Kelly Services, Inc.

Second-quarter revenue was $1.04 billion, down 5.8% year over year and better than the company’s prior guidance of down 7% to 9%. Gross profit was $212 million, down 6%, and gross margin was 20.4%, essentially flat year over year and up 150 basis points sequentially. Reported diluted EPS was $0.31; adjusted EPS was $0.37 versus $0.54 a year ago. Adjusted EBITDA was $31.1 million with a 3% margin, above guidance of at least 2.5% and down 40 basis points year over year. For the quarter, free cash flow was $47.7 million, debt was reduced by $52.4 million, total debt ended at $78.1 million, and liquidity was $303 million including $24 million cash. For Q3, Kelly expects underlying revenue growth of 1% to 2%, total revenue flat to down 2% year over year, and adjusted EBITDA margin in the low 2% range. For Q4, the company expects total revenue growth in the mid- to upper single digits and adjusted EBITDA margin of approximately 4%. For the full year, management now expects a roughly low- to mid-single-digit total revenue decline and 10 to 20 basis points of year-over-year adjusted EBITDA margin improvement.

Chris Layden said the quarter showed ‘disciplined execution’ and that Kelly is now ‘beyond stabilization’ and in the early stages of recovery. He highlighted sequential improvement across ETM, SET and Education, as well as the One Kelly go-to-market model, CRM modernization and broader AI adoption as key enablers of growth and efficiency. His tone was constructive and confident, emphasizing that demand trends are improving and that the company is positioned to capture more share in education, specialized technical work and talent management.

Troy Anderson focused on the financial improvement in the quarter: revenue of $1.04 billion, gross profit of $212 million, adjusted EBITDA of $31.1 million, and adjusted EBITDA margin of 3%. He noted adjusted SG&A of $192.7 million, down 4.1%, and said core adjusted SG&A should decline about $25 million, or 4%, for the year despite continued investments in technology and growth. On the balance sheet, he pointed to $47.7 million of free cash flow, $52.4 million of debt reduction, $78.1 million of total debt, and $303 million of available liquidity, and he said the dividend was maintained at $0.075 per share. He also described the amended receivables facility as extending term by a year and reducing cost of capital.

Analysts asked most about Education, the SET inflection, the durability of ETM demand, and capital allocation. Management said Education’s pressure is not structural, tying it mainly to Florida enrollment declines and prior-year contract delays, and said the strong renewal cycle and new wins should support a return to growth in the second half. On SET, Chris said the new leadership team is seeing broad-based improvement, with telecom and life sciences leading and more revenue coming from solution-oriented work. On capital allocation, Troy said debt paydown is the near-term priority, but the company is also evaluating inorganic opportunities as the market opens up.