Mastech Digital reports $41.99 million revenue for Q3 2026

Cover page 3 changes

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For the quarterly period ended June September 30, 2026

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The number of shares of the registrant s Common Stock, par value $.01 per share, outstanding as of July 31, October 30, 2026 was 12,012,581 12,029,183 .

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FOR THE QUARTER ENDED June September 30, 2026

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Financial statements 16 changes

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Accounts receivable, net of allowance for credit losses of $ 269 245 in 2026 and $ 275 in 2025

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Common Stock, par value $ .01 ; 100,000,000 shares authorized and 14,052,048 shares issued as of June September 30, 2026 and 13,715,016 shares issued as of December 31, 2025

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Treasury stock, at cost; 2,022,864 shares as of June September 30, 2026 and 2,022,864 shares as of December 31, 2025 ( 7,131 ( 7,131

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Other comprehensive (loss), net of tax

Stock-based compensation expense

Stock options exercised (1)

Balances, September 30, 2026

(1) Represents proceeds received in August 2026 for stock options exercised in the second quarter of 2026. No stock options were exercised during the three months ended September 30, 2026.

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Other comprehensive (loss), net of tax

Stock-based compensation expense

Stock options exercised

Purchase of treasury stock

Balances, September 30, 2025

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Bad debt expense (recovery), net

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Loss on disposition of fixed assets

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Effect of exchange rate changes on cash and cash equivalents ( 650 768 ( 59 393

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Notes to the financial statements 1 change

June September 30, 2026 and 2025

Note 1: Description of Business and Basis of Presentation: 3 changes

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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, 2025, included in our Annual Report on Form 10-K filed with the SEC on March 18, 2026. Additionally, our operating results for the three and six nine months ended June September 30, 2026 , are not necessarily indicative of the results that can be expected for the year ending December 31, 2026 or for any other period.

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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

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, 2025, 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 six nine months ended June September 30, 2026 .

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Note 2: Revenue from Contracts with Customers 3 changes

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For the three months ended June September 30, 2026 , the Company had one client (Fidelity = 26.7 28.5 %) that exceeded 10 % of total revenues. For the six nine months ended June September 30, 2026 , the Company had one client (Fidelity = 25.6 26.6 %) that exceeded 10 % of total revenues.

For the three months ended June September 30, 2025 , the Company had three clients (Fidelity = 15 18.1 %, Populus = 12.4 12.7 % and CGI = 11 10.4 %) that each exceeded 10 % of total revenues. For the six nine months ended June September 30, 2025 , the Company had the same three clients (Fidelity = 14 15.4 %, Populus = 12.1 12.3 % and CGI = 11.5 11.1 %) that each exceeded 10 % of total revenues.

The Company s top ten clients represented approximately 61 62 % and 58 59 % of total revenues for the three months ended June September 30, 2026 and 2025, respectively. For the six nine months ended June September 30, 2026 and 2025 , the Company's top ten clients represented approximately 60 % and 58 % of total revenues, respectively.

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Note 3: Goodwill and Other Intangible Assets, net 4 changes

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A reconciliation of the beginning and ending amounts of goodwill by operating segment for the periods ended June September 30, 2026 and December 31, 2025 is as follows:

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 June September 30, 2026 and December 31, 2025:

As of September 30, 2026

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Amortization expense for the three and six nine months ended June September 30, 2026 , totaled $ 0.6 million and $ 1.2 1.8 million respectively, and is included in selling, general and administrative expenses in the Consolidated Statement of Operations. Amortization expense for the three and six nine months ended June September 30, 2025 , totaled $ 0.6 0.7 million and $ 1.3 1.9 million respectively, and is included in selling, general and administrative expenses in the Consolidated Statement of Operations.

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Note 4: Leases 7 changes

The Company rents certain office facilities under noncancelable operating leases. As of June September 30, 2026 , approximately 94,000 100,000 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 2.9 3.1 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 3.3 5.4 years with a weighted average of 2.1 3.3 years. Leases with an initial term of twelve months or less are not recorded on the balance sheet.

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On March 5, 2026, the Company entered into a lease agreement (the Lease ) with EPC-CW15, LLC (the Landlord ) for approximately 5,895 square feet of office space located at 3300 Olympus Boulevard, Suite 560 , Dallas, Texas 75019 (the Property ). The Lease is expected to commence on August 24, 2026 (or such later date as specified in the Lease) and has an initial term of five years following a five-month rent abatement period, unless earlier terminated in accordance with its terms. The Company has the option to renew the Lease for one additional five-year period.

The weighted average discount rate used to calculate the present value of future lease payments was 5.9 5.8 %.

We recognize rent expense for these leases on a straight-line basis over the lease term. Rental expense for the three and six nine months ended June September 30, 2026 totaled $ 0.5 million and $ 0.9 1.4 million respectively. Rental expense for the three and six nine months ended June September 30, 2025 totaled $ 0.4 million and $ 0.8 1.2 million respectively.

Cash paid for lease liabilities for the three and six nine months ended June September 30, 2026 totaled $ 0.5 0.2 million and $ 0.9 1.1 million, respectively. Total cash paid for lease liabilities for the three and six nine months ended June September 30, 2025 totaled $ 0.3 0.4 million and $ 0.7 1.1 million, respectively.

During the three and nine months ended September 30, 2026, the Company obtained right-of-use assets in exchange for operating lease liabilities of $ 1.0 million and $ 1.4 million, respectively, which were non-cash transactions. The three-month amount relates to the Company's new Dallas, Texas office lease for approximately 5,895 square feet of office space, which commenced in the third quarter of 2026. No right-of-use assets were obtained in exchange for lease liabilities during the three and nine months ended September 30, 2025.

The Company has begun evaluating options to exit its Pittsburgh, Pennsylvania office lease and to lease space in the area that better meets its current space needs. No decision has been made.

Note 6: Employee Benefit Plan 1 change

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 no t provide for any matching contributions for the three and six nine months ended June September 30, 2026 and 2025 .

Note 7: Stock-Based Compensation 12 changes

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 and May 13, 2026 (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, stock awards or restricted stock units. As of June September 30, 2026, 788,000 718,000 shares remained available for future grant under the Plan.

The following table summarizes the equity awards granted during the three and six nine months ended June September 30, 2026 and 2025:

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Of the restricted stock granted during the six nine months ended June September 30, 2026, , 100,314 shares vested immediately upon grant but are subject to transfer restrictions that prohibit disposition until March 30, 2028, subject to immediate lapse of any restriction due to (i) separation from the Company for any reason, (ii) death, or (iii) disability. Because these shares vested immediately, they did not result in additional stock-based compensation expense, but rather, they were issued in settlement of previously accrued cash compensation. The remaining restricted stock awards and the restricted stock units granted during in the period first and second quarters vest one year from the grant date. The 70,000 restricted stock units granted in the third quarter of 2026 vest in three equal annual installments beginning on the first anniversary of the grant date.

The following table summarizes stock-based compensation expense during the three and six nine months ended June September 30, 2026 and 2025:

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The following table summarizes shares of Common Stock issued pursuant to equity awards under the Plan during the three and six nine months ended June September 30, 2026 and 2025:

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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 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.

On February 16, 2026, the Company s Board of Directors approved the termination of the Stock Purchase Plan. The termination became effective on July 1, 2026. Accordingly, no new offering periods will commence after June 30, 2026, although shares relating to the offering period in progress as of the termination date will continue to be issued in accordance with the terms of the Employee Stock Purchase Plan.

During the three months ended June 30, 2026 and 2025 , there were 4,381 shares and 11,483 shares issued under the Employee Stock Purchase Plan at a share price of $ 5.69 and $ 6.09 , respectively. Sto ck-based compensation expense related to the Stock Purchase Plan for the three months ended June 30, 2026 and 2025 totaled $ 5,000 and $ 21,000 , respectively. Stock-based compensation expense related to the Stock Purchase Plan for the six months ended June 30, 2026 and 2025 , totaled $ 10,000 and $ 42,000 , respectively, and is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. As of June 30, 2026 , there were 412,564 shares available for purchases under the Employee Stock Purchase Plan.

Stock option exercises (1)

(1) Stock option proceeds of $30,000 reflected in the Condensed Consolidated Statements of Shareholders Equity for the three months ended September 30, 2026 relate to exercises that occurred in the second quarter of 2026. See the Condensed Consolidated Statements of Shareholders' Equity .

The Company s 2019 Employee Stock Purchase Plan (the ESPP ) was terminated by the Board of Directors on February 16, 2026, effective July 1, 2026, following completion of the offering period ended June 30, 2026. No further offering periods under the ESPP will commence. Under the ESPP, eligible employees could purchase common stock at a 15 % discount to the lower of the fair market value on the first or last day of each six-month offering period; the fair value of the purchase rights was estimated using the Black-Scholes option pricing model. During the nine months ended September 30, 2026 and 2025, 4,381 shares and 11,483 shares were issued under the ESPP at $ 5.69 and $ 6.09 per share, respectively. No shares were issued during the three months ended September 30, 2026 or 2025. ESPP-related stock-based compensation expense totaled zero dollars and $ 8,000 for the three months ended September 30, 2026 and 2025 , respectively, and $ 10,000 and $ 50,000 for the nine months ended September 30, 2026 and 2025, respectively, and is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Note 8: Credit Facility 4 changes

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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, distributions, leases, asset sales, stock repurchases and mergers and acquisitions. As of June September 30, 2026, 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 $ 47,000 24,000 and $ 95,000 (net (ne t of amortization) as of June September 30, 2026, and December 31, 2025, respectively, are presented as long-term assets in the Company s Consolidated Balance Sheets.

As of June September 30, 2026, and December 31, 2025 , the Company s outstanding borrowings under the Revolver totaled zero dollars; and unused borrowing capacity available was approximately $ 20.4 18.3 million and $ 22.2 19.9 million, respectively. There were no outstanding borrowings under the Term Loan at June September 30, 2026, and December 31, 2025. 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. As of March 21, 2026 the letters of credit expired without payment and will not be renewed.

The Company is currently in discussions with the lenders to extend the maturity of the Credit Agreement. While the extension has not been finalized as of the date of these financial statements, the Company expects the amendment process to be completed during the third fourth quarter of 2026.

Note 9: Income Taxes 7 changes

The components of income (loss) before taxes, as shown in the accompanying Financial Statements, consisted of the following for the three and six nine months ended June September 30, 2026 and 2025:

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The provision (benefit) for income taxes, as shown in the accompanying Financial Statements, consisted of the following for the three and six nine months ended June September 30, 2026 and 2025:

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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 six nine months ended June September 30, 2026 and 2025, were as follows (amounts in thousands):

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* The % for the Three months period ended June 30, 2026 is not comparable with June 30, 2025 on account of near break-even pre-tax loss during the three months period ended June 30, 2026.

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Change in valuation allowance

The effective tax rate for the three months ended June 30, 2026, was significantly greater than ( 100 )% due to non-deductible executive compensation and excess tax expense arising from stock-based compensation combined with a near break-even pre-tax loss.

As of June September 30, 2026 and June 30, December 31, 2025, the Company maintained a valuation allowance of approximately $ 452,000 435,000 against net operating losses in Ireland and the United Kingdom that may not be realized.

Note 10: Shareholders Equity 2 changes

On February 16, 2026, the Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $ 5.0 million of its outstanding common stock. Repurchases under the program may be made from time to time through privately negotiated transactions, block purchases, or other means, and the program may be modified, suspended, or terminated at any time at the discretion of the Board. The timing and amount of repurchases, if any, will depend on business, market, and economic conditions, as well as other factors. No repurchases were made under this program during the three and six nine months ended June September 30, 2026.

Additionally, the Company may repurchase shares from time to time to satisfy employee tax withholding obligations related to its Stock Incentive Plan. The Company did no t repurchase any shares for this purpose during the three and six nine months ended June September 30, 2026.

Note 12: Business Segments and Geographic Information 1 change

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(1) Gross margin difference between the supplemental segment and consolidated results primarily reflects non-allocated severance expense of $ 0.1 million and $ 0.3 million recorded in cost of goods sold during the third quarter of 2026 and 2025 respectively.

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MD&A 53 changes

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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, 2025 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 six nine months ended June September 30, 2026.

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Company s top ten clients represented approximately 61% and 58% of total revenues for the three months ended June 30, 2026 and 2025, respectively.

Results of Operations for the Three Months Ended June September 30, 2026 as Compared to the Three Months Ended June September 30, 2025:

Revenues for the three months ended June September 30, 2026 totaled $41.4 $42.0 million, compared to $49.1 $48.5 million for the corresponding three-month period in 2025. This 15.6% 13.4% year-over-year revenue decrease reflected a 16.2% 16.4% revenue decrease in our Talent segment and a 14.3% 6.8% decline in our Data & AI segment. For the three months ended June September 30, 2026, the Company had one client that had revenues in excess of 10% of total revenues (Fidelity 26.7%). 28.5%). For the three months ended June September 30, 2025, the Company had three clients that each had revenues in excess of 10% of total revenues (Fidelity = 15.0%, 18.1%, Populus = 12.4% 12.7% and CGI = 11.0%). 10.4%). The Company s top ten clients represented approximately 62% and 59% of total revenues for the three months ended September 30, 2026 and 2025, respectively.

Below is a tabular presentation of revenues by reportable segment for the three months ended June September 30, 2026 and 2025, respectively:

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Revenues from our Data & AI segment totaled $13.5 million in the three months ended June 30, 2026, which decreased compared to $15.7 million in the corresponding period last year. The year-over-year decrease in revenues primarily reflects lower bookings during the second half of 2025, which resulted in a smaller pipeline of revenue generating engagements entering 2026. New bookings in the second quarter of 2026 totaled approximately $13.6 million, compared to bookings of $9.0 million in the second quarter of 2025, reflecting stronger demand for Data & AI services.

Gross profits in the second quarter of 2026 totaled $12.0 million, which was $1.8 million lower than the second quarter of 2025 gross profits. Gross profit as a percentage of revenue increased 90-basis points to 29.0% for the three-month period ended June 30, 2026, compared to 28.1% during the same period of 2025, driven by higher margins in both the Talent and Data & AI segments.

Gross margins from our Data & AI segment were 40.4% of revenues during the second quarter of 2026, which represented an increase of 140-basis points compared to 39.0% of revenues during the second quarter of 2025. The increase primarily reflected the one-time recognition of previously deferred revenue associated with the completion of a project milestone.

Revenues from our Data & AI segment totaled $14.1 million in the three months ended September 30, 2026, which decreased compared to $15.2 million in the corresponding period last year. The decrease in Data & AI revenues primarily reflects lower time-and-material and staff augmentation engagement volumes compared to the prior-year period, partially offset by increased revenue from fixed-price projects. While bookings have increased during 2026, the associated revenue contribution from recently awarded projects has not yet fully offset the decline in revenue from existing engagements. New bookings in the third quarter of 2026 totaled approximately $10.8 million, compared to bookings of $8.4 million in the third quarter of 2025, reflecting stronger demand for Data & AI services.

Revenues from our Talent segment totaled $28.0 $27.9 million in the three months ended June September 30, 2026, compared to $33.4 $33.3 million during the corresponding 2025 period. The year-over-year decline in revenue primarily reflects lower billable consultants in 2026. Billable consultants at June September 30, 2026 totaled 594-consultants 580-consultants compared to 764-consultants 734-consultants one year earlier. Our average bill rate during the second third quarter of 2026 was $92.17 $92.37 per hour compared to $88.36 $89.65 per hour in the corresponding 2025 quarter. The increase in average bill rate was due to higher value assignments during the second third quarter of 2026 and was reflective of the types of skill sets that we deployed to clients.

Gross profit for the third quarter of 2026 totaled $12.0 million, a decrease of $1.4 million compared to the third quarter of 2025. Gross margin was 28.7% in the third quarter of 2026 compared to 27.8% in the corresponding 2025 period. Excluding severance expenses of $0.1 million and $0.3 million in the third quarters of 2026 and 2025, respectively, gross margin increased 70 basis points to 29.0% from 28.3%. This increase was driven by higher gross margins in both the Talent and Data & AI segments.

Below is a tabular presentation of gross margin by reporting segment for the three months ended June September 30, 2026 and 2025, respectively:

Gross Margin (excludes severance expense)

Gross margins from our Data & AI segment were 40.5% of revenues during the third quarter of 2026, which represented an increase of 50-basis points compared to 40.0% of revenues during the third quarter of 2025. The increase primarily reflected normal fluctuations in project mix and engagement profitability. Including severance expenses of $0.1 million and $0.3 million in the third quarters of 2026 and 2025, respectively, gross margin for the segment increased to 39.7% in 2026 from 38.3% in 2025.

Gross margins from our Talent segment were 23.4% 23.1% in the second third quarter of 2026 compared to 23.0% during the corresponding quarter of 2025. This 40-basis 10-basis point increase was due to higher quality placements and better pricing on new assignments in 2026.

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Below is a tabular presentation of operating expenses by expense category for the three months ended June September 30, 2026 and 2025, respectively:

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Amortization of acquired intangible assets remained consistent with the prior-year period at $0.6 million.

SG&A expenses for the three months ended June September 30, 2026, totaled $12.3 $12.0 million or 29.7% 28.6% of total revenues, compared to $13.8 $12.6 million or 28.1% 26.0% of total revenues for the three months ended June September 30, 2025. When excluding the amortization of acquired intangible assets in 2026 both periods and the amortization of acquired intangible assets, severance expense and finance and accounting transition expense in 2025, SG&A expense as a percentage of total revenues was 28.3% 27.1% and 24.8%, 21.0%, respectively.

Fluctuations within SG&A expense components during the second third quarter of 2026, compared to the second third quarter of 2025, included the following:

Sales and marketing expense decreased by $0.8 million was flat from the corresponding 2025 period. Sales and marketing expense in our Data & AI segment increased by $0.2 $0.4 million, primarily reflecting higher payroll and related costs, as well as an increase in marketing travel costs. Sales and marketing expense in our Talent segment decreased by $1.0 $0.4 million, primarily due to lower payroll and related costs. and reduced marketing expenditures.

Operations expenses increased by $0.3 $0.5 million in the 2026 period compared to the corresponding 2025 period. Operations expense increased by $0.5 $0.8 million in our Data & AI segment due to AI-related personnel investments and decreased by $0.2 $0.3 million in our Talent segment due to lower payroll and related costs. partially offset by higher legal expense.

General and administrative expenses decreased increased by $0.1 $0.7 million in the 2026 period compared to the corresponding 2025 period. General and administrative expenses in the Data & AI segment remained were unchanged compared with the prior-year period. General and administrative expense expenses in the Talent segment decreased increased by $0.1 $0.7 million, primarily reflecting lower consulting $0.5 million in higher salary and related costs, and an increase in both legal expenses and facilities costs.

Amortization of acquired intangible assets decreased slightly to $0.6 million, as some intangibles became fully amortized.

Finance and accounting transition expense was $0.7 $0.9 million and severance expense was $0.2 $0.8 million in the 2025 period, compared to no significant expense in the second third quarter of 2026. These costs related to the Company's transition of its finance and accounting function to India and consisted primarily of severance, duplicate personnel costs during the transition period, and travel associated with training and knowledge transfer.

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Income tax expense for the three months ended June 30, 2026, totaled $98,000, compared with income tax expense of $75,000 for the three months ended June 30, 2025. The 2026 effective tax rate was significantly greater than (100%) due to non-deductible executive compensation and excess tax expense arising from stock-based compensation, combined with a near break-even pre-tax loss. By comparison, the effective tax rate for the three months ended June 30, 2025 was 35.7%.

Other Income / (Expense) for the three months ended June September 30, 2026, consisted of interest income of $260,000 $266,000 and foreign exchange gains losses of $63,000. ($29,000). For the three months ended June September 30, 2025, Other Income / (Expense) consisted of interest income of $190,000 $266,000 and foreign exchange losses of ($7,000). The higher level gains of interest income primarily reflected higher average cash balances during the current-year period. $149,000.

Income tax expense for the three months ended September 30, 2026, totaled $243,000, representing an effective tax rate on pre-tax income of 97.2%, compared with income tax expense of $294,000 for the three months ended September 30, 2025, which represented an effective tax rate on pre-tax income of 23.8%. The 2026 effective tax rate was significantly higher than the statutory rate, primarily due to non-deductible executive compensation, foreign and other items, and state taxes, applied to near break-even pre-tax income of $250,000.

Results of Operations for the Six Nine Months Ended June September 30, 2026 as Compared to the Six Nine Months Ended June September 30, 2025:

Revenues for the six nine months ended June September 30, 2026 totaled $82.5 $124.5 million, compared to $97.4 $145.9 million for the corresponding six-month nine-month period in 2025. This 15.3% 14.7% year-over-year revenue decrease reflected a 14.0% 14.8% revenue decrease in our Talent segment and a 17.9% 14.3% decline in our Data & AI segment. For the six nine months ended June September 30, 2026 the Company had one client that had revenues in excess of 10% of total revenues (Fidelity 25.6%). 26.6%). For the six nine months ended June September 30, 2025, the Company had three clients that each had revenues in excess of 10% of total revenues (Fidelity = 14.0%, 15.4%, Populus = 12.1% 12.3% and CGI = 11.5%). 11.1%). The Company s top ten clients represented approximately 60% and 58% of total revenues for the six nine months ended June September 30, 2026 and 2025, respectively.

Below is a tabular presentation of revenues by reportable segment for the six nine months ended June September 30, 2026 and 2025, respectively:

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Gross profits in the six months ended June 30, 2026 totaled $23.0 million compared to $26.7 million in the corresponding period last year. Gross profit as a percentage of revenue was 27.9% for the six months ended June 30, 2026, compared to 27.4% during the same period of 2025. This 50-basis point increase in gross margins was driven by higher margins in both the Talent and Data & AI segments.

Revenues from our Data & AI segment totaled $26.1 $40.2 million for the six nine months ended June September 30, 2026, which decreased compared to $31.7 $46.9 million in the corresponding period in 2025. The year-over-year decrease in Data & AI revenues primarily reflects lower bookings during the second half of 2025, which resulted in a smaller pipeline of revenue-generating engagements time-and-material and staff augmentation engagement volumes entering 2026, partially offset by higher fixed-price revenue in the third quarter. As newer projects ramp up, the year-over-year revenue decline has moderated in recent quarters. Order bookings for the first six nine months of 2026 totaled approximately $27.2 $38.0 million, compared with $24.3 $32.7 million for the corresponding period in 2025, reflecting stronger demand for Data & AI services.

Revenues from our Talent segment totaled $56.5 $84.3 million in the six nine months ended June September 30, 2026, compared to $65.7 $99.0 million during the corresponding 2025 period. The year-over-year decline in revenue primarily reflects lower billable consultants in 2026. Billable consultants at June September 30, 2026 totaled 594-consultants 580-consultants compared to 764-consultants 734-consultants one year earlier.

Gross profits in the nine months ended September 30, 2026 totaled $35.1 million compared to $40.2 million in the corresponding period last year. Gross profit as a percentage of revenue was 28.2% for the nine months ended September 30, 2026, compared to 27.5% during the same period of 2025. Excluding severance expenses of $0.1 million and $0.3 million for the nine months ended September 30, 2026 and 2025, respectively, gross margin increased 60 basis points to 28.3% from 27.7%.

Below is a tabular presentation of gross margin by reporting segment for the six nine months ended June September 30, 2026 and 2025, respectively:

Gross Margin (excludes severance expense)

Gross margins from our Data & AI segment were 38.9% 39.4% of revenues during the six nine months ended June September 30, 2026, which represented an increase of 50-basis points compared to 38.4% 38.9% of revenues during the corresponding period of 2025. The increase primarily reflected normal fluctuations in project mix and engagement profitability. Including severance expenses of $0.1 million and $0.3 million for the nine months ended September 30, 2026 and 2025, respectively, gross margin for the segment increased to 39.2% in 2026 from 38.3% in 2025.

Gross margins from our Talent segment were 22.8% 22.9% in the six nine months ended June September 30, 2026, compared to 22.1% 22.4% during the corresponding period of 2025. This 70-basis 50-basis point increase was due to higher quality placements and better pricing on new assignments in 2026.

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Below is a tabular presentation of operating expenses by expense category for the six nine months ended June September 30, 2026 and 2025, respectively:

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SG&A expenses for the six nine months ended June September 30, 2026, totaled $23.3 $35.3 million or 28.2% 28.4% of total revenues, compared to $28.5 $41.2 million or 29.3% 28.2% of total revenues for the six nine months ended June September 30, 2025. When excluding the amortization of acquired intangible assets in 2026 both periods and the amortization of acquired intangible assets, severance expense and finance and accounting transition expense in 2025, SG&A expense as a percentage of total revenues was 26.8% 26.9% and 25.6%, 24.1%, respectively.

Fluctuations within SG&A expense components during the first six nine months of 2026, compared to the first six nine months of 2025, included the following:

Sales and marketing expense was $2.2 million lower in the 2026 period compared to the corresponding 2025 period. Sales and marketing expense in our Data & AI segment decreased increased by $0.3 $0.1 million, primarily due to lower payroll and related marketing costs, partially offset by higher marketing lower payroll and consulting costs. related expense. Sales and marketing expense in our Talent segment decreased by $1.9 $2.3 million, resulting from lower payroll and related costs, as well as reduced marketing spend.

Operations expenses decreased increased by $0.1 $0.3 million in the 2026 period compared to the corresponding 2025 period. Operations expense in the Data & AI segment increased by $0.8 $1.6 million, primarily due to AI-related personnel investments. Operations expense in the Talent segment decreased by $0.9 $1.3 million, primarily due to workforce reductions. partially offset by higher legal expenses.

General and administrative expenses decreased increased by $0.5 $0.2 million in the 2026 period compared to the corresponding 2025 period. General and administrative expenses in our Data & AI segment decreased by $0.4 $0.5 million primarily due to lower recruiting costs payroll and the absence of bad debt expense incurred in the prior-year period. related costs, partially offset by higher facility costs. In our Talent segment, general and administrative expenses decreased increased by $0.1 $0.7 million as a result of several individually immaterial items. primarily due to payroll and related costs.

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SG&A included severance expense and finance and accounting transition expense of $1.6 $2.5 million and $0.7 $1.6 million in the 2025 period, respectively, compared to no similar significant expenses in the 2026 period. The expenses related to the departure of the Company's former Chief Financial Officer and Talent segment Sales Management, and the Company's transition of its finance and accounting function to India which consisted primarily of severance, duplicate personnel costs during the transition period, and travel associated with training and knowledge transfer.

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Other Income / (Expense) for the six nine months ended June September 30, 2026, consisted of interest income of $548,000 $814,000 and foreign exchange gains of $381,000. $352,000. For the six nine months ended June September 30, 2025, Other Income / (Expense) consisted of interest income of $305,000 $571,000 and foreign exchange losses gains of ($31,000). $118,000. The higher level of interest income primarily reflected higher average cash balances during the current six nine month period.

Income tax expense for the six nine months ended June September 30, 2026, totaled $491,000, $734,000, representing an effective tax rate on pre-tax income of 75.0%, 81.1%, compared to an income tax benefit expense of ($248,000) $46,000 for the six nine months ended June September 30, 2025, which represented an effective tax rate on a pre-tax loss of (16.0%). (14.5%). The higher effective tax rate in the 2026 period primarily reflected non-deductible executive compensation, and unfavorable tax effects associated with stock-based compensation and foreign and other items, and state taxes.

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As of June September 30, 2026, we had no bank debt, cash balances on hand of $35.6 $37.9 million and approximately $20.4 $18.3 million of borrowing capacity under our existing credit facility.

Historically, we have funded our organic business needs with cash generated from operating activities. Controlling our operating working capital levels by closely managing our accounts receivable balance is an important element of cash generation. As of June September 30, 2026, our accounts receivable days sales outstanding ( DSOs ) increased to 61-days, 56-days, compared to 53-days 55-days reported at June September 30, 2025.

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Cash (used in) provided by operating activities for the six nine months ended June September 30, 2026, totaled ($0.9) $1.7 million compared to $0.4 $6.8 million provided by operating activities during the six nine months ended June September 30, 2025. Operating cash flows for the 2026 period were driven by net income of $0.2 million, non-cash charges of $4.2 $6.0 million, and a ($5.3) ($4.5) million use of cash from changes in operating working capital. The use of cash from working capital was primarily attributable to a decrease in accrued payroll and related costs, reflecting the timing of annual bonus payments, as well as an increase in accounts receivable, prepaid and other current assets, and to a lesser extent decreases in accounts payable and other accrued liabilities. and an increase These uses of cash were partially offset by a decrease in prepaid and other current assets accounts receivable.

In the prior year period, cash provided by operating activities reflected a net loss of ($1.3) ($0.4) million, non-cash charges of $3.3 $5.2 million, and and a ($1.7) $1.9 million use source of cash from changes in operating working capital, primarily attributable to a decrease in accounts payable receivable and an increase in accrued payroll and related costs, partially offset by a decrease in accounts receivable payable and an increase in prepaid and other current assets. and an increase in other accrued liabilities.

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Cash (used in) investing activities was ($0.1) million and ($0.2) ($0.4) million in both the six nine months ended June September 30, 2026 and 2025. Investing activities in both periods consisted primarily of capital expenditures and changes in non-current deposits.

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Cash provided by financing activities for the six nine months ended June September 30, 2026 totaled $0.8 million and consisted primarily of proceeds from the exercise of stock options of $0.8 million, and a small amount from the issuance of common shares related to our Employee Stock Purchase Plan. Cash provided by used in financing activities for the six nine months ended June September 30, 2025, totaled $0.1 ($1.0) million and consisted primarily of treasury stock purchases of ($1.6) million, partially offset by proceeds from the exercise of stock options of $0.5 million and the issuance of common shares related to our Employee Stock Purchase Plan. partially offset by a small purchase of treasury shares.

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Market risk 2 changes

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As of June September 30, 2026, we had no outstanding borrowings under the Credit Agreements Refer to Note 8 Credit Facility in the Notes to Condensed Consolidated Financial Statements, included herein.

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The reporting currency of the Company and its subsidiaries is the U.S. dollar. The functional currency of the Company s subsidiary in Canada is the U.S. dollar because the majority of its revenue is denominated in U.S. dollars. The functional currencies of the Company s Indian and European subsidiaries are the local currency of the location of such subsidiary. The results of operations of the Company s Indian and European subsidiaries are translated at the monthly average exchange rates prevailing during the period. The financial position of the Company s Indian and European subsidiaries is translated at the current exchange rates at the end of the period, and the related translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within Shareholders Equity. Gains and losses resulting from foreign currency transactions are included as a component of other income (expense), net in the Condensed Consolidated Statements of Operations, and have not been material for all periods presented. A hypothetical 10% increase or decrease in overall foreign currency rates in the first six nine months of 2026 would not have had a material impact on our consolidated financial statements.

Controls and procedures 1 change

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There were no changes in the Company s internal control over financial reporting during the quarter ended June September 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Unregistered sales of stock 9 changes

April 1, 2026 April 30, 2026

May 1, 2026 May 31, 2026

June 1, 2026 June 30, 2026

A summary of our Common Stock repurchased during the quarter ended June September 30, 2026 is set forth in the following table:

July 1, 2026 July 31, 2026

August 1, 2026 August 31, 2026

September 1, 2026 September 30, 2026

(1) 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. 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. The authorization became effective on February 16, 2026. The Company did not repurchase any shares of its Common Stock during the quarter ended June September 30, 2026. As of June September 30, 2026, $5.0 million remained available for repurchase under the program.

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During the fiscal quarter ended June September 30, 2026, none of our directors or officers (as defined in Exchange Act Rule 16a-1(f)) informed us of the adoption , modification or termination of a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as those terms are defined in Regulation S-K, Item 408.

Exhibits 4 changes

Second Amendment to Mastech Digital, Inc. Stock Incentive Plan (as Amended and Restated Bylaws of Mastech Digital, Inc., effective August 5, 2026, incorporated by reference to Exhibit 10.1 3.1 of the Company s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 18, August 6, 2026.

Restricted Stock Unit Agreement between Mastech Digital, Inc. and Nirav Patel, dated August 1, 2026, incorporated by reference to Exhibit 10.1 of the Company s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 6, 2026.

Restricted Stock Unit Agreement between Mastech Digital, Inc. and Kannan Sugantharaman, dated August 10, 2026, incorporated by reference to Exhibit 10.1 of the Company s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 14, 2026.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 6th 30th day of August, October, 2026.

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