Kforce Q1FY25 Earnings Release
By Handzalah / Black Swan Research 3 May 2025, 4:36pm MYT
(May 3.): On April 28th Kforce (KFRC) released their Q1FY25 earnings. Kforce is a staffing service firm specializing in technology, finance and accounting, and other professional services. Their technology revenues is the largest portion of their revenue stream.
During the webcast, management says that the demand is wanning and that the impact of trade policies are still unclear. They talked about their new development center in India. This is part of their move to outsources talents outside the US. Additionally, they mentioned how they are shifting from traditional staffing activities to a more consulting style business.
Even though current environment remain uncertain, stable bill rates shows resilience and higher skill talent. During economic uncertainties the direct hire or permanent placement are the most susceptible to declining significantly.
2025 is the final year for the net investment in India. They mentioned how they are conservatively leveraged and how their ROE remains high, exceeding 30%. Furthermore, they stated how they returned $1 billion to shareholders since 2007.
Clients were not cancelling their projects, however there is lower accelerated spending. And Kforce expects to have lower initiation on new projects but do not expect much current project trimmings.
They see a reshaping of current jobs, like data scientist turning into AI scientist. They also see a lot of data on staffing and demand is strong. Management further added how capital allocation to shareholders remain their priority thus they are not looking to change their capital allocation strategy in the foreseeable future.
Kforce total gross profit margin decreased 40 basis-points yoy to 26.7%.
Total flex hours dropped from 4,067,000 hours to 3,726,000 hours yoy. However the firm’s average bill rate remain stable as it mildly increased from $84.76/hour to $86.57/hour yoy.
Total placements decreased by 7, from 349 to 342 yoy, while the average placement fee increased from $20,506 to $21,830 yoy.
Significant decrease in yoy net cash from operating activities. From previous year of $13,169,000 to $249,000 in the current year. The lower operating cash flow contributed to the free cash flow turning negative for the first quarter 2025.
During the quarter they increased their debt by $32,800,000. The debt allowed them to finance their capital allocation to shareholders in form of dividends and share buybacks. Furthermore their share buyback this quarter is greater at a value of $21,066,000 compared to the same quarter last year of $2,848,000.