The strong EPS beat and improved revenue trajectory, combined with raised full-year guidance, signal a potential inflection point. However, GAAP earnings and free cash flow remain under pressure. Monitor Q3 results for confirmation of the return to organic revenue growth and margin expansion promised for H2 2026.
Price Chart
Executive Summary
Kelly Services reported Q2 2026 adjusted EPS of $0.37, a 57.4% beat vs the $0.23 consensus, and revenue of $1.038B slightly above the $1.01B estimate. Revenue declined 5.8% YoY but improved sequentially, and the company raised its full-year revenue outlook to a low-to-mid single-digit decline while affirming adjusted EBITDA margin expectations. The beat was driven by better-than-expected operating leverage and cost controls, though GAAP EPS fell 40% YoY to $0.31.
Key Financial Metrics
Key Facts
- Q2 2026 adjusted EPS of $0.37 beat consensus of $0.23 by 57.4%
- Revenue of $1.038B was slightly above the $1.01B consensus estimate
- Revenue declined 5.8% YoY, but underlying revenue (excluding discrete items) fell only 0.6%
- Adjusted EBITDA margin improved to 3.0%, up 150 bps sequentially from Q1
- Company raised full-year 2026 revenue outlook to low-to-mid single-digit decline from prior view
- GAAP diluted EPS fell 40.4% YoY to $0.31, while adjusted EPS fell 31.5% YoY to $0.37
- Operating earnings of $16.1M were down 27.5% YoY, but adjusted operating earnings of $19.3M beat expectations
- Free cash flow YTD was $21.2M, down sharply from $114.8M in the prior year period
- Debt-to-capital ratio improved to 7.4% from 9.4% at year-end 2025
Financial Impact
Adjusted EPS beat consensus by $0.14 (57.4%), revenue beat by ~$28M (2.8%). Revenue decline improved 500 bps sequentially. Full-year revenue outlook raised.
Risk Factors
- Revenue still declining YoY, albeit at a slower pace
- Free cash flow YTD is $21.2M vs $114.8M last year, a significant deterioration
- Education segment continues to face headwinds from enrollment declines and contract delays
- GAAP EPS down 40% YoY, indicating underlying profitability challenges despite the adjusted beat
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 7 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0000055135-26-000160 |
| Document: kelya-20260806.htm | 0000055135-26-000160 |
| Document: q22026earningsreleasesup.htm | 0000055135-26-000160 |
| Document: 0000055135-26-000160-index-headers.html | 0000055135-26-000160 |
| Document: 0000055135-26-000160-index.html | 0000055135-26-000160 |
| Document: 0000055135-26-000160.txt | 0000055135-26-000160 |
| 8-K Data (Synthetic) | 0000055135-26-000160 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 22, 2026 5d ago | Press Release | $16.61 | awaiting T+20 | — | $16.57 (−0.24%) |
Aug 6, 2026 11w ago | 8-K | $15.62 $16.71 | ▲ +6.98% | ▲ +6.38% | $16.57 (+6.08%) |
Aug 6, 2026 11w ago | Press Release | $15.62 $16.71 | ▲ +6.98% | ▲ +6.38% | $16.57 (+6.08%) |
Aug 4, 2026 12w ago | Court Ruling | $15.22 $16.48 | ▲ +8.28% | ▲ +8.88% | $16.57 (+8.87%) |
Jun 11, 2026 19w ago | Institutional Cluster | $12.04 $13.44 | ▲ +11.63% | ▲ +9.74% | $16.57 (+37.62%) |
Apr 23, 2026 26w ago | Press Release | $9.46 $10.29 | ▲ +8.77% | ▲ +4.14% | $16.57 (+75.16%) |
Feb 25, 2026 34w ago | Insider Cluster | $9.64 $8.90 | ▼ −7.68% | ▼ −1.26% | $16.57 (+71.89%) |
Feb 18, 2026 35w ago | Court Ruling | $9.65 $8.52 | ▼ −11.71% | ▼ −8.10% | $16.57 (+71.71%) |
US Market Status
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