopted without shareholder approval pursuant to NYSE American Guide Rule 711 and provided for grants of non-qualified stock options, restricted stock awards, stock awards, performance share awards and other stock-based awards (each, an “Inducement Award”). Effective May 14, 2025, the 2024 Inducement Stock Incentive Plan was terminated, which means that no further grants can be made under the 2024 Inducement Stock Incentive Plan but existing outstanding awards granted pursuant to this plan continue to be governed by the plan’s terms. The 2024 Inducement Stock Incentive Plan was established exclusively to grant equity awards to individuals who were not previously employees or directors of the Company, as an inducement to join the Company.

During the three months ended September 30, 2025, the Company granted zero restricted share units and 92,000 stock options at an average strike price of $7.28 under the Plan. During the three months ended September 30, 2024, the Company granted 10,518 restricted share units and no stock options under the Plan.

During the nine months ended September 30, 2025, the Company granted 22,140 restricted share units and 327,000 stock options at an average strike price of $7.45 under the Plan and 702,358 stock options at a strike price of $15.41 under the 2024 Inducement Stock Incentive Plan. During the nine months ended September 30, 2024, the Company granted 40,130 restricted share units and 525,000 stock options at an average strike price of $8.41 under the Plan. As of September 30, 2025 there were 975,000 shares of Common Stock available for grants under the Plan.

Stock-based compensation expense for the three months ended September 30, 2025 and 2024 was $729,000 and $542,000, respectively, and for the nine months ended September 30, 2025 and 2024 was $2.3 million and $1.6 million, respectively. Stock-based compensation expense is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

During the three and nine months ended September 30, 2025, the Company issued 82,520 and 122,451 shares, respectively, related to the grant of restricted share units and the exercise of stock options. During the three and nine months ended September 30, 2024, the Company issued 17,281 and 87,924 shares, respectively, related to the grant of restricted share units and the exercise of stock options.

In October 2018, the Board of Directors of the Company approved the Mastech Digital, Inc. 2019 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). The Employee Stock Purchase Plan is intended to meet the requirements of Section 423 of the Code and was approved by the Company’s shareholders to be qualified. On May 15, 2019, the Company’s shareholders approved the Employee Stock Purchase Plan. Under the Employee Stock Purchase Plan, 600,000 shares of Common Stock (subject to adjustment upon certain changes in the Company’s capitalization) are available for purchase by eligible employees who become participants in the Employee Stock Purchase Plan. The purchase price per share is 85% of the lesser of (i) the fair market value per

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share of Common Stock on the first day of the offering period, or (ii) the fair market value per share of Common Stock on the last day of the offering period.

The Company’s eligible full-time employees are able to contribute up to 15% of their base compensation into the Employee Stock Purchase Plan, subject to an annual limit of $25,000 per person. Employees are able to purchase Company Common Stock at a 15% discount to the lower of the fair market value of the Company’s Common Stock on the initial or final trading dates of each six-month offering period. Offering periods begin on January 1 and July 1 of each year. The Company uses the Black-Scholes option pricing model to determine the fair value of Employee Stock Purchase Plan share-based payments. The fair value of the six-month “look-back” option in the Company’s Employee Stock Purchase Plan is estimated by adding the fair value of 15% of one share of stock to 85% of the fair value of an option on one share of stock. The Company utilized U.S. Treasury yields as of the grant date for its risk-free interest rate assumption, matching the Treasury yield terms to the six-month offering period. The Company utilized historical company data to develop its dividend yield and expected volatility assumptions.

During the three months ended September 30, 2025 and 2024, there were no shares issued under the Employee Stock Purchase Plan. During the nine months ended September 30, 2025 and 2024, there were 11,483 shares and 21,329 shares issued under the Employee Stock Purchase Plan at a share price of $6.09 and $6.38, respectively. Stock-based compensation expense related to the Stock Purchase Plan for the three months ended September 30, 2025 and 2024 totaled $8,000 and $11,000, respectively. Stock-based compensation expense related to the Stock Purchase Plan for the nine months ended September 30, 2025 and 2024 totaled $50,000 and $65,000, respectively, and is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2025 and 2024. As of September 30, 2025, there were 420,576 shares available for purchases under the Employee Stock Purchase Plan.

Credit Facility

On July 13, 2017, the Company entered into a Credit Agreement (the “Credit Agreement”) with PNC Bank, as administrative agent, swing loan lender and issuing lender, PNC Capital Markets LLC, as sole lead arranger and sole book-runner, and certain financial institution parties thereto as lenders (the “Lenders”). The Credit Agreement, as amended, provides for a total aggregate commitment of $53.1 million, consisting of (i) a revolving credit facility (the “Revolver”) in an aggregate principal amount not to exceed $40 million and (ii) a $13.1 million term loan facility (the “Term Loan), as more fully described in Exhibit 10.1 to the Company’s Form 8-Ks filed with the SEC on July 19, 2017, April 25, 2018, October 7, 2020, Exhibit 10.2 to the Form 8-K/A filed with the SEC on January 4, 2022 and Exhibits 10.11 and 10.12 to the Company’s Form 10-K filed with the SEC on March 15, 2024. Additionally, the facility includes an accordion feature for additional borrowing of up to $20 million upon satisfaction of certain conditions.

The Revolver expires in December 2026 and includes swing loan and letter of credit sub-limits in the aggregate amount not to exceed $6.0 million for swing loans and $5.0 million for letters of credit. Borrowings under the Revolver may be denominated in U.S. dollars or Canadian dollars. The maximum borrowings in U.S. dollars may not exceed the sum of 85% of eligible U.S. accounts receivable and 60% of eligible U.S. unbilled receivables, less a reserve amount established by the administrative agent. The maximum borrowings in Canadian dollars may not exceed the lesser of (i) $10.0 million; and (ii) the sum of 85% of eligible Canadian receivables, plus 60% of eligible Canadian unbilled receivables, less a reserve amount established by the administrative agent.

Amounts borrowed under the Term Loan were required to be repaid in consecutive quarterly installments of $1.1 million through and including the maturity date of October 1, 2024. In August 2022, the Company prepaid $7.6 million of the outstanding term loan with excess cash balances. The final term loan payment of $1.1 million was made on January 3, 2023, taking the outstanding balance to zero.

Borrowings under the Revolver and the Term Loan, which may be made at the Company’s election, bear interest at either (a) the higher of PNC’s prime rate or the federal funds rate plus 0.50%, plus an applicable margin determined based upon the Company’s senior leverage ratio or (b) the Secured Overnight Financing Rate (“SOFR”), plus an applicable margin determined based upon the Company’s senior leverage ratio. The applicable margin on the base rate is between 0.50% and 1.25% on Revolver borrowings and between 1.75% and 2.50% on Term Loan borrowings. The applicable margin on the SOFR is between 1.50% and 2.25% on Revolver borrowings and between 2.75% and 3.50% on Term Loan borrowings. A 20 to 30-basis point per annum commitment fee on the unused portion of the Revolver is charged and due monthly in arrears. The applicable commitment fee is determined based upon the Company’s senior leverage ratio.

The Company pledged substantially all of its assets in support of the Credit Agreement. The Credit Agreement contains standard financial covenants, including, but not limited to, covenants related to the Company’s senior leverage ratio and fixed charge ratio (as defined under the Credit Agreement) and limitations on liens, indebtedness, guarantees, contingent liabilities, loans and investments,

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distributions, leases, asset sales, stock repurchases and mergers and acquisitions. As of September 30, 2025, the Company was in compliance with all applicable provisions of the Credit Agreement.

In connection with securing the commitments under the Credit Agreement and the April 20, 2018, October 1, 2020, December 29, 2021 and December 29, 2023 amendments to the Credit Agreement, the Company paid a commitment fee and incurred deferred financing costs totaling $1,039,000, which were capitalized and are being amortized as interest expense over the life of the Credit Facility. Deferred financing costs of $118,000 and $189,000 (net of amortization) as of September 30, 2025, and December 31, 2024, respectively, are presented as long-term assets in the Company’s Consolidated Balance Sheets.

As of September 30, 2025, and December 31, 2024, the Company’s outstanding borrowings under the Revolver totaled zero dollars; and unused borrowing capacity available was approximately $20.8 million and $22.5 million, respectively. There were no outstanding borrowings under the Term Loan at September 30, 2025, and December 31, 2024. On May 9, 2024, the Company issued two standby Letters of Credit for $162,000 each from PNC Bank to a Vietnam client to secure certain performance and advance payment guarantees made to the client on an existing fixed price Data and Analytics Services assignment. The letters of credit are scheduled to expire on March 21, 2026.

Income Taxes

The components of income (loss) before income taxes, as shown in the accompanying Financial Statements, consisted of the following for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025			2024
	(Amounts in thousands)
Income (loss) before income taxes:
Domestic	$	791	$	1,748	$	(2,213	)	$	2,047
Foreign		444		824		1,896			2,052
Income (loss) before income taxes	$	1,235	$	2,572	$	(317	)	$	4,099

The Company has foreign subsidiaries which generate revenues from non-U.S.-based clients. Additionally, these subsidiaries provide services to the Company’s U.S. operations.

The provision (benefit) for income taxes, as shown in the accompanying Financial Statements, consisted of the following for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025			2024		2025			2024
	(Amounts in thousands)
Current provision (benefit):
Federal	$	(179	)	$	351	$	(442	)	$	227
State		13			77		(35	)		64
Foreign		250			216		689			517
Total current provision (benefit)		84			644		212			808
Deferred provision (benefit):
Federal		245			44		(116	)		140
State		49			8		(18	)		27
Foreign		(90	)		1		(32	)		19
Total deferred provision (benefit)		204			53		(166	)		186
Change in valuation allowance		6			-		-			-
Total provision (benefit) for income taxes	$	294		$	697	$	46		$	994

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The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision (benefit) for income taxes for the three and nine months ended September 30, 2025 and 2024 were as follows (amounts in thousands):


	Three Months Ended September 30, 2025					Three Months Ended September 30, 2024
Income taxes computed at the federal statutory rate	$	259		21.0	%	$	540	21.0	%
State income taxes, net of federal tax benefit		64		5.2			120	4.6
Excess tax expense (benefit) from stock options/restricted shares		163		13.2			25	1.0
Worthless stock deduction		—		—			—	—
Difference in income tax rate on foreign earnings/other		(198	)	(16.1	)		12	0.5
Change in valuation allowance		6		0.5			—	—
	$	294		23.8	%	$	697	27.1	%


	Nine Months Ended September 30, 2025					Nine Months Ended September 30, 2024
Income taxes computed at the federal statutory rate	$	(67	)	(21.0	)%	$	861		21.0	%
State income taxes, net of federal tax benefit		(51	)	(16.1	)		101		2.5
Excess tax expense (benefit) from stock options/restricted shares		155		48.9			156		3.8
Worthless stock deduction		—		—			(248	)	(6.1	)
Difference in income tax rate on foreign earnings/other		9		2.7			124		3.0
Change in valuation allowance		—		—			—		—
	$	46		14.5	%	$	994		24.2	%

We evaluate deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted. GAAP accounting guidance requires us to assess whether valuation allowances should be established against deferred tax assets based on all available evidence, both positive and negative using a “more likely than not” standard. Our assessment considers, among other things, the nature of cumulative losses; forecast of future profitability; the duration of statutory carry-forward periods and tax planning alternatives. Our valuation allowance was comprised of net operating losses in Ireland and the United Kingdom and totaled $452,000 at both September 30, 2025, and December 31, 2024.

10.

Shareholders’ Equity

On February 8, 2023, the Company announced that the Board of Directors authorized a share repurchase program of up to 500,000 shares of the Company’s common stock over a two-year period. 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 (including Rule 10b5-1 programs), 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. 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.

During the three and nine months ended September 30,2025, the Company repurchased 192,112 and 208,623 shares of common stock at an average price of $7.68 and $7.62 per share, respectively under this program, including 138,500 shares of common stock through a block purchase at an average price of $7.64 per share. During the three months ended September 30, 2024, the Company did not purchase any shares under this program. During the nine months ended September 30, 2024, the Company repurchased 9,222 shares of common stock at an average price of $8.70 per share under this program. Common shares available for share repurchase under this program totaled 214,456 shares on September 30, 2025.

Additionally, the Company makes stock purchases from time to time to satisfy employee tax obligations related to its Stock Incentive Plan. The Company did not purchase any shares to satisfy employee tax obligations during the three and nine months ended September 30, 2025 and 2024.

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11.

Earnings (Loss) Per Share

The computation of basic earnings (loss) per share is based on the Company’s net income (loss) divided by the weighted average number of common shares outstanding. Diluted earnings (loss) per share reflect the potential dilution that could occur if outstanding stock options were exercised. The dilutive effect of stock options was calculated using the treasury stock method.

For the three months ended September 30, 2025, there were 2,330,000 anti-dilutive stock options excluded from the computation of diluted earnings per share. For the nine months ended September 30, 2025, all stock options and restricted shares were anti-dilutive and excluded from the computation of diluted (loss) per share. For the three and nine months ended September 30, 2024, there were 1,005,000 and 1,057,000 anti-dilutive stock options excluded from the computation of diluted earnings per share, respectively.

12.

Business Segments and Geographic Information

Our reporting segments are: 1) Data and Analytics Services; and 2) IT Staffing Services.

The Data and Analytics Services segment was acquired through the July 13, 2017, acquisition of the services division of Canada-based InfoTrellis, Inc. This segment is a project-based consulting services business with specialized capabilities in data management and analytics. The business is marketed as “Mastech InfoTrellis” and utilizes a dedicated sales team with deep subject matter expertise. Mastech InfoTrellis has offices in Toronto and London, and a global delivery center in Chennai, India. Project-based delivery reflects a combination of on-site resources and offshore resources. Assignments are secured on both a time and material and fixed price basis. In October 2020, we acquired AmberLeaf, a Chicago-based customer experience consulting firm. This acquisition expanded our capabilities in customer experience strategy and managed services offering for a variety of Cloud-based enterprise application across sales, marketing and customer service organizations.

The IT Staffing Services segment offers staffing services in digital and mainstream technologies, engineering services and uses digital methods to enhance organizational learning. These services are marketed using a common sales force and delivered via our domestic and global recruitment centers. While the vast majority of our assignments are based on time and materials, we do have the capabilities to deliver our digital transformation services on a fixed price basis. Below are the operating results of our reporting segments.

Mastech Digital, Inc. 10-Q