Kforce (NYSE: KFRC) guides higher Q2 revenue with margin expansion
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Kforce Inc. reported first quarter 2026 revenue of $330.4 million, up 0.1% year over year, with diluted EPS of $0.46, a 2.2% increase. Gross profit margin reached 27.3%, improving 60 basis points year over year, and operating margin was 3.6%, up 10 basis points.
The firm returned $18.6 million to shareholders through open market share repurchases and dividends in the quarter. The board approved a second quarter cash dividend of $0.40 per share. Second quarter 2026 guidance calls for revenue of $344–$352 million and EPS of $0.67–$0.75, with expected operating margin of 5.0–5.4%.
Positive
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Negative
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Insights
Kforce shows modest Q1 growth with stronger Q2 margin guidance.
Kforce delivered Q1 2026 revenue of $330.4M, essentially flat year over year, while diluted EPS of $0.46 rose 2.2%. Gross margin improved to 27.3%, up 60 basis points, and operating margin edged up to 3.6%.
Segment data show Technology Flex revenue up 0.2% and Finance and Accounting (FA) Flex revenue up 5.7% year over year, with Flex gross margin improving 90 basis points. These shifts suggest mix and pricing discipline are supporting profitability despite subdued top-line expansion.
Q2 2026 guidance indicates revenue of $344M–$352M, EPS of $0.67–$0.75, and operating margin of 5.0–5.4%, all for the quarter ending June 30, 2026. This points to anticipated sequential margin expansion, supported by slightly higher billing days and continued gross margin strength.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q1 2026 Revenue: $330.4 million
Q1 2026 Diluted EPS: $0.46
Q1 2026 Gross Profit Margin: 27.3%
+5 more
8 metrics
Q1 2026 Revenue
$330.4 million
Quarter ended March 31, 2026; up 0.1% year over year
Q1 2026 Diluted EPS
$0.46
Quarter ended March 31, 2026; increased 2.2% year over year
Q1 2026 Gross Profit Margin
27.3%
Improved 60 basis points year over year
Q1 2026 Operating Margin
3.6%
Increased 10 basis points year over year
Capital Returned to Shareholders
$18.6 million
Share repurchases and dividends in Q1 2026
Q2 2026 Revenue Guidance
$344M–$352M
Management’s estimate for quarter with 64 billing days
Q2 2026 EPS Guidance
$0.67–$0.75
Projected diluted EPS for Q2 2026
Q1 2026 Adjusted EBITDA
$16.9 million
Non-GAAP metric for quarter ended March 31, 2026
Key Terms
Adjusted EBITDA, Free Cash Flow, Flex revenue, gross profit margin, +1 more
5 terms
Adjusted EBITDA financial
"The following table presents Adjusted EBITDA and includes a reconciliation of Net income to Adjusted EBITDA"
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.
Flex revenue financial
"Technology Flex revenue increased 0.2% year over year. FA Flex revenue increased 5.7% year over year."
gross profit margin financial
"Gross profit margin of 27.3% increased 10 basis points sequentially and 60 basis points year over year"
Gross profit margin shows how much money a company keeps from sales after paying for the goods or services it sold. It’s like checking how much profit is left over from each dollar earned before covering other costs. A higher margin indicates the company makes more money from its sales, which helps assess its profitability and efficiency.
organizational realignment activities financial
"Organizational realignment activities | — | | 1,200 | | —"
Earnings Snapshot
Revenue: $330.4 million · Guidance included
Q1 2026
Revenue
$330.4 million
+0.1% year over year
Net income
$7.9 million
slightly below $8.1 million in Q1 2025
Diluted EPS
$0.46
+2.2% year over year
Gross margin
27.3%
+60 basis points year over year
Operating margin
3.6%
+10 basis points year over year
Guidance
For Q2 2026, Kforce guides to revenue of $344–$352 million, EPS of $0.67–$0.75, gross margin of 27.7–27.9%, Flex gross margin of 26.4–26.6%, SG&A of 22.1–22.3% of revenue, and operating margin of 5.0–5.4%.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 8-K
___________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 27, 2026
_________________________________________________________________
Exact name of registrant as specified in its charter
_______________________________________________________________
| State or other jurisdiction of incorporation | Commission File Number | IRS Employer Identification No. | ||||||||||||
Address of principal executive offices Zip Code
Registrant’s telephone number, including area code: (813 ) 552-5000
N/A | ||
| (Former name, former address and former fiscal year, if changed since last report) | ||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 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. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 27, 2026, Kforce Inc. (the "Firm") issued a press release regarding its earnings for the first quarter ended March 31, 2026. A copy of this press release is furnished as Exhibit 99.1 to this Report and is incorporated into this Report by reference.
The information furnished herewith pursuant to Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information contained in this Form 8-K and in the accompanying exhibit shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission by Kforce Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is furnished herewith:
Exhibit Number | Description | |||||||
99.1 | Press Release of Kforce Inc. dated April 27, 2026. | |||||||
| 101 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted as Inline XBRL. | |||||||
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 hereunto duly authorized.
| KFORCE INC. | |||||||||||
| Date: | April 27, 2026 | By: | /s/ JEFFREY B. HACKMAN | ||||||||
| Jeffrey B. Hackman, | |||||||||||
| Chief Financial Officer | |||||||||||
| (Principal Financial and Accounting Officer) | |||||||||||
Exhibit 99.1
KFORCE REPORTS FIRST QUARTER 2026 REVENUE OF $330.4 MILLION; RETURNS TO YEAR-OVER-YEAR GROWTH
SECOND QUARTER GUIDANCE SUGGESTS ACCELERATING YEAR-OVER-YEAR REVENUE GROWTH
EPS OF $0.46 IN THE FIRST QUARTER EXCEEDED THE HIGH END OF GUIDANCE
GROSS PROFIT MARGINS IN THE FIRST QUARTER IMPROVED 60 BASIS POINTS YEAR-OVER-YEAR
TAMPA, FL, April 27, 2026 — Kforce Inc. (NYSE: KFRC), a solutions firm that specializes in technology and other professional staffing services, today announced results for the first quarter of 2026.
Joseph J. Liberatore, President and Chief Executive Officer, said, "We are extremely pleased to have successfully driven results in the first quarter that again exceeded our expectations from both a revenue and profitability perspective. The momentum that we carried into the beginning of the year has continued to increase, resulting in year-over-year revenue growth for the first time in several years. We are encouraged that our revenue trajectory has continued to improve in the first month of the second quarter, which we expect will lead to year-over-year growth in the second quarter of 2026 in the mid-single digits. I could not be prouder of the tenacity of our people or more appreciative of the trust that our world class clients are increasingly placing in Kforce to drive more meaningful and valuable engagements with them. Our go-to-market approach, which was born out of our integrated strategy efforts, appears to be paying dividends. Our people continue to operate more fully as One Kforce leveraging the Firm’s capabilities across all service offerings."
Quarterly Financial Highlights
•Revenue for the quarter ended March 31, 2026 was $330.4 million, an increase of 0.1% year over year.
•Technology Flex revenue increased 0.2% year over year. FA Flex revenue increased 5.7% year over year.
•Gross profit margin of 27.3% increased 10 basis points sequentially and 60 basis points year over year primarily driven by an increase in Flex gross profit margins.
•Flex gross profit margin of 25.9% increased 10 basis points sequentially and 90 basis points year over year. The year-over-year increase in Flex gross profit margins is due to a 70 basis point spread improvement and 20 basis points from lower healthcare costs.
•SG&A expenses as a percentage of revenue was 23.2% for the quarter ended March 31, 2026, which increased 40 basis points year over year primarily as a result of higher performance-based compensation due to improved financial performance.
•Operating margin was 3.6% for the quarter ended March 31, 2026, which increased 10 basis points year over year.
•Diluted earnings per share for the quarter ended March 31, 2026 was $0.46, an increase of 2.2% year over year.
•We returned $18.6 million in capital to our shareholders in the form of continued open market share repurchases and quarterly dividends during the first quarter of 2026.
•Our Board of Directors approved a second quarter cash dividend of $0.40 per share to shareholders of record as of the close of business on June 12, 2026, which will be payable on June 26, 2026.
Second Quarter 2026 - Guidance
Looking forward to the second quarter of 2026, there will be 64 billing days, compared to 63 billing days in the first quarter of 2026 and 64 billing days in the second quarter of 2025. Current estimates for the second quarter of 2026 are:
•Revenue of $344 million to $352 million
•Earnings per share of $0.67 to $0.75
•Gross profit margins of 27.7% to 27.9%
•Flex gross profit margins of 26.4% to 26.6%
•SG&A expenses as a percent of revenue of 22.1% to 22.3%
•Operating margin of 5.0% to 5.4%
•WASO of 16.9 million
•Effective tax rate of 31.0%
Conference Call
On Monday, April 27, 2026, Kforce will host a conference call at 5:00 p.m. E.T. to discuss these results. The dial-in number is (800) 715-9871 and the conference passcode is "Kforce." The prepared remarks for this call and webcast are available on the Investor Relations page of the Kforce Inc. website in the News and Events section. The replay of the call can be accessed at http://investor.kforce.com.
About Kforce Inc.
Kforce Inc. (the “Firm”) is a solutions firm specializing in technology, finance and accounting, and other professional staffing services. Our KNOWLEDGEforce® empowers industry-leading companies to achieve their digital transformation goals. We curate teams of technical experts who deliver solutions custom-tailored to each client’s needs. These scalable, flexible outcomes are shaped by deep market knowledge, thought leadership and our multi-industry expertise.
Our integrated approach is rooted in 60 years of proven success deploying highly skilled professionals on a temporary and direct-hire basis. Each year, approximately 17,000 talented experts work with Fortune 500 and other leading companies. Together, we deliver Great Results Through Strategic Partnership and Knowledge Sharing®.
Michael R. Blackman, Chief Corporate Development Officer
(813) 552-2927
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS | ||
All statements in this press release, other than those of a historical nature, are forward-looking statements including, but not limited to, statements regarding our expectations for year-over-year growth in the second quarter of 2026, and the Firm's guidance for the second quarter of 2026. Such forward-looking statements are 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. Factors that could cause actual results to differ materially include the following: general business conditions; global trade policy, federal administration actions, government shutdowns, other geopolitical events and their potential impacts on our operations and the broader economy; growth rates in temporary staffing and the general economy; competitive factors; risks due to shifts in the market demand, including those resulting from the growth of artificial intelligence (AI); changes in demand, or our ability to adapt to such changes; a constraint in the supply of consultants and candidates, or the Firm’s ability to attract and retain such individuals; the success of the Firm in attracting and retaining its management team and key operating employees; changes in business or service mix; the ability of the Firm to repurchase shares and issue dividends; the occurrence of unanticipated expenses, income, gains or losses; the effect of adverse weather conditions; changes in our effective tax rate; our ability to comply with or respond to government regulations, laws, orders, guidelines and policies that impact our business; risk of contract performance, delays, termination or the failure to obtain new assignments, contracts, or funding under contracts; ability to comply with our obligations in a remote work environment, including consultants engaging in unauthorized or fraudulent activity; continued performance, security of, and improvements to, our enterprise information systems; and impacts of actual or potential litigation, or other legal or regulatory matters or liabilities, including the risk factors and matters listed from time to time in the Firm’s reports filed with the Securities and Exchange Commission, including, but not limited to, the Firm’s Form 10-K for the fiscal year ended December 31, 2025, as well as assumptions regarding the foregoing. The terms “should,” “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan”, "appear" and similar expressions and variations thereof contained in this press release identify certain of such forward-looking statements, which speak only as of the date of this press release. As a result, such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Future events and actual results may differ materially from those indicated in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and the Firm undertakes no obligation to update any forward-looking statements.
Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
| Three Months Ended | |||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2025 | |||||||||
| Revenue | $ | 330,364 | $ | 332,018 | $ | 330,028 | |||||
| Direct costs | 240,296 | 241,810 | 241,768 | ||||||||
| Gross profit | 90,068 | 90,208 | 88,260 | ||||||||
| Selling, general and administrative expenses | 76,758 | 80,329 | 75,165 | ||||||||
| Depreciation and amortization | 1,304 | 1,323 | 1,464 | ||||||||
| Income from operations | 12,006 | 8,556 | 11,631 | ||||||||
| Other expense, net | 652 | 780 | 565 | ||||||||
| Income before income taxes | 11,354 | 7,776 | 11,066 | ||||||||
| Income tax expense | 3,429 | 2,613 | 2,921 | ||||||||
| Net income | $ | 7,925 | $ | 5,163 | $ | 8,145 | |||||
| Earnings per share – diluted | $ | 0.46 | $ | 0.30 | $ | 0.45 | |||||
| Weighted average shares outstanding – diluted | 17,197 | 17,409 | 18,241 | ||||||||
| Adjusted EBITDA | $ | 16,897 | $ | 16,748 | $ | 16,751 | |||||
| Billing days | 63 | 62 | 63 | ||||||||
Kforce Inc.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
| March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,338 | $ | 2,142 | ||||
| Trade receivables, net of allowances | 207,275 | 190,461 | ||||||
| Prepaid expenses and other current assets | 8,792 | 9,669 | ||||||
| Total current assets | 217,405 | 202,272 | ||||||
| Fixed assets, net | 5,530 | 6,023 | ||||||
| Other assets, net | 134,171 | 129,267 | ||||||
| Deferred tax assets, net | 2,624 | 3,036 | ||||||
| Goodwill | 25,040 | 25,040 | ||||||
| Total assets | $ | 384,770 | $ | 365,638 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and other accrued liabilities | $ | 69,215 | $ | 67,609 | ||||
| Accrued payroll costs | 46,948 | 42,328 | ||||||
| Current portion of operating lease liabilities | 3,414 | 3,342 | ||||||
| Income taxes payable | 1,988 | 451 | ||||||
| Total current liabilities | 121,565 | 113,730 | ||||||
| Long-term debt – credit facility | 91,500 | 66,400 | ||||||
| Other long-term liabilities | 54,350 | 60,905 | ||||||
| Total liabilities | 267,415 | 241,035 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 743 | 742 | ||||||
| Additional paid-in capital | 562,323 | 558,297 | ||||||
| Retained earnings | 552,828 | 552,180 | ||||||
| Treasury stock, at cost | (998,539) | (986,616) | ||||||
| Total stockholders’ equity | 117,355 | 124,603 | ||||||
| Total liabilities and stockholders’ equity | $ | 384,770 | $ | 365,638 | ||||
Kforce Inc.
Key Statistics
(Unaudited)
| Q1 2026 | Q4 2025 | Q1 2025 | |||||||||
| Total Firm | |||||||||||
| Total Revenue (000’s) | $ | 330,364 | $ | 332,018 | $ | 330,028 | |||||
| GP % | 27.3% | 27.2% | 26.7% | ||||||||
| Flex revenue (000’s) | $ | 324,228 | $ | 326,093 | $ | 322,570 | |||||
| Hours (000's) | 3,772 | 3,810 | 3,726 | ||||||||
| Flex GP % | 25.9% | 25.8% | 25.0% | ||||||||
| Direct Hire revenue (000’s) | $ | 6,136 | $ | 5,925 | $ | 7,458 | |||||
| Placements | 276 | 252 | 342 | ||||||||
| Average fee | $ | 22,270 | $ | 23,529 | $ | 21,830 | |||||
| Billing days | 63 | 62 | 63 | ||||||||
| Technology | |||||||||||
| Total Revenue (000’s) | $ | 305,963 | $ | 306,315 | $ | 306,284 | |||||
| GP % | 26.5% | 26.3% | 25.9% | ||||||||
| Flex revenue (000’s) | $ | 302,955 | $ | 303,566 | $ | 302,435 | |||||
| Hours (000’s) | 3,365 | 3,383 | 3,337 | ||||||||
| Flex GP % | 25.7% | 25.7% | 24.9% | ||||||||
| Direct Hire revenue (000’s) | $ | 3,008 | $ | 2,749 | $ | 3,849 | |||||
| Placements | 139 | 123 | 172 | ||||||||
| Average fee | $ | 21,659 | $ | 22,339 | $ | 22,324 | |||||
| Finance and Accounting | |||||||||||
| Total Revenue (000’s) | $ | 24,401 | $ | 25,703 | $ | 23,744 | |||||
| GP % | 37.1% | 37.2% | 38.2% | ||||||||
| Flex revenue (000’s) | $ | 21,273 | $ | 22,527 | $ | 20,135 | |||||
| Hours (000’s) | 407 | 427 | 389 | ||||||||
| Flex GP % | 27.9% | 28.3% | 27.2% | ||||||||
| Direct Hire revenue (000’s) | $ | 3,128 | $ | 3,176 | $ | 3,609 | |||||
| Placements | 137 | 129 | 170 | ||||||||
| Average fee | $ | 22,891 | $ | 24,667 | $ | 21,327 | |||||
Kforce Inc.
Non-GAAP Financial Measures
(Unaudited)
In addition to our financial results presented in accordance with GAAP, Kforce may use certain non-GAAP financial measures, which we believe provide useful information to investors in evaluating our core operating performance. The following non-GAAP financial measures presented may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently. Our non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to amounts presented in accordance with GAAP. We view these non-GAAP financial measures as supplemental, which are not intended to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.
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.
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 income tax expense; organizational realignment activities; and certain other items. 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:
| Three Months Ended | |||||||||||
| (in thousands) | March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||
| Net income | $ | 7,925 | $ | 5,163 | $ | 8,145 | |||||
| Depreciation and amortization | 1,304 | 1,323 | 1,464 | ||||||||
| Stock-based compensation expense | 3,590 | 3,434 | 3,656 | ||||||||
| Interest expense, net | 649 | 782 | 565 | ||||||||
| Income tax expense | 3,429 | 2,613 | 2,921 | ||||||||
| Organizational realignment activities | — | 1,200 | — | ||||||||
Other (1) | — | 2,233 | — | ||||||||
| Adjusted EBITDA | $ | 16,897 | $ | 16,748 | $ | 16,751 | |||||
(1) Other includes non-recurring expenses to further streamline our operating costs, including the write-off of previously capitalized software.
FAQ
How did Kforce (KFRC) perform in Q1 2026?
Kforce reported Q1 2026 revenue of $330.4 million, up 0.1% year over year, and diluted EPS of $0.46, a 2.2% increase. Gross profit margin improved to 27.3% and operating margin reached 3.6%, reflecting slightly stronger profitability despite flat overall revenue.
What revenue and EPS guidance did Kforce (KFRC) give for Q2 2026?
For Q2 2026, Kforce expects revenue between $344 million and $352 million and diluted EPS between $0.67 and $0.75. The guidance assumes 64 billing days, slightly above Q1, and reflects management’s expectation of mid-single-digit year-over-year revenue growth and higher margins.
How did Kforce’s margins change in Q1 2026 compared to last year?
In Q1 2026, Kforce’s gross profit margin was 27.3%, up 60 basis points year over year, while operating margin reached 3.6%, up 10 basis points. Flex gross margin improved to 25.9%, 90 basis points higher, aided by a 70-basis-point spread improvement and lower healthcare costs.
What were Kforce’s key non-GAAP metrics like Adjusted EBITDA and Free Cash Flow?
Kforce reported Q1 2026 Adjusted EBITDA of $16.9 million, roughly in line with recent quarters. Free Cash Flow was negative $7.4 million, reflecting net cash used by operating activities of $4.1 million and capital expenditures of $3.3 million, alongside higher debt to support shareholder returns.
How did Kforce’s segment revenues perform in Q1 2026?
In Q1 2026, Technology total revenue was $306.0 million, while Finance and Accounting revenue was $24.4 million. Technology Flex revenue grew 0.2% year over year, and FA Flex revenue grew 5.7%, with both segments showing higher Flex gross margins compared to Q1 2025.