Core Insights - Kforce reported Q2 2025 GAAP earnings per share of $0.59, slightly below estimates, with GAAP revenue of $334.3 million, marginally exceeding estimates by $0.15 million [1][2] - Year-over-year comparisons show a decline in both revenue (down 6.2%) and earnings (down 21.3%), although operating margins and expenses improved compared to the previous quarter [1][2][7] - Management described the results as consistent with expectations, indicating steady operational execution in a challenging environment [1] Financial Performance - Q2 2025 GAAP EPS was $0.59, matching estimates but down from $0.75 in Q2 2024, reflecting a 21.3% decline [2] - GAAP revenue for Q2 2025 was $334.3 million, slightly above the estimated $334.15 million but down from $356.3 million in Q2 2024, a decrease of 6.2% [2] - Operating margin improved to 4.5% from the previous quarter, while gross profit margin was 27.1%, down from 27.8% year-over-year [2][7] Business Overview - Kforce specializes in technology staffing and professional services, with approximately 92% of revenue derived from technology staffing as of fiscal year 2024 [3] - The company has focused on operational transformation, investing in cloud technologies and expanding its market share in U.S. technology staffing [4] Segment Performance - Technology Flex revenue was $307.8 million, up 1.8% from the prior quarter but down 5.0% year-over-year [5] - Finance and Accounting Flex revenue was $20.6 million, rising 2.1% from the previous quarter but falling 16.8% year-over-year [6] - Direct Hire segment revenue was $5.9 million, with placement volumes down over 25% from the prior quarter [6] Strategic Initiatives - Kforce is progressing on key investment programs, including the implementation of Workday, a cloud-based ERP system, expected to be completed in Q1 2026 [8] - The development center in India, operational since January 2025, has secured early project contracts [8] Shareholder Returns - The quarterly dividend was maintained at $0.39 per share, with $17.4 million returned to shareholders through dividends and share repurchases during Q2 2025 [9] - The company ended the quarter with $2.47 million in cash and $70.0 million in long-term debt [9] Future Guidance - For Q3 2025, management projected GAAP revenue between $324 million and $332 million and GAAP EPS of $0.53 to $0.61, both below the recently reported results [10] - Management remains cautious, indicating that short-term softness is due to specific client decisions rather than a decline in demand [10][11]

Company Performance - Kforce reported quarterly earnings of $0.59 per share, missing the Zacks Consensus Estimate of $0.60 per share, and down from $0.75 per share a year ago, representing an earnings surprise of -1.67% [1] - The company posted revenues of $334.32 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.16%, but down from $356.32 million year-over-year [2] - Over the last four quarters, Kforce has surpassed consensus EPS estimates just once, while topping consensus revenue estimates three times [2] Stock Performance - Kforce shares have declined approximately 18.1% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] - The current Zacks Rank for Kforce is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.61 on revenues of $331.76 million, and for the current fiscal year, it is $2.19 on revenues of $1.32 billion [7] - The outlook for the staffing industry, where Kforce operates, is currently in the top 39% of Zacks industries, suggesting potential for better performance compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Total revenues for the second quarter were $334.3 million, a decline of 6.2% year over year, consistent with expectations [12] - Earnings per share for the quarter were $0.59, aligning with expectations [21] - Overall gross margins increased by 40 basis points sequentially to 27.1%, driven by an increase in Flex margins [21] - Operating margin for the second quarter was 4.5%, with an effective tax rate of 24.6%, slightly lower than expected due to favorable adjustments [23][24] Business Line Data and Key Metrics Changes - Flex revenues in technology and finance and accounting businesses improved slightly sequentially in Q2, while Direct Hire revenues faced challenges [12] - Flex revenues in the finance and accounting business, which represent about 6% of total revenues, declined 16.8% year over year but saw sequential growth for the first time in years [18] - Average bill rate in the technology business remained stable at approximately $90, while the finance and accounting average bill rate improved to about $54 [14][18] Market Data and Key Metrics Changes - The company operates in a demand-constrained environment, with clients maintaining significant backlogs of technology investments [4][5] - Job gains have been concentrated in sectors like healthcare, leisure, hospitality, and construction, while job creation outside these sectors has been minimal [5] - The demand for consulting-led offerings remains strong, contributing to overall technology top-line outperformance [13] Company Strategy and Development Direction - The company is focused on organic growth strategies and investing in consulting-oriented solutions to meet client needs [10][12] - There is a strategic shift towards providing flexible talent solutions as companies assess macroeconomic conditions [6][9] - The company aims to leverage AI and other innovative technologies to enhance business operations and client offerings [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stability of the technology business and the potential for growth in AI-related services [9][20] - The company anticipates a modest sequential decline in technology business revenues in Q3 due to unexpected project ends [17] - Management highlighted the importance of retaining productive associates and making targeted investments to capitalize on future market demand [19][20] Other Important Information - The company has returned approximately $1 billion in capital to shareholders since 2007, representing about 75% of cash generated [26] - The company expects Q3 revenues to be in the range of $324 million to $332 million, with earnings per share between $0.53 and $0.61 [26] Q&A Session Summary Question: Can you discuss the levels of discussion regarding AI and when the company expects to assist clients more significantly? - Management noted that most organizations are still in the preparation phase for AI, focusing on foundational readiness aspects [30][31] Question: What is the nature of the unexpected project ends mentioned? - Management clarified that these project ends were due to clients reallocating technology investments rather than budget cuts [36][37] Question: How is the pipeline looking currently? - Management indicated that the pipeline remains strong, with pent-up demand for legacy projects and increased interest in data and AI preparation [38][39] Question: Is there a common thread among the project ends impacting trends? - Management stated that the project ends were largely due to strategic reallocations of technology investments by clients [77][80] Question: What impact does the nearshore/offshore dynamic have on margins? - Management confirmed that while the nearshore/offshore business is small, it has been slightly accretive to margins [81]

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $334.3 million, a decline of 6.2% year over year, consistent with expectations [11] - Earnings per share for the quarter were $0.59, aligning with expectations [21] - Overall gross margins increased by 40 basis points sequentially to 27.1%, driven by an increase in Flex margins [21][22] - Flex margins in the technology business increased by 70 basis points sequentially but declined by 30 basis points year over year due to higher healthcare costs [22] Business Line Data and Key Metrics Changes - Flex revenues in technology and finance and accounting improved slightly sequentially in Q2, while Direct Hire revenues faced challenges [11] - Flex revenues in the finance and accounting business, which represent about 6% of total revenues, declined 16.8% year over year but saw sequential growth for the first time in years [18] - The average bill rate in the technology business remained stable at $90, while the average bill rate in finance and accounting improved to approximately $54 per hour [13][18] Market Data and Key Metrics Changes - The company operates in a demand-constrained environment, with clients maintaining a significant backlog of technology investments [4][5] - Job gains have been concentrated in sectors like healthcare, leisure, hospitality, and construction, while job creation outside these sectors has been minimal [5] - The demand for consulting-led offerings remains strong, contributing to overall technology top-line outperformance [12] Company Strategy and Development Direction - The company is focused on organic growth strategies and expanding its consulting-oriented solutions to meet client needs [9][12] - There is a strategic emphasis on AI and innovative technologies, with the company positioned to assist clients in their AI journeys [6][8] - The company aims to maintain a strong balance sheet while returning capital to shareholders through dividends and share repurchases [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stability of the technology business and the potential for growth in AI-related services [8][20] - The company anticipates a modest sequential decline in technology business revenues in Q3 due to unexpected project ends [17][19] - Management highlighted the importance of retaining productive associates and making targeted investments to capitalize on future market demand [19][20] Other Important Information - The company has returned approximately $1 billion in capital to shareholders since 2007, representing about 75% of cash generated [27] - The effective tax rate for Q2 was 24.6%, slightly lower than expected due to favorable adjustments in tax credits [24][25] - The company expects Q3 revenues to range between $324 million and $332 million, with earnings per share between $0.53 and $0.61 [27] Q&A Session Summary Question: Discussion on AI projects and client engagement - Management noted that most clients are in the foundational readiness phase for AI, with only about 10% fully equipped to leverage AI [32][33] - There is significant opportunity in data preparation and modernization activities as companies prepare for AI [34][46] Question: Insights on project ends and budget reallocations - Management clarified that recent project ends were due to clients reallocating technology investments rather than budget cuts [40][41] - The overall sentiment remains one of stability, with clients engaging at consistent rates [82] Question: Trends in finance and accounting business - The finance and accounting business has seen sequential growth due to a focus on higher skill sets and a strong client base [56][60] - Management expressed confidence in the stability and execution of the finance and accounting team moving forward [57] Question: Gross margin pressures and healthcare costs - The decline in gross margins was attributed to a lower mix of Direct Hire revenues and higher healthcare costs, though Flex margins remained stable [62][66] - Consulting-oriented solutions continue to positively impact financial performance and gross margins [66] Question: Offshore capabilities and pricing strategies - The company has developed its offshore capabilities to complement domestic skill sets, providing clients with cost-effective solutions [71] - The impact of offshore business on margins has been slightly positive, though it remains a small part of overall operations [87] Question: Overall project pipeline and legacy systems - The pipeline remains strong, with pent-up demand for legacy projects and investments in data and AI preparation [42][43] - Companies are modernizing legacy systems while still investing in technology despite economic uncertainties [48][49]

Executive Summary [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) Kforce's Q2 2025 revenue was **$334.3 million**, showing sequential Flex revenue growth, improved margins, and increased diluted EPS | Metric | Q2 2025 | Sequential Change | YoY Change | | :-------------------------------- | :---------- | :---------------- | :--------- | | Revenue | $334.3 million | +1.3% | -6.2% | | Technology Flex Revenue | | +1.8% | -5.0% | | FA Flex Revenue | | +2.1% | -16.8% | | Gross Profit Margins | 27.1% | +40 bps | -70 bps | | Flex Gross Profit Margins | 25.8% | +80 bps | -40 bps | | SG&A as % of Revenue | 22.2% | -60 bps | +40 bps | | Operating Margins | 4.5% | +100 bps | -100 bps | | Diluted EPS | $0.59 | +31.1% | -21.3% | - Kforce returned **$17.4 million** in capital to shareholders through share repurchases and quarterly dividends during Q2 2025[3](index=3&type=chunk) - The Board of Directors approved a Q3 cash dividend of **$0.39 per share**[3](index=3&type=chunk) [CEO Commentary and Business Outlook](index=1&type=section&id=CEO%20Commentary%20and%20Business%20Outlook) CEO noted sequential Flex revenue growth in Technology and FA, with business stability despite macroeconomic uncertainty - Sequential Flex revenue growth achieved in both **Technology** and **Finance and Accounting** businesses[2](index=2&type=chunk) - Operating in a demand-constrained environment due to macroeconomic uncertainty, global trade negotiations, and mixed economic data[2](index=2&type=chunk) - Encouraged by recent trends affirming stability in the **Technology** business, with clients holding a significant backlog of strategically imperative technology investments[2](index=2&type=chunk) Company Information [About Kforce Inc.](index=2&type=section&id=About%20Kforce%20Inc.) Kforce Inc. specializes in technology, finance, and accounting staffing, aiding digital transformation - Kforce Inc. specializes in **technology, finance and accounting**, and other professional staffing services[5](index=5&type=chunk) - The firm's KNOWLEDGEforce® empowers companies to achieve digital transformation goals through curated teams of technical experts[5](index=5&type=chunk) - With 60 years of experience, Kforce deploys approximately **18,000 talented experts annually** to Fortune 500 and other leading companies on a temporary and direct-hire basis[6](index=6&type=chunk) Financial Results - Second Quarter 2025 [Summary of Operations](index=4&type=section&id=Summary%20of%20Operations) Kforce's Q2 2025 net income was **$10.4 million** and diluted EPS **$0.59**, reflecting sequential improvements Summary of Operations (in thousands) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------- | :------------ | :------------- | :------------ | | Revenue | $334,316 | $330,028 | $356,318 | | Gross profit | $90,648 | $88,260 | $98,973 | | Income from operations | $14,888 | $11,631 | $19,700 | | Net income | $10,449 | $8,145 | $14,157 | | Earnings per share – diluted | $0.59 | $0.45 | $0.75 | | Weighted average shares outstanding - diluted | 17,759 | 18,241 | 18,886 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$373.6 million**, driven by debt and cash, while equity decreased Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $2,472 | $349 | | Total current assets | $222,852 | $225,406 | | Total assets | $373,640 | $357,834 | | Total current liabilities | $109,332 | $112,457 | | Long-term debt – credit facility | $70,000 | $32,700 | | Total liabilities | $239,220 | $203,216 | | Total stockholders' equity | $134,420 | $154,618 | [Key Operational Statistics](index=6&type=section&id=Key%20Operational%20Statistics) Kforce's Q2 2025 total revenue was **$334.3 million**, primarily Flex revenue, with sequential growth in Technology and FA Key Operational Statistics (in thousands) | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | | :-------------------------- | :------ | :------ | :------ | | **Total Firm** | | | | | Total Revenue | $334,316 | $330,028 | $356,318 | | Flex revenue | $328,411 | $322,570 | $348,784 | | Direct Hire revenue | $5,905 | $7,458 | $7,534 | | **Technology Segment** | | | | | Total Revenue | $310,527 | $306,284 | $327,874 | | Flex revenue | $307,844 | $302,435 | $324,064 | | Direct Hire revenue | $2,683 | $3,849 | $3,810 | | **Finance and Accounting Segment** | | | | | Total Revenue | $23,789 | $23,744 | $28,444 | | Flex revenue | $20,567 | $20,135 | $24,720 | | Direct Hire revenue | $3,222 | $3,609 | $3,724 | Gross Profit Percentage by Segment | Segment | Q2 2025 (%) | Q1 2025 (%) | Q2 2024 (%) | | :-------- | :------ | :------ | :------ | | Total Firm GP % | 27.1% | 26.7% | 27.8% | | Technology GP % | 26.3% | 25.9% | 26.8% | | Finance and Accounting GP % | 38.1% | 38.2% | 38.9% | Non-GAAP Financial Measures [Revenue Growth Rates](index=7&type=section&id=Revenue%20Growth%20Rates) Non-GAAP revenue growth rates, adjusted for billing days, show **Technology Flex** grew **0.2%** and **FA Flex** grew **0.5%** sequentially - Non-GAAP revenue growth rates remove the impact of changes in billing days to better evaluate revenue trends[16](index=16&type=chunk) Flex Revenue Growth Rates (Non-GAAP) | Metric | Q2 2025 Sequential (%) | Q2 2025 Year-Over-Year (%) | | :---------------- | :----------------- | :--------------------- | | Technology Flex | +0.2% | -5.0% | | FA Flex | +0.5% | -16.8% | | Total Flex revenue | +0.2% | -5.8% | [Free Cash Flow](index=8&type=section&id=Free%20Cash%20Flow) Free Cash Flow, a non-GAAP measure, was **$10.3 million** for the six months ended June 30, 2025, a year-over-year decrease - Free Cash Flow is a non-GAAP measure representing net cash from operating activities minus capital expenditures, used to assess liquidity and cash available for strategic opportunities[18](index=18&type=chunk) Free Cash Flow (Six Months Ended June 30, in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------- | :--- | :--- | | Net cash provided by operating activities | $18,614 | $34,105 | | Capital expenditures | ($8,290) | ($4,979) | | Free cash flow | $10,324 | $29,126 | [Adjusted EBITDA](index=8&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA, a non-GAAP measure, was **$19.9 million** for Q2 2025, showing sequential growth but a year-over-year decline - Adjusted EBITDA is a non-GAAP measure used by management to assess core profitability, cash flow generation, and debt repayment ability, excluding non-cash and non-operating items[20](index=20&type=chunk)[21](index=21&type=chunk) Adjusted EBITDA Reconciliation (Three Months Ended, in thousands) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------- | :------------ | :------------- | :------------ | | Net income | $10,449 | $8,145 | $14,157 | | Depreciation and amortization | $1,390 | $1,464 | $1,555 | | Stock-based compensation expense | $3,618 | $3,656 | $3,498 | | Interest expense, net | $1,018 | $565 | $504 | | Income tax expense | $3,410 | $2,921 | $5,039 | | Adjusted EBITDA | $19,885 | $16,751 | $24,753 | [Third Quarter 2025 Guidance](index=2&type=section&id=Third%20Quarter%202025%20Guidance) Kforce anticipates Q3 2025 revenue between **$324 million** and **$332 million**, with diluted EPS from **$0.53** to **$0.61** Third Quarter 2025 Guidance | Metric | Guidance Range | | :-------------------------------- | :------------- | | Revenue | $324 million to $332 million | | Earnings per share | $0.53 to $0.61 | | Gross profit margins | 27.0% to 27.2% | | Flex gross profit margins | 25.7% to 25.9% | | SG&A expenses as a percent of revenue | 22.4% to 22.6% | | Operating margin | 4.0% to 4.4% | | WASO | 17.7 million | | Effective tax rate | 21.0% | [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) Forward-looking statements are subject to risks like macroeconomic conditions, trade policies, and competitive factors - Forward-looking statements are subject to risks and uncertainties, including macroeconomic conditions, global trade policies, competitive pressures, and market demand shifts[7](index=7&type=chunk) - Factors such as the ability to attract and retain consultants and management, changes in business mix, and compliance with regulations could materially affect actual results[7](index=7&type=chunk) [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Kforce held a conference call on July 28, 2025, at 5:00 p.m. E.T. to discuss Q2 2025 results - A conference call was held on July 28, 2025, at 5:00 p.m. E.T. to discuss Q2 2025 results[4](index=4&type=chunk) - Dial-in number: **(800) 715-9871**, Passcode: **"Kforce"**. Webcast replay available at **http://investor.kforce.com**[4](index=4&type=chunk)

Company Overview and Strategy - Kforce's market capitalization is $1.3 billion and trades on NASDAQ under the ticker "KFRC"[7] - The company generates 100% of its revenue domestically with approximately 1,800 associates across the U S[7] - Kforce is strategically focused on technology, with technology revenues representing 90% of the total, compared to 6% for government, and 22% for financial and healthcare in 2007[7] - The company returned over 100% of operating cash flows to shareholders in FY 2023[7] Financial Performance in 2023 - FY 2023 revenues declined by 10.1% to $1.5 billion[7] - Technology flex revenues decreased by 7.1% in FY 2023, but grew slightly less than 1% sequentially in Q4 2023[7, 20] - The company reduced structural annual operating costs by approximately $14 million in July 2023[21] - GAAP EPS in Q4 2023 was $0.82, and adjusted EPS in FY 2023 was $3.49[21] - TTM EBITDA is approximately $116 million with outstanding borrowings of approximately $42 million[22] Capital Allocation and Shareholder Returns - Kforce returned $94.7 million in capital to shareholders in 2023 through share repurchases and dividends[22] - The annual dividend was increased by 5.5% to $1.52 per share, and the share repurchase authorization was increased to $100 million[22] Technology Business and Market - Technology staffing addressable market is projected to be $41.2 billion in 2023 and $43.2 billion in 2024[27] - The technology bill rate is approximately $90, and the flex GP% is 25.4%[7, 29]

Financial Performance - Revenue for Q1 2025 was $330,028, a decrease of 6.2% compared to $351,889 in Q1 2024[16] - Gross profit for Q1 2025 was $88,260, down from $95,250 in Q1 2024, reflecting a decline of 7.3%[16] - Net income for Q1 2025 was $8,145, a decrease of 25.9% from $10,987 in Q1 2024[16] - Earnings per share (EPS) for Q1 2025 was $0.45, compared to $0.59 in Q1 2024, representing a decline of 23.7%[16] - Revenue for the three months ended March 31, 2025 decreased 6.2% to $330.0 million from $351.9 million in the comparable period in 2024[46] - Flex revenue for the three months ended March 31, 2025 decreased 6.4% to $322.6 million from $344.7 million in the comparable period in 2024[46] - Direct Hire revenue for the three months ended March 31, 2025 increased 4.1% to $7.5 million from $7.2 million in the comparable period in 2024[46] - Net income for the three months ended March 31, 2025 decreased 25.9% to $8.1 million, or $0.45 per share, from $11.0 million, or $0.58 per share, for the three months ended March 31, 2024[46] - Gross profit margin for the three months ended March 31, 2025 decreased 40 basis points to 26.7% from 27.1% in the comparable period in 2024[46] - Flex gross profit margin for the three months ended March 31, 2025 decreased 60 basis points to 25.0% from 25.6% in the comparable period in 2024[46] - Adjusted EBITDA for Q1 2025 was $16.8 million, down from $20.6 million in Q1 2024, reflecting a decrease of 18.5%[71] Cash Flow and Capital Management - Cash provided by operating activities was $249 in Q1 2025, a decrease from $13,169 in Q1 2024, indicating a decline of 98.1%[20] - Cash provided by operating activities was $0.2 million during the three months ended March 31, 2025, compared to $13.2 million for the three months ended March 31, 2024[46] - Free cash flow for Q1 2025 was $(3.9) million, a significant decline from $11.3 million in Q1 2024[69] - Capital expenditures in Q1 2025 were $4.1 million, an increase from $1.9 million in Q1 2024[75] - The company repurchased common stock worth $21,066 during Q1 2025, compared to $2,848 in Q1 2024, showing a significant increase in buyback activity[20] - Kforce repurchased approximately 418 thousand shares of common stock for about $21.2 million during Q1 2025[79] - The company declared and paid quarterly dividends of $7.1 million in Q1 2025, representing a 3% increase per share compared to Q1 2024[76] - The Firm returned $28.3 million of capital to shareholders in the form of open market repurchases totaling $21.2 million and quarterly dividends totaling $7.1 million during the three months ended March 31, 2025[46] Debt and Assets - Total assets increased to $368,195 as of March 31, 2025, up from $357,834 at the end of 2024, reflecting a growth of 2.0%[18] - Long-term debt increased significantly to $65,500 in Q1 2025 from $32,700 at the end of 2024, indicating a rise of 100.0%[18] - As of March 31, 2025, Kforce had $65.5 million outstanding under its credit facility, with $133.4 million available for borrowing[72] - Working capital increased to $118.5 million as of March 31, 2025, up from $112.9 million at the end of 2024[72] Market and Economic Conditions - The national U.S. unemployment rate increased to 4.2% in March 2025, up from 4.1% in December 2024, indicating a slight rise in economic uncertainty[49] - The technology temporary staffing industry is projected to grow by 2% in 2025, down from an earlier forecast of 5%[49] - Kforce expects Technology Flex revenue to improve slightly on a billing day basis in Q2 2025, while FA Flex revenue is anticipated to decrease in the mid-single digits sequentially[52][53] Strategic Initiatives and Investments - Kforce continues to prioritize investments in strategic initiatives, including the implementation of Workday, expected to go live in early 2026[64] - Selling, general and administrative expenses (SG&A) increased to 22.8% of total revenue in Q1 2025, compared to 22.2% in Q1 2024, reflecting ongoing investments in strategic priorities[63] Legal and Compliance - The company is involved in legal proceedings but does not expect these to have a material effect on its financial statements[89] - There have been no material changes in the risk factors previously disclosed in the 2024 Annual Report[90] - Kforce maintains liability insurance covering various risks, but there is no assurance that it will cover all events or liabilities[89] - The company has made accruals for certain legal matters that are not considered material individually or in the aggregate[89] - The certifications of the CEO and CFO were provided in accordance with the Sarbanes-Oxley Act of 2002[87] - The company continues to evaluate its financial position and may be subject to additional liabilities from ongoing litigation[89] Shareholder Actions - Kforce's Board approved an increase in the stock repurchase authorization to $100 million in February 2024[91] - The company has approximately $42,275,612 remaining under its stock repurchase plan as of March 31, 2025[91] - Kforce repurchased a total of 420,122 shares of common stock during the three months ended March 31, 2025, at an average price of $50.71 per share[91] - No insider trading arrangements were adopted or terminated by the company's officers or directors during the three months ended March 31, 2025[94]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $330 million, a decline of 4.7% year-over-year on a billing day basis [12] - Earnings per share were $0.45, slightly above the low end of guidance [23] - Overall gross margins decreased by 30 basis points sequentially to 26.7% due to seasonal declines in Flex margins [23][24] - Operating margin was reported at 3.5% with an effective tax rate of 26.4% [25] Business Line Data and Key Metrics Changes - Revenues in the technology business declined 5.2% sequentially and 3.5% year-over-year per billing day [12] - Flex revenues in the FA business, which represent 6.1% of total revenues, declined 22% year-over-year [20] - Average bill rates in the technology business were stable at approximately $90, showing slight growth [16][24] Market Data and Key Metrics Changes - The retail and transportation industries outperformed sequentially in Q1, while financial services experienced downward pressure [19] - The company noted that its footprint is focused on supporting large clients, leading to mixed revenue performance within the same industry verticals [19] Company Strategy and Development Direction - The company remains focused on strategically imperative technology investments and is well-positioned to capture additional market share [6] - Significant investments are being made in the implementation of Workday as a future state enterprise cloud application, expected to go live in early 2026 [7][25] - The company is evolving its nearshore and offshore delivery capabilities, particularly through its India Development Center [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding demand despite macroeconomic uncertainties, noting an improvement in consultants on assignments [5][6] - The company anticipates modest sequential growth in its technology business for Q2 2025 [19] - Management emphasized the importance of maintaining focus on long-term strategic priorities while managing productivity and profitability [25] Other Important Information - The company has returned approximately $1 billion in capital to shareholders since 2007, representing about 75% of cash generated [27] - The company continues to carry a solid balance sheet with conservative debt levels [27] Q&A Session Summary Question: Client commitment to existing projects - Management indicated that clients are generally stable in their project commitments, with no significant cancellations observed [34][46] Question: Guidance for future trends - Guidance suggests stability in sequential trends for the remainder of the quarter, without anticipating a worsening environment [37][40] Question: Capacity and personnel adjustments - The company has made significant adjustments to its delivery headcount, down nearly 40%, but believes it has ample capacity to meet increased demand without adding significant resources [21][58] Question: Healthcare costs impact - Higher healthcare costs were attributed to claim severity rather than volume, with management indicating that they monitor and price these costs accordingly [73][97] Question: Candidate availability - Candidate availability has not changed materially, with stability in pay rates reflecting the ongoing demand for skilled talent [102][104] Question: Share repurchase activity - The company has been more aggressive in share repurchase activity, returning significant capital to shareholders while maintaining a strong balance sheet [106][107]

Company Performance - Kforce reported quarterly earnings of $0.45 per share, missing the Zacks Consensus Estimate of $0.48 per share, and down from $0.58 per share a year ago, representing an earnings surprise of -6.25% [1] - The company posted revenues of $330.03 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.11%, and down from $351.89 million year-over-year [2] - Over the last four quarters, Kforce has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Kforce shares have declined approximately 22.6% since the beginning of the year, compared to a decline of -6.1% for the S&P 500 [3] - The current Zacks Rank for Kforce is 5 (Strong Sell), indicating expected underperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.69 on revenues of $343.82 million, and for the current fiscal year, it is $2.55 on revenues of $1.37 billion [7] - The staffing industry, to which Kforce belongs, is currently ranked in the bottom 8% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Data and Key Metrics Changes - Total revenues for the first quarter were $330 million, a decline of 4.7% year-over-year on a billing day basis [12] - Earnings per share were $0.45, slightly above the low end of guidance [22] - Overall gross margins decreased by 30 basis points sequentially to 26.7% due to seasonal declines in Flex margins [22][24] - Operating margin was reported at 3.5% with an effective tax rate of 26.4% [25] Business Line Data and Key Metrics Changes - Revenues in the technology business declined 5.2% sequentially and 3.5% year-over-year per billing day [12] - Flex revenues in the FA business, which currently represent 6.1% of total revenues, declined 22% year-over-year [19] - Average bill rates in the technology business remained stable at $90, continuing a trend of stability for nearly three years [16] Market Data and Key Metrics Changes - The retail and transportation industries outperformed sequentially in Q1, while financial services experienced downward pressure [18] - The company noted that its footprint is focused on supporting large clients, leading to mixed revenue performance within the same industry verticals [18] Company Strategy and Development Direction - The company remains focused on strategically imperative technology investments and has divested from federal government business to concentrate on the commercial space [6] - Significant investments are being made in the implementation of Workday as a future state enterprise cloud application, expected to go live in early 2026 [8] - The company is enhancing its nearshore and offshore delivery capabilities, particularly through its India Development Center [9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding demand despite macroeconomic uncertainties, noting an improvement in consultants on assignments [5][6] - The company anticipates modest sequential growth in its technology business for Q2 [18] - Management emphasized the importance of retaining productive associates and making targeted investments to prepare for future market demand [20] Other Important Information - The company has returned approximately $1 billion in capital to shareholders since 2007, representing about 75% of cash generated [27] - The second quarter is expected to have 64 billing days, with revenues projected between $332 million and $340 million [28] Q&A Session Summary Question: Insights on client commitments amid uncertainty - Management noted stable activity and no significant project cancellations, with clients showing caution in new spending [34][46] Question: Guidance on future revenue trends - Guidance suggests stability in trends for the remainder of the quarter, with expectations of modest growth [40] Question: Capacity to handle increased demand - The company has maintained a strong sales capacity and can ramp up quickly without significant personnel increases [60] Question: Impact of healthcare costs on margins - Higher healthcare costs were attributed to claim severity rather than volume, with expectations for stabilization in Q2 [76][100] Question: Candidate availability in the market - Candidate availability has not changed materially, reflecting stability in pay rates [105] Question: Share repurchase activity - The company has been more aggressive in share repurchase activity, returning significant capital to shareholders [108]