Q4 2023 Mastech Digital Inc Earnings Call
Greetings and welcome to the Mastech Digital Inc. Fourth quarter 2023 earnings Conference call.
Operator: Greetings, and welcome to the Mastech Digital, Inc. fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.
At this time all participants are in a listen only mode.
Operator: 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, Jennifer Ford Lacy, Manager of Legal Affairs for Mastech Digital. Thank you. You may begin.
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 Jennifer Ford Lacey manager of legal affairs for Mastech digital. Thank you you may begin.
Thank you operator, and welcome to Mastech Digital's first fourth quarter 2023 earnings Conference call. If you have not yet received a copy of our earnings announcement. It can be obtained on our website at www Dot Mastech digital dot com.
Jennifer Ford Lacy: Thank you, Operator, and welcome to Mastech Digital's fourth quarter 2023 earnings conference call. If you have not yet received a copy of our earnings announcement, it can be obtained on our website at www.mastechdigital.com. With me on the call today are Vivek Gupta, Mastech Digital's Chief Executive Officer, and Jack Cronin, our Chief Financial Officer.
With me on the call today are Vivek Gupta, Mastech Digital's, Chief Executive Officer, and Jack Cronin, our Chief Financial Officer.
Jennifer Ford Lacy: 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 believes, anticipates, plans, expects, and similar expressions are intended to identify certain forward-looking
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 offer.
Without limiting the foregoing the words believes anticipates plans expects 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.
Jennifer Ford Lacy: 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 2022 Annual Report on Form 10-K, filed with the Securities and Exchange Commission and available on its website at www.sec.gov. Additionally, management has elected to provide certain non-GAAP financial measures to supplement our financial results presented on a GAAP basis.
There are risks and uncertainties that could cause actual events to differ differ materially from these forward looking statements, including those listed in the company's 2022 annual report on Form 10-K filed with the Securities and Exchange Commission and available on its website at Www Dot SEC Dot Gov.
Additionally, management has elected to provide certain non-GAAP financial measures to supplement our financial reserve results presented on a GAAP basis.
Jennifer Ford Lacy: Specifically, we will provide non-GAAP net income and non-GAAP diluted earnings per share data, which we believe will provide greater transparency with respect to key metrics used by management in operating the business. Reconciliations of these non-GAAP financial measures to their comparable GAAP measures are included in our earnings announcement, which can be obtained from our website at www.mastechdigital.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 or calls. I will now turn the call over to Jack for a review of our fourth quarter and full year 2023 results. Thanks, Jen, and good morning, everyone.
Specifically, we will provide non-GAAP net income and non-GAAP diluted earnings per share data, which we believe will provide greater transparency with respect to key metrics used by management in operating the business reconciliations of these non-GAAP financial measures to their comparable GAAP measures are included in our earnings announcement, which can be obtained.
From our website at Www Dot Mastech digital Dot 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 or calls.
I will now turn the call over to Jack for a review of our fourth quarter and full year 2023 results.
Thanks, Jen and good morning, everyone. Our fourth quarter of 2023 financial results were impacted by economic uncertainty and our current and prospective clients responses to it.
Jack Cronin: Our fourth quarter of 2023 financial results were impacted by economic uncertainty and our current and prospective clients' responses to these challenging market conditions. Fourth quarter revenues totaled $46.1 million, representing a 20% year-over-year revenue decline. Both of our business segments contributed to this decline. Our data and analytics services segment reported revenues of $8.2 million in Q4 2023 compared to $9.1 million in the 2022 fourth quarter, as customers continue to reduce resources on existing projects, albeit at a lower rate in Q4 when compared to Q2 and Q3. Also, in Q4, order bookings totaled $19 million, which was one of our best performances since we acquired the data and analytics services segment. Accordingly, we achieved a modest pickup in revenues on a sequential basis during the third quarter of 2023.
These challenging market conditions.
Fourth quarter revenues totaled $46 $1 million, representing a 20% year over year revenue decline.
Both of our business segments contributed to this decline.
Our data and analytics services segment reported revenues of $8 $2 million in Q4, 2023 compared to $9 $1 million into 2022 fourth quarter as customers continued to reduce resources.
Existing projects, albeit at a lower rate in Q4, when compared to Q2 and Q3 of 2023.
Also Q4.
Order bookings totaled $19 million, which was one of our best performances since we acquired the data and analytics services segment.
Accordingly, we achieved a modest pickup.
In revenues on a sequential basis over the third quarter of 2023.
Jack Cronin: Fourth quarter 2023 revenues in our IT staffing services segment totaled $37.9 million compared to $48.1 million in the fourth quarter of 2022. During the quarter, our billable consultant base declined, again, at a slower rate when compared to Q2 and Q3 of 2023 and in a quarter where consultant headcount declines are the norm in the industry as clients historically seek to complete existing projects and resources prior to the start of the new year.
Fourth quarter 2023 revenues in our it staffing services segment totaled $37 $9 million compared to $48 $1 million in the fourth quarter of 2022.
During the quarter, our billable consultant base declined again at a slower rate when compared to Q2, and Q3 of 2023 and in a quarter, where consultant head count declines are the norm in the industry as clients historically seek.
The complete existing projects.
And resources prior to the start of the new year.
Yes.
Consolidated gross profit as a percent of revenues in Q4, 2023 totaled 24, 6% compared to 24, 8% in Q4 2022.
Jack Cronin: Consolidated gross profits as a percent of revenues in Q4 2023 totaled 24.6% compared to 24.8% in Q4 2022. In our data and analytics services segment, gross margins improved materially to 44.7% compared to 37% in the fourth quarter of 2022. This improvement reflects higher utilization in the 2023 quarter and reduced margins on several significant assignments in the fourth quarter of 2022. In our IT Staffing Services segment, gross margins were down compared to Q4 of 2022, largely due to a year-over-year reduction in direct higher revenues and unusually high medical claim expenses related to our self-insured healthcare program. Gap net income for Q4 2023 totaled a loss of $5.4 million, or negative $0.46 per diluted share, compared to a profit of $1.5 million or $0.13 per diluted share in Q4 2022.
And our data and analytics services segment gross margins improved materially to 44, 7% compared to 37% in the fourth quarter of 2022.
This improvement reflects higher utilizations in the 2023 quarter and reduced margins on several significant assignments in the fourth quarter of 2022.
And our it staffing services segment gross margins were down compared to Q4 of 2022, largely due to a year over year reduction in direct hire revenues and unusually high medical claim expenses related to our self insured healthcare program.
Yeah.
Okay.
GAAP net income for Q4, 2023 totaled a loss of $5 $4 million.
Were negative 46 cents per diluted share compared to a profit of $1 $5 million or 13 cents per diluted share in Q4, 2022.
These GAAP numbers do include a $5 $3 million goodwill impairment charge.
Jack Cronin: These GAP numbers do include a $5.3 million Goodwill Impairment Charge. Non-Gap Net Income for Q4 2023 was $1.3 million profit or $0.11 per diluted share compared to $2.8 million or $0.23 per diluted share in the fourth quarter of 2022. SG&A expense items not included in non-GAAP financial measures, net of tax benefits, are detailed in our fourth quarter 2023 earnings release for all periods presented, which is available on our website. Regarding our full year 2023 results, revenues were $201.1 million, which were down 17% on a year-over-year basis. Again, both business segments contributed to this decline.
non-GAAP net income for Q4, 2023 was $1 3 million dollar profit or 11 cents per diluted share compared to $2 $8 million or 23 cents per diluted share in the fourth quarter of 2022.
SG&A expense items not included in non-GAAP financial measures net of tax benefits are detailed in our fourth quarter 2023 earnings release for all periods presented which is available on our website.
Okay.
Addressing our full year 2023 results revenues were $201 $1 million, which were down 17% on a year over year basis again, both business segments contributed to this decline.
Okay.
Gross margins for the full year 2023 totaled 25, 4% compared to 26, 1% and two dogs and in 'twenty two.
Jack Cronin: Gross margins for the full year 2023 totaled 25.4% compared to 26.1% in 2022. Our data and analytics services segment gross margin percent increased by 200 basis points year over year on improved utilization, and our IT staffing services segment gross margin percent declined by 140 basis points due to lower direct hire revenues and higher health care expenses. Gap's diluted earnings per share was a loss of $0.61 in 2023 compared to a profit of $0.72 in 2022.
Our data and analytics services segment gross margin percent increased by 200 basis points year over year on an improved utilization and our it staffing services segment gross margin percent declined by 140 basis points due to lower direct hire.
Our revenues and higher health care expenses.
GAAP diluted earnings per share was a loss of 61 cents in 2023 compared to a profit of 72 cents in 2022.
non-GAAP diluted earnings per share totaled a profit of 44 cents in 23 compared to a profit of $1 13 in 'twenty two.
Jack Cronin: Non-GAAP diluted earnings per share totaled a profit of 44 cents in 2023 compared to a profit of $1.13 in 2022. Throughout 2023, our liquidity and overall financial position will remain solid. Today, we're 100% debt-free with no borrowings outstanding under our PNC facility. Also, we have $21.1 million of cash balances on hand and have cash availability of another $22.5 million under our revolving credit facility. I should also point out that our day sales outstanding measurements, on December 31, 2023, improved to 53 days from 59 days a year earlier. Thus, despite challenging economic conditions, we've prudently managed our accounts receivable credit risk and incurred no bad debt expense in 2023. I'll now turn the call over to Vivek for his comment. Good morning, everyone.
Throughout 2023, our liquidity and overall financial position remains solid.
They were 100% debt free with no borrowings outstanding under our P&C facility.
Also we have $21 $1 billion of cash balances on hand, and have cash availability of another $22.5 million under our revolving credit facility.
I should also point out that our day sales outstanding measurement on December 31, 2023 improved at 53 days from 59 days a year earlier.
Thus despite challenging economic conditions, we have prudently managed our accounts receivable credit risk and incurred no bad debt expense in 2023.
I'll now turn the call over to Vivek for his comments.
Yeah.
Good morning, everyone.
Vivek Gupta: Thank you, Jack, for the detailed financial review of our 2023 operating results. In 2023, macroeconomic headwinds clearly had a significant impact on our financial performance. Concerns over a possible recession, high inflation, increased interest rates, as well as geopolitical events, led many of our clients to take a conservative posture with respect to spending on new projects and on new IT initiatives. While the U.S. economy seems to be entering a recovery mode with positive data points on job growth and GDP expansion, concerns still exist with respect to inflation, high interest rates, and the possible escalation of a wider conflict in the
Thank you Jack for the detailed financial review of our 2023 operating results.
In 2023 macroeconomic headwinds clearly had a significant impact on our financial performance.
Concerns over a possible recession high inflation increased interest rates as well as geopolitical events led many of our clients to take a conservative posture with respect to spending on new projects and on new initiatives.
While the U S economy seems to be entering a recovery mode with positive data points in job growth and GDP expansion concerns still exist with respect to inflation high interest rates and the possible escalation of a wider conflict in the middle East.
Notwithstanding these potential economic issues we.
Vivek Gupta: Notwithstanding these potential economic issues, we are starting to see some signs of increased customer demand in both of our business sectors. In our data and analytics services segment, Q4 order bookings totaled approximately $19 million, which was one of our best performances on record. Additionally... We had a modest revenue increase on a sequential basis in Q3 of 2020. In our IT Staffing Services segment, we saw positive billable headcount growth for the first time in October and November after 15 consecutive months of decline. In December, we did see high year-end project ends, but they were largely in line with the seasonal decreases we experienced at year end. Overall, the Q4 billable headcount decline was less than the declines we experienced in the fourth quarter of the prior two years. We are encouraged by these positive indicators as we enter 2024. During the quarter, Michael Fleischman resigned from his position as the Chief Executive Officer of the Data and Analytics Services Sector.
We are starting to see some signs of increased customer demand in both of our business segments.
And our data and analytics services segment, Q4 order bookings totaled approximately $19 million.
Which was one of our best performances on record.
Additionally.
We had a modest revenue increase on a sequential basis over Q3 of 2023.
Our it staffing services segment, we saw solid positive billable head count growth for the first time in October and November after 15 consecutive months of declines.
In December we did see high year end project aims, but they were largely in line with the seasonal decreases we experienced at year end.
Overall, the Q4 billable head count decline was less than the declines we experienced in the fourth quarter of the prior two years.
We are encouraged by these positive indicators as we enter 2024.
During the quarter.
Michael Fleishman resigned from his position as the Chief Executive Officer of the data and analytics services segment.
Vivek Gupta: We thank Michael for his service, and we wish him success in his future endeavors. Until his successor is appointed, the functional heads of this segment are directly reporting. Also, during January 2024, we engaged Prime Mentor Inc. as a strategic advisory consultant. Primementor is a firm with deep experience and knowledge of the broad IT services industry and an impressive track record of strategy and business process improvements for a number of notable clients.
We thank Michael for his service and wish him success in his future endeavors.
Until his successor is appointed the functional heads of this segment are directly reporting to me.
Also during January 2024, we engaged prime mentor, Inc.
Our strategic advisory consultant.
Mentor is a firm with deep experience and knowledge of the broad it services industry and an impressive track record of strategy and business process improvements for a number of notable clients.
Vivek Gupta: We are excited about this engagement and the opportunities that it presents for Mastech. Finally, despite 2023's difficulties, we believe that our businesses remain fundamentally sound, both operationally and financially, and we are optimistic that we are positioning our businesses for an improved financial performance in 2020. Operator, we can take questions now. Thank you.
We're excited about this engagement and the opportunities that it presents for Mastech digital.
Okay.
Finally, despite 2020 three's difficulties, we believe that our businesses remain fundamentally solid both operationally and financially and we are optimistic that we are positioning our businesses for an improved financial performance in 2024.
And that concludes our prepared remarks, operator, we can take questions now.
Thank you we will now be conducting a question and answer session.
Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that you're live in the question queue. You may press star 2 if you would like to remove your question from the queue.
If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Tim Kahl with Capital Management Corporation. Please proceed with your question. Well, it's great to hear that some forward-looking indications are positive. You know, one year ago, the board authorized a share buyback. Program. And it's. Not too big.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Thank you. Our first question comes from the line of Tim call with Capital Management Corporation. Please proceed with your question.
Well, it's great to hear that.
Some forward looking indications are positive.
You are one year ago.
The board authorized a share buyback.
Yeah.
Program.
And it is.
Not too big.
Tim Kahl: You have over $20 million in cash on your balance sheet and no debt. So the net cash position is about 22% of your stock market capitalization. So it seems to be a no-brainer to put $20 million into share buybacks. However, the board was very modest and approved a $500,000 share buyback.
You have over $20 million of cash on your balance sheet and no debt.
So the net cash position is about 22% of your stock market capitalization.
So it seems to be a no brainer.
But 20 million so share buybacks.
The board was very modest and improve them.
500000 share buyback.
Jack Cronin: What's the status of that, and why is it taking a year to... make creative share buybacks when your long-term prospects are so positive? Yeah, Tim, this is Jack. Yeah, we are 100% committed to the share buyback program. I mean, I think we think our stock is undervalued compared to the intrinsic value that it presents. In, we have bought back, I think right now to date, we've bought back around 60 some thousand shares in Q4. We only bought back five, and the reason for 5,000 shares.
The status of that.
Why is it taking a year.
<unk>.
Make accretive share buybacks when your long term prospects are so positive.
Yeah, Tim this is Jack.
Yeah, we 100 per se are committed to the share back buyback program I mean, I think we think.
Our stock is undervalued.
Compared to the intrinsic.
Value that it presents.
And we.
We have bought back I think right now to date, we've I think we bought back around.
60, some thousand shares in Q4.
We only bought back five and the reason for its 5000 shares and the reason for that is we were in an extended blackout period with respect to some of these corporate events, but we are 100% committed to to the share buyback program and I think you will see us.
Jack Cronin: And the reason for that is we were in an extended blackout period with respect to some of these corporate events. But we are 100% committed to the share buyback program. And I think you will see us purchase more shares in the first quarter of 2024. There are some bigger companies that are buying back stock on a more regular basis. Maybe the person advising you about blackout periods is a little too conservative, and maybe you need a new advisor in that area.
Purchased more shares.
In first quarter of 2024.
There's some bigger companies that are buying back stock on a more regular basis.
But maybe the person advising you for blackout periods, it's a little too conservative and maybe you need a new advisor in that area.
Yeah, I think we would we would generally.
Jack Cronin: Yeah, I think we would generally be cautious on the conservative side, um, and if you're not expecting any near-term acquisitions, should the board authorize a larger Share-a-Biotech authorization? 20 million in cash; it's 22% of your stock market.
Cautious we'd be cautious on the conservative side.
Ended up.
Expecting.
Okay, not expecting any near term acquisitions.
Hi.
Sure.
Our board authorized a larger.
Share buyback authorization.
You have ever.
$20 million cash, it's 22% of your stock market.
Jack Cronin: Capitalization. I If the stock is such a good deal, hopefully, the board will consider increasing the authorization. I understand you'll want to get through this first one, but hopefully that can accelerate now. Yeah, yeah, I mean, the board could, you know, once this one is completed, the board has the ability to immediately do another buyback. So it's not like, you know, once this is over, all bets are off.
Capitalization.
Right.
If it's if the stock is such a good deal hopefully the board will lock considering increasing the authorization.
Understand you'll want to get through this first one.
Hopefully that can accelerate now.
Yeah, I mean the board.
Once disappointed as has been completed.
<unk> has the ability to immediately.
You know, giving other buyback so it's not like once this is over all bets are off we have the ability.
Jack Cronin: We have the ability to be flexible and do more if the board so desires. But again, Tim, the other thing is that our volume is relatively low. So that's another headwind where we'd like to buy, but we're limited based on our volume, the number of shares that we can buy. But again, I think the board management is committed to taking advantage of our stock position and buy back shares. Terrific, and thanks for your hard work. It's great to see the indications that business can improve next year. Thanks, Ken. Thanks, Tim.
To be flexible and do more if we give them.
<unk>, so desires, but.
Again, the other thing that Tim the other thing is our volumes relatively low so that's another headwind where we'd like to buy but we're limited on based.
Based on our volume the number of shares that we can buy but you know again I think the board management Committee.
To take advantage of of our stock position and buy back shares.
Terrific. Thanks for your hard work and a great to see the.
Indications that.
Business can improve next year.
Thanks, Ken Thanks, Tim.
As a reminder, if you would like to ask a question press star one on your telephone keypad.
Operator: As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from the line of Lisa Thompson with Zacks Investment Research. Please proceed with your question. Good morning.
Our next question comes from the line of Lisa Thompson with Zacks Investment Research. Please proceed with your question.
Good morning.
Lisa R. Thompson: Again, you people had a very, very busy fourth quarter. Yes, we're both busy indeed there, Lisa. So, could you just kind of go through the events that led to the CEO resigning and then you hiring the consultants and exactly what the consultants are hired for. Are the two related or completely unrelated?
People had a very very busy fourth quarter.
Oh, Yeah, I suppose busy indeed Lisa.
So.
Just kind of go through the.
The events that led to.
Q.
Right C E O.
And then new hiring the consultants and exactly what the consultants are hired four are the two related are completely unrelated.
Okay.
They are they are unrelated Lisa so let me pick the first one first.
Vivek Gupta: They are unrelated, Lisa, so let me pick the first one first. The board of directors and Michael had a series of discussions around the goals and strategies for Mastech Infotrelia. And once it was clear that our long-term goals would not align, Michael felt it was best to resign, and the board accepted his request. So that is what led to Michael's exit. As regards... The consultant, Prime Mentor, coming in. Prime Mentor has deep experience across the global technology and business services industry, and its principles have helped create business value and drive transformational change for a number of large-scale organizations in our industry. And the board felt it would be really good to engage Prime Mentor in order to positively impact the organization and provide strategic direction towards... significantly improving our business performance. And that's what led to us engaging Prime Mentors to help Mastech. Okay, so as I read through the documents, I first thought they were kind of turnaround improvement guys, and then I got a little concerned that maybe they were hired to sell the company. Can you discuss that?
The board of directors and Michael had a series of discussions around the goals and strategies for domestic and four trailers.
Once it was clear that our long term goals would not align Michael felt it was best to design.
And the board accepted Michael's resignation.
So that is one.
What led to.
Michael's exit.
As regards.
The consultant the primary term coming coming in.
Prime Minister has deep experience across the global technology and business services industry.
Its principles have helped create business value and drive transformational change for a number of large scale organizations in our industry.
And the board felt it would be really good to engage prime minister in order to positively impact the organization and provide strategic direction towards.
Significantly improving our business performance and growth.
And.
That's what led to us engaging primary door.
Two to help Mastech digital.
Okay. So as I read through the documents I first spot for kind of turnaround improvement guys and then I got a little concern that maybe they were hired to sell the conference can you discuss that.
Vivek Gupta: Well, I can say emphatically that we have not engaged Prime Mentor for the sale of the company; they've been engaged in order to make that positive impact I spoke about on the organization and provide the strategic direction that would help us with improved performance and growth. That is really the main objective. Okay, just checking in. Talk a little bit about how business is going. Are you feeling there are different reactions and different verticals of your base? And I always worry about CGI when I read about banks.
Well I can say that emphatically that.
We have.
Not engaged prime rental for selling the company, we have been engaged in order to make that.
Positive impact I spoke about to the organization and provide these strategic direction.
That would help us with.
Improved performance and growth.
That is really the main objective.
Okay just checking.
Okay.
Talk a little bit about how business is going are you feeling.
Different reactions in different.
Verticals of your basin I always worry about CGI when I read about banks you talk.
Vivek Gupta: So yes, as I said in my prepared remarks, there are some signs that we are seeing that business is picking up. Last time when we spoke a quarter ago, we had just completed October and had seen some positive signs. Now, if we exclude December, we've had two months of positive activity, and also, in January, which just ended, we had positive net growth. So three out of four months have been positive, and I think that's really encouraging. It's a positive indicator.
So so yes.
I said in my prepared remarks that are.
There are some signs that we are seeing that the business is picking up.
Last time, when we spoke a quarter ago, we had just completed.
October and seen some positive sign now if you exclude December we've had.
Two quarter two two months of positive activity and also in January Rich just ended we had a positive net growth. So three out of four months have been positive and I think that's really encouraging its a positive indicator.
Vivek Gupta: And again, three months don't really guarantee what the rest of the year will look like, but it's a positive sign that the REC volume is better than it was a few months ago. So that's the positive side on the IT staffing side and on the data analytics side. As we mentioned, we managed to sign a pretty large quantum of bookings adding up to 19 million dollars. However, I must caution everyone that a lot of the business in that is actually multi-year annuity deals.
Again, three months don't really guarantee what the rest of the year will look like but it.
It is a positive sign direct volume is is better than what it was a few months ago.
So that's the.
The positive side on the staffing side.
And on the data analytics side.
As we mentioned, we managed to sign up a pretty large quantum of bookings, adding up to $19 million.
I must caution.
Everyone that.
A lot of the business and that is actually multi year annuity deals. So it doesn't mean that immediately we will see a jumpstart in the revenues as a result of that what it does mean is that we've got the right kind of business, where we are seeing customers commitment for multiple years. So there is going to be a steady stream of revenue coming in and just the kind of business, we would like to have more.
Vivek Gupta: So, it doesn't mean that immediately we'll see a jumpstart in revenues as a result of that. What it does mean is that we've got the right kind of business where we are seeing customers' commitment for multiple years, so there is going to be a steady stream of revenue coming in, and just the kind of business we would like to have more and more of. So, again, for customers to open up their wallets and sign multi-year deals is very powerful. But these are only sort of early indicators; we have to now make sure that we maximize what we can from this to the fullest and make sure that 2024 turns out to be better. Okay, so given those signs, do you feel that Q1 will have higher revenues than Q4 did? Well, yeah, I think it should be sequentially higher. Don't want to say how much better it would be.
More off.
So again for our customers to open up their wallets and sign multi year deals is a very positive sign.
But these are only a sort of early indicators, we have to now make sure that we maximize what we can from this to the fullest and make sure that 2024 turns out to be a better year.
Okay. So given those signs do you feel that Q1 will have higher revenues in Q4 did.
Well yeah.
Yeah, I think it should be sequentially higher don't want to say, how much better it would be but yes, it should be.
Vivek Gupta: But yes, it should. All right, that's great. Okay, I think that's all my questions. Thank you so much.
Alright, that's great.
I think that's all my questions. Thank you so much.
Lisa R. Thompson: Thank you, Lisa. Our next question comes from the line of Ross Davidson with Banneton Capital. Please proceed with your question. Hi, Jack.
Thank you Lisa.
Our next question comes from the line of Ross Davidson with Benetton Capital. Please proceed with your question.
Hi, Jack.
Ross Davidson: Thanks for taking the question. Actually, both questions I wanted to ask were asked already, but the third one I wanted to ask was just about the goals of InfoTrellis. You alluded to that being sort of the cause of Michael deciding to resign. I'm curious if you could articulate what the board and your goal for InfoTrellis are, you know, it's sort of that direction that led to that uh, that separation. I think we will start getting into the weeds a little bit over there, but I think it's suffice to say that, you know, what the board expects or wants for the organization is to take it in a direction where it can scale very quickly to a much larger size and become a bigger portion of the Mastech Digital portfolio.
Thanks for taking the question actually both questions I wanted to ask.
Asked already but the third one I wanted to ask was just around the goals.
Charles you alluded to that was sort of the.
Cause of Michael deciding to resign I'm curious if you could articulate what is the boards and your goal for <unk>.
It's sort of that traction that led to that.
Separation.
I think we will start.
Getting into the weeds, a little bit over there, but I think it's suffice to say that you know what we.
The board expects our once for the organization is to.
Take it in a direction, where it can scale very quickly to a much larger size and become a bigger portion of the mastech digital portfolio.
Ross Davidson: And when we were looking at the goals and strategies that were being discussed, there was clearly some misalignment between the two, and we didn't see a clear path to getting to where we were hoping to. It just led to that conclusion where Michael felt that it was best to... Would it be fair to say that maybe the goals weren't that far apart? Like, I mean, the idea of growing it quickly. I'm sure Michael didn't want to shrink it.
And.
When we're looking at the goals and strategies that are being discussed there was clearly some misalignment between the two and we didn't see a clear path.
<unk>.
Being able to get to where we were hoping to.
<unk>.
It just led to that.
Conclusion, where Michael felt that it was best to design.
Yeah.
Yes.
Would it be fair to say that maybe the goals aren't that far apart like I mean, the idea of growing it quickly.
Sure Michael do you want to shrink it maybe maybe the growth rates were different and more about just the approach to how to accomplish that.
Vivek Gupta: You know, maybe the growth rates were different and more about just the approach to how to accomplish that maybe was, I'm sorry, was the approach different? So I would say, yeah, it's a mix of both the goals, the strategies, and the means to get there. And now that we have Prime Mentor on board, we are actually looking forward to getting some useful strategic direction about what we could do, what the industry is doing, what our peers are doing, and find the right actionable initiatives which will lead us. Okay, makes sense. Thanks for the added color.
I'm sorry, what was the approach.
So the approach different.
So I would say, yes. It is.
It's a mix of both of the goals the strategies and the means to get there.
And and and and and now that we have prime prime entered onboard I'm actually looking forward to getting some use.
Useful strategic direction.
What we could do what the industry's doing what our peers are doing.
And.
Finally find the right.
Actionable initiatives, which will take us there.
Yeah.
Okay.
Makes sense, thanks, and thanks for the added color.
Okay.
Our next question comes from the line of Marc Riddick with Sidoti. Please proceed with your question.
Ross Davidson: Our next question comes from the line of Mark Riddick with Sidoti. Please proceed with your question. Hey, good morning, everyone.
Hey, good morning, everyone.
Hey, Mark.
Mark Riddick: Hey Mark, I was wondering if you could give us an update on the engineering staffing services, you know, the launch from last year and maybe what we're seeing there thus far and maybe some early indications, early leads of what you're getting there. Good question, Mark.
So I was wondering if you could give us an update on the engineering staffing services.
Launch from last year, and maybe what we're what we're seeing there thus far and maybe some early indication.
What youre getting there.
Good question, that's one of the initiatives that we've got really.
Vivek Gupta: That's one of the initiatives that we are really giving a lot of emphasis on focus and investment as well. And we've seen some virtually quarter-on-quarter, or rather even month-on-month increase in the headcount for engineering staffing services. It hasn't quite become a very, what's the word I'm looking for? It's not very large growth has yet happened, but the conversations that we've initiated with our customers are showing good traction.
Giving a lot of emphasis on focus and investment as well and we've.
We've seen some.
Virtually quarter on quarter.
Our other even month on month increase in the head count or engineering staffing services.
It hasn't quite become a you know a very what should I, what's the word I'm looking for it start very large growth has not yet happened, but the conversations that we've initiated with our customers are showing up.
Good traction so essentially market there are three groups our buckets in which we have opportunities. The first half of a bucket contains customers.
Vivek Gupta: So essentially, Mark, there are three groups or buckets in which we have our opportunities. The first bucket contains customers who are already doing a bit of engineering staffing with us. So the question is, how do we wrap that up to make it much more than what we have done so far? The second bucket is customers, where we are doing IT staffing right now, but we haven't yet done engineering staffing services, getting our message across and making sure that we get invited to the party for any engineering staffing needs that they may have.
Who are already doing a bit of engineering staffing with us. So the question over that is how do we wrap that up to make it much more than what we have done so far the second bucket is customers, where we are doing it staffing right now, but we haven't yet done engineering staffing services getting our message across and making sure that we.
We get invited to the party for any engineering staffing needs that they may have and the third one of course is to go and look for new logos, new customers, who have never worked with us and the possible even stuffing.
Vivek Gupta: And the third one, of course, is to go and look for new logos, new customers who have never worked with us in the past, even IT staffing, and focus on engineering staffing services. So right now, our sales engine is focusing on all three buckets and making sure our message is understood and heard by other customers. And we hope that as a result of that, the requirement volume will start picking up as the year unfolds, and we should be able to get to the goals that we have set for. Thank you for that. I was wondering, in a way, maybe kind of shifting to the new order when it comes to the $19 million.
Focus on engineering staffing services.
So right now our sales engine is focusing on all of the three buckets.
And making sure our messages understood heard by the customers and we hope to see as a result of that.
Requirement volume will start picking up as the year unfolds, and we should be able to get to the goals that we have set for ourselves.
Okay. Thank you for that and then I was wondering in a way maybe kind of shifting to the to the new order wins of the $19 million. So long if you could talk a little bit about maybe.
Vivek Gupta: I was wondering if you could talk a little bit about, maybe without getting too specific, because you did talk about the time frames and the multi-year and the like. I was wondering if there's any particular catalyst or two that you would point to that led to those opportunities that could continue to have legs in the coming years. Mark, it's basically, you know, the kind of relationship that we've been able to establish with our client accounts and customer accounts, the stellar delivery that our team has had, the new offerings that under data modernization that we have come out with, and rolling all of that into seeing the customer's needs for the next couple of years. It's been a mix of all of that, which has led to customers feeling comfortable enough to sign up rather than doing They felt comfortable enough to commit to a multi-year deal where we know there is a steady stream of revenue which will keep coming quarter on quarter. So, I can't really put a finger on any one of them; it's actually all of them.
Without getting too specific because you did talk about the timeframes and embedded multiyear and the like I was wondering if theres any particular.
Catalysts or two that you would point to that led to those those opportunities.
That could continue to have legs and in the coming months.
Our markets basically the kind of relationship that we've been able to establish with our client.
<unk> customer accounts.
The stellar delivery that our team has had the new offerings that are unknown data modernization that we have come out with.
Rolling all of that into.
Seeing the customers needs.
Needs for the next couple of years.
It's it's been a mix of all of that which has led to the customers are feeling comfortable enough to sign up but other than doing quarter. After quarter you know individual.
Extensions of deals are signing up for new contracts.
We felt comfortable enough to commit to multiyear deals.
Where we know there is a steady stream of revenue, which will keep coming quarter on quarter.
So.
I can't really put a finger on any one of them, it's actually all of them.
Okay.
That's helpful. I'm, sorry go ahead.
Jack Cronin: I'm sorry; go ahead. Yeah, And, you know, as far as major clients are concerned, it was a combination of, you know, orders from existing clients and, like Vivek said, not a short-term order, you know, six months to a year; it was longer-term orders. And then the other thing that was encouraging was that there were some major bookings from new clients. And, you know, that's very encouraging. Great, and then the last one for me, I was wondering if you could maybe give us an update on maybe what you're seeing as far as overall bill rates and then, you know, what we would, you know, if there's much in the way of pushback or, or as far as rate increases or the like. Maybe you can sort of give us a little bit on the pricing environment that you're seeing currently.
And as far as major clients. It was it was a combination of existing orders from existing clients and like David said.
Do you know not a short term order six months to a year. It was longer term orders and then the other thing that was encouraging as there were.
Some major bookings from new clients.
And.
That's very encouraging.
Great and then the last one from me I Wonder if you could maybe give us an update on maybe what you're seeing as far as overall bill rates and then you know what what we would you know if there's much in the way you pushed back or or as far as rate increases or the like maybe you can sort of give us a little bit on on.
The pricing environment, what you're seeing currently thank you.
Jack Cronin: Thank you. So, Mark, it's interesting, and it's a very good question that you asked. In 2023, we did see constant price pressures as customers were trying to cut down on projects and also the costs on each project. And so we did lose headcount as a result of that, but they were experiencing price pressures all the time. But having said that, we've also been able to increase our bill rates over the years, which actually says a lot about the quality of relationships that we have, and the quality of deliveries that we have made. So that pricing pressure would continue, I would think, even in this year, 2024. But the higher-value services that we are providing, we are able to, in some ways, compensate for that and still be able to maintain and, if not increase, the bill.
So mark.
It's interesting and it's a very good question that you asked it in 2023, we did see constant price pressures as customers were trying to cut down on the projects and also the costs on each project.
And so.
So we did lose head count as a result of that but we devote pricing pressures all the time, but.
But having said that we've been also being able to increase our bill rates are over.
Over the.
So, which actually says a lot about the quality of relationships that we have the quality of deliveries that we have been.
So that pricing pressure would continue I would think of it in this year 2020 for Bart.
Higher value services that we are providing we are able to in some ways compensate for that.
And still be able to maintain if not increase the buildings.
I don't know if there thank you very much.
Vivek Gupta: Thank you very much. No, that's exactly where I was going. Thank you very much. Thank you, Mark. A final reminder, if you would like to ask a question, press star 1 on your telephone keypad. One moment, please, while we re-poll for any additional questions. Thank you. Mr. Gupta, it appears we have no further questions at this time. I would like to turn the floor back over to you for closing comments. Thank you, operator. So, if there are no further questions, I would like to thank you for joining our call today. And we look forward to sharing our first quarter 2024 results with you in early May.
No. That's that's exactly where I was it got it. Thank you very much. Thank.
Thank you Mark.
A final reminder, if you would like to ask a question press star one on your telephone keypad.
One moment, please while we repo for any additional questions.
Thank you Mr. Gupta. It appears we have no further questions at this time I would like to turn the floor back over to you for closing comments.
Thank you operator, so if there are no further questions I would like to thank you for joining our call today and we look forward to sharing our first quarter 2024 results with you in early may Thank you very much.
Vivek Gupta: Thank you very much. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day. www.kinstlinger.com
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
Okay.