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View All NewsCTG revenue falls 10.2% in Q2, but North American business rises 21.3%
IT staffing and solutions provider CTG (NASDAQ: CTG) reported second-quarter revenue fell 10.2% year over year. However, gross margin and net income rose.
The Amherst, New York-based firm noted strong revenue growth of 21.3% in North America IT solutions and services business partially offset the intentional decline in revenue related to the disengagement from lower-margin non-strategic technology services business.
| (US$ thousands) | Q2 2022 | Q2 2021 | % change |
| Revenue | $82,759 | $92,164 | -10.2% |
| Gross profit | $19,750 | $20,379 | -3.1% |
| Gross margin | 23.9% | 22.1% | |
| Net income | $2,040 | $1,833 | 11.3% |
“Our second quarter results again demonstrated our strong operational execution and the success of our digital solutions and service strategy while we also continue to disengage over time from our lower margin, non-strategic technology services business,” President and CEO Filip Gydé said.
“Our margin profile continued to improve with measurable expansion at the gross and operating levels on a consolidated basis, which translated into profitability improvement despite top-line headwinds.”
Revenue by segment
| (US$ thousands) | Q2 2022 | Q2 2021 | % change |
| Revenue by segment | |||
| North America IT solutions and services | $20,339 | $16,762 | 21.3% |
| Europe IT solutions and services | $37,160 | $44,054 | -15.6% |
| Non-strategic technology services | $25,260 | $31,348 | -19.4% |
The Europe IT solutions and services segment fell 15.6% year over year due to foreign currency exchange rates and labor constraints.
“With nearly half of our revenue coming from European operations, we are not immune to the challenging foreign currency translation impacts resulting from the significantly devalued Euro in the first half of 2022. Additionally, the recent increase in competition for resources in Europe is creating labor constraints in meeting client demand,” CFO John Laubacker said.
Guidance
CTG expects full-year revenue of between $330 million and $350 million, which is $20 million to $30 million lower than previous guidance.
“The macroeconomic climate in both North America and Europe has slowed our clients’ decision-making process for IT solutions and services. As we mentioned in our first quarter release, we expected quarterly performance at the outset of 2022 to be uneven due to engagement timing,” Laubacker said.
Share price and market cap
Shares in CTG were down 1.71% to $8.60 as of 11:16 a.m. Eastern time; they were 17.15% below its 52-week high, according to FT.com. The company had a market cap of $134.90 million.