Mastech Digital, Inc

And welcome to the MadTech Digital second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jenna Lacey, Manager of White Rule Affairs. Thank you. You may begin.

Thank you, Operator, and welcome to MagTech Digital's second quarter 2025 conference call. If you have not yet received a copy of our earnings announcement, it can be obtained from our website at www.magtechdigital.com. With me on the call today are Neera Patel, MagTech Digital's Chief Executive Officer, and Connors Disenvironment, our Chief Financial Operations Officer. I would like to remind everyone that statements made during this call that are not historical facts are forward-looking statements. These forward-looking statements include our financial growth and liquidity projections, as well as statements about our plans, strategies, intentions, and beliefs concerning the business, cash flows, costs, and the markets in which we operate. Without limiting the foregoing, the words beliefs, anticipate, plan, expect, and similar expressions are intended to identify certain forward-looking statements. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements, including those listed in the company's 2024 annual report on Form 10-K, Bob was a Securities and Exchange Commission and available on its website at www.sbc.gov. Additionally, management has elected to provide certain non-GAAP financial measures to supplement our financial results presented on a GAAP basis. Specifically, we will provide non-GAAP net income and non-GAAP diluted earnings for share data which we believe will provide greater transparency with respect to the key metrics used by management in operating business. Reconciliations of these non-GAAP financial measures to the comparable GAAP measures are included in our earnings announcement, which can be obtained from our website at www.masstechdigital.com. As a reminder, we will not be providing guidance during this call, nor will we provide guidance in any subsequent one-on-one meetings called. I will now turn the call over to Rob for his comments.

Thanks, Jenna, and good morning, everyone. We entered the second quarter in a market that remained cautious but are now beginning to see early signs of stabilization, particularly in North America, where trade-related uncertainties appear to have become the new normal. Across industries, we are seeing clients continue to remain cautious, prioritizing investments, that deliver clear business value while managing budgets prudently. Hiring decisions and project commitments also remain measured. Against an uncertain macroeconomic environment, I am pleased with our performance in the first half of the year, masked by continued year-over-year growth across both our IT staffing and data and analytics business segments. We believe this performance demonstrates the strength of our portfolio and our disciplined execution. In our IT staffing services segment, we saw steady demand for high-value work as clients focused on flexible cost-efficient and value-generating workforce strategies. While activity levels were lower than the prior year, we are seeing encouraging signs as macroeconomic conditions improve. I am particularly pleased with our gross margin performance, We achieved our highest growth margin to date in second quarter through our focus on revenue quality, particularly among our financial services clients. Our data and analytics services segment also showed positive year-over-year growth, while our bookings came in lower than expected, driven primarily by slower decisions on capital programs by our top customers. Beyond our financial performance, we have made good progress this quarter on our strategic initiatives and have been methodical in preparing the organization for internal alignment and execution readiness. As part of this process, we have mobilized teams and started organizing our structure to help position the company for the future. We have also focused on driving initiatives designed to unlock efficiency across the organization, starting with the recent transition of our finance and accounting function to India. We believe this implementation of our strategic initiatives will energize our teams, deepen fine relationships, and reinforce our position as a trusted partner for enterprises navigating an AI-first world. In summary, we believe we delivered a solid quarter in a measured and cautious market, demonstrating the resilience of our business and the relevance of our offerings. We remain focused on executing against our priorities and preparing the companies to seize future opportunities. I would like to thank our employees, clients and partners for their continued trust and support as we move forward with the implementation of our new strategic initiatives. With that, I will hand it over to Kannan for a deeper look at the quarter's results. Thank you and good morning everyone. Our second quarter results reflect disciplined execution in a cautious but stabilizing market Here to date, we have delivered revenue growth across both segments. IT staffing services remain stable on a year-on-year basis, supported by continued demand for high-value, flexible workforce solutions. In our data and analytics services segment, we saw a modest decline this year, consistent with the more measured decisions on capital programs that Nirav highlighted earlier. Order booking in our data and analytics segments were lower, reflecting the slower decision-making environment. We remain confident in our ability to deliver value as we move forward with implementing our strategic initiatives. Consolidated revenue during the second quarter of 2025 totaled 49.1 million, a year-over-year decrease of 0.9% compared to the corresponding quarter of 2024. Our data and analytic services segment reported revenue of 8.6 million in Q2 of 2025, which was 3.2% lower than Q2 2024. Additionally, second quarter 2025 order booking totaled 5.8 million, which was below last year's Q2 performance of 9.2 million. Second quarter 2025 revenue in our IT staffing services segment totaled 40.5 million or 0.4% lower than revenue achieved during the second quarter of 2024. Our focus on revenue quality resulted in higher bill rates and higher growth margins in this segment, though our billable consultant base declined by 11 consultants. Consolidated gross profit dollars decreased by 1.1% in Q1 of 2025 compared to the corresponding quarter of 2024. Consolidated gross margins dropped by 7 basis points over the second quarter of 2024, largely driven by the disease in our data and analytics services segment. Gap net income for the second quarter of 2025 totaled 0.1 million or 1 cent per diluted shack. compared to a net income of 1.4 million or 12 cents per diluted share in the second quarter of 2024. Non-GAAP net income for Q2 2025 was 1.8 million or 15 cents per diluted share compared to 2.2 million or 19 cents per diluted share in 2024 second quarter. However, our Q2 2025 performance was an improvement from Q1 2025. where non-GAAP net income was 0.8 million or 6 pence per diameter. As G&A expense items not included in non-GAAP financial measures, net of tax benefits are detailed in our second quarter 2025 earnings release for all periods presented which are available on our website. On the financial position during the second quarter of 2025, Our liquidity and overall financial position remains solid. On June 30, 2025, we had 27.9 million cash balance on hand, low bank debt outstanding, and cash availability of 22.2 million under our revolving credit facility. Our DHA's outstanding measurement on June 30, 2025, totaled to 53 days, which is well within our target range. and in line with ideas of measurement a year ago. Operator, this concludes our prepared remarks. You can take questions now.