ASGN Incorporated (ASGN) Income Statement

The revenue trajectory has been consistently negative since 2024Q1, with growth rates ranging from -8.5% to -1.3%. The most recent quarter's -1.3% decline is the mildest in the series, and the $1.007B revenue exceeded expectations, which may indicate that the demand trough is stabilizing. However, the sustained contraction across both commercial and federal segments suggests that discretionary IT spending remains weak, and investors should monitor whether this stabilization translates into positive growth in coming quarters.

The gross margin has fluctuated between 25.8% and 29.4% over the past ten quarters, with a clear downward drift from the 29%+ levels seen in mid-2024. The 2026Q1 dip to 25.8% was particularly sharp, suggesting either wage inflation outpacing bill rate increases or a mix shift toward lower-margin staff augmentation. This compression is concerning because ASGN's gross margin already sits below peers like Huron (29.9%) and only slightly above Kforce (26.8%), indicating limited pricing power in a competitive IT services market.

The company's SG&A expenses have remained remarkably sticky, hovering between $198M and $226M even as revenue fell from $1.05B to $1.007B. This has caused operating income to drop from $80.4M to $41.1M, a 49% decline, while revenue only fell 4%. The inability to scale down overhead proportionally suggests that ASGN's cost structure has a higher fixed component than its variable-cost model would imply, and management's cost discipline has not been sufficient to offset top-line softness.

The cost structure is heavily weighted toward consultant compensation, which is variable and should naturally decline with revenue. However, the gross margin compression indicates that COGS is not falling as fast as revenue, likely due to wage floors for specialized talent. SG&A, which includes recruitment and administrative costs, has remained nearly flat at $210-226M over the past year, suggesting that management is maintaining capacity for a potential recovery but at the cost of current profitability. This inflexibility is a key reason why operating margins have halved from their 2024 peak.

The data shows a clear peak in mid-2024, with revenue of $1.05B and operating income of $80.4M, followed by a gradual but persistent deterioration. The decline accelerated in 2025Q1 with a -7.7% revenue drop, and while the pace has slowed, the company has not recovered to prior levels. This inflection appears to be driven by a cyclical downturn in commercial IT staffing demand, compounded by federal budget uncertainty, and the lasting impact is a structurally lower margin profile that may not fully recover even if revenue stabilizes.