KFORCE INC

Previous 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.

Current wording

The following is an executive summary of what Kforce believes are highlights as of and for the six months ended June 30, 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

•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.

Current wording

•Revenue for the six months ended June 30, 2026 increased 2.3% to $679.7 million from $664.3 million in the comparable period in 2025. Revenue increased 2.1% and 4.9% for Technology and FA, respectively, primarily driven by increases in consultants on assignment.

Previous 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.

Current wording

•Gross profit margin for the six months ended June 30, 2026 increased 100 basis points to 27.9% from 26.9% in the comparable period in 2025 primarily driven by an increase in Flex gross profit margins and a greater percentage of Direct Hire revenue.

Previous 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.

Current wording

•Flex gross profit margin for the six months ended June 30, 2026 increased 100 basis points to 26.4% from 25.4% in the comparable period in 2025 primarily driven by improved bill and pay spreads.

Previous 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.

Current wording

•SG&A expenses as a percentage of revenue for the six months ended June 30, 2026 increased to 23.0% from 22.5% 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 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.

Current wording

•Net income for the six months ended June 30, 2026 increased 8.9% to $20.2 million, or $1.19 diluted earnings per share, from $18.6 million, or $1.03 diluted earnings per share, for the six months ended June 30, 2025.

Previous 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.

Current wording

•The Firm returned $28.2 million of capital to our shareholders in the form of open market repurchases totaling $14.7 million and quarterly dividends totaling $13.5 million during the six months ended June 30, 2026.

Previous 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 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.

Current wording

•Cash used in operating activities was $6.7 million during the six months ended June 30, 2026, as compared to cash provided by operating activities of $18.6 million for the six months ended June 30, 2025. The change was primarily driven by an increase in trade receivables given the improvement in revenue trends.

Previous 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.

Current wording

Kforce is a leading domestic provider of technology and finance and accounting talent solutions to innovative and industry-leading companies. At June 30, 2026, Kforce employed over 1,600 associates and had more than 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 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.

Current wording

Based on data published by SIA, temporary employment figures and trends are important indicators of staffing demand from an economic standpoint. The national U.S. unemployment rate declined to 4.2% in June 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 Months Ended March 31, 2026 and 2025

Current wording

Operating Results - Three and Six Months Ended June 30, 2026 and 2025

Previous 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.

Current wording

Flex revenue for our Technology business increased 4.0% and 2.1% during the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, primarily driven by an increase in consultants on assignment. In the third quarter, we expect Technology Flex revenue to increase in the low single digits sequentially and mid single digits year over year.

Previous 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.

Current wording

Our FA business experienced an increase in Flex revenue of 6.0% and 5.8% during the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, primarily driven by an increase in consultants on assignment. In the third quarter, we expect FA Flex revenue to increase in the low single digits sequentially and year over year.

Previous wording

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.

Current wording

Total gross profit percentage increased 140 and 100 basis points for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, primarily driven by an increase in Flex gross profit margins and a greater percentage of Direct Hire revenue.

Previous wording

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.

Current wording

Our Flex gross profit percentage increased 110 and 100 basis points for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025.

Previous 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.

Current wording

•Technology Flex gross profit margins increased 120 and 100 basis points for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, which was primarily driven by improved bill and pay spreads. In the third quarter, we expect Technology Flex gross profit margins to remain fairly stable sequentially but to increase year over year.

Previous 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.

Current wording

•FA Flex gross profit margins increased 60 and 70 basis points for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, which was primarily driven by improved bill and pay spreads and lower healthcare costs. In the third quarter, we expect FA Flex gross profit margins to remain fairly stable sequentially and year over year.

Previous 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.

Current wording

SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A represented 83.6% and 83.7% for the three and six months ended June 30, 2026, respectively, as compared to 84.6% and 84.5% for the comparable periods 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 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.

Current wording

SG&A as a percentage of revenue increased 50 basis points for the three and six months ended June 30, 2026, as compared to the same periods 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 $0.7 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.

Current wording

Other Expense, Net. Other expense, net was $1.0 million for the three months ended June 30, 2026 and 2025. Other expense, net was $1.6 million for the six months ended June 30, 2026 and 2025. 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 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.

Current wording

Income Tax Expense. Income tax expense as a percentage of income before income taxes (our “effective tax rate”) was 30.5% and 25.4% for the six months ended June 30, 2026 and 2025, respectively. The increase in our effective tax rate was primarily attributable to higher nondeductible compensation expense under Internal Revenue Code Section 162(m), the expiration of the Work Opportunity Tax Credits program in 2025, and lower research and development tax credits associated with our strategic priorities.

Previous wording

The following table presents Adjusted EBITDA and includes a reconciliation of Net income to Adjusted EBITDA:

Current wording

The following table includes a reconciliation of Net income to Adjusted EBITDA:

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 (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.

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 June 30, 2026 and December 31, 2025, we had $107.1 million and $66.4 million outstanding under our Credit Facility, respectively, and the borrowing availability was $91.8 million and $132.5 million, respectively, subject to certain covenants. At June 30, 2026, Kforce had $111.5 million in working capital compared to $88.5 million at December 31, 2025.

Previous 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.

Current wording

Cash used in operating activities was $6.7 million during the six months ended June 30, 2026, as compared to cash provided by operating activities of $18.6 million during the six months ended June 30, 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 higher trade receivables given the improvement in revenue trends.

Previous 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.

Current wording

Cash used in investing activities was $7.2 million during the six months ended June 30, 2026, and primarily consisted of cash used for capital expenditures. Cash used in investing activities during the six months ended June 30, 2025 was $7.6 million and primarily consisted of cash used for capital expenditures.

Previous 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.

Current wording

Cash provided by financing activities was $12.1 million during the six months ended June 30, 2026, as compared to $8.9 million of cash used in financing activities during the six months ended June 30, 2025. This change was primarily driven by decreases in repurchases of common stock and higher net proceeds on our Credit Facility.

Previous 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.

Current wording

During the six months ended June 30, 2026 and 2025, Kforce’s Board of Directors (the “Board”) declared and paid quarterly dividends of $13.5 million ($0.80 per share) and $14.0 million ($0.78 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

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.

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 June 30, 2026, $107.1 million was outstanding and $91.8 million was available on our Credit Facility, and at December 31, 2025, $66.4 million was outstanding. At June 30, 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 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.

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 six months ended June 30, 2026, Kforce repurchased approximately 527 thousand shares of common stock on the open market at a total cost of approximately $14.7 million. In addition, $82.5 million remained available for further repurchases under the Board-authorized common stock repurchase program at June 30, 2026.