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- **Revenue Beat**: Q3 revenue of $332.6M (+15% YoY) and EPS $0.63 exceeded high-end guidance, driven by 4% sequential growth in consultants on assignment.
- **AI Growth Driver**: Consulting-led AI readiness projects (e.g., data modernization) growing with 400-600bps margin premium, signaling strategic shift to higher-margin solutions.
- **Q4 Outlook**: Sequential growth expected in both Technology and FA businesses, with Q4 revenue guidance of $326-334M and EPS $0.43-$0.51.
- **Strategic Investments**: Workday implementation and offshore expansion to deliver 100bps+ margin improvement by 2027 as revenue returns to $1.7B.

**【CEO Summary Section】**
- Q3 2025 revenue of $332.6 million and EPS of $0.63 exceeded high-end guidance, driven by stabilization in Technology and sequential growth in FA businesses.
- Technology revenue declined 1.1% sequentially but showed 4% increase in consultants on assignment from Q3 lows, with FA revenue growing 7% sequentially.
- Emphasis on AI readiness and flexible talent solutions as key growth drivers amid macroeconomic uncertainty.

**【COO Commentary】**
- Consulting-led engagements in Technology (e.g., cloud, data/AI) contributed to 4% sequential growth in consultants on assignment, with stable average bill rates at $90/hour.
- FA business saw 6.9% sequential growth, first consecutive quarters of growth, with bill rates improving year-over-year.
- Offshore capabilities (e.g., Pune development center) support cost-effective talent delivery across onshore, nearshore, and blended models.

**【CFO Financial Commentary】**
- Gross margin of 27.7% (up 60bps sequentially) driven by lower healthcare costs and consulting mix; Flex margins stable at 50bps improvement.
- SG&A expenses at 22.8% of revenue due to strategic investments in sales and Workday implementation.
- Q4 guidance: $326-334 million revenue (midpoint $330M) and EPS $0.43-$0.51, reflecting sequential growth in both segments.
- Share buybacks and dividend program continue, with $100M authorization reaffirmed.

**【Q&A Highlights】**
- **AI Impact**: Consulting engagements in AI readiness (e.g., data modernization) growing, with 400-600bps margin premium vs. staff augmentation.
- **H-1B Fees**: Minimal impact as company focuses on renewing existing visas; compliance strength positions for competitive advantage.
- **Staffing Recovery**: Sequential growth in both segments suggests stabilization; broader market demand for flexible talent expected to persist.
- **Long-Term Strategy**: Workday implementation and offshore expansion to drive efficiency and profitability in 2027+.

Kforce Inc. (KFRC) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

KFRC

KFRC fundamentals

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