Kelly Services (KELYA) investor relations material

Executive summary

• Q3 2025 revenue was $935 million, down 9.9% year-over-year, mainly due to reduced demand from federal government and three large customers, partially offset by growth in Education.

• Profitability was pressured by lower revenue and gross profit, with a $102 million non-cash goodwill impairment in SET and a $69.7 million deferred tax asset valuation allowance, resulting in a net loss of $150.1 million and an operating loss of $102.1 million.

• Adjusted EBITDA was $16.5 million (margin 1.8%), down 36.7% year-over-year; adjusted EPS was $0.18, compared to $0.21 last year.

• Strategic restructuring, cost optimization, and technology modernization initiatives are underway, including integration of recent acquisitions and executive transition.

• The company plans active share repurchases and maintained a $0.075 per share dividend.

Financial highlights

• Q3 gross profit was $194 million, down 12.5% year-over-year; gross profit rate was 20.8%, down 60 basis points.

• Q3 adjusted SG&A expenses declined 9.7%–11.2% due to cost management and integration.

• Q3 net loss was $150.1 million; diluted loss per share was $4.26, including $2.37 per share from goodwill impairment and $1.98 per share from deferred tax asset valuation allowance.

• Year-to-date operating cash flow was $94 million; free cash flow was $87.2 million.

• Liquidity at quarter-end included $35.4 million in cash and $269 million in unused borrowing capacity.

Outlook and guidance

• Q4 2025 revenue expected to decline 12–14% year-over-year, with 8% of the drop from reduced demand by federal contractors and large customers.

• Underlying Q4 revenue decline, excluding discrete impacts, projected at 4–6%.

• Adjusted EBITDA margin for Q4 expected at approximately 3%, up sequentially but down 70 basis points year-over-year.

• Continued revenue and margin pressure anticipated through the first half of 2026.