The Q1 results show no inflection yet — revenue, margins, and cash flow all deteriorated. The maintained H2 recovery guidance is unchanged from the prior quarter's narrative and lacks concrete catalysts. Watch for Q2 results in August for evidence of the promised sequential improvement; a miss on the Q2 guidance (revenue -7% to -9%, EBITDA margin ≥2.5%) would likely trigger further downside.
Price Chart
Executive Summary
Kelly Services reported Q1 2026 revenue of $1.04B, down 10.7% YoY, and a GAAP loss per share of -$0.17 vs. +$0.16 in the prior year. Adjusted EPS fell to $0.03 from $0.39, and adjusted EBITDA dropped 54.7% to $15.8M. The company maintained its full-year outlook for a return to organic growth and margin expansion in H2 2026, but the Q1 results show continued fundamental deterioration across all segments.
Key Financial Metrics
Key Facts
- Q1 2026 revenue of $1.04B, down 10.7% YoY ($1.16B in Q1 2025)
- GAAP diluted loss per share of -$0.17 vs. +$0.16 in Q1 2025
- Adjusted diluted EPS of $0.03 vs. $0.39 in Q1 2025, down 92.3%
- Operating loss of $5.1M vs. operating income of $10.8M in Q1 2025
- Adjusted EBITDA of $15.8M, down 54.7% from $34.9M in Q1 2025
- Adjusted EBITDA margin of 1.5%, down 150 bps YoY
- Gross profit rate fell 140 bps to 18.9%
- All three segments reported revenue declines: ETM -13.2%, SET -11.6%, Education -4.8%
- Free cash flow was -$26.5M vs. +$21.4M in Q1 2025
- Q2 2026 guidance: revenue decline of 7-9% YoY, adjusted EBITDA margin of at least 2.5%
- Company reaffirms expectation of modest YoY revenue growth and margin expansion in H2 2026
Financial Impact
Revenue decline of $124.2M YoY; GAAP net loss of $5.9M vs. profit of $5.8M; adjusted EBITDA down $19.1M
Risk Factors
- Continued revenue decline across all three segments with no clear bottom
- Negative free cash flow of -$26.5M vs. positive $21.4M a year ago
- Education segment revenue declined 4.8% after prior growth, signaling potential structural headwinds
- Guidance relies on H2 recovery which is unchanged from prior quarter and remains unsubstantiated
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 7 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0000055135-26-000114 |
| Document: kelya-20260507.htm | 0000055135-26-000114 |
| Document: q12026earningsreleasesup.htm | 0000055135-26-000114 |
| Document: 0000055135-26-000114-index-headers.html | 0000055135-26-000114 |
| Document: 0000055135-26-000114-index.html | 0000055135-26-000114 |
| Document: 0000055135-26-000114.txt | 0000055135-26-000114 |
| 8-K Data (Synthetic) | 0000055135-26-000114 |
US Market Status
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