• Q4 Revenue: $985 million, a decrease of 8.3% year-over-year.
• Commercial Segment Revenue: $692.7 million, a decrease of 7.5% year-over-year.
• Federal Government Segment Revenue: $292.3 million, a decrease of 10.2% year-over-year.
• Gross Margin: 29%, an increase of 60 basis points from the previous year.
• Net Income: $42.4 million for the fourth quarter.
• Adjusted EBITDA: $109.7 million with an adjusted EBITDA margin of 11.1%.
• Free Cash Flow: $88.9 million for the fourth quarter, with a conversion rate of approximately 81% of adjusted EBITDA.
• Cash and Cash Equivalents: $205.2 million at quarter end.
• Share Repurchase: $43.9 million deployed to repurchase 0.5 million shares at an average price of $90.45.
• TopBloc Acquisition: $340 million, expected to close late in the first quarter of 2025.
• Q1 2025 Revenue Guidance: $950 million to $970 million.
• Q1 2025 Net Income Guidance: $27.8 million to $30.7 million.
• Q1 2025 Adjusted EBITDA Guidance: $91 million to $95 million with an adjusted EBITDA margin of 9.6% to 9.8%.

• Warning! GuruFocus has detected 4 Warning Signs with TENB.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ASGN Inc (NYSE:ASGN) reported growth in IT consulting revenues, which now comprise 58% of total revenues, up from 53% in the previous year.
• The company achieved double-digit year-over-year growth in commercial consulting bookings in Q4, indicating strong client engagement.
• ASGN Inc (NYSE:ASGN) exceeded expectations in gross and adjusted EBITDA margins despite constrained IT budgets.
• The acquisition of TopBloc, a Workday Services Partner, is expected to enhance ASGN's ERP capabilities and contribute to revenue growth.
• ASGN Inc (NYSE:ASGN) maintains strong relationships with Fortune 1000 companies and key defense and intelligence agencies, which are crucial for market differentiation.

Negative Points

• Q4 revenue was slightly below expectations, primarily due to lower-than-expected software license sales in the Federal Government Segment.
• The financial services vertical experienced a year-over-year decline, although there was slight improvement in big banks and fintech.
• ASGN Inc (NYSE:ASGN) anticipates a sequential decrease in EBITDA margin in Q1 2025 due to the annual payroll tax reset.
• The Federal Government Segment's revenues fell below expectations, impacted by delays in certain research and development projects.
• There is ongoing uncertainty regarding the impact of the new administration's spending initiatives on federal contracts.

Q & A Highlights

Q: Can you provide more color on the federal government segment and the potential impact of the new administration? A: Theodore Hanson, CEO, explained that the federal government is in high need of services like cyber, AI, data cloud, and IT modernization. While there may be short-term disruptions due to the new administration, the long-term need for IT modernization is clear. The company's customer base, including the Department of Defense and Homeland Security, is expected to remain durable despite current uncertainties.

Q: Have you seen any slowdown in awarding contracts or payments due to the federal disruptions? A: Theodore Hanson, CEO, noted that while there is no slowdown in payments, the awarding of new contracts is mixed, varying by agency. Some areas have seen new awards, while others have experienced slowdowns due to agency directives.

Q: What is the strategic importance of the TopBloc acquisition, and what synergies do you expect? A: Theodore Hanson, CEO, highlighted that TopBloc's capabilities in the Workday ecosystem align with ASGN's strategic focus on enterprise systems. The acquisition is expected to be accretive to growth and margins, with potential synergies in both the commercial and federal sectors.

Q: Are you seeing any signs of improving activity in the commercial segment? A: Randolph Blazer, President, mentioned that there are positive indicators such as backlog, pipeline, and bookings, particularly in sectors like financial services, which are good bellwethers for IT spend. These factors contribute to a cautiously optimistic outlook.

Q: How did the financial services vertical perform, and what is the outlook? A: Theodore Hanson, CEO, stated that financial services, particularly big banks, appear to have bottomed out and are starting to show signs of improvement. Historically, this vertical comprised about 20-25% of the commercial revenue mix, and it is currently in the high teens.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.