Kelly Services (KELYA) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue was $1.0 billion, down 10.7% year-over-year, but underlying revenue excluding discrete items declined only 3.3%, showing sequential improvement.

• Adjusted EBITDA margin was 1.5%, in line with expectations, and sequentially improved from Q4, though down 150 basis points year-over-year.

• Strategic priorities include technology modernization, cost optimization, and a unified go-to-market approach, with a new Growth Office and leadership changes to drive commercial integration.

• New customer wins, including a major MSP contract with a global oil and gas company, contributed to stabilizing trends.

• Education segment continued to face pressure from delayed contracts, enrollment declines, and weather-related school closures.

Financial highlights

• Gross profit was $196.4 million, down 17% year-over-year, with a gross profit rate of 18.9%, a 140 basis point decline.

• Adjusted SG&A expenses decreased 10.3% year-over-year, with core SG&A down sequentially for three quarters.

• Adjusted EPS was $0.03, down from $0.39 in the prior year; reported loss per share was $0.17.

• Net loss was $5.9 million, compared to net earnings of $5.8 million in Q1 2025.

• Cash used in operations was $25.4 million; total liquidity at quarter-end was $252 million, with $130.5 million in borrowings.

Outlook and guidance

• Q2 2026 revenue expected to decline 7–9% year-over-year, with at least 100 basis points improvement in underlying decline; adjusted EBITDA margin expected at least 2.5%.

• Modest revenue growth and margin expansion anticipated in the second half of 2026; full-year revenue to decline mid-single digits.

• Full-year core SG&A expenses projected to decline by $25 million despite ongoing investments.

• Management expects to meet ongoing cash requirements through operations, available cash, and credit facilities.