Kelly Services Inc (KELYA) · Nov 5, 2026 · Earnings
In line — Adjusted EPS $0.07 vs ~$0.07 consensus
Kelly Services earnings show a sharper recovery in underlying demand and margins, though softer Q4 expectations and weak cash flow temper the read.
Kelly is a staffing and workforce-solutions company trying to turn around a multi-quarter revenue decline through higher-growth talent solutions, acquisition integration, technology modernization, and tighter cost control. Earlier 2026 guidance already anticipated improving underlying demand and margin expansion, so the central question was whether the recovery would show up in the numbers; the prior outlook called for Q3 underlying revenue growth of 1% to 2% and an adjusted EBITDA margin in the low-2% range.
The operating recovery is real, but still narrow. Q3 underlying revenue grew 2.3% despite reported revenue falling 0.8%, with Enterprise Talent Management up 7.7% on an underlying basis; however, Science, Engineering & Technology remained down 0.8% underlying and Education fell 6.4%. The reported result was slightly above the published revenue consensus of about $925.9 million, while adjusted EPS matched the roughly $0.07 consensus. 〔0〕
| Metric | Q3 2026 | Q3 2025 | Consensus |
|---|---|---|---|
| Revenue from services (Financial Highlights) | $927.2M (-0.8%) | $935.0M | $925.9M |
| Adjusted diluted EPS (Adjusted EPS reconciliation) | $0.07 | $0.17 | $0.07 |
| Adjusted EBITDA (Adjusted EBITDA reconciliation) | $21.3M (+29.1%) | $16.5M | |
| Adjusted EBITDA margin (Financial Highlights) | 2.3% (+0.5 pts.) | 1.8% | |
| Year-to-date free cash flow (Cash Flow statement) | $(35.0)M | $87.2M |
Margin execution beat the revenue story. Adjusted EBITDA rose 29.1% and margin expanded 50 basis points year over year, helped by a 20-basis-point gross-profit-rate improvement and lower adjusted SG&A. That is meaningful progress against the turnaround plan, and it exceeded the company’s prior Q3 margin framing, but it remains partly efficiency-led rather than broad-based demand-led.
The forward view is the main offset. Full-year 2026 expectations were maintained at a mid-single-digit revenue decline and 2.6% to 2.7% adjusted EBITDA margin, but Q4 revenue and margin expectations were reduced from the prior view because Education is taking longer to return to growth and one ETM customer is adding near-term pressure. The downgrade is limited because the full-year framework was preserved, but it shows the recovery is not yet broad or durable.
Cash conversion remains a material weakness. Kelly generated negative $35.0 million of free cash flow year to date versus $87.2 million positive last year, largely reflecting a $124.5 million use of cash from accounts receivable. That makes the improved earnings quality less convincing until working-capital pressure eases, even though the company reported $400 million of combined borrowing capacity.
Bottom line: This quarter advances the recovery story through positive underlying growth and better margins, but the Q4 reset and negative cash flow keep it from being a clean breakout. Relative to expectations, it is essentially in line on earnings with a modestly better operating trend, offset by a softer near-term outlook.**
Q4 earnings report, February 2027
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