Overview

• US talent solutions provider's Q1 revenue fell 10.7% yr/yr; underlying revenue down 3.3%

• Adjusted EPS for Q1 missed analyst expectations

• Company attributes revenue decline to lower demand from government and large commercial customers

Outlook

• Kelly expects Q2 revenue to decline 7% to 9% year-over-year

• Company sees Q2 adjusted EBITDA margin of at least 2.5%

• Kelly expects modest revenue growth and margin expansion in second half of 2026

Result Drivers

• DISCRETE CUSTOMER IMPACTS - Revenue decline driven by reduced demand from U.S. federal government contractors and three large commercial customers, resulting in a 7.4% negative impact

• SEGMENT PERFORMANCE - Sequential improvement in ETM and pockets of growth in SET, including Telecom and Science and Engineering specialties, partially offset overall declines

• EXPENSE MANAGEMENT - Adjusted SG&A expenses declined 10.3% year-over-year due to ongoing structural and demand-driven optimization initiatives

Company press release: ID:nGNX2bNHll

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 Revenue		$1 bln
Q1 Adjusted EPS	Miss	$0.03	$0.07 (3 Analysts)
Q1 EPS		-$0.17
Q1 Operating Income		-$5.10 mln

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the employment services peer group is "buy"

• Wall Street's median 12-month price target for Kelly Services Inc is $17.00, about 73.6% above its May 6 closing price of $9.79

• The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 6 three months ago

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