Kelly Services, Inc.

What they do

Kelly provides temporary and permanent staffing, outcome-based solutions, recruitment process outsourcing (RPO), managed service provider (MSP) programs, and payroll process outsourcing (PPO). The company operates through three specialty business units: Kelly Education, Kelly Science Engineering & Technology, and Kelly Enterprise Talent Management. It focuses on North America while maintaining global RPO and MSP capabilities.

Revenue drivers

• Enterprise Talent Management (ETM) — Delivers temporary staffing, outcome-based solutions, and permanent placement. Revenue declined due to reduced demand from three large commercial customers, but underlying growth came from improved demand and new business.
• Science, Engineering & Technology (SET) — Provides specialized staffing and solutions. Revenue grew sequentially for the first time in over two years, driven by Telecom specialty, though U.S. federal government contractor demand reduced revenue.
• Education — Provides staffing and solutions to educational institutions. Revenue declined due to delayed prior year contract decisions and declines in student enrollment in key markets.

Recent performance

In Q2 2026, revenue was $1.04 billion, down 5.8% year-over-year, with underlying revenue decline of approximately 0.6% after excluding discrete impacts. Operating earnings were $16.1 million, and adjusted EBITDA margin was 3.0%. For the 26-week period ended June 28, 2026, revenue was $2.08 billion, down 8.3%, and net earnings were $5.5 million. Diluted EPS for Q2 2026 was $0.31.

Strategy

Kelly is integrating its businesses into one enterprise system, with the first phase for SET completed in early 2026. The company is focusing on specialty, higher-margin segments and has divested non-core assets like EMEA staffing operations. It completed acquisitions such as Teachers On Call, GTA, NextGen, and MRP to expand in SET, Education, and OCG. The company emphasizes operational efficiency and technology modernization to improve profitability.

Risks

• Economic cyclicality — Demand for staffing services is highly sensitive to economic downturns, and customers reduce temporary employees first during declines.
• Customer concentration — Reduced demand from three large commercial customers in ETM and U.S. federal government contractors in SET significantly impacted revenue.
• Competitive pricing pressure — Economic declines may lead to more competitive pricing and slower customer payments.
• Integration and transformation risk — Multi-year enterprise system integration and business transformation may cause disruptions and fail to achieve expected efficiencies.

Outlook

Management increased fiscal 2026 revenue outlook, expecting a low-to-mid-single digit decline, and affirmed adjusted EBITDA margin expectation of modest year-over-year growth. They expect accelerating underlying revenue growth and operating efficiencies in the second half of the year.