Kelly Services Q4 revenue falls, EPS misses estimates

Overview

• Specialty talent provider's Q4 revenue fell 11.9% yr/yr due to lower demand in key segments

• Adjusted EPS for Q4 missed analyst expectations

• Company completed $10 mln share repurchases in Q4

Outlook

• Company expects Q1 2026 revenue to decline 11% to 13% year-over-year

• Kelly anticipates modest revenue growth and EBITDA margin expansion in H2 2026

• Company forecasts Q1 2026 adjusted EBITDA margin of approximately 1.5%

Result Drivers

• DEMAND DECLINE - Revenue fell 11.9% due to lower demand in ETM and SET segments, impacted by reduced demand from U.S. federal government contractors and three large commercial customers

• TECHNOLOGY INITIATIVE - Completion of a significant milestone in technology modernization, expected to enhance efficiency and growth

• EXPENSE OPTIMIZATION - Adjusted SG&A expenses declined 11.1% due to expense optimization initiatives including acquisition integration and technology modernization

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the employment services peer group is "buy"

• Wall Street's median 12-month price target for Kelly Services Inc is $17.00, about 71.5% above its February 11 closing price of $9.91

• The stock recently traded at 6 times the next 12-month earnings vs. a P/E of 4 three months ago

Press Release: ID:nGNX18xy7Q

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