Kforce(KFRC) - 2025 Q2 - Quarterly Results

Executive Summary Second Quarter 2025 Performance Highlights 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] - The Board of Directors approved a Q3 cash dividend of $0.39 per share[3] CEO Commentary and Business Outlook 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] - Operating in a demand-constrained environment due to macroeconomic uncertainty, global trade negotiations, and mixed economic data[2] - Encouraged by recent trends affirming stability in the Technology business, with clients holding a significant backlog of strategically imperative technology investments[2] Company Information About Kforce Inc. 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] - The firm's KNOWLEDGEforce® empowers companies to achieve digital transformation goals through curated teams of technical experts[5] - 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] Financial Results - Second Quarter 2025 Summary of Operations 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 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 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 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] 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 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] 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 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][21] 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 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 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] - 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] Conference Call Details 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] - Dial-in number: (800) 715-9871, Passcode: "Kforce". Webcast replay available at **http://investor.kforce.com**[4](index=4&type=chunk)