Kforce (KFRC) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue was $334.3 million, up 1.3% sequentially but down 6.2% year-over-year, reflecting stable demand in core Technology and Finance & Accounting Flex segments despite macroeconomic uncertainty.

• Flex revenue grew sequentially in both Technology and Finance & Accounting, while Direct Hire revenue remained challenged and below expectations.

• AI and digital transformation are key focus areas, with growing client interest and early-stage project engagements.

• Net income for Q2 2025 was $10.4 million, with EPS of $0.59, a 31.1% sequential increase but a 21.3% decrease year-over-year.

• $17.4 million was returned to shareholders via share repurchases and dividends in Q2 2025.

Financial highlights

• Gross profit margin for Q2 2025 was 27.1%, up 40 bps sequentially but down 70 bps year-over-year due to higher healthcare costs and lower direct hire mix.

• Operating margin was 4.5%, up 100 bps sequentially, down 100 bps year-over-year; effective tax rate was 24.6%.

• Adjusted EBITDA for Q2 2025 was $19.9 million, up from $16.8 million in Q1 2025 but down from $24.8 million in Q2 2024.

• Free cash flow for the first half of 2025 was $10.3 million, compared to $29.1 million in the prior year period.

• SG&A expenses were 22.2% of revenue, up 40 bps year-over-year.

Outlook and guidance

• Q3 2025 revenue expected between $324 million and $332 million; EPS guidance is $0.53–$0.61.

• Gross profit margin projected at 27.0% to 27.2%; operating margin at 4.0% to 4.4%.

• Technology Flex revenue expected to decline low single digits sequentially and mid single digits year-over-year in Q3 2025.

• FA Flex revenue projected to improve mid single digits sequentially but decline high single digits year-over-year in Q3 2025.

• Direct Hire revenue anticipated to remain flat sequentially and decrease in the mid-20% range year-over-year in Q3 2025.