Kforce, Inc.

Ladies and gentlemen, thank you for joining us and welcome to the KFORCE Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Joe Liberatore, President and CEO. Please go ahead, sir.

Good afternoon and thank you for your time today. You can find additional information about our results in our earnings release and SEC filings. In addition, we have published our prepared remarks within the investor relation portion of our website. Thank you for watching. As a point of reflection, the year-over-year growth rate in Q2 for our technology business was at its highest level since the end of 2022, and our sequential improvement was the best we've experienced in four years. I am incredibly proud of the determination of our people and deeply appreciative of the trust of our world-class clients continue to place in K-Force as we help them advance more meaningful, high-value engagements. Our go-to-market approach, shaped by our integrated strategy efforts, is clearly gaining traction. Across the firm, our people are operating more fully as one K-Force, bringing the full breadth of our capabilities to bear across our service offerings. The revenue inflection that we experienced in our business in the first half of 2026 is consistent with the improving macro demand environment for talent, as evidenced by indicators such as the ISM Services PMI, ASA Staffing Index, and the SIA Bullhorn Staffing Indicator that have strengthened over the last several months. In addition, overall U.S. job growth has moderated in recent months, but recent gains have been increasingly concentrated in professional and business services, which are far more aligned to K-Forces and markets than the growth drivers over the past couple years. Our results reflect disciplined execution and a meaningful shift in client behavior. Organizations are increasingly turning to flexible talent models to advance large backlogs of high priority technology initiatives, particularly as AI accelerates transformation and CEOs remain measured in adding permanent headcount. Broader uncertainty, including the geopolitical tensions 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 consecutive quarters of revenue improvements are consistent with a more typical cyclical demand recovery. KForce has a very rich 64-year operating history, and as such, we've witnessed and participated in major technology shifts before, including personal computing, the emergence of the Internet, the mobile revolution, and the move to cloud computing. Each of these periods affected the labor markets, but over time, workers, and specifically technologists, adapted by upskilling and retraining as technology evolved, resulting in a net increase of technology-related roles. From an AI perspective, we continue to take a disciplined approach both internally and externally. Internally, we are evaluating our core business processes and selectively deploying AI enabled solutions where we see the greatest opportunity to enhance productivity, improve the associate and client experience, and drive operating leverage. Externally, we continue to educate and train our sales associates and leaders while adding specialized AI expertise within our consulting solutions organizations. We believe AI as one of the most significant technology shifts over the last several decades. However, we believe enterprise adoption remains in the early stages and is likely to follow a progression similar to prior transformative technology cycles. Thank you for joining us. As a result, we believe demand will continue to grow for highly skilled professionals and talented teams who can help organizations design, implement, and scale AI, data, and digital transformation initiatives. Through our technology talent solutions and consulting capabilities, we believe K-Force is well positioned to help clients navigate this transformation, accelerate modernization efforts, and realize the value of their technology investments, creating a competitive advantage. Regardless of how quickly the underlying technology evolves, organizations will continue to require skilled professionals and teams of individuals who can bridge the gap between innovation and execution. We believe this dynamic supports the long-term demand environment for technology talent and consulting solutions that are central to our strategy. 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 has proven durable. That focus combined with a unified and resilient culture Thank you for joining us. Dave Kelly, our Chief Operating Officer, will now give greater insights into our performance and recent operating trends. Jeff Hackman, K-Force's Chief Financial Officer, will then provide additional detail on our financial results as well as our future financial expectations. Dave. Thank you, Joe.

Total revenues of $349.3 million represented overall revenue growth of 4.5% on a year-over-year basis and 4.1% on a sequential billing day basis, both of which represent levels not seen in nearly four years. There has been a lot of discussion about whether we and the broader sector can continue to deliver revenue growth given the much-speculated negative demand impact of AI tools and technologies. Encouragingly, we've been successful at delivering three consecutive quarters of revenue growth that has returned to pre-pandemic and thus pre-AI advancement norms. This growth is being seen both in our consulting revenues and our traditional staff augmentation business. The strength in direct hire revenues across both our technology and FA businesses was also a positive contributor for us in the second quarter, further signaling the desire for companies to add critical long-term talent. Our client portfolio is exceptional, our strategic direction is clear and unchanged, and our culture is unmatched. We recognize that there is still uncertainty in the geopolitical and macroeconomic environment. While we've been successful in our go-to-market strategy, leveraging the progress made with our integrated strategy efforts, clients continue to take a measured approach to technology spend. With that said, our results in operating trends suggest that they are actively prioritizing critical initiatives in areas such as data, digital, and the platforms that underpin AI strategies, among other areas that may have been previously postponed, and that we are taking client and overall market share. Importantly, the improvement in our business has been broad-based, with positive trends evidenced 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 and application development roles and projects. Overall technology demand remains broad, with eight of our top ten industries showing sequential growth and similar performance on a year-over-year basis. We continue to make targeted organic investments to fortify the depth of expertise in our consulting solutions business to meet rising client demand for cost effective access to highly skilled talent. Our consulting led offerings are contributing positively to the performance of our technology business supported by an increasing volume of opportunities. Our fully integrated sales and delivery model, which also leverages a combination of onshore, nearshore, and offshore talent from our Pune Delivery Center, addresses a growing need in the market, offering clients a seamless experience across consulting, project-based work, and more traditional staffing assignments spanning multiple technologies and skill sets. Thank you for watching. Thank you for watching. Thank you for watching. We've maintained a stable average bill rate of approximately $90 per hour over the last four years while continuing to build a higher quality, higher margin revenue stream. This reflects the growing mix of consulting-oriented engagements which command higher bill rates and stronger margin profiles as well as disciplined management of wage inflation in core technology skill sets. Together, These factors have effectively offset the bill rate pressure associated with a greater mix of consultants based outside the U.S. Frankly, we would expect to continue seeing stability in our average bill rate as we look forward, with the potential for slight enhancements as technology labor continues to upskill in the face of advancements in AI. Demand remains strong across core practice areas, including data and AI, digital platform engineering, and cloud. The number of opportunities in our consulting solutions offering continues to expand and will be a primary driver for our sequential growth in Q3. These disciplines are foundational to the development and deployment of AI solutions, and we believe organizations will increasingly require specialized talent to execute their strategies. This creates meaningful and durable growth opportunities for our firm. Looking forward to Q3, we expect the pace of overall technology activities to continue to improve along historical pre-pandemic levels and for revenue to improve sequentially in the low single digits, which will result in further improvements in our year-over-year performance. Over the last several years, we have made responsible adjustments to align headcount levels with revenue levels and productivity expectations. We believe we have sufficient Thank you. Thank you, Dave.