Kelly Reports Second-Quarter 2025 Earnings
TROY, Mich., Aug. 07, 2025 (GLOBE NEWSWIRE) -- Kelly (NASDAQ:KELYA, KELYB)), a leading specialty talent solutions provider, today announced results for the second quarter of 2025.
Q2 revenue of $1.1 billion, up 4.2% year-over-year reflecting previously disclosed acquisitions, and down 3.3% on an organic basis
Q2 operating earnings of $22.2 million; $24.6 million on an adjusted basis, down 12.1% versus the prior year period
Q2 adjusted EBITDA of $37.0 million, down 8.7% versus the prior year; adjusted EBITDA margin decreased 40 basis points ("bps") to 3.4%
Company expects year-over-year revenue decline of 5% to 7% in Q3 driven by reduced demand for U.S. federal contractors and from certain large customers. Adjusted EBITDA margin expansion of 80 to 90 bps is expected in Q3 and modest year-over-year margin improvement for the full year.
"In the second quarter, Kelly continued to drive growth in more resilient markets, including K-12 staffing in our Education business, telecom and engineering solutions in SET, and payroll process outsourcing in ETM. Across the business, particularly in areas where customers are taking a more measured approach to hiring, we maintained our focus on aligning resource levels with demand," said Peter Quigley, president and chief executive officer. "Our results reflect our commitment to staying close to our customers and creating opportunities in the current operating environment. By meeting employers' evolving needs and executing on our efficiency and growth initiatives, we'll continue to deliver near-term results while positioning Kelly for the future."
Financial Results for the thirteen-week period ended June 29, 2025:
Revenue of $1.1 billion, a 4.2% increase compared to the corresponding quarter of 2024 resulting primarily from the May 2024 acquisition of Motion Recruitment Partners, LLC ("MRP"). Excluding the impact of the MRP acquisition, revenue was down 3.3% on an organic basis, including approximately 1.4% of revenue decline due to reduced demand for U.S. federal government contractors and growth of 5.6% in the Education segment.
Operating earnings of $22.2 million, compared to earnings of $12.2 million reported in the second quarter of 2024. Adjusted earnings1 were $24.6 million in the second quarter of 2025 and $28.1 million in the second quarter of 2024. Adjusted EBITDA1 of $37.0 million, a decrease of 8.7% versus the prior year period. Adjusted EBITDA margin of 3.4%, a decrease of 40 basis points driven primarily by near-term margin pressure in SET and ETM reflecting timing of revenue trends and related expense management actions.
Earnings per share were $0.52 compared to earnings per share of $0.12 in the second quarter of 2024. On an adjusted basis1, earnings per share were $0.54 in the second quarter of 2025 compared to $0.71 per share in the corresponding quarter of 2024. The year-over-year decline includes $0.08 of increased net interest expense due to an elevated average cash balance in the prior year quarter and debt incurred in conjunction with the MRP acquisition as well as lower operating earnings.
Financial Results for the 26-week period ended June 29, 2025:
Revenue of $2.3 billion, a 7.8% increase compared to the corresponding period in 2024 resulting primarily from the May 2024 acquisition of MRP. Excluding the impact of the MRP acquisition, revenue was down 1.6% on an organic basis and includes approximately 1.1% revenue decline due to reduced demand for U.S. federal government contractors and growth of 6.1% in the Education segment.
Operating earnings of $33.0 million, compared to earnings of $39.0 million reported over the same period in 2024. Adjusted earnings1 were $46.7 million in the first half of 2025 and $51.2 million in the corresponding period of 2024. Adjusted EBITDA1 of $71.9 million, a decrease of 2.6% versus the prior year period. Adjusted EBITDA margin of 3.2%, a decrease of 30 basis points driven primarily by near-term margin pressure in SET and ETM reflecting timing of revenue trends and related expense management actions.
Earnings per share were $0.67 compared to earnings per share of $0.83 in the same period of 2024. On an adjusted basis1, earnings per share were $0.93 for the first half of 2025 compared to $1.26 per share in the corresponding period of 2024 reflecting higher interest expense following the MRP acquisition and lower operating earnings.
_________________________________________1 Adjusted measures represent non-GAAP financial measures. Refer to our reconciliation of non-GAAP financial measures to the most closely related GAAP measure included in this document.
Quarterly Cash Dividend:
Kelly also reported that on August 6, its board of directors declared a dividend of $0.075 per share. The dividend is payable on September 3, 2025 to stockholders of record as of the close of business on August 20, 2025.
In conjunction with its earnings release, Kelly has published a financial presentation and will host a live webcast of a conference call at 9 a.m. ET on August 7 to review the financial and operation results from the quarter. The presentation and a link to the live webcast will be accessible through the Company's public website on the Investor Relations page under Events & Presentations. The webcast will be recorded, and a replay will be available within one hour of completion of the event through the same link as the live webcast.
Chief Accounting Officer Transition:
Kelly also announced that it has appointed Nick Zuhlke as vice president, controller and chief accounting officer, effective August 11, 2025. He succeeds Laura Lockhart, whose planned retirement was previously announced by the Company. Zuhlke brings to Kelly decades of global finance leadership experience with DexKo Global, Plastipak Holdings, and KPMG.
Forward-Looking Statements:
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly's financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers' compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business's anticipated growth strategies, (vii) our future business development, results of operations and financial condition, (viii) damage to our brands, (ix) dependency on second parties for the execution of critical functions, (x) conducting business in foreign countries, including foreign currency fluctuations, (xi) availability of temporary workers with appropriate skills required by customers, (xii) cyberattacks or other breaches of network or information technology security, and (xiii) other risks, uncertainties and factors discussed in this release and in the Company's filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no duty to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
About Kelly®
Kelly Services, Inc. (NASDAQ:KELYA, KELYB)) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect more than 400,000 people with work every year. Our suite of outsourcing and consulting services ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2024 was $4.3 billion. Learn more at kellyservices.com.
KLYA-FIN
ANALYST & MEDIA CONTACT:
Scott Thomas
(248) 251-7264
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED JUNE 29, 2025 AND JUNE 30, 2024
(UNAUDITED)
(In millions of dollars except per share data)
%
2025
2024
Change
Change
Revenue from services
$
1,101.8
$
1,057.5
$
44.3
4.2
%
Cost of services
876.3
843.8
32.5
3.8
Gross profit
225.5
213.7
11.8
5.5
Selling, general and administrative expenses
207.3
191.5
15.8
8.2
Asset impairment charge
—
5.5
(5.5
)
NM
(Gain) loss on sale of EMEA staffing operations
(4.0
)
10.0
(14.0
)
(139.3
)
Gain on sale of assets
—
(5.5
)
5.5
NM
Earnings from operations
22.2
12.2
10.0
81.0
Other income (expense), net
(2.3
)
(6.5
)
4.2
65.0
Earnings before taxes
19.9
5.7
14.2
249.1
Income tax expense
0.9
1.1
(0.2
)
(23.8
)
Net earnings
$
19.0
$
4.6
$
14.4
314.7
%
Basic earnings per share
$
0.52
$
0.13
$
0.39
300.0
%
Diluted earnings per share
$
0.52
$
0.12
$
0.40
333.3
%
STATISTICS:
Permanent placement revenue (included in revenue from services)
$
14.8
$
10.7
$
4.1
38.7
%
Gross profit rate
20.5
%
20.2
%
0.3
pts.
Adjusted EBITDA
$
37.0
$
40.5
$
(3.5
)
Adjusted EBITDA margin
3.4
%
3.8
%
(0.4
)
pts.
Effective income tax rate
4.2
%
19.4
%
(15.2
)
pts.
Average number of shares outstanding (millions):
Basic
35.2
35.5
Diluted
35.7
35.9
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JUNE 29, 2025 AND JUNE 30, 2024
(UNAUDITED)
(In millions of dollars except per share data)
%
2025
2024
Change
Change
Revenue from services
$
2,266.7
$
2,102.6
$
164.1
7.8
%
Cost of services
1,804.7
1,683.2
121.5
7.2
Gross profit
462.0
419.4
42.6
10.2
Selling, general and administrative expenses
433.0
382.0
51.0
13.3
Asset impairment charge
—
5.5
(5.5
)
NM
Gain on sale of EMEA staffing operations
(4.0
)
(1.6
)
(2.4
)
(139.3
)
Gain on sale of assets
—
(5.5
)
5.5
NM
Earnings from operations
33.0
39.0
(6.0
)
(15.5
)
Gain on forward contract
—
1.2
(1.2
)
NM
Other income (expense), net
(5.5
)
(4.7
)
(0.8
)
(15.8
)
Earnings before taxes
27.5
35.5
(8.0
)
(22.6
)
Income tax expense
2.7
5.1
(2.4
)
(48.0
)
Net earnings
$
24.8
$
30.4
$
(5.6
)
(18.3
)
%
Basic earnings per share
$
0.68
$
0.84
$
(0.16
)
(19.0
)
%
Diluted earnings per share
$
0.67
$
0.83
$
(0.16
)
(19.3
)
%
STATISTICS:
Permanent placement revenue (included in revenue from services)
$
26.3
$
18.7
$
7.6
40.7
%
Gross profit rate
20.4
%
19.9
%
0.5
pts.
Adjusted EBITDA
$
71.9
$
73.8
$
(1.9
)
Adjusted EBITDA margin
3.2
%
3.5
%
(0.3
)
pts.
Effective income tax rate
9.7
%
14.4
%
(4.7
)
pts.
Average number of shares outstanding (millions):
Basic
35.1
35.5
Diluted
35.6
35.9
KELLY SERVICES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(UNAUDITED)
(In millions of dollars)
We utilize business unit profit (loss) to evaluate the performance of our segments. Business unit profit (loss) and SG&A expenses as presented in the segment information table below do not include depreciation and amortization expenses. Adjusted SG&A expenses and business unit profit (loss) further exclude integration, realignment and restructuring charges.
Second Quarter
%
2025
2024
Change
Enterprise Talent Management
Revenue from services
$
520.2
$
541.2
(3.9
)
%
Gross profit
104.0
109.0
(4.6
)
Adjusted SG&A expenses
91.8
93.2
(1.6
)
Integration, realignment and restructuring charges
1.1
0.3
387.4
Total SG&A expenses
92.9
93.5
(0.7
)
Business unit profit (loss)
11.1
15.5
(28.5
)
Adjusted business unit profit (loss)
12.2
15.8
(22.6
)
Gross profit rate
20.0
%
20.1
%
(0.1
)
pts.
Science, Engineering & Technology
Revenue from services
$
317.3
$
265.7
19.4
%
Gross profit
82.4
67.8
21.5
Adjusted SG&A expenses
62.2
48.6
28.1
Integration, realignment and restructuring charges
0.9
0.3
166.9
Total SG&A expenses
63.1
48.9
29.0
Business unit profit (loss)
19.3
18.9
2.1
Adjusted business unit profit (loss)
20.2
19.2
4.9
Gross profit rate
26.0
%
25.5
%
0.5
pts.
Education
Revenue from services
$
265.3
$
251.1
5.6
%
Gross profit
39.1
36.9
6.1
Adjusted SG&A expenses
25.4
24.2
5.2
Integration, realignment and restructuring charges
0.1
—
NM
Total SG&A expenses
25.5
24.2
5.6
Business unit profit (loss)
13.6
12.7
7.1
Adjusted business unit profit (loss)
13.7
12.7
7.9
Gross profit rate
14.7
%
14.7
%
—
pts.
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
We utilize business unit profit (loss) to evaluate the performance of our segments. Business unit profit (loss) and SG&A expenses as presented in the segment information table below do not include depreciation and amortization expenses. Adjusted SG&A expenses and business unit profit (loss) further exclude integration, realignment and restructuring charges.
June Year-to-Date
%
2025
2024
Change
Enterprise Talent Management
Revenue from services
$
1,054.2
$
1,065.3
(1.0
)
%
Gross profit
212.0
215.2
(1.5
)
Adjusted SG&A expenses
190.3
190.6
(0.2
)
Integration, realignment and restructuring charges
3.8
1.0
296.2
Total SG&A expenses
194.1
191.6
1.3
Business unit profit (loss)
17.9
23.6
(24.0
)
Adjusted business unit profit (loss)
21.7
24.6
(11.4
)
Gross profit rate
20.1
%
20.2
%
(0.1
)
pts.
Science, Engineering & Technology
Revenue from services
$
639.7
$
497.3
28.6
%
Gross profit
164.7
125.2
31.5
Adjusted SG&A expenses
130.0
91.8
41.6
Integration, realignment and restructuring charges
2.0
0.3
NM
Total SG&A expenses
132.0
92.1
43.3
Business unit profit (loss)
32.7
33.1
(1.3
)
Adjusted business unit profit (loss)
34.7
33.4
3.6
Gross profit rate
25.7
%
25.2
%
0.5
pts.
Education
Revenue from services
$
574.3
$
