Strategic Transformation and Market Dynamics

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• Management realigned the company into two new reportable segments, Talent and Data and AI, to better integrate capabilities and drive durable client value.

• The Talent segment's revenue decline was driven by a deliberate strategic exit from lower-margin, non-strategic positions to improve overall revenue quality.

• Enterprises are exhibiting 'deliberate' spending behavior, pulling back on discretionary tech spend while prioritizing non-discretionary data infrastructure and AI readiness.

• The Data and AI segment achieved a nearly 90% increase in new bookings momentum year-over-year, signaling strong market relevance for its modernization offerings.

• The EDGE initiative has successfully transitioned from its efficiency phase to an investment phase, creating the financial capacity to pivot toward an AI-first vision.

• A significant multi-year strategic win with a top-10 healthcare payer validates the company's industry-led data platform modernization strategy.

• Management is methodically shifting from a legacy IT services model to a specialized AI engineering and modern data platform provider to capture the 'AI super cycle'.

Investment Posture and Operational Outlook

• The company intends to invest disproportionately in AI engineering, proprietary tools, and modern data platform capabilities throughout the remainder of 2026.

• SG&A expenses are expected to step up starting in Q2 2026 as efficiency gains from the EDGE initiative are redeployed into go-to-market and technical talent.

• Management expects market conditions to remain fluid and volatile through 2026, with procurement cycles remaining rigorous and decision cycles elongated.

• The Talent segment's headcount reduction and insourcing headwinds from a top-10 client are expected to persist as a factor through the rest of the year.

• The company aims to replicate its healthcare 'cross-sell and integration' success story across its broader customer base to deepen strategic relationships.

Structural Changes and Financial Context

• A new $5 million share repurchase program was authorized in February 2026, though no shares were repurchased during the first quarter.

• The Talent segment achieved record-high average bill rates of $90.91, reflecting the successful shift toward higher-quality engagements.

• A one-time tax effect elevated the Q1 tax rate, but management expects it to normalize to a 24% to 25% range for the remainder of the year.

• The company maintains a strong liquidity position with $33.6 million in cash and no outstanding bank debt as of March 31, 2026.