Kforce 2025 Q2 Earnings Misses Targets as Net Income Declines 26%

Kforce Inc. (NYSE: KFRC), a solutions firm specializing in technology and professional staffing services, reported fiscal 2025 Q2 earnings on July 30, 2025, with an EPS of $0.59 and revenue of $334.3 million, meeting analyst expectations but reflecting a year-over-year decline. The company anticipates third-quarter revenue between $324 million and $332 million, projecting earnings per share to range from $0.53 to $0.61, aligning with market forecasts. Despite ongoing global trade uncertainties, Kforce remains optimistic about capturing market share through strategic investments.

Revenue

Kforce's total revenue decreased by 6.2% year over year to $334.32 million in Q2 2025. The Technology sector contributed $310.53 million, while Flex revenue saw $307.84 million. Direct Hire revenue totaled $2.68 million. The Finance and Accounting division generated $23.79 million, with Flex revenue at $20.57 million and Direct Hire revenue at $3.22 million.

Earnings/Net Income

Kforce's EPS declined 22.4% to $0.59 in Q2 2025 from $0.76 in Q2 2024, with net income dropping 26.2% to $10.45 million. The decrease reflects challenging market conditions negatively impacting performance.

Price Action

The stock price of Kforce decreased 5.83% during the latest trading day, falling 18.92% over the most recent full trading week, and has dropped 11.60% month-to-date.

Post Earnings Price Action Review

The strategy of purchasing KFRC shares following an earnings beat and holding for 30 days has yielded disappointing results. This approach resulted in a compound annual growth rate (CAGR) of -18.35% and an excess return of -37.36%, significantly underperforming the benchmark return of 16.17%. The strategy also experienced a notable maximum drawdown of 30.25% and a Sharpe ratio of -0.61, indicating considerable risk and losses. This underscores the volatility and challenges investors face when adopting such a strategy, particularly in a turbulent market environment.

CEO Commentary

Joseph J. Liberatore, President and CEO, highlighted sequential Flex revenue growth in the Technology and Finance and Accounting sectors amid challenging economic conditions. Despite ongoing global trade negotiation risks, he expressed optimism about the stability of Kforce's Technology business, citing significant backlogs of technology investments from clients. Liberatore acknowledged client-specific dynamics affecting third-quarter guidance but remains confident in the firm's strategic market positioning.

Guidance

For Q3 2025, Kforce expects revenue between $324 million and $332 million, with EPS ranging from $0.53 to $0.61. Gross profit margins are projected between 27.0% and 27.2%, while Flex gross profit margins are anticipated from 25.7% to 25.9%. SG&A expenses are expected to be 22.4% to 22.6% of revenue, with operating margins forecasted between 4.0% and 4.4%.

Additional News

Kforce Inc. has announced a $0.39 per share cash dividend for the third quarter of 2025, payable on September 26, 2025, to shareholders of record as of September 12, 2025. The company has returned $17.4 million to shareholders through share repurchases and dividends in Q2 2025. Additionally, Kforce's development center in Pune continues to enhance its ability to deliver cost-effective solutions through a blended onshore, nearshore, and offshore model, strengthening its consulting-oriented solutions and market position.