Kelly Services Stock Earnings Reports

Key points for investors: Kelly Services reported Q1 2026 revenue of $1.0B, down 10.7% year-over-year (down ~3.3% on an underlying basis after disclosed discrete impacts). Underlying trends improved sequentially: ETM was roughly flat (-0.4% underlying), staffing showed stabilization with February/March growth, SET saw pressure (down ~6% underlying) but sequential improvement in telecom, life sciences and engineering, and Education was down ~4.8% due to delayed contracts, enrollment declines and weather impacts. Reported gross profit declined and gross margin compressed, but gross margin sequentially improved versus Q4. Adjusted EBITDA was $15.8M (1.5% margin), in line with expectations; adjusted EPS was $0.03 (vs $0.39 prior year) after $9.2M of charges tied to integrations, modernization, realignment and other items. SG&A showed meaningful improvement: reported SG&A down ~11.7% and core adjusted SG&A is expected to decline ~$25M year-over-year in 2026, driven by structural and volume-related cost optimizations (including AI and tech-driven efficiencies). Technology modernization continues (CRM migration to HubSpot for commercial teams by mid-year; phased enterprise platform migrations into Q4 and early 2027 for broader HCM and billing capabilities). Management highlighted a large new MSP win (global oil & gas) leveraging Helix analytics and AI-enabled rate intelligence, and created a Growth Office to drive a unified go-to-market and cross-sell. Balance sheet: $252M available liquidity, $130.5M total borrowings, operating cash use of ~$25.4M this quarter (working-capital timing); dividend maintained at $0.075/quarter. Outlook: Q2 revenue decline expected 7–9% (with at least 100 bps improvement in underlying decline) and adjusted EBITDA margin target of at least 2.5% (≥100 bps improvement vs Q1). Management expects sequential year-over-year improvement each quarter in 2026, modest revenue growth in H2 and margin expansion in H2, assuming no material macro changes.