Kelly Services' Q2 Earnings Call: Mixed Outlook Amid Strategic Shifts, CEO Transition

Kelly Services reported mixed Q2 earnings, with growth in the Education and SET segments offset by revenue declines in ETM. The Education segment saw a 5.6% YoY revenue growth, while the SET segment experienced a 19% increase in revenue. Gross profit improved by 30 basis points, and adjusted EBITDA margin is expected to increase by 80-90 basis points in Q3. A new CEO, Chris Layden, was announced, with a focus on accelerating profitable growth.

Kelly Services, Inc. (Nasdaq: KELYA, KELYB) reported mixed second-quarter (Q2) 2025 earnings, with revenue and adjusted EBITDA margins reflecting a combination of growth and declines across various segments. The company announced its results on August 7, 2025, highlighting a 4.2% year-over-year (YoY) increase in revenue to $1.1 billion, driven primarily by the May 2024 acquisition of Motion Recruitment Partners, LLC (MRP) [1].

The Education segment saw a notable 5.6% YoY revenue growth, while the Science, Engineering, and Technology (SET) segment experienced a 19% increase in revenue. However, the Payroll Process Outsourcing (ETM) segment contributed to a 1.4% revenue decline, primarily due to reduced demand for U.S. federal government contractors. Overall, excluding the impact of the MRP acquisition, revenue was down 3.3% on an organic basis [1].

Operating earnings for Q2 2025 were $22.2 million, compared to $12.2 million in the same period of 2024. Adjusted earnings stood at $24.6 million, a decrease of 12.1% from the prior year. Adjusted EBITDA for Q2 2025 was $37.0 million, down 8.7% from the previous year, with an adjusted EBITDA margin of 3.4%, a 40 basis point decrease [1].

Kelly Services expects a year-over-year revenue decline of 5% to 7% in Q3 2025, driven by reduced demand for U.S. federal contractors and certain large customers. The company anticipates an adjusted EBITDA margin expansion of 80 to 90 basis points in Q3 and a modest year-over-year margin improvement for the full year [1].

The company also announced the appointment of Chris Layden as its new CEO, effective August 11, 2025. Layden will focus on accelerating profitable growth, particularly in the face of economic uncertainties and market conditions [1].

References:
[1] https://ir.kellyservices.com/news-releases/news-release-details/kelly-reports-second-quarter-2025-earnings