Kelly Services — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue was $0.9 billion, a 0.8% decrease year-over-year (YoY) and an improvement of 500 basis points versus the prior quarter; underlying revenue grew 2.3% YoY.
• Q3 operating earnings were $0.6 million compared to a loss of $102.1 million in Q3 2025, which included a $102.0 million non-cash goodwill impairment charge.
• Adjusted operating earnings for Q3 2026 were $6.1 million, up from $4.3 million in Q3 2025.
• Adjusted EBITDA for Q3 2026 was $21.3 million, a 29.1% increase YoY, with an adjusted EBITDA margin of 2.3% (up 50 bps YoY).
• Q3 2026 loss per share was $0.05 compared to a loss of $4.26 per share in Q3 2025; adjusted earnings per share were $0.07 compared to $0.17 in Q3 2025.
• For the 39 weeks ended September 27, 2026, revenue was $3.0 billion, a 6.1% decrease YoY; underlying revenue declined approximately 0.7%.
• Operating earnings for the first nine months of 2026 were $11.6 million compared to a loss of $69.1 million in the same period of 2025.
• Adjusted EBITDA for the first nine months of 2026 was $68.2 million, a 22.9% decrease YoY, with an adjusted EBITDA margin of 2.3% (down 50 bps YoY).
• Adjusted operating earnings for the first nine months of 2026 were $29.5 million, down from $51.0 million in the prior year period.
• Year-to-date earnings per share were $0.10 compared to a loss of $3.56 per share in 2025; adjusted earnings per share were $0.46 compared to $1.10 in 2025.
• Year-to-date free cash flow was $(35.0) million compared to $87.2 million in the prior year period.
• Long-term debt as of September 27, 2026, was $122.5 million, up from $118.4 million in September 2025.
• Cash and equivalents were $22.2 million as of September 27, 2026, down from $30.1 million in September 2025.
• Working capital was $486.3 million as of September 27, 2026, compared to $473.3 million in September 2025.

Guidance and Future Outlook:

• Q4 2026 revenue is expected to be flat to up 1% YoY; the outlook includes the benefit of an extra fiscal week which adds approximately 3 points to revenue growth.
• Q4 2026 adjusted EBITDA margin is expected to expand 180 to 200 bps YoY, resulting in a margin of 3.8% to 4.0%.
• Full year 2026 revenue is expected to decline in the mid-single digits.
• Full year 2026 adjusted EBITDA margin is expected to be 2.6% to 2.7%, reflecting flat to 10 bps of YoY improvement.
• The outlook assumes no material change in the macroeconomic environment relative to the third quarter and is consistent with full-year expectations set in February 2026.
• The outlook reflects delayed return to growth in the Education business and near-term incremental demand pressure from one discrete ETM customer.

Business Segments and Product Lines:

• Enterprise Talent Management (ETM) underlying revenue grew 7.7% YoY (2.4% reported), driven by growth in staffing and talent solutions specialties.
• Science, Engineering & Technology (SET) underlying revenue decreased 0.8% YoY (2.0% reported); Science and Engineering specialties grew YoY, while Technology strengthened sequentially.
• Education segment revenue decreased 6.4% YoY in Q3, impacted by reduced student enrollment in key markets and delayed prior-year contract decisions.
• Discrete impacts from reduced demand for U.S. federal government contractors in SET and three large commercial customers in ETM totaled approximately 3.1% in Q3 and 5.4% year-to-date.
• ETM adjusted EBITDA margin improved YoY and versus the prior quarter; SET adjusted EBITDA margin also improved YoY and versus the prior quarter.
• Education segment adjusted EBITDA margin was negative in Q3 due to school year seasonality.
• Permanent placement income in Q3 2026 was $14.2 million, up 21.4% from $11.7 million in Q3 2025.

Market and Competitive Landscape:

• Demand trends are described as increasingly constructive, with positive operational momentum across much of the portfolio.
• The company faces reduced demand for U.S. federal government contractors in the SET segment.
• The Education segment continues to face headwinds from reduced student enrollment in key markets.
• The company cites benefits from acquisition integration and technology modernization efforts contributing to expense management.

Risks and Challenges:

• Forward-looking statements note risks including changing market and economic conditions, disruption in the labor market, and weakened demand due to technological advances or competitive pressures.
• Risks include loss of large corporate customers and government contractor requirements, changes in laws and regulations, and unexpected claim trends on benefit plans.
• Potential risks include litigation, brand damage, dependence on third parties, foreign currency fluctuations, and cyberattacks.
• The company faces challenges related to the availability of temporary workers with appropriate skills.

Management Commentary and Tone:

• CEO Chris Layden stated results were delivered above the midpoint of guidance, driven by growth and efficiency initiatives and constructive demand trends.
• Management noted that year-over-year revenue improved sequentially for a third consecutive quarter.
• The tone reflects confidence in the company's position to capitalize on increasing demand while driving margin expansion and long-term value creation.
• Management highlighted that ETM pivoted to positive YoY revenue growth and SET delivered another quarter of sequential revenue improvement.

Other Key Points:

• On November 4, 2026, the board declared a quarterly dividend of $0.075 per share, payable December 2, 2026, to stockholders of record as of November 18, 2026.
• The board approved the renewal and extension of the share repurchase program without an expiration date, authorizing the repurchase of up to $50.0 million of Class A common stock.
• The prior year period included a $102.0 million non-cash goodwill impairment charge in the SET segment driven by reduced demand and acquisition integration.
• The company published a financial presentation and hosted a live webcast conference call on November 5, 2026.
• Integration, realignment, and restructuring charges in Q3 2026 totaled $5.1 million, primarily related to integrating MRP and other prior acquisitions.
• Transaction costs in 2026 were primarily related to a controlling shareholder change in the first quarter.
• Executive transition costs in 2026 were associated with segment leader changes.
• Asset impairment charges in 2026 related to right-of-use assets and lease portfolio realignment.
• The company serves approximately 375,000 people annually with a network of suppliers and partners globally.