Kforce’s fourth quarter was met with a significant negative market reaction, as investors responded to both a year-on-year revenue decline and a substantial miss on profit expectations. Management attributed the quarter’s results to a combination of persistent weakness in the technology services sector and a challenging labor market, but pointed to sequential growth in its technology business and positive momentum entering the new year. CEO Joseph Liberatore described the environment as one where “clients may increasingly pursue a flexible talent model as a means to complete critical projects in this uncertain macro landscape.” The company also absorbed restructuring costs to better align its workforce and cost base with current demand.
Is now the time to buy KFRC? Find out in our full research report (it’s free for active Edge members).
Kforce (KFRC) Q4 CY2025 Highlights:
- Revenue: $332 million vs analyst estimates of $329.3 million (3.4% year-on-year decline, 0.8% beat)
- EPS (GAAP): $0.30 vs analyst expectations of $0.47 (36.3% miss)
- Adjusted EBITDA: $16.75 million vs analyst estimates of $17.93 million (5% margin, 6.6% miss)
- Revenue Guidance for Q1 CY2026 is $328 million at the midpoint, above analyst estimates of $321.7 million
- EPS (GAAP) guidance for Q1 CY2026 is $0.41 at the midpoint, beating analyst estimates by 9.3%
- Operating Margin: 2.6%, down from 4.5% in the same quarter last year
- Market Capitalization: $622.2 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Kforce’s Q4 Earnings Call
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Mark Marcon (Baird) asked about the sustainability of sequential improvement and AI-related demand. CEO Joseph Liberatore explained that clients are still in early adoption stages, with most demand tied to foundational projects rather than broad AI rollouts.
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Trevor Romeo (William Blair) inquired whether recent momentum reflected new spending or reprioritization. Liberatore clarified that clients are shifting budgets to foundational work, and COO David Kelly added that data and digital backlogs are growing at double-digit rates.
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Tyler Barishaw (Truist Securities) questioned strategies for raising technology bill rates amid stable pricing. Kelly responded that consulting-led growth and higher-value projects help maintain rates, despite competitive and market-driven pressures.
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Kartik Mehta (Northcoast Research) probed whether Kforce has turned the corner towards year-over-year revenue growth. Kelly pointed to improved front-end indicators, such as client visits and order flow, but cautioned that macro trends still matter.
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Josh Chan (UBS) sought clarification on margin drivers for 2026. Kelly confirmed that margin expansion is expected from both gross margin improvements and SG&A leverage, assuming stable revenue trends and continued cost discipline.
Catalysts in Upcoming Quarters
In the coming quarters, our team will watch (1) whether Kforce sustains momentum in consulting-led and offshore engagements, (2) if client demand for technology and data modernization projects materializes into higher billings, and (3) the impact of recent cost reductions on operating margins. Trends in client hiring behavior and progress on large-scale AI adoption will also be key indicators of execution.
Kforce currently trades at $36.08, down from $36.68 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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