Kelly Services, Inc.

Second-quarter revenue totaled $1.04 billion, down 5.8% year over year and better than guidance of down 7% to 9%. Gross profit was $212 million, down 6% year over year, and gross margin was 20.4%, essentially flat to last year and up 150 basis points sequentially. Reported diluted EPS was $0.31, while adjusted EPS was $0.37 versus $0.54 in the prior-year quarter. Adjusted EBITDA was $31.1 million with a 3% margin, above the prior guide of at least 2.5%. On the balance sheet, Kelly ended the quarter with $303 million of total available liquidity, $24 million in cash, $279 million available on credit facilities, $78.1 million of total debt, and generated $47.7 million of free cash flow while reducing debt by $52.4 million. For Q3, management expects underlying revenue growth of 1% to 2%, total revenue flat to down 2%, and adjusted EBITDA margin in the low 2% range, with year-over-year margin improvement of 40 to 50 basis points. For Q4, management expects total revenue growth in the mid- to upper single digits and about 200 basis points of adjusted EBITDA margin expansion, with adjusted EBITDA margin of approximately 4%, including the effect of an extra fiscal week. For the full year, Kelly expects a low- to mid-single-digit total revenue decline and 10 to 20 basis points of year-over-year adjusted EBITDA margin improvement.

Chris Layden framed the quarter as evidence that Kelly is moving from stabilization into early recovery, pointing to two straight quarters of improving underlying trends, SET’s first sequential growth in two years, and ETM’s return to growth. He emphasized that the company’s One Kelly go-to-market approach, unified CRM rollout, and AI-enabled tools are helping drive cross-selling, efficiency, and better customer outcomes. His tone was constructive and confident, with repeated references to stronger demand trends, broad-based improvement, and a positive trajectory into the second half of 2026.

Troy Anderson focused on the financial improvement and the company’s cost discipline. He cited $1.04 billion of revenue, $212 million of gross profit, a 20.4% gross margin, $195.9 million of reported SG&A, $192.7 million of adjusted SG&A, and $31.1 million of adjusted EBITDA at a 3% margin; he also noted $3.2 million of charges tied to integration, realignment, restructuring, and transaction costs. He highlighted $47.7 million of free cash flow, $52.4 million of debt reduction, $303 million of liquidity, and the extension of the receivables securitization facility by a year, while reiterating a quarterly dividend of $0.075 per share and a disciplined, opportunistic capital allocation approach.

Analysts pressed on Education’s delayed contract decisions, and management said the pressure is not structural but tied largely to Florida enrollment declines and school choice attrition, with the prior year’s delayed decisions now largely worked through. Questions also centered on SET’s inflection point and whether AI is a headwind or tailwind; management said AI is a tailwind, especially as demand from data centers, engineering, telecom, and solutions work expands. In ETM, management described broad-based professional and industrial staffing demand as sustainable because customers are using MSP and RPO more strategically, not just as temporary cost cuts. They also said the company remains open to M&A, but near-term cash is being directed first toward debt paydown and seasonal working-capital needs.