Kforce’s third quarter results were shaped by a growing mix of consulting-led solutions and rising demand for AI-related talent, leading to a positive market reaction. Management pointed to a consistent expansion in the number of consultants on assignment, with CEO Joseph Liberatore emphasizing, “Our internal KPIs improved throughout the third quarter, and this translates to an increase in consultants on assignment.” The company’s Finance and Accounting business also showed sequential growth for the first time in years, supported by targeted investments and stabilization efforts. Despite persistent macroeconomic uncertainty and a weak labor market, Kforce saw improvements across both its Technology and Finance and Accounting segments, with broad-based gains in client engagements and talent models.
Is now the time to buy KFRC? Find out in our full research report (it’s free for active Edge members).
Kforce (KFRC) Q3 CY2025 Highlights:
- Revenue: $332.6 million vs analyst estimates of $327.6 million (5.9% year-on-year decline, 1.5% beat)
- Adjusted EPS: $0.63 vs analyst estimates of $0.56 (11.6% beat)
- Adjusted EBITDA: $19.41 million vs analyst estimates of $18.67 million (5.8% margin, 3.9% beat)
- Revenue Guidance for Q4 CY2025 is $330 million at the midpoint, above analyst estimates of $320.3 million
- Operating Margin: 4.5%, in line with the same quarter last year
- Market Capitalization: $519.6 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Kforce’s Q3 Earnings Call
- Trevor Romeo (William Blair) asked about the sustainability of the 4% sequential increase in consultants on assignment. COO David Kelly said this growth continued into October but noted pre-pandemic periods sometimes saw higher rates, making comparisons difficult.
- Trevor Romeo (William Blair) inquired about the factors behind margin improvement, especially the impact of consulting mix. CFO Jeffrey Hackman explained that consulting-led projects carry 400 to 600 basis points higher margins, and higher-value skill areas have provided pricing durability.
- Trevor Romeo (William Blair) sought clarification on exposure to possible H-1B visa fee increases. COO David Kelly said Kforce sponsors virtually no new H-1B visas, so there is minimal near-term impact, and strong compliance gives Kforce a competitive advantage.
- Alexander Sinatra (Robert Baird) questioned the scale and outlook for AI-related projects. CEO Joseph Liberatore described broad client focus on foundational AI readiness, emphasizing data, cloud, and security, while noting that operational AI use cases are most prevalent.
- Karandeep Singhania (UBS) asked about industry-specific stabilization. CFO Jeffrey Hackman said growth was broad-based across industries and geography, with no single sector driving results.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory analyst team will be monitoring (1) the pace at which consulting-led and AI readiness engagements convert to sustained revenue growth; (2) margin trends as the business mix continues to shift toward higher-value services; and (3) early signs of broader labor market stabilization or incremental demand in Finance and Accounting. Successful execution on strategic investments in sales enablement and productivity tools will be an additional indicator of progress.
Kforce currently trades at $30.41, up from $24.54 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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