Kforce Inc. 2026 Q3 Earnings Call

Please go ahead, sir. Good afternoon, and thank you for your time today.

This call contains certain statements that are forward-looking, are based upon current assumptions and expectations that are subject to risk and uncertainties. Actual results may vary materially from the factors listed in Kforce's public filing and other reports and filings with the SEC. We cannot undertake any duty to update any forward-looking statements. You can find additional information about our results in our earnings release and our SEC filings. In addition, we have published our prepared remarks within the investor relation portion of our website. We are extremely pleased to deliver a quarter of accelerating revenue and earnings growth.

Revenues, which exceeded the high end of our guidance, reflect the continued build of momentum that began in the second half of 2025, as evidenced by another quarter of sequential growth and further accentuated with year-over-year growth rate in our technology business of nearly 8%, that is roughly equivalent to our pre-pandemic compounded annual growth rate. As Jeff Hackman will cover in more detail, this momentum has continued into the fourth quarter, where we're expected to deliver another quarter of strong sequential billing day growth. During the challenging years of 2023 to 2025, we didn't hang our heads. We spent considerable time selectively and responsibly investing in our people, strengthening our service offerings, and evolving our brand and go-to-market strategy supported by our integrated strategy efforts and fine-tuning our world-class client portfolio.

We also weren't unnerved when the dramatic evolution of technology that occurred with AI in the fall of 2022, because across Kforce's 64-year history, we have navigated and helped our clients navigate several defining periods of technological change, from mainframe and personal computing and the internet, to mobile technology and cloud computing. We witnessed that each transition reshaped the labor market, yet it also created new opportunities as workers, particularly technology professionals, developed new skills and adapted to the evolving demands. Over time, these cycles ultimately expanded the number and breadth of technology-related roles. In fact, there is some recent evidence supporting our historical experience with technological changes playing out with AI. Recent research and labor market data continues to reinforce the durability of technology talent demand, even as AI automates a significant amount of coding activity.

Indeed data showed U.S. software development jobs postings have increased nearly 15% since February 2025. With that growth significantly concentrated in senior roles, which aligns well with where we have historically focused. Longer term, the U.S. Bureau of Labor Statistics projects employment for software developers and related roles to grow approximately 10% through 2035, much faster than the average for all occupations. Our approach to AI remains deliberate and balanced, both within Kforce and how we support our clients. Internally, we are examining our core processes and introducing AI-enabled capabilities where they can meaningfully improve the quality and speed of the associate and client experience, resulting in improved productivity and operating leverage. Externally, we are continuing to build fluency across our sales team and leadership while expanding the specialized AI expertise within our Consulting Solutions organization.

We believe that enterprise adoption of AI is still at the early stage and will likely develop over time, much like other major technology transitions. The greatest opportunity will extend beyond the technology itself to the thoughtful and secure integration of AI into business processes and operating models. Capturing that value will require organizations to bring together strategy, talent, data, governance, and change management to produce measurable outcomes. We therefore expect growing demand for highly skilled professionals and teams capable of designing, implementing, and scaling AI data and broader digital transformation initiatives. We believe clients will progressively turn to outside expertise to redesign business to be AI native. A recent example of a major U.S. financial institution bringing in 1,000 technology consultants to help align their internal systems with recently acquired AI tools is indicative of how outside expertise can be leveraged.

With our technology talent solutions and consulting capabilities, Kforce is well-positioned to help clients modernize their operations, translate technology investments into business value, and build competitive advantage. No matter the pace of innovation, organizations will continue to need experienced professionals who can connect emerging technologies with practical execution. We believe that need supports the long-term demand for technology talent and Consulting Solutions that is at the center of our strategy. The demand for flexible technology talent is broadly based and extends beyond AI. The labor environment remains a bit mixed, with IT unemployment rates remaining relatively low at approximately 2.9%, indicative of a tight market for technology talent. At the same time, recent BLS data indicates modest job declines in the information and professional services sector.

This is an environment where many companies remain hesitant to add full-time staff, while the project-based nature of technology work may further incentivize clients to leverage flexible talent solutions. Organizations are also increasingly turning to flexible talent models to advance large backlogs of high-priority technology initiatives. Broader uncertainty, including geopolitical tensions, rising interest rates, and related volatility in the global energy markets, has further reinforced the need for agility. We believe these dynamics highlight the value of flexible workforce solutions as clients adapt to near-term uncertainty while assessing the longer-term implications of emerging technologies on their business and talent strategies. As a result, we remain encouraged that our operating trends and revenue improvements since late 2025 are consistent with a more typical cyclical demand recovery. Our business model is intentionally simple, organically driven, and intensely focused.

By limiting inorganic growth within our existing service areas, we protect our teams from unnecessary complexities and distractions. That focus allows our people to do what they do best, build deep relationships, and partner with clients to solve their most critical business challenges. Our strategy has been thoughtfully refined over time, not overhauled, because it is proven durable. That focus, combined with a unified and resilient culture, is a real differentiator for us and central to our consistent market outperformance. I am incredibly proud of the determination of our people and deeply appreciative of the trust our world-class clients continue to place in Kforce. The way our teams collaborate, serve our clients, and move our strategic priorities forward is creating meaningful momentum across Kforce and clear evidence to me that our people are operating more fully as One Kforce.

With that, I will turn the call over to Dave Kelly, our Chief Operating Officer, for additional perspective on our performance and operating trends. Jeff Hackman, our Chief Financial Officer, will then review our financial results and outlook in greater detail.

Dave? Thank you, Joe. Total revenues exceeded guidance on the strength of our technology revenue growth of 7.8% year over year and 2.5% on a sequential billing day basis.

While there has been considerable debate about whether AI tools and technologies will constrain demand across our sector, over the last four quarters, we've seen buying patterns improve and have delivered revenue growth that is at or above pre-pandemic norms. Both consulting and traditional staff augmentation revenues are growing, and our Consulting Solutions business has been growing in excess of 10% annually for the last few years. Our client portfolio is exceptional. Our go-to-market and integrated strategy efforts are gaining traction, and our culture is unmatched. Clients remain measured in their technology spending, though our recent acceleration in revenue growth and leading indicators suggest that more projects are being green-lighted and demand for our services is increasing.

Our results and operating trends indicate that clients are prioritizing critical initiatives in data, digital, and the platforms that support AI strategies and other critical projects that may have been deferred. Our growth rates provide concrete evidence that we are gaining share with our clients and across the broader market. Importantly, the improvement in our business has been broad-based, with positive trends evident across a wide range of industries and skill sets within our client portfolio. We continue to see growth in AI-related data, digital, and cloud projects, while also experiencing a ramp in demand for platform engineering roles and projects. It seems increasingly clear that the demand for flexible talent with high-end skill sets and technology is strengthening despite overall technology job growth being tepid, which further validates our focus on delivering high-end solutions to clients.