Kelly Services (KELYA) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue rose 4.2% year-over-year to $1.1B, primarily driven by the MRP acquisition, while organic revenue declined 3.3% due to reduced demand from U.S. federal contractors and large customers.

• Adjusted EBITDA for Q2 was $37.0M, down 8.7% year-over-year, with margin decreasing 40 bps to 3.4%.

• Net earnings increased to $19.0M in Q2 2025 from $4.6M in Q2 2024; EPS rose to $0.52, while adjusted EPS was $0.54, down from $0.71.

• Education segment grew 5.6% in Q2, offsetting declines in other areas; SET and ETM segments faced margin pressure.

• Integration of MRP and realignment of business units advanced, with a focus on higher-margin, outcome-based solutions and technology modernization.

Financial highlights

• Q2 2025 revenue: $1,101.8M (up 4.2% year-over-year); gross profit: $225.5M (up 5.5%); gross margin: 20.5% (up 30 bps).

• Adjusted EBITDA: $37.0M (down 8.7% YoY); adjusted EBITDA margin: 3.4% (down 40 bps YoY).

• Net earnings: $19.0M; adjusted net earnings: $19.8M; adjusted EPS: $0.54 (down from $0.71 in Q2 2024).

• Free cash flow YTD: $114.8M (vs. $25.5M in 2024); total available liquidity: $301M.

• $4M gain from the sale of EMEA staffing operations included in Q2 results.

Outlook and guidance

• Q3 2025 revenue expected to decline 5–7% year-over-year, mainly due to reduced demand from federal contractors and large customers; underlying revenue growth (excluding these) projected at 1–3%.

• Q3 adjusted EBITDA margin expected to expand by 80–90 bps year-over-year; modest full-year margin improvement anticipated.

• Net debt expected to increase over the remainder of the year due to seasonal cash flow, but overall reduction in net debt versus prior year anticipated.

• No material impact expected from recent U.S. tax law changes.