KELLY SERVICES INC (KELYA): Third-Quarter 2026 Earnings
KELLY SERVICES INC (KELYA) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Kelly Reports Third-Quarter 2026 Earnings TROY, Mich. (November 5, 2026) – Kelly (Nasdaq: KELYA, KELYB), a leading specialty talent solutions provider, today announced results for the third quarter of 2026. • Q3 revenue of $0.9 billion, down 0.8% year-over-year, an i
How this was made
The 30-second read
Why it matters
The earnings release provides fresh guidance and performance metrics that were not public before this filing.
Market read
First‑report earnings data for a mid‑cap staffing firm; may trigger short‑covering and modest buying.
What to watch
Education segment weakness and reliance on federal contracts could pressure future quarters.
Kelly Reports Third-Quarter 2026 Earnings
Third-quarter underlying revenue grew and adjusted EBITDA margin expanded, but reported revenue declined, adjusted earnings per share declined, Education remained weak, year-to-date free cash flow was negative, and fourth-quarter revenue expectations were reduced relative to the prior view.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Third Quarter revenue from servicesGAAP | $927.2M | improvement of 500 bps versus the prior quarter | (0.8)% |
| Third Quarter underlying revenueother | approximately 2.3% increase | – | approximately 2.3% |
| Third Quarter cost of servicesGAAP | $732.8M | – | (1.1)% |
| Third Quarter gross profitGAAP | $194.4M | – | 0.2% |
| Third Quarter gross profit rateGAAP | 21.0 % | – | 0.2 pts. |
| Third Quarter selling, general and administrative expensesGAAP | $193.6M | – | (0.4)% |
| Third Quarter adjusted SG&A expensesnon-GAAP | $188.3M | – | – |
| Third Quarter earnings (loss) from operationsGAAP | $600K | – | NM |
| Third Quarter adjusted earnings from operationsnon-GAAP | $6.1M | – | – |
| Third Quarter net earnings (loss)GAAP | −$1.7M | – | 98.9% |
| Third Quarter adjusted net earningsnon-GAAP | $2.4M | – | – |
| Third Quarter diluted earnings (loss) per shareGAAP | $(0.05) | – | 98.8% |
| Third Quarter adjusted diluted earnings per sharenon-GAAP | $0.07 | – | – |
| Third Quarter adjusted EBITDAnon-GAAP | $21.3M | – | 29.1% |
| Third Quarter adjusted EBITDA marginnon-GAAP | 2.3 % | – | 0.5 pts. |
| Third Quarter income tax expenseGAAP | $1.2M | – | (97.4)% |
| Third Quarter adjusted income tax expense (benefit)non-GAAP | $2.6M | – | – |
| Third Quarter permanent placement incomeGAAP | $14.2M | – | 21.4% |
| September Year-to-Date revenue from servicesGAAP | $3.01B | – | (6.1)% |
| September Year-to-Date underlying revenueother | approximately 0.7% decline | – | approximately (0.7)% |
| September Year-to-Date gross profitGAAP | $602.8M | – | (8.1)% |
| September Year-to-Date gross profit rateGAAP | 20.1 % | – | (0.4) pts. |
| September Year-to-Date earnings (loss) from operationsGAAP | $11.6M | – | NM |
| September Year-to-Date adjusted earnings from operationsnon-GAAP | $29.5M | – | – |
| September Year-to-Date net earnings (loss)GAAP | $3.8M | – | NM |
| September Year-to-Date diluted earnings (loss) per shareGAAP | $0.10 | – | NM |
| September Year-to-Date adjusted diluted earnings per sharenon-GAAP | $0.46 | – | – |
| September Year-to-Date adjusted EBITDAnon-GAAP | $68.2M | – | (22.9)% |
| September Year-to-Date adjusted EBITDA marginnon-GAAP | 2.3 % | – | (0.5) pts. |
| September Year-to-Date free cash flownon-GAAP | −$35M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Enterprise Talent Management, Third Quarter 2026Underlying revenue grew 7.7%, supported by improved demand and new business, including growth in staffing and each of the talent solutions specialties. | $496.1M | underlying revenue improved 460 bps versus the prior quarter | 2.4 % |
| Science, Engineering & Technology, Third Quarter 2026Science and Engineering specialties grew year-over-year, while the Technology specialty continued to strengthen sequentially. | $302.1M | underlying revenue improved 220 bps versus the prior quarter | (2.0) % |
| Education, Third Quarter 2026The segment continued to be impacted by demand declines primarily driven by reduced student enrollment in key markets. | $134.2M | – | (6.4) % |
| Enterprise Talent Management, September Year-to-Date 2026The release cited improved demand and growth in each of the talent solutions specialties. | $1.44B | – | (5.8) % |
| Science, Engineering & Technology, September Year-to-Date 2026Growth in the Telecom specialty and improved Science and Engineering performance were offset by lower demand in other specialties, largely Technology. | $892.9M | – | (6.7) % |
| Education, September Year-to-Date 2026Revenue was affected by delayed prior-year contract decisions and lower demand driven by reduced student enrollment in key markets. | $681.8M | – | (5.0) % |
Fiscal Fourth Quarter 2026 and Full Year 2026 outlook
- RevenueFourth Quarter of 2026: flat to up 1% on a year-over-year basis; Full Year 2026: a mid-single digit total revenue decline
- NoteFourth Quarter of 2026: adjusted EBITDA margin expansion of 180 to 200 bps year-over-year resulting in a margin of 3.8% to 4.0%.
- NoteFourth-quarter outlook includes the impact of an extra fiscal week, which benefits revenue growth by approximately 3 points in the fourth quarter, but negatively impacts adjusted EBITDA.
- NoteFull Year 2026: adjusted EBITDA margin of 2.6% to 2.7%, reflecting flat to 10 bps of year-over-year improvement.
Capital returns
- On November 4, 2026, the board of directors declared a dividend of $0.075 per share, payable on December 2, 2026 to stockholders of record as of the close of business on November 18, 2026.
- On November 4, 2026, the board approved renewal and extension of the share repurchase program without an expiration date, authorizing repurchases of up to $50.0 million of Class A common stock.
- September Year-to-Date dividend payments were $(8.2) million, compared with $(8.3) million in 2025.
What drove it
- Third-quarter discrete impacts from reduced demand for U.S. federal government contractors in SET and three large commercial customers in ETM totaled approximately 3.1%.
- Adjusted EBITDA margin expanded 50 bps year-over-year, reflecting 20 bps higher gross margin and volume-related and structural expense management actions, including acquisition integration and technology modernization benefits.
- ETM and SET improved their adjusted EBITDA margins year-over-year; Education adjusted EBITDA was negative due to school year seasonality.
- Third-quarter adjusted operating earnings increased to $6.1 million from $4.3 million, while reported operating earnings benefited from the absence of the prior-year $102.0 million non-cash goodwill impairment charge.
Concerns
- Reported third-quarter revenue from services declined (0.8)% year-over-year and September Year-to-Date revenue declined (6.1)%.
- Third-quarter adjusted diluted earnings per share was $0.07 versus $0.17 in the corresponding quarter of 2025.
- Education third-quarter revenue declined (6.4)%, and its adjusted EBITDA was $(5.8) million.
- September Year-to-Date adjusted EBITDA declined (22.9)% and adjusted EBITDA margin declined (0.5) pts.
- Fourth-quarter revenue growth and adjusted EBITDA margin expectations were adjusted relative to the prior view due largely to a delayed return to growth in Education and near-term incremental demand pressure from one discrete ETM customer.
- September Year-to-Date free cash flow was $(35.0) million, versus $87.2 million in 2025.
What to watch
- Whether ETM maintains positive year-over-year revenue growth after the identified discrete customer impacts.
- Whether SET Technology demand continues its sequential strengthening and whether Science and Engineering growth persists.
- The timing of a return to growth in Education amid reduced student enrollment and delayed contract decisions.
- Fourth-quarter execution against revenue growth of flat to up 1% and adjusted EBITDA margin of 3.8% to 4.0%, including the effect of the extra fiscal week.
- Accounts receivable and Global Days Sales Outstanding, which were $1,300.0 million and 68 at September 27, 2026.
Balance sheet and cash flow
- Cash and equivalents were $22.2 million at September 27, 2026, compared with $33.0 million at December 28, 2025 and $30.1 million at September 28, 2025.
- Long-term debt was $122.5 million at September 27, 2026, compared with $101.9 million at December 28, 2025 and $118.4 million at September 28, 2025.
- Working Capital was $486.3 million and the Current Ratio was 1.5 at September 27, 2026.
- September Year-to-Date net cash used in operating activities was $(30.7) million, compared with $94.0 million of net cash from operating activities in 2025.
- September Year-to-Date capital expenditures were $(4.3) million, compared with $(6.8) million in 2025.
- Global Days Sales Outstanding were 68, compared with 61 at December 28, 2025 and 66 at September 28, 2025.
Analysis
Kelly reported third-quarter revenue from services of $927.2 million, down (0.8)% from $935.0 million. The company said discrete impacts from lower U.S. federal government contractor demand in SET and three large ETM commercial customers totaled approximately 3.1%, resulting in an underlying revenue increase of approximately 2.3%. Management characterized the reported year-over-year revenue result as an improvement of 500 bps versus the prior quarter.
Mix improved within ETM, where revenue from services increased 2.4% to $496.1 million and underlying revenue grew 7.7%. Management cited improved demand and new business, including staffing and each talent solutions specialty. SET revenue declined (2.0)% to $302.1 million, though its underlying revenue decline was (0.8)% and Science and Engineering grew year-over-year. Education revenue declined (6.4)% to $134.2 million, with lower student enrollment in key markets continuing to pressure demand.
Profitability improved sharply on a reported operating basis because the prior-year quarter included a $102.0 million non-cash goodwill impairment charge. More relevant operating measures also improved: adjusted operating earnings rose to $6.1 million from $4.3 million, while adjusted EBITDA increased 29.1% to $21.3 million and adjusted EBITDA margin increased to 2.3% from 1.8%. The margin improvement reflected 20 bps higher gross margin and expense-management actions. Adjusted diluted earnings per share, however, declined to $0.07 from $0.17.
Year-to-date trends remain weaker than the quarterly trajectory. Revenue from services declined (6.1)% to $3,006.1 million, adjusted EBITDA declined (22.9)% to $68.2 million, and adjusted EBITDA margin declined to 2.3% from 2.8%. Cash conversion also warrants attention: net cash used in operating activities was $(30.7) million and free cash flow was $(35.0) million, while Global Days Sales Outstanding increased to 68. Long-term debt was $122.5 million and cash and equivalents were $22.2 million at September 27, 2026.
For the fourth quarter, Kelly expects revenue to be flat to up 1% year-over-year and adjusted EBITDA margin of 3.8% to 4.0%, an expansion of 180 to 200 bps. The outlook incorporates an extra fiscal week that benefits revenue growth by approximately 3 points but negatively impacts adjusted EBITDA. Management adjusted its revenue-growth and margin expectations relative to its prior view because of the delayed return to growth in Education and incremental near-term demand pressure from one discrete ETM customer. The company also renewed and extended its share repurchase program for up to $50.0 million and declared a $0.075 per-share dividend.
Management, verbatim
In the third quarter, we delivered results above the midpoint of our guidance, driven by meaningful progress on our growth and efficiency initiatives along with increasingly constructive demand trends. Year-over-year revenue improved sequentially for a third consecutive quarter, and we drove adjusted EBITDA margin expansion over the prior year period. Our performance reflects positive operational momentum across much of our portfolio, as ETM pivoted to positive year-over-year revenue growth in the quarter and SET delivered another quarter of sequential revenue improvement. We remain well positioned to capitalize on increasing demand while continuing to drive margin expansion and long-term value creation.
Chris Layden, chief executive officer
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so no reported results are compared with prior guidance.
- Third-quarter operating cash flow and third-quarter free cash flow were not reported.
- Fourth-quarter and full-year GAAP earnings, GAAP EPS, GAAP operating income, gross margin, operating-expense, and tax-rate guidance were not provided.
- A numerical prior-quarter value for total revenue, segment revenue, adjusted EBITDA, adjusted EBITDA margin, operating earnings, or earnings per share was not provided.
- Third-quarter GAAP net income margin was not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Kelly Services Inc. (NASDAQ: KELYA) filed a Form 8‑K reporting its third‑quarter 2026 results.
Ticker impact
Q3 2026 earnings released via 8‑K showing revenue of $0.9 B and a swing to a $0.6 M operating loss versus a $102 M loss a year ago.
likely modest upside as the market prices in the loss‑to‑profit swing and margin expansion.
The primary earnings disclosure includes better‑than‑expected operating earnings and EBITDA margin expansion, which can attract short‑covering and buying.
Market effects
Talent‑solutions sector may see modest re‑rating as Kelly shows turnaround signs.
U.S. staffing and professional services segment could see slight positive bias.
Limited to U.S. market; no broader macro effect.
Counterpoint
Investors may view the modest revenue decline as a warning sign despite earnings improvement.
Key entities
- companyKelly Services Inc.
U.S. specialty talent solutions provider.
- executiveChris Layden
Chief Executive Officer of Kelly Services.
