Kelly Services (KELYA) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue declined 5.8% year-over-year to $1.04 billion, but underlying revenue trends improved sequentially, driven by ETM and SET segment strength and stabilization in Education.

• Adjusted EBITDA margin returned to 3.0%, up sequentially, reflecting operating leverage, cost base re-engineering, and disciplined SG&A management.

• Technology modernization and AI integration advanced with new leadership and the launch of an enterprise-wide CRM system, enhancing productivity and customer experience.

• Recognized as a leader in staffing and recruiting by Everest Group and Forbes, reflecting industry leadership and customer satisfaction.

• Strategic initiatives and operational discipline positioned the company for future growth, with a focus on profitable growth and enhanced go-to-market strategies.

Financial highlights

• Q2 2026 revenue was $1.04 billion, down 5.8% year-over-year, with gross profit of $212 million (20.4% margin), and adjusted EBITDA of $31.1 million (3.0% margin).

• Adjusted EPS was $0.37, down from $0.54 prior year; diluted EPS was $0.31, down from $0.52.

• SG&A expenses decreased due to structural efficiencies and integration cost reductions.

• Free cash flow was $47.7 million for the quarter; cash and equivalents at quarter-end were $24.2 million.

• Debt-to-total capital ratio was 7.4% at Q2 2026 end; available liquidity was $303 million.

Outlook and guidance

• Fiscal 2026 outlook improved to a low-to-mid single digit revenue decline, with 10–20 bps improvement in adjusted EBITDA margin.

• Q3 2026: underlying revenue growth of 1–2% year-over-year, total revenue flat to down 2%, adjusted EBITDA margin in the low 2% range.

• Q4 2026: mid-to-upper single digit revenue growth, adjusted EBITDA margin ~4%, aided by an extra fiscal week.

• Management expects to capitalize on improving demand trends and drive profitable growth and long-term value creation.