KFORCE INC

Previous wording

The following is an executive summary of what Kforce believes are highlights as of and for the nine months ended September 30, 2025, 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.

Current wording

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.

Previous wording

•Gross profit margin for the nine months ended September 30, 2025 decreased 40 basis points to 27.2% from 27.6% in the comparable period in 2024 primarily driven by declines in the mix of Direct Hire revenue and Flex gross profit margins.

Current wording

•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.

Previous wording

•Flex gross profit margin for the nine months ended September 30, 2025 decreased 30 basis points to 25.7% from 26.0% in the comparable period in 2024 primarily driven by higher healthcare costs.

Current wording

•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.

Previous wording

•SG&A expenses as a percentage of revenue for the nine months ended September 30, 2025 increased to 22.6% from 22.1% in the comparable period in 2024 primarily driven by the declines in revenue and gross profit.

Current wording

•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.

Previous wording

•Net income for the nine months ended September 30, 2025 decreased 24.6% to $29.7 million, or $1.66 diluted earnings per share, from $39.4 million, or $2.08 diluted earnings per share, for the nine months ended September 30, 2024.

Current wording

•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.

Previous wording

•The Firm returned $61.9 million of capital to our shareholders in the form of open market repurchases totaling $41.1 million and quarterly dividends totaling $20.8 million during the nine months ended September 30, 2025.

Current wording

•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.

Previous wording

Kforce is a leading domestic provider of technology and finance and accounting talent solutions to innovative and industry-leading companies. At September 30, 2025, Kforce employed over 1,600 associates and had approximately 7,500 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.

Current wording

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.

Previous wording

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 increased to 4.3% in August 2025 as compared to 4.1% in December 2024. In the latest U.S. staffing industry forecast published by SIA in September 2025, the technology temporary staffing industry is estimated to decline 2% in 2025.

Current wording

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.

Previous wording

Operating Results - Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Operating Results - Three Months Ended March 31, 2026 and 2025

Previous wording

Flex revenue for our Technology business decreased 5.5% and 5.2% during the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024. On a billing day basis, the decreases were 5.5% and 4.7% during the three and nine months ended September 30, 2025, respectively. These changes are primarily driven by a decrease in consultants on assignment, which we believe is primarily related to macroeconomic uncertainties. Our average Technology bill rate was $90 for the three and nine months ended September 30, 2025, which remained flat as compared to the same periods in 2024. In the fourth quarter, we expect Technology Flex revenue to increase in the low single digits sequentially on a billing day basis and decline in the mid-single digits year over year on a billing day basis.

Current wording

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.

Previous wording

Our FA business experienced a decrease in Flex revenue of 7.3% and 16.0% during the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024. On a billing day basis, the decreases were 7.3% and 15.6% during the three and nine months ended September 30, 2025, respectively. These changes are primarily driven by a decrease in consultants on assignment, which we believe is related to macroeconomic uncertainties. Notably, FA Flex revenue increased 6.9% on a sequential basis in the third quarter, representing the second consecutive quarter of sequential improvement on a billing day basis, primarily due to more consultants on assignment. Our average FA bill rates improved by 2.2% and 2.8% for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024, which is reflective of the higher-skilled assignments that we are strategically pursuing. In the fourth quarter, we expect FA Flex revenue to be slightly up sequentially on a billing day basis and decline in the mid-single digits year over year on a billing day basis.

Current wording

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.

Previous wording

Direct Hire revenue decreased 14.8% and 11.0% during the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024, which was primarily driven by a decrease in placements, partially offset by an increase in placement fees. In the fourth quarter, we expect Direct Hire Revenue to decline slightly on a sequential basis due to seasonality and decrease in the low-teens range year over year.

Current wording

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.

Previous wording

•Technology Flex gross profit margins remained flat and decreased 20 basis points for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024. The decrease for the nine months ended September 30, 2025 was primarily driven by higher healthcare costs, which was partially offset by slightly improved bill and pay spreads. In the fourth quarter, we expect Technology Flex gross profit margins to decline sequentially due to the typical season impact of vacation days taken by our consultants, although the underlying bill and pay spreads are expected to be stable.

Current wording

•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.

Previous wording

•FA Flex gross profit margins decreased 30 and 110 basis points for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024. The decrease for the three months ended September 30, 2025 was primarily driven by changes in our client portfolio mix and unfavorable payroll taxes. The decrease for the nine months ended September 30, 2025 includes the aforementioned items, in addition to higher healthcare costs. In the fourth quarter, we expect FA Flex gross profit margins to decline slightly due to seasonality on a sequential basis.

Current wording

•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.

Previous wording

SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A represented 84.1% and 84.4% for the three and nine months ended September 30, 2025, respectively, as compared to 84.5% and 84.2% for the comparable periods in 2024, respectively. 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.

Current wording

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.

Previous wording

SG&A as a percentage of revenue increased 60 and 50 basis points for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024.

Current wording

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.

Previous wording

Other Expense, Net. Other expense, net was $0.8 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively. Other expense, net was $2.4 million and $1.6 million for the nine months ended September 30, 2025 and 2024, respectively. Other expense, net primarily includes interest expense related to outstanding borrowings under our credit facility.

Current wording

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.

Previous wording

Income Tax Expense. Income tax expense as a percentage of income before income taxes (our “effective tax rate”) was 24.3% and 25.1% for the nine months ended September 30, 2025 and 2024, respectively. The primary driver for the decrease relates to increased research and development tax credits associated with our strategic priorities.

Current wording

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.

Previous wording

To meet our capital and liquidity requirements, we primarily rely on our operating cash flows, as well as borrowings under our credit facility. At September 30, 2025 and December 31, 2024, we had $65.0 million and $32.7 million outstanding under our Amended and Restated Credit Facility, respectively, and the borrowing availability was $134.0 million and $166.3 million, respectively, subject to certain covenants. At September 30, 2025, Kforce had $101.7 million in working capital compared to $112.9 million at December 31, 2024.

Current wording

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.

Previous wording

Cash provided by operating activities was $41.9 million during the nine months ended September 30, 2025, as compared to $65.1 million during the nine months ended September 30, 2024. 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 in cash provided by operating activities was primarily driven by lower profitability levels, higher capitalized implementation costs related to cloud computing arrangements for Workday, and the payment of 2024 federal income taxes that were deferred pursuant to IRS guidance.

Current wording

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.

Previous wording

Cash used in investing activities was $11.1 million during the nine months ended September 30, 2025, and primarily consisted of cash used for capital expenditures of $11.8 million, partially offset by proceeds from company-owned life insurance of $1.4 million. Cash used in investing activities during the nine months ended September 30, 2024 was $7.9 million and primarily consisted of cash used for capital expenditures of $8.5 million and premiums paid on company-owned life insurance policies of $1.8 million, partially offset by proceeds from company-owned life insurance of $2.4 million.

Current wording

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.

Previous wording

Cash provided by financing activities was $29.9 million during the nine months ended September 30, 2025, as compared to $57.2 million of cash used in financing activities during the nine months ended September 30, 2024. This change was primarily driven by the net proceeds on our Amended and Restated Credit Facility, partially offset by an increase in repurchases of common stock.

Current wording

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.

Previous wording

During the nine months ended September 30, 2025 and 2024, Kforce’s Board of Directors (the “Board”) declared and paid quarterly dividends of $20.8 million ($1.17 per share) and $21.3 million ($1.14 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.

Current wording

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.

Previous wording

We believe that existing cash and cash equivalents, operating cash flows and available borrowings under our Amended and Restated 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.

Current wording

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.

Previous wording

On October 20, 2021, the Firm entered into the Amended and Restated Credit Facility, which has a maximum borrowing capacity of $200.0 million, and subject to certain conditions and the participation of the lenders, may be increased up to an aggregate additional amount of $150.0 million. At September 30, 2025, $65.0 million was outstanding and $134.0 million was available on our Amended and Restated Credit Facility, and at December 31, 2024, $32.7 million was outstanding. At September 30, 2025, we were in compliance with all of the covenants contained in the Amended and Restated Credit Facility as described in our 2024 Annual Report on Form 10-K, and we currently expect that we will be able to maintain compliance with these covenants.

Current wording

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.

Previous wording

In October 2025, the Board approved an increase in our stock repurchase authorization, bringing the total authorization to $100.0 million. During the nine months ended September 30, 2025, Kforce repurchased approximately 950 thousand shares of common stock on the open market at a total cost of approximately $41.1 million. In addition, $22.3 million remained available for further repurchases under the Board-authorized common stock repurchase program at September 30, 2025.

Current wording

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.

Previous wording

Refer to Note A - “Summary of Significant Accounting Policies” in the Notes to the Unaudited Condensed Consolidated Financial Statements, included in Item 1. Financial Statements of this report for a discussion of new accounting standards.

Current wording

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.