ASGN Inc. (NYSE: ASGN), a provider of IT services and solutions, reported third-quarter revenue fell 6.8% year over year to $1.12 billion. Revenue in the Richmond, Virginia-based firm’s commercial segment fell 13.1%, while revenue in its federal government segment rose 12.3%.

Revenue surpassed the midpoint of ASGN’s guidance range, ASGN CEO Ted Hanson said in press release, and IT consulting revenue across its commercial and government businesses reached approximately 55% of consolidated revenue, ahead of the 2024 goal.

“The strength of ASGN’s business lies in our large enterprise account base in six critical industry verticals,” Hanson said. “This diversified account base provides support and stability throughout market cycles, as is evident in the double-digit year-over-year revenue growth of our countercyclical federal government business this past quarter. Consistent with our peer set and our client base, we remain cautious about the near-term market demand. Nevertheless, with great qualifications across sought-after IT solutions and skillsets, ASGN is ready to leverage the growth in IT spend when demand improves.”

The company’s commercial segment provides IT and marketing/creative staffing. It also provides consulting services. The federal government segment provides IT services to US government customers.

Federal government segment revenue included $24.6 million from the October 2022 acquisition of Iron Vine.

Revenue fell 13.1% year over year in ASGN’s commercial segment, which includes five verticals; the consumer and industrial vertical and the healthcare vertical saw low single-digit revenue declines, while the remaining three verticals saw double-digit declines.

Overall, SG&A expenses included $1.1 million in acquisition, integration and strategic planning expenses and a $2.7 million tentative legal settlement, both of which were not included in the company’s previously announced guidance estimates.

In the conference call, Hanson also thanked Treasurer Jim Brill, who is retiring after 16 years with ASGN. Chris Donnini, who brings an extensive background in finance and treasury for publicly traded companies and has served as VP of finance and treasury at ASGN since July, will transition into the role.

Guidance

ASGN forecast fourth-quarter revenue to be down year over year by between 7.6% and 9.4%. It also estimates net income of $46.2 million to $49.1 million.

“We expect macro conditions to remain challenging in the fourth quarter,” CFO Marie Perry said in a conference call with analysts on Wednesday. “In our commercial segment, we anticipate revenues to remain soft across both assignment and consulting. These declines are expected to be partially offset by growth in our federal government segment.”

Gross margin is estimated to range from 28.0% to 28.3% in the fourth quarter.

“We are expecting gross margins will decline year over year due to business mix similar to more recent trends, including a greater mix of federal government work and continued softness in our more cyclical and discretionary commercial businesses,” Perry said. “This should be partially offset by improvement in our year-over-year cash SG&A expense margin.”

Share price

Shares in ASGN were up 3.36% to $81.69 as of 11:12 a.m. Eastern time today; they were 16.48% below their 52-week low, according to FT.com.