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Dec 28, 2025
Kelly Services Q4 2025 Earnings Report
Kelly Services reported its fourth-quarter and full-year 2025 earnings, showing a decline in revenue but an increase in free cash flow.
Key Takeaways
Kelly Services reported a fourth-quarter revenue of $1.1 billion, an 11.9% decrease year-over-year, primarily due to lower demand in ETM and SET segments. Despite the revenue decline, the company achieved a sixfold increase in full-year free cash flow to $114 million and reduced adjusted SG&A expenses by 11.1%. The company anticipates a return to organic revenue growth and adjusted EBITDA margin expansion in the second half of 2026.
Fourth-quarter revenue decreased by 11.9% to $1.0492 billion, primarily due to lower demand in ETM and SET segments.
Full-year free cash flow significantly increased to $114 million, a sixfold rise compared to the prior year.
Adjusted SG&A expenses declined by 11.1% in Q4, reflecting successful expense optimization and integration efforts.
The company reported a Q4 operating loss of $0.7 million, but an adjusted operating earnings of $8.3 million.
Revenue by Segment
Forward Guidance
Kelly Services anticipates a challenging first quarter of 2026, with revenue expected to decline, but projects a return to organic revenue growth and adjusted EBITDA margin expansion in the second half of the year.
Positive Outlook
- Expect relative improvement in year-over-year performance each successive quarter after Q1 2026.
- Project modest year-over-year revenue growth in the second half of 2026.
- Anticipate measurable adjusted EBITDA margin expansion in the second half of 2026.
- Positive trends in all segments noted in Q4 2025, providing a foundation for future growth.
- Completion of the first significant milestone in technology modernization, consolidating SET acquisitions onto a unified platform.
Challenges Ahead
- First Quarter 2026 revenue expected to decline between 11% to 13% year-over-year.
- Underlying revenue decline of 3% to 5% in Q1 2026, excluding discrete customer impacts.
- Adjusted EBITDA margin for Q1 2026 expected to be approximately 1.5%, including the impact of annual payroll tax resets.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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