GEE Group Inc.

Quarterly revenue was $20.8 million and year-to-date revenue was $60.8 million, down 15% and 17% versus the comparable prior periods. Gross profit was $8.3 million in the quarter and $23.1 million year-to-date, with gross margin of 39.9% and 38.0%, up 450 basis points and 380 basis points year over year. Net income was $566,000, or $0.01 per diluted share, for the quarter and $430,000, or $0.00 per diluted share, year-to-date; adjusted EBITDA was $570,000 for the quarter and $582,000 year-to-date. Direct hire revenue was $3.8 million for the quarter and $9.7 million year-to-date, up about 16% and 10%, while contract staffing revenue was $17.0 million and $51.1 million, down 20% and 21%. Management did not give formal next-quarter or full-year financial guidance, but said it remains cautiously optimistic for improvement in the fourth quarter and beyond, expects contingent labor demand to stabilize, and believes returns from AI-related and system integration initiatives could begin later this year.

Derek Dewan framed the quarter as better performance despite a choppy hiring market, citing macro uncertainty, AI-related disruption, and the loss of a higher-volume client as key headwinds. He emphasized a pivot toward higher-margin direct hire, AI-enabled recruiting and sales processes, and better use of VMS/MSP business, saying those initiatives should begin to show returns later this year. He also reiterated that the company is focused on maximizing shareholder value through the strategic review process and said the company remains well positioned to grow organically and pursue strategic opportunities.

Kim Thorpe highlighted the move to profitability, with net income of $566,000 for the quarter and $430,000 year-to-date, compared with prior-year losses that included a $22 million goodwill impairment and a $9.7 million tax-valuation allowance charge. She pointed to adjusted EBITDA of $570,000 for the quarter and $582,000 year-to-date, versus negative adjusted EBITDA in the prior periods, and said gross margin improved to 39.9% and 38.0% from 35.4% and 34.2%. She also noted SG&A fell to $7.8 million in the quarter and $23.0 million year-to-date, with $3.8 million of annualized savings implemented in late fiscal 2025 contributing $1.1 million and $3.5 million of reductions in the quarter and year-to-date. On liquidity, she said the company had $20.3 million in cash, $5.2 million of undrawn ABL availability, $24.4 million of net working capital, no outstanding debt, and a 5:1 current and working capital ratio, while systems/ERP and ATS integration is expected to be substantially complete by the end of September and fully complete by the end of calendar 2026.

The main Q&A centered on the strategic alternatives process: management said the response has been robust, the board and M&A committee are actively engaged, and a decision should come soon, but they would not give a firm timetable. On capital allocation, they said an ABL facility is standard for staffing companies and is kept for flexibility, while share repurchases are “always on the table” and will be considered in the strategic review context. They also addressed a question about Hornet Staffing, calling it a successful tuck-in acquisition that brought about $4.5 million to $5 million of revenue and offshore recruiting capability, and said they will suspend acquisitions until the strategic review concludes, though they may keep relationships active in the market.