Kforce (KFRC) Q4 2025 earnings summary

Executive summary

• Fourth quarter 2025 revenues were $332 million, exceeding expectations and showing the highest sequential flex revenue growth in technology since Q2 2022, though year-over-year revenue declined 3.4%.

• Full year 2025 revenue was $1.33 billion, down 5.4% year-over-year, marking the third consecutive year of declines, but recent trends show momentum and optimism for 2026.

• Strategic initiatives advanced, including Workday implementation, offshore delivery in India, and integrated service offerings.

Financial highlights

• Q4 2025 gross margin was 27.2%, down 50 bps sequentially but up 20 bps year-over-year; full year gross margin was 27.2%, down 20 bps year-over-year.

• Q4 2025 operating margin was 2.6% (adjusted 3.6%), down 190 bps sequentially and year-over-year; full year operating margin was 3.8% (adjusted 4.0%), down 120 bps.

• Q4 2025 diluted EPS was $0.30 (adjusted $0.43), down 31.7% sequentially and 28.3% year-over-year; full year EPS was $1.96 (adjusted $2.09), down 26.9% and 22.0% year-over-year.

• Q4 2025 Adjusted EBITDA was $16.7 million; full year Adjusted EBITDA was $72.8 million.

• Free cash flow for 2025 was $46.8 million; operating cash flows were $19.7 million.

Outlook and guidance

• Q1 2026 revenue guidance: $324–$332 million; EPS: $0.37–$0.45; gross margin expected at 26.9%–27.1%; operating margin at 3.0%–3.4%.

• Effective tax rate for Q1 and 2026 expected at 29% due to lower credits and higher non-deductible compensation.

• Annualized benefit from cost actions expected to be $7 million or $0.30 per share.

• Operating margins expected to improve in 2026 even if revenue trends remain flat.

• Guidance reflects best start to a year since 2022, with Q4 momentum carrying into Q1.