First-quarter revenue at CTG (NASDAQ; CTG) fell 12.5% year over year to $78.2 million, but gross margin improved at the Buffalo, New York-based IT staffing and solutions provider.

Revenue growth in the quarter came from CTG’s “North America IT solutions and services” segment, where it rose 13.5% year over year to $23.2 million. Gross margin in the segment improved to 38.7% from 33.6% in the year-ago quarter. This segment includes results from Eleviant Technologies, which CTG acquired in September 2022.

Revenue fell in CTG’s two other segments:

Europe IT solutions and services. First-quarter revenue fell 5.6% to $40.1 million. Gross margin narrowed to 23.3% from 24.7% in the first quarter of last year.

Non-strategic technology services. Revenue declined by 43.7% year over year to $14.9 million. Gross margin held steady at 12.3%.

The company reported it disengaged $11.6 million in nonstrategic technology services business during the first quarter. It also reported an IT solutions deal in North America with expected revenue of $20 million over the next two years.

“We continue to successfully execute our strategy despite the difficult macroeconomic environment,” President and CEO Filip Gydé said. “As we work to complete the first phase of our transformation, we are driving the digital solutions and services business mix to more than 80% of revenue, our highest level to date, and expanding our IT solutions margins.”

Looking at CTG’s revenue by geography, North America first-quarter revenue fell 18.1% in constant currency to $37.9 million, while European revenue fell 2.0% in constant currency to $40.3 million.

Guidance

CTG updated its forecast for full-year 2023 revenue growth to between $310 million and $340 million, representing a year-over-year decline in revenue of 4.6% to year-over-year growth of 4.6%. It previously forecast 2023 revenue of between $300 million and $350 million.

Share price and market cap

Shares in CTG were down 3.69% to $6.27 as of 11:26 a.m. Eastern time; they set a new 52-week low in trading today when they reached $6.05, according to FT.com. The company had a market cap of $102.5 million.