kfrc-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________________________________________________________________

FORM 10-Q

________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-42104

_________________________________________________________________

Kforce Inc.

Exact name of registrant as specified in its charter

_______________________________________________________________


Florida						59-3264661
State or other jurisdiction of incorporation or organization						IRS Employer Identification No.


1150 Assembly Drive, Suite 500, Tampa, Florida						33607
Address of principal executive offices						Zip Code

Registrant’s telephone number, including area code: (813) 552-5000

_______________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	KFRC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.): Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

The number of shares outstanding (in thousands) of the registrant’s common stock at July 23, 2025 was 18,599.

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KFORCE INC.

TABLE OF CONTENTS



PART I	Item 1.	Financial Statements.	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	23
	Item 4.	Controls and Procedures.	23

PART II	Item 1.	Legal Proceedings.	24
	Item 1A.	Risk Factors.	24
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	24
	Item 3.	Defaults Upon Senior Securities.	24
	Item 4.	Mine Safety Disclosures.	24
	Item 5.	Other Information.	25
	Item 6.	Exhibits.	26
	SIGNATURES		27


CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

References in this document to the “Registrant,” “Kforce,” the “Company,” the “Firm,” “management,” “we,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context otherwise requires or indicates.

This report, particularly Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and Part II, Item 1A. Risk Factors, and the documents we incorporate into this report contain certain statements that are, or may be deemed to be, forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance upon the protections provided by such acts for forward-looking statements. Such statements may include, but may not be limited to:

•expectations of financial or operational performance, including the potential effects of macroeconomic uncertainties, such as inflation and the recently implemented U.S. tariffs, among others, on our business;

•the impacts of revenue and gross profit levels on SG&A expenses as well as our ability to control discretionary spending and decrease operating costs;

•our expectations of growth rates in temporary staffing and future changes in revenue and gross profit margins of each segment of our business;

•the ability of the Firm to maintain and attract clients in the face of changing economic or competitive conditions;

•changes in demand for our services and our ability to adapt to such changes;

•continued investments in our strategic priorities, including the expected timing of our implementation of Workday and our ability to realize the benefits of our strategic priorities;

•potential government actions or changes in policies, laws and regulations, including material impacts of income tax changes;

•the Firm’s priority of retaining the most productive and tenured associates in preparation for higher levels of demand in the future;

•the Firm’s commitment, intent and ability to return significant capital to its shareholders through open market repurchases and quarterly dividends;

•our ability to meet the capital expenditure and working capital requirements of our operations;

•financing needs or plans, or our ability to maintain compliance with our credit facility's covenants;

•increased cautiousness for companies to invest in significant technological change and the impacts of such cautiousness on our financial results; and

•assumptions as to any of the foregoing and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events.

For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, refer to the MD&A and Risk Factors sections. In addition, when used in this discussion, the terms “anticipate,” “assume,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “may,” “likely,” “could,” “should,” “future” and variations thereof and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted. Future events and actual results could differ materially from those set forth in or underlying the forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this report, which speak only as of the date of this report. Kforce undertakes no obligation to update any forward-looking statements.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

KFORCE INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue	$	334,316	$	356,318	$	664,344	$	708,207
Direct costs	243,668		257,345		485,436		513,984
Gross profit	90,648		98,973		178,908		194,223
Selling, general and administrative expenses	74,370		77,718		149,535		155,908
Depreciation and amortization	1,390		1,555		2,854		2,888
Income from operations	14,888		19,700		26,519		35,427
Other expense, net	1,029		504		1,594		1,160
Income before income taxes	13,859		19,196		24,925		34,267
Income tax expense	3,410		5,039		6,331		9,123
Net income	$	10,449	$	14,157	$	18,594	$	25,144

Earnings per share – basic	$	0.59	$	0.76	$	1.04	$	1.34
Earnings per share – diluted	$	0.59	$	0.75	$	1.03	$	1.33

Weighted average shares outstanding – basic	17,714		18,696		17,936		18,711
Weighted average shares outstanding – diluted	17,759		18,886		17,994		18,903

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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KFORCE INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


	June 30, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	2,472	$	349
Trade receivables, net of allowances of $1,446 and $1,560, respectively	209,879		215,690
Prepaid expenses and other current assets	10,501		9,367
Total current assets	222,852		225,406
Fixed assets, net	6,644		7,723
Other assets, net	112,416		94,656
Deferred tax assets, net	6,688		5,009
Goodwill	25,040		25,040
Total assets	$	373,640	$	357,834
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	63,293	$	61,753
Accrued payroll costs	39,668		38,823
Current portion of operating lease liabilities	3,006		3,038
Income taxes payable	3,365		8,843
Total current liabilities	109,332		112,457
Long-term debt – credit facility	70,000		32,700
Other long-term liabilities	59,888		58,059
Total liabilities	239,220		203,216
Commitments and contingencies (Note J)
Stockholders’ equity:
Preferred stock, $0.01 par value; 15,000 shares authorized, none issued and outstanding	—		—
Common stock, $0.01 par value; 250,000 shares authorized, 73,888 and 73,835 issued, respectively	739		738
Additional paid-in capital	551,200		543,109
Retained earnings	550,143		546,202
Treasury stock, at cost; 55,277 and 54,619 shares, respectively	(967,662)		(935,431)
Total stockholders’ equity	134,420		154,618
Total liabilities and stockholders’ equity	$	373,640	$	357,834

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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KFORCE INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS)


	Common Stock			Additional Paid-In Capital				Treasury Stock			Total Stockholders’ Equity
	Shares	Amount				Retained Earnings		Shares	Amount
Balance, December 31, 2024	73,835	$	738	$	543,109	$	546,202	54,619	$	(935,431)	$	154,618
Net income	—	—		—		8,145		—	—		8,145
Issuance for stock-based compensation and dividends, net of forfeitures	6	—		376		(376)		—	—		—
Stock-based compensation expense	—	—		3,656		—		—	—		3,656
Employee stock purchase plan	—	—		119		—		(3)	56		175
Dividends ($0.39 per share)	—	—		—		(7,051)		—	—		(7,051)
Repurchases of common stock	—	—		—		—		420	(21,512)		(21,512)
Other	—	—		—		(4)		—	—		(4)
Balance, March 31, 2025	73,841	738		547,260		546,916		55,036	(956,887)		138,027
Net income	—	—		—		10,449		—	—		10,449
Issuance for stock-based compensation and dividends, net of forfeitures	47	1		322		(323)		—	—		—
Stock-based compensation expense	—	—		3,618		—		—	—		3,618
Dividends ($0.39 per share)	—	—		—		(6,900)		—	—		(6,900)
Repurchases of common stock	—	—		—		—		241	(10,775)		(10,775)
Other	—	—		—		1		—	—		1
Balance, June 30, 2025	73,888	$	739	$	551,200	$	550,143	55,277	$	(967,662)	$	134,420

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	Common Stock			Additional Paid-In Capital					Treasury Stock			Total Stockholders’ Equity
	Shares	Amount				Retained Earnings	Shares		Amount
Balance, December 31, 2023	73,462	$	734	$	527,288		$	525,222	53,941	$	(894,164)	$	159,080
Net income	—	—		—			10,987		—	—		10,987
Issuance for stock-based compensation and dividends, net of forfeitures	(7)	1		285			(286)		—	—		—
Stock-based compensation expense	—	—		3,501			—		—	—		3,501
Employee stock purchase plan	—	—		152			—		(3)	52		204
Dividends ($0.38 per share)	—	—		—			(7,128)		—	—		(7,128)
Repurchases of common stock	—	—		—			—		30	(2,139)		(2,139)
Balance, March 31, 2024	73,455	735		531,226			528,795		53,968	(896,251)		164,505
Net income	—	—		—			14,157		—	—		14,157
Issuance for stock-based compensation and dividends, net of forfeitures	24	—		286			(286)		—	—		—
Stock-based compensation expense	—	—		3,498			—		—	—		3,498
Employee stock purchase plan	—	—		151			—		(3)	51		202
Dividends ($0.38 per share)	—	—		—			(7,101)		—	—		(7,101)
Repurchases of common stock	—	—		—			—		139	(8,641)		(8,641)
Balance, June 30, 2024	73,479	$	735	$	535,161		$	535,565	54,104	$	(904,841)	$	166,620

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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KFORCE INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)


	Six Months Ended June 30,
	2025		2024
Cash flows from operating activities:
Net income	$	18,594	$	25,144
Adjustments to reconcile net income to cash provided by operating activities:
Deferred income tax provision, net	(1,679)		(1,461)
Provision for (recoveries of) credit losses	62		(17)
Depreciation and amortization	2,854		2,888
Stock-based compensation expense	7,274		6,999
Noncash lease expense	1,889		1,848
Other	(454)		(993)
(Increase) decrease in operating assets
Trade receivables, net	5,749		2,730
Other assets	(10,809)		(395)
Increase (decrease) in operating liabilities
Accrued payroll costs	1,019		6,027
Other liabilities	(5,885)		(8,665)
Cash provided by operating activities	18,614		34,105
Cash flows from investing activities:
Capital expenditures	(8,290)		(4,979)
Proceeds from company-owned life insurance	1,383		2,377
Premiums paid for company-owned life insurance	(686)		(1,150)
Cash used in investing activities	(7,593)		(3,752)
Cash flows from financing activities:
Proceeds from credit facility	323,500		141,600
Payments on credit facility	(286,200)		(146,500)
Repurchases of common stock	(32,243)		(11,229)
Cash dividends	(13,951)		(14,229)
Other	(4)		(4)
Cash used in financing activities	(8,898)		(30,362)
Change in cash and cash equivalents	2,123		(9)
Cash and cash equivalents, beginning of period	349		119
Cash and cash equivalents, end of period	$	2,472	$	110

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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	Six Months Ended June 30,
Supplemental Disclosure of Cash Flow Information	2025		2024
Cash Paid During the Period For:
Income taxes, net	$	13,517	$	8,593
Operating lease liabilities	2,348		2,485
Interest, net	1,878		1,097
Non-Cash Investing and Financing Transactions:
ROU assets obtained from operating leases	$	3,432	$	1,825
Employee stock purchase plan	175		406
Unsettled repurchases of common stock	—		400

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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KFORCE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A - Summary of Significant Accounting Policies

Unless otherwise noted below, there have been no material changes to the accounting policies presented in Note 1 - “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of our 2024 Annual Report on Form 10-K.

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and footnotes normally required by GAAP for complete financial statements have been condensed or omitted pursuant to those rules and regulations, although management believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2024 Annual Report on Form 10-K. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation. The Unaudited Condensed Consolidated Balance Sheet at December 31, 2024, was derived from our audited Consolidated Balance Sheet at December 31, 2024, as presented in our 2024 Annual Report on Form 10-K.

Our quarterly operating results are affected by the seasonality of our clients’ businesses and changes in holiday and vacation days taken. In addition, we typically experience higher costs in the first quarter of each fiscal year as a result of certain U.S. state and federal employment tax resets, which adversely affects our gross profit and overall profitability relative to the remainder of the fiscal year. As such, the results of operations for any interim period may be impacted by these factors, among others, and are not necessarily indicative of, nor comparable to, the results of operations for a full year.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of Kforce Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. References in this document to “Kforce,” the “Company,” the “Firm,” “management,” “we,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context indicates otherwise.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most critical of these estimates and assumptions include income taxes and the evaluation of goodwill for impairment. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.

Income Taxes

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements, but we do not expect it to have a material effect on our consolidated financial statements.

Earnings per Share

Basic earnings per share is computed as net income divided by the weighted-average number of common shares outstanding (“WASO”) during the period. WASO excludes unvested shares of restricted stock. Diluted earnings per share is computed by dividing net income by diluted WASO. Diluted WASO includes the effect of potentially dilutive securities, such as unvested shares of restricted stock using the treasury stock method, except where the effect of including potential common shares would be anti-dilutive.

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The following table provides information on potentially dilutive securities:


(shares in thousands)	2025	2024
Three Months Ended June 30,
Common stock equivalents	45	190
Anti-dilutive shares	704	7
Six Months Ended June 30,
Common stock equivalents	58	192
Anti-dilutive shares	701	4

New Accounting Standards

Recently Adopted Accounting Standards

In December 2023, the FASB issued guidance for disclosure improvements for income taxes. These amendments require the disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This new guidance is effective for Kforce for our annual disclosures for the year ending December 31, 2025. This new guidance will modify our disclosures, but we do not expect this standard to have a material effect on our consolidated financial statements.

Note B - Reportable Segments

Kforce’s two reportable segments are Technology and Finance and Accounting (“FA”). Within each segment, we provide highly skilled professionals on a Flex and Direct Hire basis to our customers on traditional staffing engagements and increasingly, within our Technology segment, as a part of an overall solutions engagement. The chief operating decision-maker (“CODM”), our President and Chief Executive Officer, establishes the strategic direction of the Firm, its priorities and longer-term financial objectives. Our CODM is ultimately responsible for evaluating segment performance and making decisions regarding resource allocation. Our CODM evaluates performance based on, among others, revenue trends (relative to peers and market benchmarks) and segment gross profit, and other key leading indicators such as client visits, job order trends for traditional staffing assignments, opportunity pipeline reviews for solutions-oriented engagements, and trends in consultants on assignment. The CODM uses these financial metrics and productivity measures when making decisions about allocating capital and resources to the segments.

Segment gross profit is defined as segment revenue, less direct costs attributable to the reportable segment. The CODM is not provided income from operations or asset information by reportable segment as operations are largely combined.

The following table provides information on the operations of our segments:


(in thousands)	Technology		FA		Total
Three Months Ended June 30,
2025
Revenue	$	310,527	$	23,789	$	334,316
Direct costs	228,953		14,715		243,668
Gross profit	$	81,574	$	9,074	$	90,648
Less:
Selling, general and administrative expenses					74,370
Depreciation and amortization					1,390
Other expense, net					1,029
Income before income taxes					$	13,859

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	Technology		FA		Total
2024
Revenue	$	327,874	$	28,444	$	356,318
Direct costs	239,977		17,368		257,345
Gross profit	$	87,897	$	11,076	$	98,973
Less:
Selling, general and administrative expenses					77,718
Depreciation and amortization					1,555
Other expense, net					504
Income before income taxes					$	19,196
Six Months Ended June 30,
2025
Revenue	$	616,811	$	47,533	$	664,344
Direct costs	456,053		29,383		485,436
Gross profit	$	160,758	$	18,150	$	178,908
Less:
Selling, general and administrative expenses					149,535
Depreciation and amortization					2,854
Other expense, net					1,594
Income before income taxes					$	24,925
2024
Revenue	$	649,958	$	58,249	$	708,207
Direct costs	478,024		35,960		513,984
Gross profit	$	171,934	$	22,289	$	194,223
Less:
Selling, general and administrative expenses					155,908
Depreciation and amortization					2,888
Other expense, net					1,160
Income before income taxes					$	34,267

Note C - Disaggregation of Revenue

The following table provides information about disaggregated revenue by segment and revenue type:


(in thousands)	Technology		FA		Total
Three Months Ended June 30,
2025
Flex revenue	$	307,844	$	20,567	$	328,411
Direct Hire revenue	2,683		3,222		5,905
Total Revenue	$	310,527	$	23,789	$	334,316
2024
Flex revenue	$	324,064	$	24,720	$	348,784
Direct Hire revenue	3,810		3,724		7,534
Total Revenue	$	327,874	$	28,444	$	356,318

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	Technology		FA		Total
Six Months Ended June 30,
2025
Flex revenue	$	610,279	$	40,702	$	650,981
Direct Hire revenue	6,532		6,831		13,363
Total Revenue	$	616,811	$	47,533	$	664,344
2024
Flex revenue	$	642,578	$	50,930	$	693,508
Direct Hire revenue	7,380		7,319		14,699
Total Revenue	$	649,958	$	58,249	$	708,207

Note D - Allowance for Credit Losses

The following table presents the activity within the allowance for credit losses on trade receivables for the six months ended June 30, 2025:


(in thousands)
Allowance for credit losses, December 31, 2024	$	916
Current period provision	62
Write-offs charged against the allowance, net of recoveries of amounts previously written off	(76)
Allowance for credit losses, June 30, 2025	$	902

The allowances on trade receivables presented in the Unaudited Condensed Consolidated Balance Sheets include $0.5 million and $0.6 million for reserves unrelated to credit losses at June 30, 2025 and December 31, 2024, respectively.

Note E - Other Assets, Net

Other assets, net consisted of the following:


(in thousands)	June 30, 2025		December 31, 2024
Assets held in Rabbi Trust	$	52,939	$	49,356
Capitalized software, net (1)	40,108		29,090
ROU assets for operating leases, net	15,320		13,764
Other non-current assets	4,049		2,446
Total Other assets, net	$	112,416	$	94,656

(1) This balance includes $11.6 million and $6.3 million related to capitalized implementation costs from cloud computing arrangements at June 30, 2025 and December 31, 2024, respectively. Accumulated amortization of capitalized software was $41.6 million and $40.1 million at June 30, 2025 and December 31, 2024, respectively.

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Note F - Current Liabilities

The following table provides information on certain current liabilities:


(in thousands)	June 30, 2025		December 31, 2024
Accounts payable	$	45,625	$	38,315
Deferred compensation payable	8,526		8,602
Customer rebates payable	4,918		6,556
Accrued liabilities	2,617		4,259
Accrued professional fees	1,607		4,021
Total Accounts payable and other accrued liabilities	$	63,293	$	61,753
Payroll and benefits	$	33,456	$	32,990
Health insurance liabilities	3,759		3,593
Payroll taxes	1,886		1,698
Workers’ compensation liabilities	567		542
Total Accrued payroll costs	$	39,668	$	38,823

Note G - Credit Facility

On October 20, 2021, the Firm entered into an amended and restated credit agreement with Wells Fargo Bank, National Association, as administrative agent, Wells Fargo Securities, LLC, as lead arranger and bookrunner, Bank of America, N.A., as syndication agent, BMO Harris Bank, N.A., as documentation agent, and the lenders referred to therein (the “Amended and Restated Credit Facility”). Under the Amended and Restated Credit Facility, the Firm has a maximum borrowing capacity of $200.0 million, which may, subject to certain conditions and the participation of the lenders, be increased up to an aggregate additional amount of $150.0 million. Borrowings under the Amended and Restated Credit Facility are secured by substantially all of the tangible and intangible assets of the Firm. The maturity date of the Amended and Restated Credit Facility is October 20, 2026.

At June 30, 2025 and December 31, 2024, $70.0 million and $32.7 million was outstanding under the Amended and Restated Credit Facility, respectively. Kforce had $1.0 million of outstanding letters of credit at June 30, 2025 and December 31, 2024, which pursuant to the Amended and Restated Credit Facility, reduces the availability of our borrowing capacity. At June 30, 2025, we were in compliance with all of the covenants contained in the Amended and Restated Credit Facility.

Note H - Other Long-Term Liabilities

Other long-term liabilities consisted of the following:


(in thousands)	June 30, 2025		December 31, 2024
Deferred compensation payable - long term	$	46,466	$	46,183
Operating lease liabilities	13,410		11,858
Other long-term liabilities	12		18
Total Other long-term liabilities	$	59,888	$	58,059

Note I - Stock-Based Compensation

On April 23, 2025, Kforce’s shareholders approved the 2025 Stock Incentive Plan (the “2025 Plan”). The 2025 Plan allows for the issuance of stock options, stock appreciation rights (“SAR”), stock awards (including restricted stock awards (“RSAs”) and restricted stock units (“RSUs”)) and other stock-based awards, such as Performance-Based Awards (collectively referred to as “Restricted Stock”). The aggregate number of shares reserved under the 2025 Plan is approximately 2.7 million. Grants of an option or SAR reduce the reserve by one share, while a Restricted Stock award reduces the reserve by 2.72 shares. The 2025 Plan terminates on April 23, 2035.

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The following table presents the Restricted Stock activity for the six months ended June 30, 2025:


(in thousands, except per share amounts)	Number of Restricted Stock	Weighted-Average Grant Date Fair Value		Total Intrinsic Value of Restricted Stock Vested
Outstanding at December 31, 2024	910	$	61.28
Granted	60	$	48.01
Forfeited	(7)	$	63.67
Vested	(38)	$	47.67	$	1,667
Outstanding at June 30, 2025	925	$	60.97

At June 30, 2025, total unrecognized stock-based compensation expense related to restricted stock was $37.7 million, which is expected to be recognized over a weighted-average remaining period of 4.3 years.

During the three and six months ended June 30, 2025, stock-based compensation expense was $3.6 million and $7.3 million, respectively. During the three and six months ended June 30, 2024, stock-based compensation expense was $3.5 million and $7.0 million, respectively. Stock-based compensation is included in Selling, general and administrative expenses (“SG&A”) in the Unaudited Condensed Consolidated Statements of Operations.

Note J - Commitments and Contingencies

Employment Agreements

Kforce has employment agreements with certain executives that provide for certain post-employment benefits under certain circumstances. At June 30, 2025, our liability would be approximately $28.2 million if, following a change in control, all of the executives under contract were terminated without cause by the employer or if the executives resigned for good reason, and $9.1 million if, in the absence of a change in control, all of the executives under contract were terminated by Kforce without cause or if the executives resigned for good reason.

Litigation

We are involved in legal proceedings, claims and administrative matters that arise in the ordinary course of business, and we have made accruals with respect to certain of these matters, where appropriate, that are reflected in our unaudited condensed consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters for which an accrual has not been made, we have not yet determined that a loss is probable, or the amount of loss cannot be reasonably estimated. The outcome of any litigation is inherently uncertain, but we do not expect that these proceedings and claims, individually or in the aggregate, will have a material effect on our unaudited condensed consolidated financial statements; however, if decided adversely to us, or if we determine that settlement of particular litigation is appropriate, we may be subject to additional liabilities that could have a material adverse effect on our financial position, results of operations or cash flows. Kforce maintains liability insurance that insures us against workers’ compensation, personal and bodily injury, property damage, directors’ and officers’ liability, errors and omissions, cyber liability, employment practices liability and fidelity losses. There can be no assurance that Kforce’s liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

EXECUTIVE SUMMARY

The following is an executive summary of what Kforce believes are highlights as of and for the six months ended June 30, 2025, which should be considered in the context of the additional discussions herein and in conjunction with the unaudited condensed consolidated financial statements and notes thereto.

•Revenue for the six months ended June 30, 2025 decreased 6.2% (5.5% on a billing day basis) to $664.3 million from $708.2 million in the comparable period in 2024. Revenue decreased 5.1% (4.4% on a billing day basis) and 18.4% (17.8% on a billing day basis) for Technology and FA, respectively, primarily driven by decreases in consultants on assignment, which we believe is related to macroeconomic uncertainties.

•Flex revenue for the six months ended June 30, 2025 decreased 6.1% (5.4% on a billing day basis) to $651.0 million from $693.5 million in the comparable period in 2024. Flex revenue decreased 5.0% (4.3% on a billing day basis) for Technology and 20.1% (19.5% on a billing day basis) for FA. Flex revenue for both Technology and FA improved slightly in the second quarter of 2025 on a sequential billing day basis.

•Direct Hire revenue for the six months ended June 30, 2025 decreased 9.1% to $13.4 million from $14.7 million in the comparable period in 2024. Direct Hire revenue declined 22.1% in the second quarter of 2025 on a sequential billing day basis.

•Gross profit margin for the six months ended June 30, 2025 decreased 50 basis points to 26.9% from 27.4% in the comparable period in 2024 primarily driven by declines in the mix of Direct Hire revenue and Flex gross profit margins.

•Flex gross profit margin for the six months ended June 30, 2025 decreased 50 basis points to 25.4% from 25.9% in the comparable period in 2024 primarily driven by higher healthcare costs.

•SG&A expenses as a percentage of revenue for the six months ended June 30, 2025 increased to 22.5% from 22.0% in the comparable period in 2024 primarily driven by the declines in revenue.

•Net income for the six months ended June 30, 2025 decreased 26.0% to $18.6 million, or $1.03 diluted earnings per share, from $25.1 million, or $1.33 per share, for the six months ended June 30, 2024.

•The Firm returned $45.7 million of capital to our shareholders in the form of open market repurchases totaling $31.7 million and quarterly dividends totaling $14.0 million during the six months ended June 30, 2025.

•Cash provided by operating activities was $18.6 million during the six months ended June 30, 2025, as compared to $34.1 million for the six months ended June 30, 2024. The decrease was primarily related to lower profitability levels, higher capitalized costs related to cloud computing arrangements for our Workday implementation, and the payment of 2024 federal income taxes that were deferred pursuant to IRS guidance.

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RESULTS OF OPERATIONS

Business Overview

Kforce is a leading domestic provider of technology and finance and accounting talent solutions to innovative and industry-leading companies. At June 30, 2025, Kforce employed over 1,600 associates and had approximately 7,500 consultants on assignment. Kforce serves clients across a diverse set of industries and organizations of all sizes, but we place a particular focus on serving Fortune 500 and other leading companies.

While early 2025 began with optimism around U.S. economic growth and companies generally investing in technology initiatives to a greater degree, that momentum softened in the first half of 2025 amid rising macroeconomic uncertainties. While the enactment of the One Big Beautiful Bill Act removed some uncertainty related to tax policy, the global trade negotiations and potential retaliatory measures are far from settled and the potential derivative negative effects on the U.S. consumer and broader U.S. economy remain highly uncertain as exhibited by continued mixed economic data. Against the backdrop of the current macro environment, we are pleased to have delivered sequential Flex revenue growth in both our Technology and Finance and Accounting businesses in the second quarter of 2025. Our operating trends suggest that we continue to operate in a demand-constrained environment; however, we believe our clients continue to carry a significant backlog of strategically imperative technology investments that they expect to execute once greater positive visibility exists.

Based on data published by the U.S. Bureau of Labor Statistics and Staffing Industry Analysts (“SIA”), temporary employment figures and trends are important indicators of staffing demand from an economic standpoint. The national U.S. unemployment rate remained flat at 4.1% in June 2025 as compared to December 2024. In the latest U.S. staffing industry forecast published by SIA in March 2025, the technology temporary staffing industry is estimated to grow 2% in 2025, which is down from the earlier forecast of 5%. We would expect a downward adjustment in SIA’s expectations of growth in their next update, which is expected to be released in September 2025.

Operating Results - Three and Six Months Ended June 30, 2025 and 2024

The following table presents certain items in our Unaudited Condensed Consolidated Statements of Operations as a percentage of revenue:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue by segment:
Technology	92.9	%	92.0	%	92.8	%	91.8	%
FA	7.1		8.0		7.2		8.2
Total Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Revenue by type:
Flex	98.2	%	97.9	%	98.0	%	97.9	%
Direct Hire	1.8		2.1		2.0		2.1
Total Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Gross profit	27.1	%	27.8	%	26.9	%	27.4	%
Selling, general and administrative expenses	22.2	%	21.8	%	22.5	%	22.0	%
Depreciation and amortization	0.4	%	0.4	%	0.4	%	0.4	%
Income from operations	4.5	%	5.5	%	4.0	%	5.0	%
Income before income taxes	4.1	%	5.4	%	3.8	%	4.8	%
Net income	3.1	%	4.0	%	2.8	%	3.6	%

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Revenue. The following table presents revenue by type for each segment and the percentage change from the prior period:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2025		Increase (Decrease)		2024		2025		Increase (Decrease)		2024
Technology
Flex revenue	$	307,844	(5.0)	%	$	324,064	$	610,279	(5.0)	%	$	642,578
Direct Hire revenue	2,683		(29.6)	%	3,810		6,532		(11.5)	%	7,380
Total Technology revenue	$	310,527	(5.3)	%	$	327,874	$	616,811	(5.1)	%	$	649,958
FA
Flex revenue	$	20,567	(16.8)	%	$	24,720	$	40,702	(20.1)	%	$	50,930
Direct Hire revenue	3,222		(13.5)	%	3,724		6,831		(6.7)	%	7,319
Total FA revenue	$	23,789	(16.4)	%	$	28,444	$	47,533	(18.4)	%	$	58,249

Total Flex revenue	$	328,411	(5.8)	%	$	348,784	$	650,981	(6.1)	%	$	693,508
Total Direct Hire revenue	5,905		(21.6)	%	7,534		13,363		(9.1)	%	14,699
Total Revenue	$	334,316	(6.2)	%	$	356,318	$	664,344	(6.2)	%	$	708,207

Flex Revenue. The key drivers of Flex revenue are the number of consultants on assignment, billable hours, the bill rate per hour and, to a limited extent, the amount of billable expenses incurred by Kforce.

Flex revenue for our Technology business decreased 5.0% during each of the three and six months ended June 30, 2025 and 4.3% on a billing day basis for the six months ended June 30, 2025, as compared to the same periods in 2024. These changes are primarily driven by a decrease in consultants on assignment, which we believe is related to macroeconomic uncertainties. Technology Flex revenue improved 1.8% (0.2% on a billing day basis) sequentially in the second quarter. Our average Technology bill rates remained stable for the three and six months ended June 30, 2025, as compared to the same periods in 2024. In the third quarter, we expect Technology Flex revenue to decline in the low single digits on a sequential basis and mid single digits year over year.

Our FA business experienced a decrease in Flex revenue of 16.8% and 20.1% during the three and six months ended June 30, 2025, respectively, and 19.5% on a billing day basis for the six months ended June 30, 2025, as compared to the same periods in 2024. These changes are primarily driven by a decrease in consultants on assignment. FA Flex revenue improved 2.1% (0.5% on a billing day basis) in the second quarter of 2025 on a sequential billing day basis, which was the first sequential improvement in FA Flex since the second quarter of 2022. Our average FA bill rates improved by 4.7% and 3.0% for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024, which is reflective of the higher-skilled assignments that we are strategically pursuing. In the third quarter, we expect FA Flex revenue to improve in the mid single digits sequentially and decline in the high single digits year over year.

The following table presents the key drivers for the change in Flex revenue by segment over the prior period (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2025 vs. June 30, 2024				June 30, 2025 vs. June 30, 2024
Key Drivers - Increase (Decrease)	Technology		FA		Technology		FA
Volume - hours billed	$	(15,474)	$	(5,070)	$	(34,961)	$	(11,380)
Bill rate	(787)		924		2,603		1,181
Billable expenses	41		(7)		59		(29)
Total change in Flex revenue	$	(16,220)	$	(4,153)	$	(32,299)	$	(10,228)

The following table presents total Flex hours billed by segment and percentage change over the prior period:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025	Increase (Decrease)		2024	2025	Increase (Decrease)		2024
Technology	3,404	(4.8)	%	3,575	6,741	(5.5)	%	7,130
FA	383	(20.5)	%	482	771	(22.4)	%	994
Total Flex hours billed	3,787	(6.7)	%	4,057	7,512	(7.5)	%	8,124

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Direct Hire Revenue. The key drivers of Direct Hire revenue are the number of placements and the associated placement fee. Direct Hire revenue also includes conversion revenue, which may occur when a consultant initially assigned to a client on a temporary basis is later converted to a permanent placement for a fee.

Direct Hire revenue decreased 21.6% and 9.1% during the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024, which was primarily driven by decreases in placements, partially offset by an increase in placement fees. In the third quarter, we expect Direct Hire Revenue to remain flat sequentially and decrease in the mid 20% range year over year.

Gross Profit. Gross profit is determined by deducting direct costs (primarily consultant compensation, payroll taxes and certain fringe benefits, as well as independent contractor costs) from total revenue. In addition, there are no consultant payroll costs associated with Direct Hire placements; thus, all Direct Hire revenue increases gross profit by the full amount of the placement fee.

The following table presents gross profit (gross profit as a percentage of total revenue) by segment and percentage change over the prior period:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		Increase (Decrease)		2024		2025		Increase (Decrease)		2024
Technology	26.3	%	(1.9)	%	26.8	%	26.1	%	(1.5)	%	26.5	%
FA	38.1	%	(2.1)	%	38.9	%	38.2	%	(0.3)	%	38.3	%
Total gross profit percentage	27.1	%	(2.5)	%	27.8	%	26.9	%	(1.8)	%	27.4	%

The total gross profit percentage decreased 70 and 50 basis points for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024, primarily driven by declines in the mix of Direct Hire revenue and Flex gross profit margins.

Flex gross profit percentage (Flex gross profit as a percentage of Flex revenue) provides management with helpful insights into the other drivers of total gross profit percentage driven by our Flex business, such as changes in the spread between the consultants’ bill rate and pay rate, changes in payroll tax rates or benefits costs, as well as the impact of billable expenses, which provide no profit margin.

The following table presents the Flex gross profit percentage by segment and percentage change over the prior period:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		Increase (Decrease)		2024		2025		Increase (Decrease)		2024
Technology	25.6	%	(1.2)	%	25.9	%	25.3	%	(1.2)	%	25.6	%
FA	28.5	%	(4.0)	%	29.7	%	27.8	%	(5.4)	%	29.4	%
Total Flex gross profit percentage	25.8	%	(1.5)	%	26.2	%	25.4	%	(1.9)	%	25.9	%

Our Flex gross profit percentage decreased 40 and 50 basis points for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024.

•Technology Flex gross profit margins decreased 30 basis points for each of the three and six months ended June 30, 2025, as compared to the same periods in 2024, which was primarily driven by higher healthcare costs and partially offset by slightly improved bill and pay spreads. In the third quarter, we expect Technology Flex gross profit margins to remain stable sequentially.

•FA Flex gross profit margins decreased 120 and 160 basis points for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024, which was primarily driven by a tighter pricing environment and higher healthcare costs. In the third quarter, we expect FA Flex gross profit margins to remain stable sequentially.

The following table presents the key drivers for the change in Flex gross profit by segment over the prior period (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2025 vs. June 30, 2024				June 30, 2025 vs. June 30, 2024
Key Drivers - Increase (Decrease)	Technology		FA		Technology		FA
Revenue impact (volume)	$	(4,209)	$	(1,235)	$	(8,271)	$	(3,006)
Profitability impact (bill rate)	(987)		(265)		(2,057)		(644)
Total change in Flex gross profit	$	(5,196)	$	(1,500)	$	(10,328)	$	(3,650)

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SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A represented 84.6% and 84.5% for the three and six months ended June 30, 2025, respectively, as compared to 84.2% and 84.0% for the comparable periods in 2024, respectively. Commissions and other bonus incentives are variable costs driven primarily by revenue and gross profit levels. Therefore, as those levels change, these expenses would also generally be anticipated to change.

The following table presents certain components of SG&A as a percentage of total revenue:


(in thousands)	2025		% of Revenue		2024		% of Revenue
Three Months Ended June 30,
Compensation, commissions, payroll taxes and benefits costs	$	62,904	18.8	%	$	65,425	18.4	%
Other (1)	11,466		3.4	%	12,293		3.4	%
Total SG&A	$	74,370	22.2	%	$	77,718	21.8	%
Six Months Ended June 30,
Compensation, commissions, payroll taxes and benefits costs	$	126,380	19.0	%	$	131,033	18.5	%
Other (1)	23,155		3.5	%	24,875		3.5	%
Total SG&A	$	149,535	22.5	%	$	155,908	22.0	%

(1) Includes items such as credit loss expense, lease expense, professional fees, travel, communication and office-related expense, and certain other expenses.

SG&A as a percentage of revenue increased 40 and 50 basis points for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024.

For compensation and related expenses, we continue to experience a degree of SG&A deleverage as we continue to make investments in our strategic priorities and retain our most productive associates to strategically position the Firm to capture an increased market share when the demand environment improves. We also experienced an increase in healthcare costs during the three and six months ended June 30, 2025, as compared to the same periods in 2024. To mitigate the pressure on our profitability levels from the revenue and gross profit declines, we continue to take certain actions to align our costs such as tight discretionary spend control.

We continue to prioritize investments in our strategic initiatives, including the implementation of Workday as part of our back-office transformation program, which is expected to go live in 2026; integrated strategy efforts; the evolution of our nearshore and offshore delivery capabilities; and most recently, driving Kforce’s strategy through leverage of artificial intelligence (“AI”).

Depreciation and Amortization. The followin

SEC Form 10-Q filed by Kforce Inc.