Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $332.6 million, exceeding expectations, with earnings per share of $0.63, surpassing the high end of guidance [2][19] - Overall gross margins improved to 27.7%, up 60 basis points sequentially, while flex margins in the technology business increased by 50 basis points [19][20] - SG&A expenses as a percentage of revenue increased to 22.8%, primarily due to lower revenue and gross profit levels [20] Business Line Data and Key Metrics Changes - Technology business revenues declined 1.1% sequentially and 5.6% year-over-year, while finance and accounting business grew approximately 7% sequentially but declined slightly more than 8% year-over-year [11][19] - Consultants on assignment grew roughly 4% from early third quarter lows, indicating a positive trend in staffing [11][12] - Flex revenues in the finance and accounting business, which currently represent about 7% of total revenues, declined 7.3% year-over-year but saw 6.9% sequential growth [16] Market Data and Key Metrics Changes - The labor market remains weak, with prolonged stagnation in job gains, but internal KPIs improved throughout Q3, leading to an increase in consultants on assignment [4][11] - Demand for services is broad-based across various industries, with no specific industry driving growth, indicating a stable market environment [56][58] Company Strategy and Development Direction - The company is focused on organic growth strategies, emphasizing partnerships with clients to address critical business challenges [9][24] - There is a strong commitment to investing in AI readiness and evolving skill sets to meet growing client demands [9][15] - The company aims to achieve double-digit operating margins and approximately 8% profitability when annual revenues return to $1.7 billion [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic position and ability to deliver above-market results despite macroeconomic uncertainties [26] - The ongoing federal government shutdown and global trade negotiations create a challenging near-term outlook, but there is optimism for sequential growth in Q4 [3][4] - The company anticipates a sequential billing day increase in the technology business during Q4, supported by momentum from new engagements [15][19] Other Important Information - The company returned $16.2 million to shareholders through dividends and share repurchases, maintaining a strong balance sheet with conservative leverage [22][24] - The board approved an increase in share authorization to $100 million, reaffirming the company's commitment to returning capital to shareholders [23] Q&A Session Summary Question: Can you provide a sense of typical July through September performance compared to this year? - Management noted a 4% increase in consultants on assignment, indicating a healthy growth rate compared to pre-pandemic levels, though slightly lower than historical highs [28][29] Question: What contributed to the improvement in gross margins? - The increase in flex gross margins was attributed to lower healthcare costs and a favorable mix shift towards consulting engagements, which typically carry higher margins [30][32] Question: What is the company's exposure to H1B visa changes? - The company has minimal exposure as it does not sponsor new H1B visas, focusing instead on transitioning existing employees, thus expecting no immediate impact on talent access [34][36] Question: What types of AI-related projects are driving demand? - The majority of work involves foundational readiness, data modernization, and operational AI use cases, with a focus on measurable returns [42][44] Question: How close is the company to a staffing revenue bottom? - Management indicated promising signs of stabilization in staffing revenue, with growth observed in both staff augmentation and consulting services [49][50]

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]