Kforce Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the quarter ended September 30, 2026, was $357.8 million, representing a 7.5% year-over-year increase and a 2.4% sequential increase.
• Technology Flex revenue grew 7.8% year over year, while FA Flex revenue increased 4.6% year over year.
• Gross profit margins were 28.2%, an improvement of 50 basis points year over year, though they decreased 30 basis points sequentially.
• Flex gross profit margins were 26.8%, up 50 basis points year over year and down 10 basis points sequentially.
• SG&A expenses as a percentage of revenue were 21.6%, a decrease of 120 basis points year over year and 110 basis points sequentially; this included a 60 basis point benefit from a gain on company-owned life insurance (COLI) policies.
• Operating margins were 6.3%, an increase of 180 basis points year over year and 90 basis points sequentially, also benefiting by 60 basis points from the COLI gain.
• Diluted earnings per share (EPS) were $0.90, a 42.9% increase year over year and 23.3% sequentially; excluding the $0.12 COLI gain, the year-over-year increase would have been 23.8%.
• Net income was $15.445 million for the quarter.
• Adjusted EBITDA was $27.477 million for the quarter.
• Free cash flow for the nine months ended September 30, 2026, was negative $8.029 million, compared to positive $30.139 million in the same period of 2025.
• Long-term debt increased to $107.9 million as of September 30, 2026, from $66.4 million as of December 31, 2025.
• Cash and cash equivalents decreased to $250,000 as of September 30, 2026, from $2.142 million as of December 31, 2025.

Guidance and Future Outlook:

• Fourth quarter 2026 revenue guidance is $352 million to $360 million.
• Fourth quarter 2026 EPS guidance is $0.62 to $0.70.
• Fourth quarter 2026 gross profit margin guidance is 27.8% to 28.0%.
• Fourth quarter 2026 Flex gross profit margin guidance is 26.4% to 26.6%.
• Fourth quarter 2026 SG&A expenses as a percent of revenue guidance is 22.8% to 23.0%.
• Fourth quarter 2026 operating margin guidance is 4.5% to 4.9%.
• Fourth quarter 2026 guidance includes an estimated 62 billing days.
• Fourth quarter 2026 effective tax rate guidance is 28.7%.
• Management noted that revenue growth momentum began in the second half of 2025, with Technology business growth rates roughly equivalent to pre-pandemic compound annual growth rates.

Business Segments and Product Lines:

• Technology segment revenue was $331.2 million, growing 7.8% year over year, with Technology Flex revenue at $328.1 million.
• Finance and Accounting (FA) segment revenue was $26.5 million, growing 4.6% year over year, with FA Flex revenue at $23.0 million.
• Direct Hire revenue was $6.7 million for the quarter, with 309 placements and an average fee of $21,709.
• Technology Direct Hire revenue was $3.2 million with 154 placements.
• FA Direct Hire revenue was $3.5 million with 155 placements.
• Total hours billed were 4,018,000, up from 3,795,000 in the prior year period.

Market and Competitive Landscape:

• Management highlighted that broader uncertainty and client hesitation to add full-time staff reinforce the need for flexible workforce solutions.
• The firm operates in an environment where technological transitions continue to reshape the labor market and create opportunities for workers to develop new skills.
• The firm serves Fortune 500 and other leading companies, with approximately 17,000 experts working annually.

Risks and Challenges:

• Forward-looking statements identify risks including general business conditions, global trade policy, geopolitical events, and government shutdowns.
• Risks include shifts in market demand, specifically those resulting from the growth of artificial intelligence (AI).
• Potential constraints in the supply of consultants and candidates, or the firm's ability to attract and retain them, are noted.
• Risks related to contract performance, delays, termination, or failure to obtain new assignments are mentioned.
• Risks include the ability to comply with obligations in a remote work environment, including unauthorized or fraudulent activity by consultants.
• Risks include changes in the effective tax rate, adverse weather conditions, and potential litigation or regulatory matters.

Management Commentary and Tone:

• President and CEO Joseph J. Liberatore expressed extreme pleasure with accelerating revenue and earnings growth, noting the quarter exceeded the high end of guidance.
• Management stated that the firm's "One Kforce" integrated operating model is gaining traction.
• Liberatore emphasized the value of flexible workforce solutions as clients adapt to near-term uncertainty and assess the implications of emerging technologies.
• Management expressed pride in the determination of their people and the trust placed by clients in advancing meaningful, higher-value engagements.

Other Key Points:

• The company returned $6.7 million in capital to shareholders via quarterly dividends during the third quarter of 2026.
• The Board of Directors approved a fourth quarter cash dividend of $0.40 per share, payable on December 18, 2026, to shareholders of record as of December 4, 2026.
• A $0.12 gain on company-owned life insurance policies contributed to the quarter's EPS and operating margins.
• The firm hosted a conference call on October 26, 2026, to discuss results.
• Non-GAAP financial measures including Revenue Growth Rates (adjusted for billing days), Free Cash Flow, and Adjusted EBITDA were presented with reconciliations to GAAP figures.