[10-Q] KFORCE INC Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Kforce Inc. reported essentially flat results for the quarter ended March 31, 2026, with revenue of nearly $330.4 million, up 0.1% from $330.0 million a year earlier. Technology revenue was stable while Finance & Accounting grew 2.8%.
Flex revenue rose 0.5% to $324.2 million, driven by more consultants on assignment, while higher-margin Direct Hire revenue fell 17.7% to $6.1 million as placements declined. Total gross profit margin improved to 27.3% from 26.7%, helped by better bill/pay spreads and lower healthcare costs.
Net income declined 2.7% to $7.9 million, though diluted EPS edged up to $0.46 from $0.45 as the share count decreased. Operating cash flow was a use of $4.1 million, mainly from slower collections, and debt under the credit facility increased to $91.5 million. The company returned about $18.6 million to shareholders via stock repurchases and dividends and ended with $95.8 million of working capital.
Positive
- None.
Negative
- None.
Key Figures
Revenue: $330.4M
Net income: $7.9M
Diluted EPS: $0.46
+5 more
8 metrics
Revenue
$330.4M
Three months ended March 31, 2026; up 0.1% year over year
Net income
$7.9M
Three months ended March 31, 2026; down 2.7% year over year
Diluted EPS
$0.46
Three months ended March 31, 2026; up from $0.45 in 2025
Gross profit margin
27.3%
Q1 2026; increased 60 basis points from 26.7% in Q1 2025
Flex revenue
$324.2M
Q1 2026; 0.5% growth versus Q1 2025
Direct Hire revenue
$6.1M
Q1 2026; decreased 17.7% versus Q1 2025
Adjusted EBITDA
$16.9M
Q1 2026 non-GAAP metric including addbacks for D&A, stock comp, interest and taxes
Credit facility debt
$91.5M
Outstanding under senior secured credit facility at March 31, 2026
Key Terms
Flex revenue, Direct Hire revenue, Adjusted EBITDA, Free Cash Flow, +2 more
6 terms
Flex revenue financial
"Flex revenue for the three months ended March 31, 2026 increased 0.5% to $324.2 million"
Direct Hire revenue financial
"Direct Hire revenue for the three months ended March 31, 2026 decreased 17.7% to $6.1 million"
Adjusted EBITDA financial
"“Adjusted EBITDA,” a non-GAAP financial measure, is defined by Kforce as net income before depreciation and amortization"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free Cash Flow financial
"“Free Cash Flow,” a non-GAAP financial measure, is defined by Kforce as net cash provided by operating activities"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Credit Facility financial
"the Firm entered into a senior secured credit facility with Bank of America, N.A."
A credit facility is a flexible loan arrangement that allows a borrower to access funds up to a set limit whenever needed, similar to a company having an overdraft option on a bank account. It matters to investors because it indicates how easily a business can secure cash when required, affecting its ability to manage expenses, invest, or respond to financial challenges.
Stock-based compensation financial
"Stock-based compensation expense was $3.6 million and $3.7 million, respectively"
Stock-based compensation is when a company pays employees, directors or consultants with shares or the right to buy shares instead of or in addition to cash. It matters to investors because issuing stock or options spreads ownership thinner (like cutting a pie into more slices), which can reduce each existing share’s claim on profits and can also change reported earnings; investors watch it to assess true cost of running the business and how management is incentivized.
Earnings Snapshot
Revenue: $330.4M
Q1 2026
Revenue
$330.4M
+0.1% YoY
Net income
$7.9M
-2.7% YoY
Gross profit margin
27.3%
+0.6 percentage points YoY
Flex revenue
$324.2M
+0.5% YoY
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________________________________________________
FORM 10-Q
________________________________________________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number 001-42104
_________________________________________________________________
Exact name of registrant as specified in its charter
_______________________________________________________________
| State or other jurisdiction of incorporation or organization | IRS Employer Identification No. | |||||||
| Address of principal executive offices | Zip Code | |||||||
Registrant’s telephone number, including area code: (813 ) 552-5000
_______________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.): Yes ☐ No ☒
The number of shares outstanding (in thousands) of the registrant’s common stock at April 22, 2026 was 17,832 .
Table of Contents
KFORCE INC.
TABLE OF CONTENTS
PART I | Item 1. | Financial Statements. | 3 | ||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 12 | |||||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 20 | |||||||||
| Item 4. | Controls and Procedures. | 20 | |||||||||
PART II | Item 1. | Legal Proceedings. | 21 | ||||||||
| Item 1A. | Risk Factors. | 21 | |||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 21 | |||||||||
| Item 3. | Defaults Upon Senior Securities. | 21 | |||||||||
| Item 4. | Mine Safety Disclosures. | 21 | |||||||||
| Item 5. | Other Information. | 21 | |||||||||
| Item 6. | Exhibits. | 22 | |||||||||
SIGNATURES | 23 | ||||||||||
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS | ||
References in this document to the “Registrant,” “Kforce,” the “Company,” the “Firm,” “management,” “we,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context otherwise requires or indicates. This report, particularly Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and Part II, Item 1A. Risk Factors, and the documents we incorporate into this report contain certain statements that are, or may be deemed to be, forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance upon the protections provided by such acts for forward-looking statements. Such statements may include, but may not be limited to:
•expectations of financial or operational performance, including the potential effects of macroeconomic and geopolitical uncertainties, such as impacts of energy prices on consumer spending and tariffs, among others, on our business;
•our predictions regarding improving client confidence and early signs of stabilization across the labor market;
•our prediction that organizations are increasingly turning to flexible talent strategies to advance technology initiatives;
•the impacts of revenue and gross profit levels on SG&A expenses;
•our expectations of growth rates in temporary staffing and future changes in revenue and gross profit margins of each segment of our business;
•changes in demand for our services and our ability to adapt to such changes;
•continued investments in our strategic priorities, and our ability to realize the benefits of our strategic priorities;
•the Firm’s commitment, intent and ability to return significant capital to its shareholders through open market repurchases and quarterly dividends;
•our ability to meet the capital expenditure and working capital requirements of our operations;
•financing needs or plans, or our ability to maintain compliance with our credit facility's covenants;
•clients’ increased cautiousness and subdued hiring practices due to macroeconomic uncertainty;
•the impact of technological change, such as artificial intelligence (“AI") and derivative developments including generative AI, agentic AI, cognitive AI, etc. on the demand for our services; and
•assumptions as to any of the foregoing and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events.
For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, refer to the MD&A and Risk Factors sections. In addition, when used in this discussion, the terms “anticipate,” “assume,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “may,” “likely,” “could,” “should,” “future” and variations thereof and similar expressions are intended to identify forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted. Future events and actual results could differ materially from those set forth in or underlying the forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this report, which speak only as of the date of this report. Kforce undertakes no obligation to update any forward-looking statements.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
KFORCE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Direct costs | ||||||||
| Gross profit | ||||||||
| Selling, general and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Income from operations | ||||||||
| Other expense, net | ||||||||
| Income before income taxes | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Earnings per share – basic | $ | $ | ||||||
| Earnings per share – diluted | $ | $ | ||||||
| Weighted average shares outstanding – basic | ||||||||
| Weighted average shares outstanding – diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KFORCE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
Trade receivables, net of allowances of $ | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Other assets, net | ||||||||
| Deferred tax assets, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and other accrued liabilities | $ | $ | ||||||
| Accrued payroll costs | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Income taxes payable | ||||||||
| Total current liabilities | ||||||||
| Long-term debt – credit facility | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
Commitments and contingencies (Note J) | ||||||||
| Stockholders’ equity: | ||||||||
Preferred stock, $ | ||||||||
Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
Treasury stock, at cost; | ( | ( | ||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KFORCE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS)
| Common Stock | Additional Paid-In Capital | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Retained Earnings | Shares | Amount | |||||||||||||||||||
Balance, December 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Issuance for stock-based compensation and dividends, net of forfeitures | ( | — | — | ||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||
Dividends ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
| Repurchases of common stock | — | — | — | — | ( | ( | |||||||||||||||||
| Other | — | — | — | ( | — | — | ( | ||||||||||||||||
Balance, March 31, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||
| Common Stock | Additional Paid-In Capital | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Retained Earnings | Shares | Amount | |||||||||||||||||||
Balance, December 31, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Issuance for stock-based compensation and dividends, net of forfeitures | ( | — | — | ||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||
| Employee stock purchase plan | — | — | — | ( | |||||||||||||||||||
Dividends ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
| Repurchases of common stock | — | — | — | — | ( | ( | |||||||||||||||||
| Other | — | — | — | ( | — | — | ( | ||||||||||||||||
Balance, March 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KFORCE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
| Deferred income tax provision, net | ( | |||||||
| Provision for credit losses | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Noncash lease expense | ||||||||
| Other | ||||||||
| (Increase) decrease in operating assets | ||||||||
| Trade receivables, net | ( | ( | ||||||
| Other assets | ( | ( | ||||||
| Increase (decrease) in operating liabilities | ||||||||
| Accrued payroll costs | ||||||||
| Other liabilities | ( | ( | ||||||
| Cash (used in) provided by operating activities | ( | |||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | ( | ( | ||||||
| Premiums paid for company-owned life insurance | ( | |||||||
| Cash used in investing activities | ( | ( | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from credit facility | ||||||||
| Payments on credit facility | ( | ( | ||||||
| Repurchases of common stock | ( | ( | ||||||
| Cash dividends | ( | ( | ||||||
| Other | ( | |||||||
| Cash provided by financing activities | ||||||||
| Change in cash and cash equivalents | ( | |||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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| Three Months Ended March 31, | ||||||||
| Supplemental Disclosure of Cash Flow Information | 2026 | 2025 | ||||||
| Cash Paid During the Period For: | ||||||||
| Income taxes, net | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Interest, net | ||||||||
| Non-Cash Investing and Financing Transactions: | ||||||||
| ROU assets obtained from operating leases | $ | $ | ||||||
| Employee stock purchase plan | ||||||||
| Unsettled repurchases of common stock | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KFORCE INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - Summary of Significant Accounting Policies
Unless otherwise noted below, there have been no material changes to the accounting policies presented in Note 1 - “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of our 2025 Annual Report on Form 10-K.
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and footnotes normally required by GAAP for complete financial statements have been condensed or omitted pursuant to those rules and regulations, although management believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2025 Annual Report on Form 10-K. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation. The Unaudited Condensed Consolidated Balance Sheet at December 31, 2025, was derived from our audited Consolidated Balance Sheet at December 31, 2025, as presented in our 2025 Annual Report on Form 10-K.
Our quarterly operating results are affected by the seasonality of our clients’ businesses and changes in holiday and vacation days taken. In addition, we typically experience higher costs in the first quarter of each fiscal year as a result of certain U.S. state and federal employment tax resets, which adversely affects our gross profit and overall profitability relative to the remainder of the fiscal year. As such, the results of operations for any interim period may be impacted by these factors, among others, and are not necessarily indicative of, nor comparable to, the results of operations for a full year.
Principles of Consolidation
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most critical of these estimates and assumptions include income taxes and the evaluation of goodwill for impairment. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.
Earnings per Share
The following table provides information on potentially dilutive securities:
| (shares in thousands) | 2026 | 2025 | ||||||
| Three Months Ended March 31, | ||||||||
| Common stock equivalents | ||||||||
| Anti-dilutive shares | ||||||||
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Treasury Stock
The Board of Directors has approved a stock repurchase program, which has been amended several times to increase the aggregate amount of the stock repurchase authorization. During the three months ended March 31, 2026, Kforce repurchased 428 thousand shares of common stock on the open market at a total cost of $11.8 million under this repurchase program. During the three months ended March 31, 2025, Kforce repurchased 418 thousand shares of common stock on the open market at a total cost of $21.2 million under this repurchase program. In October 2025, the Board approved an increase in the stock repurchase authorization, bringing the total authorization to $100.0 million for the stock repurchase program.
Note B - Reportable Segments
The following table provides information on the operations of our two reportable segments:
| (in thousands) | Technology | FA | Total | ||||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | |||||||||||
| Revenue | $ | $ | $ | ||||||||
| Direct costs | |||||||||||
| Gross profit | $ | $ | $ | ||||||||
| Less: | |||||||||||
| Selling, general and administrative expenses | |||||||||||
| Depreciation and amortization | |||||||||||
| Other expense, net | |||||||||||
| Income before income taxes | $ | ||||||||||
| 2025 | |||||||||||
| Revenue | $ | $ | $ | ||||||||
| Direct costs | |||||||||||
| Gross profit | $ | $ | $ | ||||||||
| Less: | |||||||||||
| Selling, general and administrative expenses | |||||||||||
| Depreciation and amortization | |||||||||||
| Other expense, net | |||||||||||
| Income before income taxes | $ | ||||||||||
Note C - Disaggregation of Revenue
The following table provides information about disaggregated revenue by segment and revenue type:
| (in thousands) | Technology | FA | Total | ||||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | |||||||||||
| Flex revenue | $ | $ | $ | ||||||||
| Direct Hire revenue | |||||||||||
| Total Revenue | $ | $ | $ | ||||||||
| 2025 | |||||||||||
| Flex revenue | $ | $ | $ | ||||||||
| Direct Hire revenue | |||||||||||
| Total Revenue | $ | $ | $ | ||||||||
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Note D - Allowance for Credit Losses
The following table presents the activity within the allowance for credit losses on trade receivables for the three months ended March 31, 2026:
| (in thousands) | |||||
| Allowance for credit losses, December 31, 2025 | $ | ||||
| Current period provision | |||||
| Write-offs charged against the allowance, net of recoveries of amounts previously written off | ( | ||||
| Allowance for credit losses, March 31, 2026 | $ | ||||
The allowances on trade receivables presented in the Unaudited Condensed Consolidated Balance Sheets include $0.4
Note E - Other Assets, Net
Other assets, net consisted of the following:
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Assets held in Rabbi Trust | $ | $ | ||||||
Capitalized software, net (1) | ||||||||
| Other non-current assets | ||||||||
| Total Other assets, net | $ | $ | ||||||
(1) This balance includes $23.7 million and $20.0 million related to capitalized implementation costs from cloud computing arrangements at March 31, 2026 and December 31, 2025, respectively. Accumulated amortization of capitalized software was $43.5 million and $42.9 million at March 31, 2026 and December 31, 2025, respectively.
Note F - Current Liabilities
The following table provides information on certain current liabilities:
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Accounts payable | $ | $ | ||||||
| Deferred compensation payable | ||||||||
| Customer rebates payable | ||||||||
| Accrued liabilities | ||||||||
| Accrued professional fees | ||||||||
| Total Accounts payable and other accrued liabilities | $ | $ | ||||||
| Payroll and benefits | $ | $ | ||||||
| Health insurance liabilities | ||||||||
| Payroll taxes | ||||||||
| Workers’ compensation liabilities | ||||||||
| Total Accrued payroll costs | $ | $ | ||||||
Note G - Credit Facility
On November 5, 2025, the Firm entered into a senior secured credit facility with Bank of America, N.A., as administrative and collateral agent, BofA Securities, Inc. and PNC Capital Markets LLC as joint lead arrangers, BofA Securities, Inc. as bookrunner and the lenders referred to therein (the “Credit Facility”). Under the Credit Facility, the Firm has a maximum borrowing capacity of $200.0 million, which includes a $10.0 million sublimit for the issuance of standby and commercial letters and $10.0 million sublimit for swingline loans, and may, subject to certain conditions and the participation of the lenders, be increased up to an aggregate additional amount of $150.0 million. Borrowings under the Credit Facility are secured by substantially all of the tangible and intangible assets of the Firm. The maturity date of the Credit Facility is November 5, 2030.
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At March 31, 2026 and December 31, 2025, $91.5 million and $66.4 million was outstanding under the Credit Facility, respectively. Kforce had $1.1
Note H - Other Long-Term Liabilities
Other long-term liabilities consisted of the following:
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Deferred compensation payable - long term | $ | $ | ||||||
| Other long-term liabilities | ||||||||
| Total Other long-term liabilities | $ | $ | ||||||
Note I - Stock-Based Compensation
On April 22, 2026, Kforce’s shareholders approved the 2026 Stock Incentive Plan (the “2026 Plan”). The 2026 Plan allows for the issuance of stock options, stock appreciation rights (“SAR”), stock awards (including restricted stock awards (“RSAs”) and restricted stock units (“RSUs”)) and other stock-based awards, such as Performance-Based Awards (collectively referred to as “Restricted Stock”). The aggregate number of shares reserved under the 2026 Plan is approximately 2.8 million. Grants of an option or SAR reduce the reserve by one share, while a Restricted Stock award reduces the reserve by 2.72 shares. The 2026 Plan terminates on April 22, 2036.
The following table presents the Restricted Stock activity for the three months ended March 31, 2026:
| (in thousands, except per share amounts) | Number of Restricted Stock | Weighted-Average Grant Date Fair Value | Total Intrinsic Value of Restricted Stock Vested | ||||||||
| Outstanding at December 31, 2025 | $ | ||||||||||
| Granted | $ | ||||||||||
| Forfeited | ( | $ | |||||||||
| Vested | ( | $ | $ | ||||||||
| Outstanding at March 31, 2026 | $ | ||||||||||
At March 31, 2026, total unrecognized stock-based compensation expense related to restricted stock was $36.7 million, which is expected to be recognized over a weighted-average remaining period of 4.0 years.
During the three months ended March 31, 2026 and 2025, stock-based compensation expense was $3.6 million and $3.7 million, respectively. Stock-based compensation is included in Selling, general and administrative expenses (“SG&A”) in the Unaudited Condensed Consolidated Statements of Operations.
Note J - Commitments and Contingencies
Employment Agreements
Kforce has employment agreements with certain executives that provide for certain post-employment benefits under certain circumstances. At March 31, 2026, our liability would be approximately $30.9 million if, following a change in control, all of the executives under contract were terminated without cause by the employer or if the executives resigned for good reason, and $11.7 million if, in the absence of a change in control, all of the executives under contract were terminated by Kforce without cause or if the executives resigned for good reason.
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Litigation
We are involved in legal proceedings, claims and administrative matters that arise in the ordinary course of business, and we have made accruals with respect to certain of these matters, where appropriate, that are reflected in our unaudited condensed consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters for which an accrual has not been made, we have not yet determined that a loss is probable, or the amount of loss cannot be reasonably estimated. The outcome of any litigation is inherently uncertain, but we do not expect that these proceedings and claims, individually or in the aggregate, will have a material effect on our unaudited condensed consolidated financial statements; however, if decided adversely to us, or if we determine that settlement of particular litigation is appropriate, we may be subject to additional liabilities that could have a material adverse effect on our financial position, results of operations or cash flows. Kforce maintains liability insurance that insures us against workers’ compensation, personal and bodily injury, property damage, directors’ and officers’ liability, errors and omissions, cyber liability, employment practices liability and fidelity losses. There can be no assurance that Kforce’s liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
EXECUTIVE SUMMARY
The following is an executive summary of what Kforce believes are highlights as of and for the three months ended March 31, 2026, which should be considered in the context of the additional discussions herein and in conjunction with the unaudited condensed consolidated financial statements and notes thereto.
•Revenue for the three months ended March 31, 2026 increased 0.1% to nearly $330.4 million from $330.0 million in the comparable period in 2025. Revenue decreased 0.1% for Technology and increased 2.8% for FA.
•Flex revenue for the three months ended March 31, 2026 increased 0.5% to $324.2 million from $322.6 million in the comparable period in 2025. Flex revenue increased 0.2% and 5.7% for Technology and FA, respectively, primarily driven by an increase in consultants on assignment.
•Direct Hire revenue for the three months ended March 31, 2026 decreased 17.7% to $6.1 million from $7.5 million in the comparable period in 2025.
•Gross profit margin for the three months ended March 31, 2026 increased 60 basis points to 27.3% from 26.7% in the comparable period in 2025 primarily driven by an increase in Flex gross profit margins, which was partially offset by a decline in Direct Hire revenue.
•Flex gross profit margin for the three months ended March 31, 2026 increased 90 basis points to 25.9% from 25.0% in the comparable period in 2025 primarily driven by improved bill and pay spreads and lower healthcare costs.
•SG&A expenses as a percentage of revenue for the three months ended March 31, 2026 increased to 23.2% from 22.8% in the comparable period in 2025 primarily driven by higher performance-based compensation costs due to improved financial performance.
•Net income for the three months ended March 31, 2026 decreased 2.7% to $7.9 million, or $0.46 diluted earnings per share, from $8.1 million, or $0.45 diluted earnings per share, for the three months ended March 31, 2025.
•The Firm returned $18.6 million of capital to our shareholders in the form of open market repurchases totaling $11.8 million and quarterly dividends totaling $6.8 million during the three months ended March 31, 2026.
•Cash used in operating activities was $4.1 million during the three months ended March 31, 2026, as compared to cash provided by operating activities of $0.2 million for the three months ended March 31, 2025. The change was primarily driven by lower collections on trade receivables, partially offset by the timing of payments.
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RESULTS OF OPERATIONS
Business Overview
Kforce is a leading domestic provider of technology and finance and accounting talent solutions to innovative and industry-leading companies. At March 31, 2026, Kforce employed over 1,600 associates and had nearly 8,000 consultants on assignment. Kforce serves clients across a diverse set of industries and organizations of all sizes, but we place a particular focus on serving Fortune 500 and other leading companies.
Recent economic data continues to point to a softer labor market, particularly in professionally oriented roles. Heightened geopolitical uncertainty, including the conflict involving Iran, has contributed to significant volatility in global energy markets, resulting in sharp increases across oil, gasoline, natural gas and electricity. In this environment, discussions with our clients indicate they are focused on agility. We believe uncertainty is reinforcing the value of flexible workforce solutions as organizations seek to advance a significant backlog of high-priority technology initiatives while they gain greater clarity around geopolitical developments and the longer-term impact of emerging technologies on their businesses and talent strategies.
Against this backdrop, we experienced year‑over‑year revenue growth in the first quarter of 2026 for the first time in over three years, which we expect to further improve in the second quarter of 2026. Supported by our integrated go‑to‑market approach and the continued focus of our teams operating as One Kforce - our integrated operating model where our teams work together across service lines - we believe we are well positioned to support clients as they advance their technology roadmaps amid an evolving economic environment.
Based on data published by the Staffing Industry Analysts (“SIA”), temporary employment figures and trends are important indicators of staffing demand from an economic standpoint. The national U.S. unemployment rate declined to 4.3% in March 2026 as compared to 4.4% in December 2025. In the latest U.S. staffing industry forecast published by SIA in March 2026, the technology temporary staffing industry is estimated to grow 1% in 2026.
Operating Results - Three Months Ended March 31, 2026 and 2025
The following table presents certain items in our Unaudited Condensed Consolidated Statements of Operations as a percentage of revenue:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue by segment: | ||||||||
| Technology | 92.6 | % | 92.8 | % | ||||
| FA | 7.4 | 7.2 | ||||||
| Total Revenue | 100.0 | % | 100.0 | % | ||||
| Revenue by type: | ||||||||
| Flex | 98.1 | % | 97.7 | % | ||||
| Direct Hire | 1.9 | 2.3 | ||||||
| Total Revenue | 100.0 | % | 100.0 | % | ||||
| Gross profit | 27.3 | % | 26.7 | % | ||||
| Selling, general and administrative expenses | 23.2 | % | 22.8 | % | ||||
| Depreciation and amortization | 0.4 | % | 0.4 | % | ||||
| Income from operations | 3.6 | % | 3.5 | % | ||||
| Income before income taxes | 3.4 | % | 3.4 | % | ||||
| Net income | 2.4 | % | 2.5 | % | ||||
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Revenue. The following table presents revenue by type for each segment and the percentage change from the prior period:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2026 | Increase (Decrease) | 2025 | ||||||||
| Technology | |||||||||||
| Flex revenue | $ | 302,955 | 0.2 | % | $ | 302,435 | |||||
| Direct Hire revenue | 3,008 | (21.8) | % | 3,849 | |||||||
| Total Technology revenue | $ | 305,963 | (0.1) | % | $ | 306,284 | |||||
| FA | |||||||||||
| Flex revenue | $ | 21,273 | 5.7 | % | $ | 20,135 | |||||
| Direct Hire revenue | 3,128 | (13.3) | % | 3,609 | |||||||
| Total FA revenue | $ | 24,401 | 2.8 | % | $ | 23,744 | |||||
| Total Flex revenue | $ | 324,228 | 0.5 | % | $ | 322,570 | |||||
| Total Direct Hire revenue | 6,136 | (17.7) | % | 7,458 | |||||||
| Total Revenue | $ | 330,364 | 0.1 | % | $ | 330,028 | |||||
Flex Revenue. The key drivers of Flex revenue are the number of consultants on assignment, billable hours, the bill rate per hour and, to a limited extent, the amount of billable expenses incurred by Kforce.
Flex revenue for our Technology business increased 0.2% during the three months ended March 31, 2026, as compared to the same period in 2025, primarily driven by an increase in consultants on assignment, which was partially offset by a slight decrease in our average bill rate. In the second quarter, we expect Technology Flex revenue to increase in the low to mid single digits sequentially, on a billing day basis, and year over year.
Our FA business experienced an increase in Flex revenue of 5.7% during the three months ended March 31, 2026, as compared to the same period in 2025, primarily driven by an increase in consultants on assignment. Additionally, our average FA bill rates improved by nearly 1% for the three months ended March 31, 2026, as compared to the same period in 2025, which continues to reflect the higher-skilled assignments that we have been strategically pursuing. In the second quarter, we expect FA Flex revenue to increase in the mid to high single digits sequentially, on a billing day basis, and increase in the high single digits year over year.
The following table presents the key drivers for the change in Flex revenue by segment over the prior period (in thousands):
| Three Months Ended | ||||||||
| March 31, 2026 vs. March 31, 2025 | ||||||||
| Key Drivers - Increase (Decrease) | Technology | FA | ||||||
| Volume - hours billed | $ | 2,478 | $ | 946 | ||||
| Bill rate | (1,848) | 198 | ||||||
| Billable expenses | (110) | (6) | ||||||
| Total change in Flex revenue | $ | 520 | $ | 1,138 | ||||
The following table presents total Flex hours billed by segment and percentage change over the prior period:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2026 | Increase (Decrease) | 2025 | ||||||||
| Technology | 3,365 | 0.8 | % | 3,337 | |||||||
| FA | 407 | 4.6 | % | 389 | |||||||
| Total Flex hours billed | 3,772 | 1.2 | % | 3,726 | |||||||
Direct Hire Revenue. The key drivers of Direct Hire revenue are the number of placements and the associated placement fee. Direct Hire revenue also includes conversion revenue, which may occur when a consultant initially assigned to a client on a temporary basis is later converted to a permanent placement for a fee.
Direct Hire revenue decreased 17.7% during the three months ended March 31, 2026, as compared to the same period in 2025, which was primarily driven by a decrease in placements.
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Gross Profit. Gross profit is determined by deducting direct costs (primarily consultant compensation, payroll taxes and certain fringe benefits, as well as independent contractor costs) from total revenue. In addition, there are no consultant payroll costs associated with Direct Hire placements; thus, all Direct Hire revenue increases gross profit by the full amount of the placement fee.
The following table presents gross profit (gross profit as a percentage of total revenue) by segment and percentage change over the prior period:
| Three Months Ended March 31, | |||||||||||
| 2026 | Increase (Decrease) | 2025 | |||||||||
| Technology | 26.5 | % | 2.3 | % | 25.9 | % | |||||
| FA | 37.1 | % | (2.9) | % | 38.2 | % | |||||
| Total gross profit percentage | 27.3 | % | 2.2 | % | 26.7 | % | |||||
Total gross profit percentage increased 60 basis points for the three months ended March 31, 2026, as compared to the same period in 2025, primarily driven by an increase in Flex gross profit margins, offsetting a decline in Direct Hire revenue.
Flex gross profit percentage (Flex gross profit as a percentage of Flex revenue) provides management with helpful insights into the other drivers of total gross profit percentage driven by our Flex business, such as changes in the spread between the consultants’ bill rate and pay rate, changes in payroll tax rates or benefits costs, as well as the impact of billable expenses, which provide no profit margin.
The following table presents the Flex gross profit percentage by segment and percentage change over the prior period:
| Three Months Ended March 31, | |||||||||||
| 2026 | Increase (Decrease) | 2025 | |||||||||
| Technology | 25.7 | % | 3.2 | % | 24.9 | % | |||||
| FA | 27.9 | % | 2.6 | % | 27.2 | % | |||||
| Total Flex gross profit percentage | 25.9 | % | 3.6 | % | 25.0 | % | |||||
Our Flex gross profit percentage increased 90 basis points for the three months ended March 31, 2026, as compared to the same period in 2025.
•Technology Flex gross profit margins increased 80 basis points for the three months ended March 31, 2026, as compared to the same period in 2025. The increase for the three months ended March 31, 2026 was primarily driven by improved bill and pay spreads and lower healthcare costs. In the second quarter, we expect Technology Flex gross profit margins to increase sequentially due to lower seasonal payroll taxes and for bill and pay spreads to be stable sequentially.
•FA Flex gross profit margins increased 70 basis points for the three months ended March 31, 2026, as compared to the same period in 2025. The increase for the three months ended March 31, 2026 was primarily driven by improved bill and pay spreads and lower healthcare costs. In the second quarter, we expect FA Flex gross profit margins to increase sequentially due to lower seasonal payroll taxes and for bill and pay spreads to be stable sequentially.
The following table presents the key drivers for the change in Flex gross profit by segment over the prior period (in thousands):
| Three Months Ended | ||||||||
| March 31, 2026 vs. March 31, 2025 | ||||||||
| Key Drivers - Increase (Decrease) | Technology | FA | ||||||
| Revenue impact (volume) | $ | 129 | $ | 309 | ||||
| Profitability impact (bill rate) | 2,537 | 154 | ||||||
| Total change in Flex gross profit | $ | 2,666 | $ | 463 | ||||
SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A represented 83.8% for the three months ended March 31, 2026, as compared to 84.4% for the comparable period in 2025. Commissions and other bonus incentives are variable costs driven primarily by revenue and gross profit levels. Therefore, as those levels change, these expenses would also generally be anticipated to change.
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The following table presents certain components of SG&A as a percentage of total revenue:
| (in thousands) | 2026 | % of Revenue | 2025 | % of Revenue | ||||||||||
| Three Months Ended March 31, | ||||||||||||||
| Compensation, commissions, payroll taxes and benefits costs | $ | 64,350 | 19.5 | % | $ | 63,476 | 19.2 | % | ||||||
Other (1) | 12,408 | 3.7 | % | 11,689 | 3.6 | % | ||||||||
| Total SG&A | $ | 76,758 | 23.2 | % | $ | 75,165 | 22.8 | % | ||||||
(1) Includes items such as credit loss expense, lease expense, professional fees, travel, communication and office-related expense, and certain other expenses.
SG&A as a percentage of revenue increased 40 basis points for the three months ended March 31, 2026, as compared to the same period in 2025, which is primarily driven by higher performance-based compensation costs due to improved financial performance.
We continue to prioritize investments in our strategic initiatives, including the implementation of Workday as part of our back-office transformation program, integrated strategy efforts, the evolution of our nearshore and offshore delivery capabilities, and driving our strategy through leverage of AI.
Depreciation and Amortization. The following table presents depreciation and amortization expense and percentage change over the prior period by major category:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2026 | Increase (Decrease) | 2025 | ||||||||
| Fixed asset depreciation | $ | 639 | (10.4) | % | $ | 713 | |||||
| Capitalized software amortization | 665 | (11.5) | % | 751 | |||||||
| Total Depreciation and amortization | $ | 1,304 | (10.9) | % | $ | 1,464 | |||||
Other Expense, Net. Other expense, net was $0.7 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively. Other expense, net primarily includes interest expense related to outstanding borrowings under our credit facility.
Income Tax Expense. Income tax expense as a percentage of income before income taxes (our “effective tax rate”) was 30.2% and 26.4% for the three months ended March 31, 2026 and 2025, respectively. The increase in our effective tax rate is related to nondeductible items such as Internal Revenue Code Section 162(m) limitations.
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Non-GAAP Financial Measures
Revenue Growth Rates. “Revenue growth rates,” a non-GAAP financial measure, is defined by Kforce as revenue growth after removing the impacts on reported revenues from the changes in the number of billing days. Management believes this data is particularly useful because it aids in evaluating revenue trends over time. The impact of billing days is calculated by dividing each comparative period’s reported revenues by the number of billing days for the respective period to arrive at a per billing day amount for each quarter. Growth rates are then calculated using the per billing day amounts as a percentage change compared to the respective period. Management calculates the number of billing days for each reporting period based on the number of holidays and business days in the quarter.
| Sequential Growth Rates (GAAP) | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||
| Technology Flex | (0.2)% | (0.2)% | (1.2)% | 1.8% | (3.7)% | |||||||||||||||
| FA Flex | (5.6)% | 2.4% | 6.9% | 2.1% | (12.8)% | |||||||||||||||
| Total Flex revenue | (0.6)% | (0.1)% | (0.7)% | 1.8% | (4.3)% | |||||||||||||||
| Sequential Growth Rates (Non-GAAP) | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||
| Billing Days | 63 | 62 | 64 | 64 | 63 | |||||||||||||||
| Technology Flex | (1.8)% | 3.0% | (1.2)% | 0.2% | (5.2)% | |||||||||||||||
| FA Flex | (7.1)% | 5.7% | 6.9% | 0.5% | (14.2)% | |||||||||||||||
| Total Flex revenue | (2.2)% | 3.2% | (0.7)% | 0.2% | (5.8)% | |||||||||||||||
| Year-Over-Year Growth Rates (GAAP) | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||
| Technology Flex | 0.2% | (3.3)% | (5.5)% | (5.0)% | (5.0)% | |||||||||||||||
| FA Flex | 5.7% | (2.4)% | (7.3)% | (16.8)% | (23.2)% | |||||||||||||||
| Total Flex revenue | 0.5% | (3.3)% | (5.7)% | (5.8)% | (6.4)% | |||||||||||||||
| Year-Over-Year Growth Rates (Non-GAAP) | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||
| Billing Days | 63 | 62 | 64 | 64 | 63 | |||||||||||||||
| Technology Flex | 0.2% | (3.3)% | (5.5)% | (5.0)% | (3.5)% | |||||||||||||||
| FA Flex | 5.7% | (2.4)% | (7.3)% | (16.8)% | (22.0)% | |||||||||||||||
| Total Flex revenue | 0.5% | (3.3)% | (5.7)% | (5.8)% | (4.9)% | |||||||||||||||
Free Cash Flow. “Free Cash Flow,” a non-GAAP financial measure, is defined by Kforce as net cash provided by operating activities determined in accordance with GAAP, less capital expenditures. Management believes this provides an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows and is useful information to investors as it provides a measure of the amount of cash generated from the business that can be used for strategic opportunities, including investing in our business, repurchasing common stock, paying dividends or making acquisitions. Free Cash Flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. Therefore, we believe it is important to view Free Cash Flow as a complement to, but not a replacement of, our Unaudited Condensed Consolidated Statements of Cash Flows.
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The following table presents Free Cash Flow:
| Three Months Ended March 31, | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Net cash used by operating activities | $ | (4,055) | $ | 249 | ||||
| Capital expenditures | (3,345) | (4,149) | ||||||
| Free cash flow | (7,400) | (3,900) | ||||||
| Change in debt | 25,100 | 32,800 | ||||||
| Repurchases of common stock | (11,683) | (21,066) | ||||||
| Cash dividends | (6,821) | (7,051) | ||||||
| Premiums paid for company-owned life insurance | — | (686) | ||||||
| Other | — | (2) | ||||||
| Change in cash and cash equivalents | $ | (804) | $ | 95 | ||||
Adjusted EBITDA. “Adjusted EBITDA,” a non-GAAP financial measure, is defined by Kforce as net income before depreciation and amortization; stock-based compensation expense; interest expense, net; and income tax expense. Adjusted EBITDA should not be considered a measure of financial performance under GAAP. Items excluded from Adjusted EBITDA are significant components in understanding and assessing our past and future financial performance, and this presentation should not be construed as an inference by us that our future results will be unaffected by those items excluded from Adjusted EBITDA. Adjusted EBITDA is a key measure used by management to assess our operations including our ability to generate cash flows and our ability to repay our debt obligations, and management believes it provides a good metric of our core profitability in comparing our performance to our competitors, as well as our performance over different time periods. Consequently, management believes it is useful information to investors. The measure should not be considered in isolation or as an alternative to net income, cash flows or other financial statement information presented in the unaudited condensed consolidated financial statements as indicators of financial performance or liquidity. Also, Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.
In addition, although we excluded stock-based compensation expense because it is a non-cash expense, we expect to continue to incur stock-based compensation expense in the future and the associated stock issued may result in an increase in our outstanding shares of stock, which may result in the dilution of our shareholder ownership interest. We suggest that you evaluate these items and the potential risks of excluding such items when analyzing our financial position.
The following table presents Adjusted EBITDA and includes a reconciliation of Net income to Adjusted EBITDA:
(in thousands) | 2026 | 2025 | ||||||
| Three Months Ended March 31, | ||||||||
| Net income | $ | 7,925 | $ | 8,145 | ||||
| Depreciation and amortization | 1,304 | 1,464 | ||||||
| Stock-based compensation expense | 3,590 | 3,656 | ||||||
| Interest expense, net | 649 | 565 | ||||||
| Income tax expense | 3,429 | 2,921 | ||||||
| Adjusted EBITDA | $ | 16,897 | $ | 16,751 | ||||
LIQUIDITY AND CAPITAL RESOURCES
To meet our capital and liquidity requirements, we primarily rely on our operating cash flows, as well as borrowings under our Credit Facility (as defined below). At March 31, 2026 and December 31, 2025, we had $91.5 million and $66.4 million outstanding under our Credit Facility, respectively, and the borrowing availability was $107.4 million and $132.5 million, respectively, subject to certain covenants. At March 31, 2026, Kforce had $95.8 million in working capital compared to $88.5 million at December 31, 2025.
Cash Flows
Our business has historically generated a significant amount of operating cash flows, which allows us to balance deploying available capital towards: (i) investing in our strategic priorities that we expect will accelerate future revenue growth and profitability levels; (ii) our dividend and share repurchase programs; and (iii) maintaining sufficient liquidity for potential acquisitions or other strategic investments.
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Cash used in operating activities was $4.1 million during the three months ended March 31, 2026, as compared to cash provided by operating activities of $0.2 million during the three months ended March 31, 2025. Our largest source of operating cash flows is the collection of trade receivables, and our largest use of operating cash flows is the payment of our associate and consultant compensation. The year-over-year decrease was primarily driven by lower collections on trade receivables, partially offset by the timing of payments.
Cash used in investing activities was $3.3 million during the three months ended March 31, 2026, and primarily consisted of cash used for capital expenditures. Cash used in investing activities during the three months ended March 31, 2025 was $4.8 million and primarily consisted of cash used for capital expenditures of $4.1 million.
Cash provided by financing activities was $6.6 million during the three months ended March 31, 2026, as compared to $4.7 million of cash used in financing activities during the three months ended March 31, 2025. This change was primarily driven by decreases in repurchases of common stock and net proceeds on our Credit Facility.
The following table presents the cash flow impact of the common stock repurchase activity:
| Three Months Ended March 31, | ||||||||
(in thousands) | 2026 | 2025 | ||||||
| Open market repurchases | $ | 11,629 | $ | 20,982 | ||||
| Repurchased shares withheld for tax withholding upon vesting of restricted stock | 54 | 84 | ||||||
| Total cash flow impact from Repurchases of common stock | $ | 11,683 | $ | 21,066 | ||||
| Cash paid in current year for settlement of prior year repurchases | $ | 200 | $ | 260 | ||||
During the three months ended March 31, 2026 and 2025, Kforce’s Board of Directors (the “Board”) declared and paid quarterly dividends of $6.8 million ($0.40 per share) and $7.1 million ($0.39 per share), respectively, which represents a 3% increase on a per share basis. While the Board has declared and paid quarterly dividends since the fourth quarter of 2014, and intends to in the foreseeable future, dividends will be subject to determination by our Board each quarter following its review of, among other things, the Firm’s current and expected financial performance as well as the ability to pay dividends under applicable law.
We believe that existing cash and cash equivalents, operating cash flows and available borrowings under our Credit Facility will be adequate to meet the capital expenditure and working capital requirements of our operations for at least the next 12 months, and the foreseeable future, which we believe will provide us the flexibility to continue returning significant capital to our shareholders. However, a material deterioration in the macroeconomic environment or market conditions, among other things, could adversely affect operating results and liquidity, as well as the ability of our lenders to fund borrowings. Actual results could also differ materially from those indicated as a result of a number of factors, including the use of currently available resources for capital expenditures, investments, additional common stock repurchases or dividends.
Credit Facility
On November 5, 2025, the Firm entered into a senior secured credit facility with Bank of America, N.A., as administrative and collateral agent, BofA Securities, Inc. and PNC Capital Markets LLC as joint lead arrangers, BofA Securities, Inc. as bookrunner and the lenders referred to therein (the “Credit Facility”). Under the Credit Facility, the Firm has a maximum borrowing capacity of $200.0 million, which includes a $10.0 million sublimit for the issuance of standby and commercial letters and $10.0 million sublimit for swingline loans, and may, subject to certain conditions and the participation of the lenders, be increased up to an aggregate additional amount of $150.0 million. At March 31, 2026, $91.5 million was outstanding and $107.4 million was available on our Credit Facility, and at December 31, 2025, $66.4 million was outstanding. At March 31, 2026, we are in compliance with all of the covenants contained in the Credit Facility as described in our 2025 Annual Report on Form 10-K, and we currently expect that we will be able to maintain compliance with these covenants.
Stock Repurchases
In October 2025, the Board approved an increase in our stock repurchase authorization, bringing the total authorization to $100.0 million. During the three months ended March 31, 2026, Kforce repurchased approximately 428 thousand shares of common stock on the open market at a total cost of approximately $11.8 million. In addition, $85.4 million remained available for further repurchases under the Board-authorized common stock repurchase program at March 31, 2026.
Contractual Obligations and Commitments
Other than the changes described elsewhere in this Quarterly Report, there have been no material changes during the period covered by this report on Form 10-Q to our contractual obligations previously disclosed in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Annual Report on Form 10-K.
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CRITICAL ACCOUNTING ESTIMATES
Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our unaudited condensed consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amount of assets, liabilities, revenues, expenses and the related disclosures. Our assumptions, estimates and judgments are based on historical experience, current trends and other factors that management believes to be relevant at the time our unaudited condensed consolidated financial statements are prepared. Management regularly reviews the accounting policies, estimates, assumptions and judgments to ensure that our unaudited condensed consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
NEW ACCOUNTING STANDARDS
Refer to Note 1 - “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data in our 2025 Annual Report on Form 10-K, for a discussion of new accounting standards.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
With respect to our quantitative and qualitative disclosures about market risk, there have been no material changes to the information included in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our 2025 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As of March 31, 2026, we carried out an evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act (the “Evaluation”), under the supervision and with the participation of our CEO and CFO, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act (“Disclosure Controls”). Based on the Evaluation, our CEO and CFO concluded that the design and operation of our Disclosure Controls were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (2) accumulated and communicated to management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding disclosure.
Changes in Internal Control over Financial Reporting
Management has evaluated, with the participation of our CEO and CFO, whether any changes in our internal control over financial reporting that occurred during our last fiscal quarter have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on the evaluation we conducted, management has concluded that no such changes have occurred.
Inherent Limitations of Internal Control Over Financial Reporting
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
CEO and CFO Certifications
Exhibits 31.1 and 31.2 are the Certifications of the CEO and the CFO, respectively. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section contains the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are involved in legal proceedings, claims and administrative matters that arise in the ordinary course of business, and we have made accruals with respect to certain of these matters, where appropriate, that are reflected in our unaudited condensed consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters for which an accrual has not been made, we have not yet determined that a loss is probable, or the amount of loss cannot be reasonably estimated. The outcome of any litigation is inherently uncertain, but we do not expect that these proceedings and claims, individually or in the aggregate, will have a material effect on our unaudited condensed consolidated financial statements; however, if decided adversely to us, or if we determine that settlement of particular litigation is appropriate, we may be subject to additional liabilities that could have a material adverse effect on our financial position, results of operations or cash flows. Kforce maintains liability insurance that insures us against workers’ compensation, personal and bodily injury, property damage, directors’ and officers’ liability, errors and omissions, cyber liability, employment practices liability and fidelity losses. There can be no assurance that Kforce’s liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities.
ITEM 1A. RISK FACTORS.
There have been no material changes in the risk factors previously disclosed in our 2025 Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Purchases of Equity Securities by the Issuer
Purchases of common stock under the Board authorized stock repurchase plan (the “Plan”) are subject to certain price, market, volume and timing constraints, which are specified in the Plan.
The following table presents information with respect to our repurchases of Kforce Inc. common stock during the three months ended March 31, 2026:
| Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||
| January 1, 2026 to January 31, 2026 | — | $ | — | — | $ | 97,199,305 | ||||||||
| February 1, 2026 to February 28, 2026 | 165,551 | $ | 28.12 | 163,683 | $ | 92,597,785 | ||||||||
| March 1, 2026 to March 31, 2026 | 264,482 | $ | 27.04 | 264,482 | $ | 85,445,414 | ||||||||
| Total | 430,033 | $ | 27.46 | 428,165 | $ | 85,445,414 | ||||||||
(1) Includes 1,868 repurchased shares withheld for tax withholding upon vesting of restricted stock for the period from February 1, 2026 to February 28, 2026.
(2) In October 2025, the Board approved a change to the Plan increasing the available authorization to $100 million.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
Insider Trading Arrangements
During the three months ended March 31, 2026, none of the Company’s officers or directors adopted terminated
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ITEM 6. EXHIBITS.
| Exhibit Number | Description | ||||
| 3.1 | Amended and Restated Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 33-91738) filed with the SEC on April 28, 1995. | ||||
3.1a | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended. | ||||
3.1b | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended. | ||||
3.1c | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended. | ||||
3.1d | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on May 17, 2000. | ||||
3.1e | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on March 29, 2002. | ||||
3.2 | Amended & Restated Bylaws, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on April 29, 2013. | ||||
10.1* | Kforce Inc. 2026 Stock Incentive Plan, incorporated by reference to the Registrant’s Registration Statement on Form S-8 (File No. 333-295318) filed with the SEC on April 24, 2026. | ||||
10.2*² | Restricted Stock Agreements under the 2026 Stock Incentive Plan. | ||||
31.1² | Certification by the Chief Executive Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||
31.2² | Certification by the Chief Financial Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||
32.1 | Certification by the Chief Executive Officer of Kforce Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 as furnished herewith. | ||||
32.2 | Certification by the Chief Financial Officer of Kforce Inc. pursuant to 18 U.S.C. Section 2350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 as furnished herewith. | ||||
| 101.1 | The following material from this Quarterly Report on Form 10-Q of Kforce Inc. for the period ended March 31, 2026, formatted in XBRL Part I, Item 1 of this Form 10-Q formatted in XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statements of Operations; (ii) Unaudited Condensed Consolidated Balance Sheets; (iii) Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity; (iv) Unaudited Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements. | ||||
| 104 | Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101. | ||||
² | Filed herewith. | ||||
| * | Management contract or compensatory plan or arrangement. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KFORCE INC. | ||||||||||||||
| Date: | April 29, 2026 | By: | /s/ JEFFREY B. HACKMAN | |||||||||||
| Jeffrey B. Hackman | ||||||||||||||
| Chief Financial Officer | ||||||||||||||
| (Principal Financial and Accounting Officer) | ||||||||||||||
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FAQ
How did Kforce (KFRC) perform financially in Q1 2026?
Kforce delivered essentially flat revenue at $330.4 million, up 0.1% year over year. Net income was $7.9 million, down 2.7%, while diluted EPS rose slightly to $0.46 because of a lower share count and higher gross margins.
What drove Kforce’s revenue mix in Q1 2026?
Revenue was dominated by Flex staffing, which grew 0.5% to $324.2 million. Direct Hire revenue declined 17.7% to $6.1 million, mainly from fewer permanent placements, slightly reducing the contribution from this higher-fee, but smaller, business line.
How did Kforce’s profit margins change in Q1 2026?
Overall gross profit margin improved to 27.3% from 26.7%, a 60 basis-point increase. Flex gross margin rose to 25.9%, up 90 basis points, helped by better bill/pay spreads and lower healthcare costs, partly offsetting weaker Direct Hire activity.
What was Kforce’s cash flow and debt position in Q1 2026?
Operating activities used $4.1 million of cash, largely due to lower collections on trade receivables. The firm increased borrowings on its credit facility to $91.5 million outstanding and ended the quarter with $1.3 million in cash and $95.8 million of working capital.
What are the key trends in Kforce’s Technology and FA segments?
Technology Flex revenue grew 0.2%, with more consultants offsetting slightly lower bill rates, while FA Flex revenue increased 5.7%. Both segments saw Flex gross margin expansion, with Technology and FA Flex margins rising 80 and 70 basis points, respectively, versus the prior year.