Kelly Services (KELYA) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue rose 11.5% year-over-year to $1.16 billion, primarily driven by the Motion Recruitment Partners (MRP) acquisition, while organic revenue growth was 0.2% as Education gains offset declines in SET and federal contractor demand.

• Integration of MRP and realignment of operating segments advanced, streamlining operations and enhancing efficiency, with a focus on North American specialty staffing, global RPO/MSP, and outcome-based solutions in semiconductors and renewables.

• Net earnings declined to $5.8 million from $25.8 million year-over-year, reflecting higher SG&A, integration, and interest costs related to the MRP acquisition.

• Continued emphasis on expense management, targeted cost actions, and capturing synergies from recent acquisitions.

• Education and outcome-based solutions were key growth drivers, with new customer wins and robust demand.

Financial highlights

• Q1 2025 revenue was $1.16 billion, up 11.5% year-over-year; organic revenue up 0.2%.

• Gross profit increased 15.0% to $236.5 million, with a gross profit rate of 20.3%, up 60 basis points year-over-year.

• Adjusted EBITDA was $34.9 million, up about 5% year-over-year; adjusted EBITDA margin was 3.0%, down 20 basis points.

• Net earnings were $5.8 million, down from $25.8 million; reported EPS was $0.16 (vs. $0.70 prior year); adjusted EPS was $0.39 (vs. $0.56 prior year), mainly due to MRP acquisition debt and prior year gains.

• SG&A expenses rose 18.5% to $225.7 million, including $10.7 million in integration and realignment costs.

Outlook and guidance

• Q2 2025 revenue expected to grow 6%-7% year-over-year, with organic revenue projected to decline 1%-2% due to federal contractor and economic headwinds.

• Adjusted EBITDA margin for Q2 expected to decline 20–30 basis points year-over-year, with margin expansion anticipated in Q3, Q4, and for the full year as efficiency initiatives take effect.

• Management remains focused on organic growth, efficiency, and margin expansion, with sufficient liquidity for anticipated cash requirements.