Financial Performance - Kforce's Technology business represents 93% of overall revenues, with total revenues decreasing 4.8% year-over-year to $1.2 billion in 2025[33]. - Revenue for the year ended December 31, 2025, decreased 5.4% to $1.33 billion from $1.41 billion in 2024, primarily due to decreases in consultants on assignment[133]. - Flex revenue decreased 5.3% to $1.30 billion in 2025 from $1.38 billion in 2024, with Technology Flex revenue decreasing 4.7% and FA Flex revenue decreasing 12.8%[133]. - Direct Hire revenue decreased 11.1% to $25.7 million in 2025 from $28.9 million in 2024[133]. - Net income for the year ended December 31, 2025, decreased 30.9% to $34.8 million, or $1.96 diluted earnings per share, from $50.4 million, or $2.68 diluted earnings per share, in 2024[133]. - Selling, General and Administrative expenses as a percentage of revenue increased to 23.0% from 22.0% in 2024, primarily due to declines in revenue and gross profit[133]. - The firm experienced a decline in gross profit margin, decreasing 20 basis points to 27.2% in 2025 from 27.4% in 2024[133]. - The company's net income for 2025 was $34,825,000, down 30.9% from $50,414,000 in 2024[192]. - The effective tax rate for 2025 was 25.8%, slightly up from 25.4% in 2024[152]. - Cash provided by operating activities was $61.645 million in 2025, down from $86.874 million in 2024, primarily due to lower profitability levels[161]. Market Position and Strategy - The technology temporary staffing industry is projected to generate revenues of $38 billion in 2026, with Kforce holding approximately 3% market share[43]. - Kforce's integrated strategy aims to enhance service delivery and accelerate revenue growth, targeting an operating margin of approximately 8% at $1.7 billion in annual revenues[49]. - Kforce focuses on technology staffing and solutions, with over 93% of its business concentrated in this area, enhancing its competitive advantage[53]. - Kforce's strategic partnerships with market leaders like Microsoft and Workday are expected to enhance operational efficiency through AI integration[51]. - The staffing industry is highly competitive, with significant pricing pressures and limited barriers to entry for new competitors, impacting Kforce's market share[74]. Operational Developments - The company established a development center in Pune, India, in January 2025 to enhance its offshore delivery capabilities[22]. - Kforce's commitment to employee well-being includes flexible work environments and comprehensive health and wellness programs[64]. - Kforce's strategic initiatives, including technological transformation and the establishment of an India development center, aim to enhance service offerings and profitability[75]. Economic and Regulatory Risks - The unemployment rate increased to 4.4% in December 2025, indicating broader economic uncertainty, yet demand for skilled professionals in technology remains strong[44]. - Kforce faces risks related to economic fluctuations, which can significantly affect demand for its services and overall financial performance[70]. - The company is subject to immigration regulations that could restrict the hiring of skilled foreign nationals, impacting its ability to meet client needs[92]. - Kforce's business model may be adversely affected by reclassification of independent contractors, leading to potential retroactive wages and tax liabilities[94]. - Increases in payroll-related costs could negatively impact financial results, as the company may struggle to raise client fees in response[95]. - The company is exposed to tax audits and changes in tax laws, which could affect its tax obligations and effective tax rate[96]. - Kforce's operations could be impacted by government regulations affecting the workplace, potentially increasing costs and compliance burdens[97]. Financial Management and Shareholder Returns - Kforce has returned $1.1 billion to shareholders since 2007, indicating a strong commitment to shareholder value[23]. - The firm returned $76.0 million of capital to shareholders, including $48.5 million in open market repurchases and $27.5 million in quarterly dividends[133]. - The Board declared dividends of $27.493 million in 2025, reflecting a per-share dividend of $1.56[163]. - In January 2026, the Board approved an increase in the dividend to $1.60 per share, marking the seventh consecutive annual increase[164]. - The company repurchased 1,205,000 shares for $48,552,000 in 2025, with $97.2 million remaining available for future repurchases under the stock repurchase program[167]. Challenges and Concerns - Kforce's dependence on key management and operating employees is critical; losing any key executive could adversely affect strategic priorities and financial objectives[85]. - Cybersecurity risks are a significant concern, with potential unauthorized access to sensitive information that could disrupt operations and harm financial results[86]. - Kforce relies on third-party suppliers for consultants, and any economic or regulatory changes could hinder their ability to provide necessary services, impacting client satisfaction and market expansion[81]. - The company faces risks from third-party software providers, including potential downtime and misalignment with business needs, which could lead to increased costs and operational inefficiencies[82]. - A hypothetical 10% increase in interest rates would increase annual interest expense by less than $500,000 based on the outstanding amount under the Credit Facility[180]. Financial Metrics and Ratios - Total assets increased to $365,638 thousand in 2025 from $357,834 thousand in 2024, representing a growth of 0.8%[195]. - Total liabilities increased to $241,035 thousand in 2025 from $203,216 thousand in 2024, reflecting an increase of 18.6%[195]. - Stockholders' equity decreased to $124,603 thousand in 2025 from $154,618 thousand in 2024, a decline of 19.4%[195]. - Cash and cash equivalents rose significantly to $2,142 thousand in 2025 from $349 thousand in 2024, marking a substantial increase of 512.6%[200]. - Capital expenditures for 2025 were $14,840 thousand, significantly higher than $7,573 thousand in 2024, an increase of 96.0%[200].

Core Viewpoint - Kforce (KFRC) has shown an 8.3% increase in stock price over the past four weeks, with a mean price target of $45.13 indicating a potential upside of 27.9% from the current price of $35.28 [1] Price Targets - The average price target for KFRC ranges from a low of $34.50 to a high of $71.00, with a standard deviation of $17.31, indicating variability in analyst estimates [2] - The lowest estimate suggests a decline of 2.2%, while the highest indicates a potential upside of 101.3% [2] - A low standard deviation signifies greater agreement among analysts regarding price movement [9] Analyst Sentiment - Analysts are optimistic about KFRC's earnings prospects, as indicated by upward revisions in EPS estimates, which historically correlate with stock price movements [11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 0.2%, with one estimate moving higher and no negative revisions [12] Zacks Rank - KFRC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, suggesting strong potential for upside [13] Conclusion on Price Targets - While the consensus price target may not be a reliable indicator of the extent of KFRC's potential gains, it does provide a directional guide for price movement [14]

分组1 - Kforce reported quarterly earnings of $0.43 per share, missing the Zacks Consensus Estimate of $0.47 per share, and down from $0.6 per share a year ago, representing an earnings surprise of -8.51% [1] - The company posted revenues of $332.02 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 0.65%, but down from year-ago revenues of $343.78 million [2] - Kforce shares have increased approximately 14.3% since the beginning of the year, outperforming the S&P 500's gain of 1.4% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.41 on revenues of $319.77 million, and for the current fiscal year, it is $2.28 on revenues of $1.32 billion [7] - The Zacks Industry Rank indicates that the Staffing Firms industry is currently in the bottom 14% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - Total revenues for Q4 2025 were $332 million, representing a 3% sequential improvement per billing day [10] - Fiscal 2025 revenues were approximately $1.33 billion, a decrease of roughly 5% year-over-year [21] - GAAP earnings per share for Q4 2025 was $0.30, while adjusted earnings per share was $0.43, falling below guidance due to higher healthcare costs [22] - Overall gross margins were 27.2%, down 50 basis points sequentially but up 20 basis points year-over-year [22][23] Business Line Data and Key Metrics Changes - Flex revenues in the technology business grew sequentially by 3% and in the finance and accounting (F&A) business by 5.7% in Q4 [10] - Flex revenues in the F&A business declined 2.4% year-over-year but saw 5.7% sequential growth in Q4 [16] - The average bill rate in the technology business remained steady at approximately $90 per hour over the past three years [14] Market Data and Key Metrics Changes - Sequential growth was observed in eight of the top ten industries served by the company [11] - The company noted a significant increase in demand for consulting-oriented engagements, which typically command higher bill rates [15] Company Strategy and Development Direction - The company is focusing on strategic initiatives such as the implementation of Workday for HCM and Financials, and enhancing offshore delivery capabilities in India [4] - The integrated approach to service delivery across various technologies and skill sets is a key driver of success [12] - The company aims to achieve approximately 8% operating margin when annual revenues return to $1.7 billion, which is more than 100 basis points higher than in 2022 [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recent operating trends, suggesting a return to more typical cyclicality in demand for flexible talent solutions [5][6] - The company anticipates that clients may increasingly pursue flexible talent models due to economic uncertainty and the evolving landscape of AI [7] - Management highlighted the importance of change management in successfully implementing AI initiatives, noting that many organizations are still in the early stages of adapting to these technologies [34] Other Important Information - The company announced further refinements in headcount and organizational structure to align with current revenue levels [18] - Operating cash flows were $19.7 million, and the return on equity remains at approximately 30% [26] Q&A Session Summary Question: Can you elaborate on the sequential improvement in revenue per billing day and the impact of AI? - Management noted that the positive trend in temporary and contract employment began in August 2025, coinciding with the company's sequential improvements [31] Question: What were the end-of-year dynamics observed from clients? - Clients maintained more consultants on staff towards the end of the year, leading to a stronger start in Q1 2026 compared to previous years [38] Question: How do you expect margins to hold up in 2026? - Management expects operating margins to improve in 2026 even without significant revenue growth, driven by cost efficiencies and a favorable mix of business [66]

Financial Data and Key Metrics Changes - Total revenues for Q4 2025 were $332 million, representing a 3% sequential improvement per billing day [10] - Fiscal 2025 revenues were approximately $1.33 billion, a decrease of roughly 5% year-over-year [21] - GAAP earnings per share for Q4 2025 was $0.30, while adjusted earnings per share was $0.43, falling below guidance due to higher healthcare costs [22] - Overall gross margins were 27.2%, down 50 basis points sequentially but up 20 basis points year-over-year [22][23] Business Line Data and Key Metrics Changes - Flex revenues in the technology business grew sequentially by 3% and by 5.7% in the finance and accounting (F&A) business in Q4 [10] - Flex margins in the technology business increased by 40 basis points year-over-year but declined by 40 basis points sequentially due to higher healthcare costs [23] - Flex revenues in the F&A business declined 2.4% year-over-year but saw 5.7% sequential growth in Q4 [16] Market Data and Key Metrics Changes - Sequential growth was observed in eight of the top ten industries served by the company [11] - The company noted a persistently weak labor market, with a significant backlog of IT projects as companies reassess their technology investments [5][11] Company Strategy and Development Direction - The company is focusing on strategic initiatives such as the implementation of Workday for HCM and financials, and enhancing offshore delivery capabilities in India [4] - The integrated approach to service delivery is seen as a key driver of success, allowing the company to enhance client experience and maintain stable average bill rates [12][13] - The company aims to achieve approximately 8% operating margin when annual revenues return to $1.7 billion, which is more than 100 basis points higher than in 2022 [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recent operating trends, suggesting that clients are increasingly pursuing flexible talent models amid economic uncertainty [3][5] - The company anticipates that the demand for flexible talent will continue as organizations prioritize agility in their operations [7] - Management highlighted the importance of change management in successfully implementing AI initiatives, indicating that many organizations are still in the early stages of adapting to these technologies [34] Other Important Information - The company returned $14.1 million to shareholders through dividends and share repurchases [25] - The board approved an increase in dividends, marking the seventh consecutive year of increases [26] - The company expects Q1 revenues to be in the range of $324 million to $332 million, with earnings per share between $0.37 and $0.45 [26] Q&A Session Summary Question: Can you elaborate on the sequential improvement in revenue per billing day and the impact of AI? - Management noted that the positive trend in temporary and contract employment correlates with the company's sequential improvements, indicating a shift in client investment strategies towards AI and technology [31][32] Question: What are the dynamics observed from clients towards the end of the year? - Management observed that clients retained more consultants and showed a strong desire to engage in projects, indicating a positive shift in demand [38] Question: How do you see the direct hire business evolving in 2026? - Management indicated that small to mid-sized businesses are becoming more active in direct hiring, while larger enterprises have slowed down, suggesting a mixed outlook [83]

Financial Data and Key Metrics Changes - Total revenues for Q4 2025 were $332 million, representing a 3% sequential improvement per billing day [9] - Fiscal 2025 revenues were approximately $1.33 billion, a decrease of roughly 5% year-over-year [18] - GAAP earnings per share for Q4 2025 was $0.30, while adjusted earnings per share was $0.43, falling below guidance due to higher healthcare costs [19][20] - Overall gross margins were 27.2%, down 50 basis points sequentially but up 20 basis points year-over-year [20][21] Business Line Data and Key Metrics Changes - Flex revenues in the technology business grew sequentially by 3% and in the finance and accounting (F&A) business by 5.7% in Q4 [9] - Flex revenues in the F&A business declined 2.4% year-over-year but saw a 5.7% sequential growth in Q4 [14] - The average bill rate in the technology business remained steady at approximately $90 per hour over the past three years [12] Market Data and Key Metrics Changes - Sequential growth was observed in eight of the top ten industries served by the company [10] - The company noted a significant increase in demand for consulting solutions, particularly in data and digital practices, which are growing at double-digit rates [50] Company Strategy and Development Direction - The company is focusing on a domestic organic growth strategy, minimizing distractions and enhancing client partnerships [7] - Strategic initiatives include the implementation of Workday for HCM and financials, and the evolution of offshore delivery capabilities in India [4] - The company aims to achieve approximately 8% operating margin when annual revenues return to $1.7 billion, which is over 100 basis points higher than in 2022 [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recent operating trends, suggesting a potential return to typical cyclicality in client demand [5] - The company anticipates that clients are increasingly prioritizing flexible talent solutions amid economic uncertainty [6] - There is a belief that the returns from AI investments may take longer to realize and will be more specific to unique business problems [3] Other Important Information - The company announced further refinements in headcount and organizational structure to align with current revenue levels [16] - Operating cash flows were $19.7 million, and the return on equity remains at approximately 30% [24] Q&A Session Summary Question: Can you elaborate on the sequential improvement in revenue per billing day and the impact of AI? - Management noted that the positive trend began in August 2025, coinciding with a positive turn in the American Staffing Association Index, and emphasized the complexity of executing corporate AI initiatives [30][31] Question: What are the dynamics of client demand and project execution? - Management indicated that clients are increasingly unable to wait to execute technology projects due to the foundational work required for AI and modernization efforts [47][48] Question: How do you see the direct hire business evolving in 2026? - Management expressed optimism for small to mid-sized businesses in direct hire, while large enterprises have slowed their hiring [80]

Revenue Performance - Fourth quarter 2025 revenue was $332.0 million, a decrease of 0.2% sequentially and a decrease of 3.4% year over year[5]. - Full year 2025 revenue was $1.33 billion, a decrease of 5.4% year over year[5]. - Total revenue for Q4 2025 was $332,018,000, a decrease of 0.2% from Q3 2025 and a decrease of 3.4% from Q4 2024[20]. - Flex revenue in Q4 2025 was $326,093,000, down from $326,263,000 in Q3 2025 and $337,104,000 in Q4 2024, with a Flex GP margin of 25.8%[20]. - Year-over-year total Flex revenue decreased by 5.3% in Q4 2025 compared to Q4 2024[24]. Profitability Metrics - Gross profit margin for the fourth quarter was 27.2%, down 50 basis points sequentially but up 20 basis points year over year[5]. - Diluted earnings per share for the fourth quarter were $0.30, with adjusted diluted earnings per share at $0.43, a decrease of 31.7% sequentially and 28.3% year over year[5]. - Adjusted EBITDA for Q4 2025 was $16,748,000, a decrease of 14.3% from $19,407,000 in Q3 2025 and a decrease of 18.5% from $20,565,000 in Q4 2024[31]. - Adjusted EBITDA for the year 2025 totaled $72,790,000, a decrease of 18.8% from $89,687,000 in 2024[32]. - Net income for the year ended December 31, 2025, was $34,825,000, down 30.9% from $50,414,000 in 2024[32]. Expenses and Costs - SG&A expenses as a percentage of revenue for the fourth quarter were 24.2%, an increase of 140 basis points sequentially and 220 basis points year over year[5]. - Selling, general and administrative expenses for Q4 2025 were $80,329,000, resulting in an operating margin of 2.6%[28]. - Free cash flow for the year ended December 31, 2025, was $46,805,000, a decrease from $79,301,000 in 2024[26]. - Total depreciation and amortization for 2025 was $5,548,000, compared to $5,922,000 in 2024, reflecting a decrease of 6.3%[32]. - Stock-based compensation expense for the year 2025 was $13,742,000, a slight decrease of 2.2% from $14,044,000 in 2024[32]. - Interest expense, net, increased to $3,122,000 in 2025, up 49% from $2,097,000 in 2024[32]. - Income tax expense for 2025 was $12,120,000, down 29.7% from $17,210,000 in 2024[32]. - Organizational realignment activities incurred an expense of $1,200,000 in 2025, with no such expense reported in 2024[32]. - Other non-recurring expenses amounted to $2,233,000 in 2025, with no comparable expenses in 2024[32]. Shareholder Returns - The Board of Directors approved a quarterly dividend increase to $1.60 per share, marking the seventh consecutive annual increase[6]. - The company returned $76.0 million in capital to shareholders through share repurchases and dividends during 2025, representing over 100% of operating cash flows[10]. Future Outlook - First quarter 2026 guidance estimates revenue between $324 million and $332 million, with earnings per share projected between $0.37 and $0.45[10]. - The implementation of Workday as a future state enterprise cloud application is expected to be transformational for the company[2]. - The company is focused on streamlining operating costs through various initiatives, including the write-off of previously capitalized software[31].

Core Viewpoint - Kforce Inc. reported its financial results for the fourth quarter and full year of 2025, highlighting adjustments for certain expenses in its non-GAAP measures [1] Financial Performance - The company provided adjusted figures for the fourth quarter and the full year ended December 31, 2025, which are detailed in the Adjusted Financial Performance section [1]

Group 1 - Truist raised the price target on Kforce (KFRC) to $38 from $35 while maintaining a Hold rating on the shares [1] - Firms are indicating improving business conditions with expectations of 4%-6% year-over-year revenue growth in 2026 [1] - Private companies reported improved business conditions throughout the fourth quarter, with January 2026 starting off solidly [1] Group 2 - Kforce initiated a stock repurchase plan in December 2025 [2]

Industry Overview - The Staffing Firms industry is expected to gradually recover to pre-pandemic levels, enabling companies to pay regular dividends [1] - The industry encompasses a wide range of human resources and workforce solutions, including recruitment, payroll administration, and organizational planning [2] Market Trends - There is stable demand in the mature business services industry, with revenues and cash flows anticipated to recover to pre-pandemic levels [3] - The adoption of remote work and hybrid models has significantly increased, prompting staffing agencies to focus on flexible staffing solutions [4] - Technological advancements are being implemented to enhance operational efficiency, with AI-driven tools and platforms becoming more prevalent [5] Industry Performance - The Zacks Staffing Firms industry currently holds a Zacks Industry Rank of 227, placing it in the bottom 7% of 244 Zacks industries, indicating sluggish near-term prospects [6] - Over the past year, the industry has underperformed the S&P 500, declining 39.2% compared to the S&P 500's growth of 18.9% [8] Valuation Metrics - The industry is currently trading at an EV-to-EBITDA ratio of 5.76X, significantly lower than the S&P 500's 18.98X and the sector's 10.7X [9] Company Highlights Resources Connection (RGP) - RGP has seen favorable international growth, particularly in Europe, India, Japan, and the Philippines, with steady revenues and improved gross margins [14] - The company holds $90 million in cash with zero current debt, indicating a strong balance sheet [16] - RGP's current ratio is 2.64, suggesting strong short-term debt coverage capability [16] - The Zacks Consensus Estimate for RGP's 2025 earnings per share has been revised up by 14.3% [17] Kforce (KFRC) - Kforce reported a top line of $332.6 million and 63 cents in EPS, exceeding expectations [18] - The company maintains a strong balance sheet with zero current debt and a current ratio of 1.88 [20] - KFRC's shares have gained 21.1% over the past three months [21] HireQuest (HQI) - HQI's system-wide sales grew 6.1% year-over-year, with a net income of $2.3 million in the third quarter of 2025 [21][22] - The company's current ratio is 2.4, indicating a strong liquidity position [23] - HQI's shares have gained 29.6% over the past three months [23]