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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________________________________________________
FORM 10-Q
________________________________________________________

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number 001-42104
_________________________________________________________________
Kforce Inc.
Exact name of registrant as specified in its charter
_______________________________________________________________

Florida |  | 59-3264661
State or other jurisdiction of incorporation or organization |  | IRS Employer Identification No.

1150 Assembly Drive, Suite 500, Tampa, Florida |  | 33607
Address of principal executive offices |  | Zip Code

Registrant’s telephone number, including area code: (813) 552-5000
_______________________________________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.01 per share | KFRC | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer |  | ☒ |  | Accelerated filer |  | ☐
Non-accelerated filer |  | ☐ |  | Smaller reporting company |  | ☐
|  |  |  | Emerging growth company |  | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.): Yes ☐ No ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
The number of shares outstanding (in thousands) of the registrant’s common stock as of April 23, 2025 was 18,630.

Table of Contents
KFORCE INC.
TABLE OF CONTENTS

PART I | Item 1. | Financial Statements. | 3
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 13
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 21
Item 4. | Controls and Procedures. | 21
PART II | Item 1. | Legal Proceedings. | 22
Item 1A. | Risk Factors. | 22
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 22
Item 3. | Defaults Upon Senior Securities. | 22
Item 4. | Mine Safety Disclosures. | 22
Item 5. | Other Information. | 22
Item 6. | Exhibits. | 23
SIGNATURES | 24

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

References in this document to the “Registrant,” “Kforce,” the “Company,” the “Firm,” “management,” “we,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context otherwise requires or indicates.
This report, particularly Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and Part II, Item 1A. Risk Factors, and the documents we incorporate into this report contain certain statements that are, or may be deemed to be, forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance upon the protections provided by such acts for forward-looking statements. Such statements may include, but may not be limited to:
•expectations of financial or operational performance, including the potential effects of macroeconomic uncertainties, including tariffs, among others, on our business;
•the impacts of revenue and gross profit levels on SG&A expenses as well as our ability to control discretionary spending and decrease operating costs;
•our expectations of growth rates in temporary staffing and future changes in revenue and gross profit margins of each segment of our business;
•the ability of the Firm to maintain and attract clients in the face of changing economic or competitive conditions;
•potential government actions or changes in policies, laws and regulations;
•effects of interest rate variations and inflation;
•our continued investments in strategic priorities, including our expected implementation of Workday;
•the Firm’s commitment, intent and ability to return significant capital to its shareholders through open market repurchases and quarterly dividends;
•our ability to meet capital expenditure and working capital requirements of our operations;
•the Firm’s priority of retaining talented associates for a higher demand environment in the future;
•changes in client demand for our services and our ability to adapt to such changes;
•financing needs or plans, or our ability to maintain compliance with our credit facility's covenants;
•anticipated costs and benefits of acquisitions, divestitures, joint ventures and other investments; and
•assumptions as to any of the foregoing and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events.
For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, refer to the MD&A and Risk Factors sections. In addition, when used in this discussion, the terms “anticipate,” “assume,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “may,” “likely,” “could,” “should,” “future” and variations thereof and similar expressions are intended to identify forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted. Future events and actual results could differ materially from those set forth in or underlying the forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this report, which speak only as of the date of this report. Kforce undertakes no obligation to update any forward-looking statements.
2

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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
KFORCE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Revenue | $ | 330,028 |  |  | $ | 351,889 |  |  |  |  |
Direct costs | 241,768 |  |  | 256,639 |  |  |  |  |
Gross profit | 88,260 |  |  | 95,250 |  |  |  |  |
Selling, general and administrative expenses | 75,165 |  |  | 78,190 |  |  |  |  |
Depreciation and amortization | 1,464 |  |  | 1,333 |  |  |  |  |
Income from operations | 11,631 |  |  | 15,727 |  |  |  |  |
Other expense, net | 565 |  |  | 656 |  |  |  |  |
Income before income taxes | 11,066 |  |  | 15,071 |  |  |  |  |
Income tax expense | 2,921 |  |  | 4,084 |  |  |  |  |
Net income | $ | 8,145 |  |  | $ | 10,987 |  |  |  |  |
Earnings per share – basic | $ | 0.45 |  |  | $ | 0.59 |  |  |  |  |
Earnings per share – diluted | $ | 0.45 |  |  | $ | 0.58 |  |  |  |  |
Weighted average shares outstanding – basic | 18,161 |  |  | 18,726 |  |  |  |  |
Weighted average shares outstanding – diluted | 18,241 |  |  | 18,932 |  |  |  |  |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

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KFORCE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

| March 31, 2025 |  | December 31, 2024
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 444 |  |  | $ | 349 |
Trade receivables, net of allowances of $1,504 and $1,560, respectively | 220,532 |  |  | 215,690 |
Prepaid expenses and other current assets | 8,845 |  |  | 9,367 |
Total current assets | 229,821 |  |  | 225,406 |
Fixed assets, net | 7,154 |  |  | 7,723 |
Other assets, net | 100,936 |  |  | 94,656 |
Deferred tax assets, net | 5,244 |  |  | 5,009 |
Goodwill | 25,040 |  |  | 25,040 |
Total assets | $ | 368,195 |  |  | $ | 357,834 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable and other accrued liabilities | $ | 59,367 |  |  | $ | 61,753 |
Accrued payroll costs | 40,922 |  |  | 38,823 |
Current portion of operating lease liabilities | 3,152 |  |  | 3,038 |
Income taxes payable | 7,856 |  |  | 8,843 |
Total current liabilities | 111,297 |  |  | 112,457 |
Long-term debt – credit facility | 65,500 |  |  | 32,700 |
Other long-term liabilities | 53,371 |  |  | 58,059 |
Total liabilities | 230,168 |  |  | 203,216 |
Commitments and contingencies (Note J) |  |  |
Stockholders’ equity: |  |  |
Preferred stock, $0.01 par value; 15,000 shares authorized, none issued and outstanding | — |  |  | — |
Common stock, $0.01 par value; 250,000 shares authorized, 73,841 and 73,835 issued, respectively | 738 |  |  | 738 |
Additional paid-in capital | 547,260 |  |  | 543,109 |
Retained earnings | 546,916 |  |  | 546,202 |
Treasury stock, at cost; 55,036 and 54,619 shares, respectively | (956,887) |  |  | (935,431) |
Total stockholders’ equity | 138,027 |  |  | 154,618 |
Total liabilities and stockholders’ equity | $ | 368,195 |  |  | $ | 357,834 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KFORCE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS)

| Common Stock |  | Additional Paid-In Capital |  |  |  |  |  | Treasury Stock |  | Total Stockholders’ Equity
| Shares |  | Amount |  |  |  | Retained Earnings |  | Shares |  | Amount |
Balance, December 31, 2024 | 73,835 |  |  | $ | 738 |  |  | $ | 543,109 |  |  |  |  | $ | 546,202 |  |  | 54,619 |  |  | $ | (935,431) |  |  | $ | 154,618 |
Net income | — |  |  | — |  |  | — |  |  |  |  | 8,145 |  |  | — |  |  | — |  |  | 8,145 |
Issuance for stock-based compensation and dividends, net of forfeitures | 6 |  |  | — |  |  | 376 |  |  |  |  | (376) |  |  | — |  |  | — |  |  | — |
Stock-based compensation expense | — |  |  | — |  |  | 3,656 |  |  |  |  | — |  |  | — |  |  | — |  |  | 3,656 |
Employee stock purchase plan | — |  |  | — |  |  | 119 |  |  |  |  | — |  |  | (3) |  |  | 56 |  |  | 175 |
Dividends ($0.39 per share) | — |  |  | — |  |  | — |  |  |  |  | (7,051) |  |  | — |  |  | — |  |  | (7,051) |
Repurchases of common stock | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 420 |  |  | (21,512) |  |  | (21,512) |
Other | — |  |  | — |  |  | — |  |  |  |  | (4) |  |  | — |  |  | — |  |  | (4) |
Balance, March 31, 2025 | 73,841 |  |  | $ | 738 |  |  | $ | 547,260 |  |  |  |  | $ | 546,916 |  |  | 55,036 |  |  | $ | (956,887) |  |  | $ | 138,027 |

| Common Stock |  | Additional Paid-In Capital |  |  |  |  |  | Treasury Stock |  | Total Stockholders’ Equity
| Shares |  | Amount |  |  |  | Retained Earnings |  | Shares |  | Amount |
Balance, December 31, 2023 | 73,462 |  |  | $ | 734 |  |  | $ | 527,288 |  |  |  |  | $ | 525,222 |  |  | 53,941 |  |  | $ | (894,164) |  |  | $ | 159,080 |
Net income | — |  |  | — |  |  | — |  |  |  |  | 10,987 |  |  | — |  |  | — |  |  | 10,987 |
Issuance for stock-based compensation and dividends, net of forfeitures | (7) |  |  | 1 |  |  | 285 |  |  |  |  | (286) |  |  | — |  |  | — |  |  | — |
Stock-based compensation expense | — |  |  | — |  |  | 3,501 |  |  |  |  | — |  |  | — |  |  | — |  |  | 3,501 |
Employee stock purchase plan | — |  |  | — |  |  | 152 |  |  |  |  | — |  |  | (3) |  |  | 52 |  |  | 204 |
Dividends ($0.38 per share) | — |  |  | — |  |  | — |  |  |  |  | (7,128) |  |  | — |  |  | — |  |  | (7,128) |
Repurchases of common stock | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 30 |  |  | (2,139) |  |  | (2,139) |
Balance, March 31, 2024 | 73,455 |  |  | $ | 735 |  |  | $ | 531,226 |  |  |  |  | $ | 528,795 |  |  | 53,968 |  |  | $ | (896,251) |  |  | $ | 164,505 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KFORCE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

| Three Months Ended March 31,
| 2025 |  | 2024
Cash flows from operating activities: |  |  |
Net income | $ | 8,145 |  |  | $ | 10,987 |
Adjustments to reconcile net income to cash provided by operating activities: |  |  |
Deferred income tax provision, net | (235) |  |  | (244) |
Provision for (recoveries of) credit losses | 69 |  |  | (40) |
Depreciation and amortization | 1,464 |  |  | 1,333 |
Stock-based compensation expense | 3,656 |  |  | 3,501 |
Noncash lease expense | 971 |  |  | 938 |
Other | 382 |  |  | 404 |
(Increase) decrease in operating assets |  |  |
Trade receivables, net | (4,911) |  |  | (3,456) |
Other assets | (4,988) |  |  | (608) |
Increase (decrease) in operating liabilities |  |  |
Accrued payroll costs | 2,273 |  |  | 5,982 |
Other liabilities | (6,577) |  |  | (5,628) |
Cash provided by operating activities | 249 |  |  | 13,169 |
Cash flows from investing activities: |  |  |
Capital expenditures | (4,149) |  |  | (1,875) |
Premiums paid for company-owned life insurance | (686) |  |  | (529) |
Cash used in investing activities | (4,835) |  |  | (2,404) |
Cash flows from financing activities: |  |  |
Proceeds from credit facility | 171,800 |  |  | 107,600 |
Payments on credit facility | (139,000) |  |  | (108,400) |
Repurchases of common stock | (21,066) |  |  | (2,848) |
Cash dividends | (7,051) |  |  | (7,128) |
Other | (2) |  |  | (2) |
Cash provided by (used in) financing activities | 4,681 |  |  | (10,778) |
Change in cash and cash equivalents | 95 |  |  | (13) |
Cash and cash equivalents, beginning of period | 349 |  |  | 119 |
Cash and cash equivalents, end of period | $ | 444 |  |  | $ | 106 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

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| Three Months Ended March 31,
Supplemental Disclosure of Cash Flow Information | 2025 |  | 2024
Cash Paid During the Period For: |  |  |
Income taxes, net | $ | 4,156 |  |  | $ | 300 |
Operating lease liabilities | 1,206 |  |  | 1,297 |
Interest, net | 657 |  |  | 614 |
Non-Cash Investing and Financing Transactions: |  |  |
ROU assets obtained from operating leases | $ | 1,469 |  |  | $ | 1,152 |
Employee stock purchase plan | 175 |  |  | 204 |
Unsettled repurchases of common stock | 500 |  |  | 200 |
Equipment and software additions included in accounts payable and other accrued liabilities | — |  |  | 181 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

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KFORCE INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - Summary of Significant Accounting Policies
Unless otherwise noted below, there have been no material changes to the accounting policies presented in Note 1 - “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of our 2024 Annual Report on Form 10-K.
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and footnotes normally required by GAAP for complete financial statements have been condensed or omitted pursuant to those rules and regulations, although management believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2024 Annual Report on Form 10-K. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation. The Unaudited Condensed Consolidated Balance Sheet as of December 31, 2024, was derived from our audited Consolidated Balance Sheet as of December 31, 2024, as presented in our 2024 Annual Report on Form 10-K.
Our quarterly operating results are affected by the seasonality of our clients’ businesses and changes in holiday and vacation days taken. In addition, we typically experience higher costs in the first quarter of each fiscal year as a result of certain U.S. state and federal employment tax resets, which adversely affects our gross profit and overall profitability relative to the remainder of the fiscal year. As such, the results of operations for any interim period may be impacted by these factors, among others, and are not necessarily indicative of, nor comparable to, the results of operations for a full year.
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of Kforce Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. References in this document to “Kforce,” the “Company,” the “Firm,” “management,” “we,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context indicates otherwise.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most critical of these estimates and assumptions relate to the following: income taxes and the evaluation of goodwill for impairment. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.
Earnings per Share
Basic earnings per share is computed as net income divided by the weighted-average number of common shares outstanding (“WASO”) during the period. WASO excludes unvested shares of restricted stock. Diluted earnings per share is computed by dividing net income by diluted WASO. Diluted WASO includes the effect of potentially dilutive securities, such as unvested shares of restricted stock using the treasury stock method, except where the effect of including potential common shares would be anti-dilutive.
The following table provides information on potentially dilutive securities:

(shares in thousands) | 2025 |  | 2024
Three Months Ended March 31, |  |  |
Common stock equivalents | 80 |  |  | 206 |
Anti-dilutive shares | 583 |  |  | 1 |

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New Accounting Standards
Recently Adopted Accounting Standards
In December 2023, the FASB issued guidance for disclosure improvements for income taxes. These amendments require the disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This new guidance is effective for Kforce for our annual disclosures for the year ending December 31, 2025. This new guidance will modify our disclosures, but we do not expect this standard to have a material effect on our consolidated financial statements.
Note B - Reportable Segments
Kforce’s two reportable segments are Technology and FA. Within each segment, we provide highly skilled professionals on a Flex and Direct Hire basis to our customers on traditional staffing engagements and increasingly, within our Technology segment, as a part of an overall solutions engagement. The chief operating decision-maker (“CODM”), our President and Chief Executive Officer, establishes the strategic direction of the Firm, its priorities and longer-term financial objectives. Our CODM is ultimately responsible for evaluating segment performance and making decisions regarding resource allocation. Our CODM evaluates performance based on, among others, revenue trends (relative to peers and market benchmarks) and segment gross profit, and other key leading indicators such as client visits, job order trends for traditional staffing assignments, opportunity pipeline reviews for solutions-oriented engagements, and trends in consultants on assignment. The CODM uses these financial metrics and productivity measures when making decisions about allocating capital and resources to the segments.
Segment gross profit is defined as segment revenue, less direct costs attributable to the reportable segment. The CODM is not provided income from operations or asset information by reportable segment as operations are largely combined.
The following table provides information on the operations of our segments:

(in thousands) | Technology |  | FA |  | Total
Three Months Ended March 31, |  |  |  |  |
2025 |  |  |  |  |
Revenue | $ | 306,284 |  |  | $ | 23,744 |  |  | $ | 330,028 |
Direct costs | 227,100 |  |  | 14,668 |  |  | 241,768 |
Gross profit | $ | 79,184 |  |  | $ | 9,076 |  |  | $ | 88,260 |
Less: |  |  |  |  |
Selling, general and administrative expenses |  |  |  |  | 75,165 |
Depreciation and amortization |  |  |  |  | 1,464 |
Other expense, net |  |  |  |  | 565 |
Income before income taxes |  |  |  |  | $ | 11,066 |

2024 |  |  |  |  |
Revenue | $ | 322,084 |  |  | $ | 29,805 |  |  | $ | 351,889 |
Direct costs | 238,047 |  |  | 18,592 |  |  | 256,639 |
Gross profit | $ | 84,037 |  |  | $ | 11,213 |  |  | $ | 95,250 |
Less: |  |  |  |  |
Selling, general and administrative expenses |  |  |  |  | 78,190 |
Depreciation and amortization |  |  |  |  | 1,333 |
Other expense, net |  |  |  |  | 656 |
Income before income taxes |  |  |  |  | $ | 15,071 |

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Note C - Disaggregation of Revenue
The following table provides information about disaggregated revenue by segment and revenue type:

(in thousands) | Technology |  | FA |  | Total
Three Months Ended March 31, |  |  |  |  |
2025 |  |  |  |  |
Flex revenue | $ | 302,435 |  |  | $ | 20,135 |  |  | $ | 322,570 |
Direct Hire revenue | 3,849 |  |  | 3,609 |  |  | 7,458 |
Total Revenue | $ | 306,284 |  |  | $ | 23,744 |  |  | $ | 330,028 |
2024 |  |  |  |  |
Flex revenue | $ | 318,514 |  |  | $ | 26,210 |  |  | $ | 344,724 |
Direct Hire revenue | 3,570 |  |  | 3,595 |  |  | 7,165 |
Total Revenue | $ | 322,084 |  |  | $ | 29,805 |  |  | $ | 351,889 |

Note D - Allowance for Credit Losses
The following table presents the activity within the allowance for credit losses on trade receivables for the three months ended March 31, 2025:

(in thousands) |
Allowance for credit losses, December 31, 2024 | $ | 916 |
Current period provision | 69 |
Write-offs charged against the allowance, net of recoveries of amounts previously written off | (48) |
Allowance for credit losses, March 31, 2025 | $ | 937 |

The allowances on trade receivables presented in the Unaudited Condensed Consolidated Balance Sheets include $0.6 million for reserves unrelated to credit losses at March 31, 2025 and December 31, 2024.
Note E - Other Assets, Net
Other assets, net consisted of the following:

(in thousands) | March 31, 2025 |  | December 31, 2024
Assets held in Rabbi Trust | $ | 47,912 |  |  | $ | 49,356 |
Capitalized software, net (1) | 34,085 |  |  | 29,090 |
ROU assets for operating leases, net | 14,275 |  |  | 13,764 |
Other non-current assets | 4,664 |  |  | 2,446 |
Total Other assets, net | $ | 100,936 |  |  | $ | 94,656 |

(1) This balance includes $8.8 million and $6.3 million related to capitalized implementation costs from cloud computing arrangements as of March 31, 2025 and December 31, 2024, respectively. Accumulated amortization of capitalized software was $40.8 million and $40.1 million as of March 31, 2025 and December 31, 2024, respectively.
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Note F - Current Liabilities
The following table provides information on certain current liabilities:

(in thousands) | March 31, 2025 |  | December 31, 2024
Accounts payable | $ | 42,718 |  |  | $ | 38,315 |
Deferred compensation payable | 7,423 |  |  | 8,602 |
Customer rebates payable | 4,326 |  |  | 6,556 |
Accrued liabilities | 3,714 |  |  | 4,259 |
Accrued professional fees | 1,186 |  |  | 4,021 |
Total Accounts payable and other accrued liabilities | $ | 59,367 |  |  | $ | 61,753 |
Payroll and benefits | $ | 31,983 |  |  | $ | 32,990 |
Payroll taxes | 4,396 |  |  | 1,698 |
Health insurance liabilities | 3,988 |  |  | 3,593 |
Workers’ compensation liabilities | 555 |  |  | 542 |
Total Accrued payroll costs | $ | 40,922 |  |  | $ | 38,823 |

Note G - Credit Facility
On October 20, 2021, the Firm entered into an amended and restated credit agreement with Wells Fargo Bank, National Association, as administrative agent, Wells Fargo Securities, LLC, as lead arranger and bookrunner, Bank of America, N.A., as syndication agent, BMO Harris Bank, N.A., as documentation agent, and the lenders referred to therein (the “Amended and Restated Credit Facility”). Under the Amended and Restated Credit Facility, the Firm has a maximum borrowing capacity of $200.0 million, which may, subject to certain conditions and the participation of the lenders, be increased up to an aggregate additional amount of $150.0 million. Borrowings under the credit facility are secured by substantially all of the tangible and intangible assets of the Firm. The maturity date of the Amended and Restated Credit Facility is October 20, 2026.
As of March 31, 2025 and December 31, 2024, $65.5 million and $32.7 million was outstanding under the Amended and Restated Credit Facility, respectively. Kforce had $1.1 million and $1.0 million of outstanding letters of credit at March 31, 2025 and December 31, 2024, respectively, which pursuant to the Amended and Restated Credit Facility, reduces the availability of the borrowing capacity. As of March 31, 2025, we were in compliance with all of the covenants contained in the Amended and Restated Credit Facility.
Note H - Other Long-Term Liabilities
Other long-term liabilities consisted of the following:

(in thousands) | March 31, 2025 |  | December 31, 2024
Deferred compensation payable - long term | $ | 41,087 |  |  | $ | 46,183 |
Operating lease liabilities | 12,268 |  |  | 11,858 |
Other long-term liabilities | 16 |  |  | 18 |
Total Other long-term liabilities | $ | 53,371 |  |  | $ | 58,059 |

Note I - Stock-Based Compensation
On April 23, 2025, Kforce’s shareholders approved the 2025 Stock Incentive Plan (the “2025 Plan”). The 2025 Plan allows for the issuance of stock options, stock appreciation rights (“SAR”), stock awards (including restricted stock awards (“RSAs”) and restricted stock units (“RSUs”)) and other stock-based awards, such as Performance-Based Awards (collectively referred to as “Restricted Stock”). The aggregate number of shares reserved under the 2025 Plan is approximately 2.7 million. Grants of an option or SAR reduce the reserve by one share, while a Restricted Stock award reduces the reserve by 2.72 shares. The 2025 Plan terminates on April 23, 2035.
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The following table presents the Restricted Stock activity for the three months ended March 31, 2025:

(in thousands, except per share amounts) | Number of Restricted Stock |  | Weighted-Average Grant Date Fair Value |  | Total Intrinsic Value of Restricted Stock Vested
Outstanding at December 31, 2024 | 910 |  |  | $ | 61.28 |  |  |
Granted | 8 |  |  | $ | 60.21 |  |  |
Forfeited | (1) |  |  | $ | 57.79 |  |  |
Vested | (6) |  |  | $ | 24.10 |  |  | $ | 308 |
Outstanding at March 31, 2025 | 911 |  |  | $ | 61.53 |  |  |

As of March 31, 2025, total unrecognized stock-based compensation expense related to restricted stock was $39.8 million, which is expected to be recognized over a weighted-average remaining period of 4.4 years.
During the three months ended March 31, 2025 and 2024, stock-based compensation expense was $3.7 million and $3.5 million, respectively. Stock-based compensation is included in Selling, general and administrative expenses (“SG&A”) in the Unaudited Condensed Consolidated Statements of Operations.
Note J - Commitments and Contingencies
Employment Agreements
Kforce has employment agreements with certain executives that provide for certain post-employment benefits under certain circumstances. At March 31, 2025, our liability would be approximately $28.6 million if, following a change in control, all of the executives under contract were terminated without cause by the employer or if the executives resigned for good reason, and $9.3 million if, in the absence of a change in control, all of the executives under contract were terminated by Kforce without cause or if the executives resigned for good reason.
Litigation
We are involved in legal proceedings, claims and administrative matters that arise in the ordinary course of business, and we have made accruals with respect to certain of these matters, where appropriate, that are reflected in our unaudited condensed consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters for which an accrual has not been made, we have not yet determined that a loss is probable, or the amount of loss cannot be reasonably estimated. The outcome of any litigation is inherently uncertain, but we do not expect that these proceedings and claims, individually or in the aggregate, will have a material effect on our unaudited condensed consolidated financial statements; however, if decided adversely to us, or if we determine that settlement of particular litigation is appropriate, we may be subject to additional liabilities that could have a material adverse effect on our financial position, results of operations or cash flows. Kforce maintains liability insurance that insures us against workers’ compensation, personal and bodily injury, property damage, directors’ and officers’ liability, errors and omissions, cyber liability, employment practices liability and fidelity losses. There can be no assurance that Kforce’s liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
EXECUTIVE SUMMARY
The following is an executive summary of what Kforce believes are highlights as of and for the three months ended March 31, 2025, which should be considered in the context of the additional discussions herein and in conjunction with the unaudited condensed consolidated financial statements and notes thereto.
•Revenue for the three months ended March 31, 2025 decreased 6.2% (4.7% on a billing day basis) to $330.0 million from $351.9 million in the comparable period in 2024. Revenue decreased 4.9% (3.4% on a billing day basis) and 20.3% (19.1% on a billing day basis) for Technology and FA, respectively, primarily driven by the ongoing macroeconomic uncertainty.
•Flex revenue for the three months ended March 31, 2025 decreased 6.4% (4.9% on a billing day basis) to $322.6 million from $344.7 million in the comparable period in 2024. Flex revenue decreased 5.0% (3.5% on a billing day basis) for Technology and decreased 23.2% (22.0% on a billing day basis) for FA.
•Direct Hire revenue for the three months ended March 31, 2025 increased 4.1% to $7.5 million from $7.2 million in the comparable period in 2024.
•Gross profit margin for the three months ended March 31, 2025 decreased 40 basis points to 26.7% from 27.1% in the comparable period in 2024 as a result of a decline in Flex gross profit margins.
•Flex gross profit margin for the three months ended March 31, 2025 decreased 60 basis points to 25.0% from 25.6% in the comparable period in 2024 primarily driven by higher healthcare costs, which was partially offset by improvements in the spread between bill and pay rates.
•SG&A expenses as a percentage of revenue for the three months ended March 31, 2025 increased to 22.8% from 22.2% in the comparable period in 2024.
•Net income for the three months ended March 31, 2025 decreased 25.9% to $8.1 million, or $0.45 per share, from $11.0 million, or $0.58 per share, for the three months ended March 31, 2024.
•The Firm returned $28.3 million of capital to our shareholders in the form of open market repurchases totaling $21.2 million and quarterly dividends totaling $7.1 million during the three months ended March 31, 2025.
•Cash provided by operating activities was $0.2 million during the three months ended March 31, 2025, as compared to $13.2 million for the three months ended March 31, 2024. The decrease was primarily related to the payment of 2024 federal income taxes that were deferred pursuant to IRS guidance, elevated distributions from our non-qualified deferred compensation plan and the timing of cash receipts from our clients.
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RESULTS OF OPERATIONS
Business Overview
Kforce is a leading domestic provider of technology and finance and accounting talent solutions to innovative and industry-leading companies. As of March 31, 2025, Kforce employed approximately 1,700 associates and had approximately 7,500 consultants on assignment. Kforce serves clients across a diverse set of industries and organizations of all sizes, but we place a particular focus on serving Fortune 500 and other leading companies.
Like many others, we entered 2025 with a general sense of optimism for U.S. economic growth. This optimism fueled our expectation of a potential boost in our clients’ confidence resulting in businesses launching technology initiatives that had been deferred for the last several years. The ongoing discussion of potentially significant tariffs, of which the outcome and impact remains unclear, have reintroduced many uncertainties into the U.S. economic outlook. The general tonality is that the early 2025 optimism has waned to a degree, and macroeconomic uncertainties have increased, which may likely result in continued cautiousness being exercised by companies with regard to investing in significant technological change. Such cautiousness may negatively impact our financial results.
Based on data published by the U.S. Bureau of Labor Statistics and Staffing Industry Analysts (“SIA”), temporary employment figures and trends are important indicators of staffing demand from an economic standpoint. The national U.S. unemployment rate increased slightly to 4.2% in March 2025 as compared to 4.1% in December 2024. In the latest U.S. staffing industry forecast published by SIA in March 2025, the technology temporary staffing industry is estimated to grow 2% in 2025, which is down from the earlier forecast of 5%.
Operating Results - Three Months Ended March 31, 2025 and 2024
The following table presents certain items in our Unaudited Condensed Consolidated Statements of Operations as a percentage of revenue:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Revenue by segment: |  |  |  |  |  |  |
Technology | 92.8 | % |  | 91.5 | % |  |  |  |
FA | 7.2 |  |  | 8.5 |  |  |  |  |
Total Revenue | 100.0 | % |  | 100.0 | % |  |  |  |
Revenue by type: |  |  |  |  |  |  |
Flex | 97.7 | % |  | 98.0 | % |  |  |  |
Direct Hire | 2.3 |  |  | 2.0 |  |  |  |  |
Total Revenue | 100.0 | % |  | 100.0 | % |  |  |  |
Gross profit | 26.7 | % |  | 27.1 | % |  |  |  |
Selling, general and administrative expenses | 22.8 | % |  | 22.2 | % |  |  |  |
Depreciation and amortization | 0.4 | % |  | 0.4 | % |  |  |  |
Income from operations | 3.5 | % |  | 4.5 | % |  |  |  |
Income before income taxes | 3.4 | % |  | 4.3 | % |  |  |  |
Net income | 2.5 | % |  | 3.1 | % |  |  |  |

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Revenue. The following table presents revenue by type for each segment and the percentage change from the prior period:

| Three Months Ended March 31, |  |
(in thousands) | 2025 |  | Increase (Decrease) |  | 2024 |  |  |  |  |  |
Technology |  |  |  |  |  |  |  |  |  |  |
Flex revenue | $ | 302,435 |  |  | (5.0) | % |  | $ | 318,514 |  |  |  |  |  |  |
Direct Hire revenue | 3,849 |  |  | 7.8 | % |  | 3,570 |  |  |  |  |  |  |
Total Technology revenue | $ | 306,284 |  |  | (4.9) | % |  | $ | 322,084 |  |  |  |  |  |  |
FA |  |  |  |  |  |  |  |  |  |  |
Flex revenue | $ | 20,135 |  |  | (23.2) | % |  | $ | 26,210 |  |  |  |  |  |  |
Direct Hire revenue | 3,609 |  |  | 0.4 | % |  | 3,595 |  |  |  |  |  |  |
Total FA revenue | $ | 23,744 |  |  | (20.3) | % |  | $ | 29,805 |  |  |  |  |  |  |
Total Flex revenue | $ | 322,570 |  |  | (6.4) | % |  | $ | 344,724 |  |  |  |  |  |  |
Total Direct Hire revenue | 7,458 |  |  | 4.1 | % |  | 7,165 |  |  |  |  |  |  |
Total Revenue | $ | 330,028 |  |  | (6.2) | % |  | $ | 351,889 |  |  |  |  |  |  |

Flex Revenue. The key drivers of Flex revenue are the number of consultants on assignment, billable hours, the bill rate per hour and, to a limited extent, the amount of billable expenses incurred by Kforce.
Flex revenue for our Technology business decreased 5.0% (3.5% on a billing day basis) during the three months ended March 31, 2025, as compared to the same period in 2024, primarily driven by a decrease in consultants on assignment because of the ongoing macroeconomic uncertainties. Our average Technology bill rates improved by 1.1% for the three months ended March 31, 2025, as compared to the same period in 2024. In the second quarter, we expect Technology Flex revenue to improve slightly on a billing day basis sequentially and decrease in the low-to-mid single digits year over year.
Our FA business experienced a decrease in Flex revenue of 23.2% (22.0% on a billing day basis) during the three months ended March 31, 2025, as compared to the same period in 2024, primarily driven by a decrease in consultants on assignment because of the ongoing macroeconomic uncertainties. In the second quarter, we expect FA Flex revenue to decrease in the mid-single digits sequentially.
The following table presents the key drivers for the change in Flex revenue by segment over the prior period (in thousands):

| Three Months Ended |  |
| March 31, 2025 vs. March 31, 2024 |  |
Key Drivers - Increase (Decrease) | Technology |  | FA |  |  |  |
Volume - hours billed | $ | (19,462) |  |  | $ | (6,309) |  |  |  |  |
Bill rate | 3,366 |  |  | 256 |  |  |  |  |
Billable expenses | 17 |  |  | (22) |  |  |  |  |
Total change in Flex revenue | $ | (16,079) |  |  | $ | (6,075) |  |  |  |  |

The following table presents total Flex hours billed by segment and percentage change over the prior period:

| Three Months Ended March 31, |  |
(in thousands) | 2025 |  | Increase (Decrease) |  | 2024 |  |  |  |  |  |
Technology | 3,337 |  |  | (6.1) | % |  | 3,555 |  |  |  |  |  |  |
FA | 389 |  |  | (24.0) | % |  | 512 |  |  |  |  |  |  |
Total Flex hours billed | 3,726 |  |  | (8.4) | % |  | 4,067 |  |  |  |  |  |  |

Direct Hire Revenue. The key drivers of Direct Hire revenue are the number of placements and the associated placement fee. Direct Hire revenue also includes conversion revenue, which may occur when a consultant initially assigned to a client on a temporary basis is later converted to a permanent placement for a fee.
Direct Hire revenue increased 4.1% during the three months ended March 31, 2025, as compared to the same period in 2024, which was primarily driven by an increase in placement fees. In the second quarter, we expect Direct Hire Revenue to decrease slightly year over year.
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Gross Profit. Gross profit is determined by deducting direct costs (primarily consultant compensation, payroll taxes and certain fringe benefits, as well as independent contractor costs) from total revenue. In addition, there are no consultant payroll costs associated with Direct Hire placements; thus, all Direct Hire revenue increases gross profit by the full amount of the placement fee.
The following table presents gross profit (gross profit as a percentage of total revenue) by segment and percentage change over the prior period:

| Three Months Ended March 31, |  |
| 2025 |  | Increase (Decrease) |  | 2024 |  |  |  |  |  |
Technology | 25.9 | % |  | (0.8) | % |  | 26.1 | % |  |  |  |  |  |
FA | 38.2 | % |  | 1.6 | % |  | 37.6 | % |  |  |  |  |  |
Total gross profit percentage | 26.7 | % |  | (1.5) | % |  | 27.1 | % |  |  |  |  |  |

The total gross profit percentage decreased 40 basis points for the three months ended March 31, 2025, as compared to the same period in 2024, primarily as a result of a decline in Flex gross profit margins.
Flex gross profit percentage (Flex gross profit as a percentage of Flex revenue) provides management with helpful insights into the other drivers of total gross profit percentage driven by our Flex business, such as changes in the spread between the consultants’ bill rate and pay rate, changes in payroll tax rates or benefits costs, as well as the impact of billable expenses, which provide no profit margin.
The following table presents the Flex gross profit percentage by segment and percentage change over the prior period:

| Three Months Ended March 31, |  |
| 2025 |  | Increase (Decrease) |  | 2024 |  |  |  |  |  |
Technology | 24.9 | % |  | (1.6) | % |  | 25.3 | % |  |  |  |  |  |
FA | 27.2 | % |  | (6.5) | % |  | 29.1 | % |  |  |  |  |  |
Total Flex gross profit percentage | 25.0 | % |  | (2.3) | % |  | 25.6 | % |  |  |  |  |  |

Our Flex gross profit percentage decreased 60 basis points for the three months ended March 31, 2025, as compared to the same period in 2024.
•Technology Flex gross profit margins decreased 40 basis points for the three months ended March 31, 2025, as compared to the same period in 2024, primarily driven by higher healthcare costs. The impact of higher healthcare costs was partially offset by an improvement in the spread between bill and pay rates. In the second quarter, we expect Technology Flex gross profit margins to increase sequentially due to lower seasonal payroll taxes.
•FA Flex gross profit margins decreased 190 basis points for the three months ended March 31, 2025, as compared to the same period in 2024, primarily driven by a tighter pricing environment, higher healthcare costs and slightly higher payroll taxes. In the second quarter, we expect FA Flex gross profit margins to increase sequentially due to lower seasonal payroll taxes.
The following table presents the key drivers for the change in Flex gross profit by segment over the prior period (in thousands):

| Three Months Ended |  |
| March 31, 2025 vs. March 31, 2024 |  |
Key Drivers - Increase (Decrease) | Technology |  | FA |  |  |  |
Revenue impact (volume) | $ | (4,062) |  |  | $ | (1,766) |  |  |  |  |
Profitability impact (bill rate) | (1,071) |  |  | (385) |  |  |  |  |
Total change in Flex gross profit | $ | (5,133) |  |  | $ | (2,151) |  |  |  |  |

SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A represented 84.4% for the three months ended March 31, 2025, as compared to 83.9% for the comparable period in 2024. Commissions and other bonus incentives are variable costs driven primarily by revenue and gross profit levels. Therefore, as those levels change, these expenses would also generally be anticipated to change.
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The following table presents certain components of SG&A as a percentage of total revenue:

(in thousands) | 2025 |  | % of Revenue |  | 2024 |  | % of Revenue
Three Months Ended March 31, |  |  |  |  |  |  |
Compensation, commissions, payroll taxes and benefits costs | $ | 63,476 |  |  | 19.2 | % |  | $ | 65,609 |  |  | 18.6 | %
Other (1) | 11,689 |  |  | 3.6 | % |  | 12,581 |  |  | 3.6 | %
Total SG&A | $ | 75,165 |  |  | 22.8 | % |  | $ | 78,190 |  |  | 22.2 | %

(1) Includes items such as credit loss expense, lease expense, professional fees, travel, communication and office-related expense, and certain other expenses.
SG&A as a percentage of revenue increased 60 basis points for the three months ended March 31, 2025, as compared to the same period in 2024. We continue to experience a degree of SG&A deleverage as we continue to make investments in our strategic priorities and to retain our most productive associates to strategically position the Firm to capture an increased market share when the demand environment eventually improves. To mitigate the pressure on our profitability levels from the revenue and gross profit declines, we continue to take certain actions to align our costs.
We continue to prioritize investments in our strategic initiatives, including the implementation of Workday as part of our back-office transformation program, which is expected to go live in early 2026; integrated strategy efforts; and the evolution of our nearshore and offshore delivery capabilities.
Depreciation and Amortization. The following table presents depreciation and amortization expense and percentage change over the prior period by major category:

| Three Months Ended March 31, |  |
(in thousands) | 2025 |  | Increase (Decrease) |  | 2024 |  |  |  |  |  |
Fixed asset depreciation | $ | 713 |  |  | (10.9) | % |  | $ | 800 |  |  |  |  |  |  |
Capitalized software amortization | 751 |  |  | 40.9 | % |  | 533 |  |  |  |  |  |  |
Total Depreciation and amortization | $ | 1,464 |  |  | 9.8 | % |  | $ | 1,333 |  |  |  |  |  |  |

Other Expense, Net. Other expense, net was $0.6 million and $0.7 million for the three months ended March 31, 2025 and 2024, respectively. Other expense, net primarily includes interest expense related to outstanding borrowings under our credit facility.
Income Tax Expense. Income tax expense as a percentage of income before income taxes (our “effective tax rate”) was 26.4% and 27.1% for the three months ended March 31, 2025 and 2024, respectively. The primary driver for the decrease relates to the recognition of research and development tax credits associated with the implementation of Workday.
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Non-GAAP Financial Measures
R evenue Growth Rates. “Revenue growth rates,” a non-GAAP financial measure, is defined by Kforce as revenue growth after removing the impacts on reported revenues from the changes in the number of billing days. Management believes this data is particularly useful because it aids in evaluating revenue trends over time. The impact of billing days is calculated by dividing each comparative period’s reported revenues by the number of billing days for the respective period to arrive at a per billing day amount for each quarter. Growth rates are then calculated using the per billing day amounts as a percentage change compared to the respective period. Management calculates the number of billing days for each reporting period based on the number of holidays and business days in the quarter.

| Sequential Growth Rates (GAAP)
|  | 2025 |  | 2024
|  | Q1 |  | Q4 |  | Q3 |  | Q2 |  | Q1
Technology Flex |  | (3.7)% |  | (2.5)% |  | (0.6)% |  | 1.7% |  | (2.3)%
FA Flex |  | (12.8)% |  | (2.7)% |  | (4.1)% |  | (5.7)% |  | (11.5)%
Total Flex revenue |  | (4.3)% |  | (2.5)% |  | (0.8)% |  | 1.2% |  | (3.1)%
| Sequential Growth Rates (Non-GAAP)
|  | 2025 |  | 2024
|  | Q1 |  | Q4 |  | Q3 |  | Q2 |  | Q1
Billing Days |  | 63 |  | 62 |  | 64 |  | 64 |  | 64
Technology Flex |  | (5.2)% |  | 0.6% |  | (0.6)% |  | 1.7% |  | (6.9)%
FA Flex |  | (14.2)% |  | 0.5% |  | (4.1)% |  | (5.7)% |  | (15.7)%
Total Flex revenue |  | (5.8)% |  | 0.6% |  | (0.8)% |  | 1.2% |  | (7.6)%

|  |  | Year-Over-Year Growth Rates (GAAP)
|  |  |  | 2025 |  | 2024
|  |  |  | Q1 |  | Q4 |  | Q3 |  |  |  | Q2 |  | Q1
Technology Flex |  |  |  | (5.0)% |  | (3.7)% |  | (3.6)% |  |  |  | (6.4)% |  | (11.4)%
FA Flex |  |  |  | (23.2)% |  | (22.1)% |  | (20.7)% |  |  |  | (23.1)% |  | (27.2)%
Total Flex revenue |  |  |  | (6.4)% |  | (5.2)% |  | (5.0)% |  |  |  | (7.8)% |  | (12.8)%
|  |  | Year-Over-Year Growth Rates (Non-GAAP)
|  |  |  | 2025 |  | 2024
|  |  |  | Q1 |  | Q4 |  | Q3 |  |  |  | Q2 |  | Q1
Billing Days |  |  |  | 63 |  | 62 |  | 64 |  |  |  | 64 |  | 64
Technology Flex |  |  |  | (3.5)% |  | (5.2)% |  | (5.1)% |  |  |  | (6.4)% |  | (11.4)%
FA Flex |  |  |  | (22.0)% |  | (23.3)% |  | (21.9)% |  |  |  | (23.1)% |  | (27.2)%
Total Flex revenue |  |  |  | (4.9)% |  | (6.7)% |  | (6.5)% |  |  |  | (7.8)% |  | (12.8)%

Free Cash Flow. “Free Cash Flow,” a non-GAAP financial measure, is defined by Kforce as net cash provided by operating activities determined in accordance with GAAP, less capital expenditures. Management believes this provides an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows and is useful information to investors as it provides a measure of the amount of cash generated from the business that can be used for strategic opportunities, including investing in our business, repurchasing common stock, paying dividends or making acquisitions. Free Cash Flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. Therefore, we believe it is important to view Free Cash Flow as a complement to, but not a replacement of, our Unaudited Condensed Consolidated Statements of Cash Flows.
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The following table presents Free Cash Flow:

| Three Months Ended March 31, |
(in thousands) | 2025 |  | 2024 |
Net cash provided by operating activities | $ | 249 |  |  | $ | 13,169 |  |
Capital expenditures | (4,149) |  |  | (1,875) |  |
Free cash flow | (3,900) |  |  | 11,294 |  |
Change in debt | 32,800 |  |  | (800) |  |
Repurchases of common stock | (21,066) |  |  | (2,848) |  |
Cash dividends | (7,051) |  |  | (7,128) |  |
Premiums paid for company-owned life insurance | (686) |  |  | (529) |  |
Other | (2) |  |  | (2) |  |
Change in cash and cash equivalents | $ | 95 |  |  | $ | (13) |  |

Adjusted EBITDA. “Adjusted EBITDA,” a non-GAAP financial measure, is defined by Kforce as net income before depreciation and amortization; stock-based compensation expense; interest expense, net; and income tax expense. Adjusted EBITDA should not be considered a measure of financial performance under GAAP. Items excluded from Adjusted EBITDA are significant components in understanding and assessing our past and future financial performance, and this presentation should not be construed as an inference by us that our future results will be unaffected by those items excluded from Adjusted EBITDA. Adjusted EBITDA is a key measure used by management to assess our operations including our ability to generate cash flows and our ability to repay our debt obligations, and management believes it provides a good metric of our core profitability in comparing our performance to our competitors, as well as our performance over different time periods. Consequently, management believes it is useful information to investors. The measure should not be considered in isolation or as an alternative to net income, cash flows or other financial statement information presented in the unaudited condensed consolidated financial statements as indicators of financial performance or liquidity. The measure is not determined in accordance with GAAP and is thus susceptible to varying calculations. Also, Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.
In addition, although we excluded stock-based compensation expense because it is a non-cash expense, we expect to continue to incur stock-based compensation expense in the future and the associated stock issued may result in an increase in our outstanding shares of stock, which may result in the dilution of our shareholder ownership interest. We suggest that you evaluate these items and the potential risks of excluding such items when analyzing our financial position.
The following table presents a reconciliation of net income to Adjusted EBITDA:

(in thousands) | 2025 |  | 2024
Three Months Ended March 31, |  |  |
Net income | $ | 8,145 |  |  | $ | 10,987 |
Depreciation and amortization | 1,464 |  |  | 1,333 |
Stock-based compensation expense | 3,656 |  |  | 3,501 |
Interest expense, net | 565 |  |  | 655 |
Income tax expense | 2,921 |  |  | 4,084 |
Adjusted EBITDA | $ | 16,751 |  |  | $ | 20,560 |

LIQUIDITY AND CAPITAL RESOURCES
To meet our capital and liquidity requirements, we primarily rely on our operating cash flows, as well as borrowings under our credit facility. At March 31, 2025 and December 31, 2024, we had $65.5 million and $32.7 million outstanding under our Amended and Restated Credit Facility, respectively, and the borrowing availability was $133.4 million and $166.3 million, respectively, subject to certain covenants. At March 31, 2025, Kforce had $118.5 million in working capital compared to $112.9 million at December 31, 2024.
Cash Flows
Our business has historically generated a significant amount of operating cash flows, which allows us to balance deploying available capital towards: (i) investing in our strategic priorities that we expect will accelerate future revenue growth and profitability levels; (ii) our dividend and share repurchase programs; and (iii) maintaining sufficient liquidity for potential acquisitions or other strategic investments.
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Cash provided by operating activities was $0.2 million during the three months ended March 31, 2025, as compared to $13.2 million during the three months ended March 31, 2024. Our largest source of operating cash flows is the collection of trade receivables, and our largest use of operating cash flows is the payment of our associate and consultant compensation. The year-over-year decrease in cash provided by operating activities was primarily driven by the payment of 2024 federal income taxes that were deferred pursuant to IRS guidance, higher distributions from our non-qualified deferred compensation plan, lower profitability levels and the timing of collections on trade receivables.
Cash used in investing activities was $4.8 million during the three months ended March 31, 2025, and primarily consisted of cash used for capital expenditures of $4.1 million. C ash used in investing activities during the three months ended March 31, 2024 was $2.4 million and primarily consisted of cash used for capital expenditures of $1.9 million.
Cash provided by f inancing activities was $4.7 million during the three months ended March 31, 2025, as compared to $10.8 million of cash used in financing activities during the three months ended March 31, 2024. This change was primarily driven by the net proceeds on our Amended and Restated Credit Facility, partially offset by an increase in repurchases of common stock.
The following table presents the cash flow impact of the common stock repurchase activity:

|  | Three Months Ended March 31,
(in thousands) |  | 2025 |  | 2024
Open market repurchases |  | $ | 20,982 |  |  | $ | 2,720 |
Repurchased shares withheld for tax withholding upon vesting of restricted stock |  | 84 |  |  | 128 |
Total cash flow impact from Repurchases of common stock |  | $ | 21,066 |  |  | $ | 2,848 |
Cash paid in current year for settlement of prior year repurchases |  | $ | 260 |  |  | $ | 920 |

During the three months ended March 31, 2025 and 2024, Kforce declared and paid quarterly dividends of $7.1 million ($0.39 per share) and $7.1 million ($0.38 per share), respectively, which represents a 3% increase on a per share basis. While the Firm’s Board of Directors (the “Board”) has declared and paid quarterly dividends since the fourth quarter of 2014, and intends to in the foreseeable future, dividends will be subject to determination by our Board each quarter following its review of, among other things, the Firm’s current and expected financial performance as well as the ability to pay dividends under applicable law.
We believe that existing cash and cash equivalents, operating cash flows and available borrowings under our Amended and Restated Credit Facility will be adequate to meet the capital expenditure and working capital requirements of our operations for at least the next 12 months, and the foreseeable future, which we believe will provide us the flexibility to continue returning significant capital to our shareholders. However, a material deterioration in the macroeconomic environment or market conditions, among other things, could adversely affect operating results and liquidity, as well as the ability of our lenders to fund borrowings. Actual results could also differ materially from these indicated as a result of a number of factors, including the use of currently available resources for capital expenditures, investments, additional common stock repurchases or dividends.
Credit Facility
On October 20, 2021, the Firm entered into the Amended and Restated Credit Facility, which has a maximum borrowing capacity of $200.0 million, and subject to certain conditions and the participation of the lenders, may be increased up to an aggregate additional amount of $150.0 million. As of March 31, 2025, $65.5 million was outstanding and $133.4 million was available on our Amended and Restated Credit Facility, and as of December 31, 2024, $32.7 million was outstanding. As of March 31, 2025, we were in compliance with all of the covenants contained in the Amended and Restated Credit Facility as described in our 2024 Annual Report on Form 10-K, and we currently expect that we will be able to maintain compliance with these covenants.
Stock Repurchases
During the three months ended March 31, 2025, Kforce repurchased approximately 418 thousand shares of common stock on the open market at a total cost of approximately $21.2 million. In addition, $42.3 million remained available for further repurchases under the Board-authorized common stock repurchase program at March 31, 2025.
Contractual Obligations and Commitments
Other than the changes described below and elsewhere in this Quarterly Report, there have been no material changes during the period covered by this report on Form 10-Q to our contractual obligations previously disclosed in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report on Form 10-K.
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CRITICAL ACCOUNTING ESTIMATES
Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our unaudited condensed consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amount of assets, liabilities, revenues, expenses and the related disclosures. Our assumptions, estimates and judgments are based on historical experience, current trends and other factors that management believes to be relevant at the time our unaudited condensed consolidated financial statements are prepared. Management regularly reviews the accounting policies, estimates, assumptions and judgments to ensure that our unaudited condensed consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
N E W ACCOUNTING STANDARDS
Refer to Note A - “Summary of Significant Accounting Policies” in the Notes to the Unaudited Condensed Consolidated Financial Statements, included in Item 1. Financial Statements of this report for a discussion of new accounting standards.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
With respect to our quantitative and qualitative disclosures about market risk, there have been no material changes to the information included in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our 2024 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As of March 31, 2025, we carried out an evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act (the “Evaluation”), under the supervision and with the participation of our CEO and CFO, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act (“Disclosure Controls”). Based on the Evaluation, our CEO and CFO concluded that the design and operation of our Disclosure Controls were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (2) accumulated and communicated to management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding disclosure.
Changes in Internal Control over Financial Reporting
Management has evaluated, with the participation of our CEO and CFO, whether any changes in our internal control over financial reporting that occurred during our last fiscal quarter have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on the evaluation we conducted, management has concluded that no such changes have occurred.
Inherent Limitations of Internal Control Over Financial Reporting
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
CEO and CFO Certifications
Exhibits 31.1 and 31.2 are the Certifications of the CEO and the CFO, respectively. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section contains the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are involved in legal proceedings, claims and administrative matters that arise in the ordinary course of business, and we have made accruals with respect to certain of these matters, where appropriate, that are reflected in our unaudited condensed consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters for which an accrual has not been made, we have not yet determined that a loss is probable, or the amount of loss cannot be reasonably estimated. The outcome of any litigation is inherently uncertain, but we do not expect that these proceedings and claims, individually or in the aggregate, will have a material effect on our unaudited condensed consolidated financial statements; however, if decided adversely to us, or if we determine that settlement of particular litigation is appropriate, we may be subject to additional liabilities that could have a material adverse effect on our financial position, results of operations or cash flows. Kforce maintains liability insurance that insures us against workers’ compensation, personal and bodily injury, property damage, directors’ and officers’ liability, errors and omissions, cyber liability, employment practices liability and fidelity losses. There can be no assurance that Kforce’s liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities.
ITEM 1A. RISK FACTORS.
There have been no material changes in the risk factors previously disclosed in our 2024 Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Purchases of Equity Securities by the Issuer
Purchases of common stock under the Board authorized stock repurchase plan (the “Plan”) are subject to certain price, market, volume and timing constraints, which are specified in the Plan. The following table presents information with respect to our repurchases of Kforce common stock during the three months ended March 31, 2025:

Period | Total Number of Shares Purchased (1) |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1, 2025 to January 31, 2025 | 15,870 |  |  | $ | 54.23 |  |  | 15,870 |  |  | $ | 62,637,076 |
February 1, 2025 to February 28, 2025 | 193,612 |  |  | $ | 51.36 |  |  | 191,940 |  |  | $ | 52,777,188 |
March 1, 2025 to March 31, 2025 | 210,640 |  |  | $ | 49.86 |  |  | 210,640 |  |  | $ | 42,275,612 |
Total | 420,122 |  |  | $ | 50.71 |  |  | 418,450 |  |  | $ | 42,275,612 |

(1) Includes 1,672 repurchased shares withheld for tax withholding upon vesting of restricted stock for the period February 1, 2025 to February 28, 2025.
(2) In February 2024, the Board approved a change in our stock repurchase authorization increasing the available authorization to $100 million.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
Insider Trading Arrangements
During the three months ended March 31, 2025, none of the Company’s officers or directors adopted or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.
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ITEM 6. EXHIBITS.

Exhibit Number | Description
3.1 | Amended and Restated Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 33-91738) filed with the SEC on April 28, 1995.
3.1a | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1b | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1c | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1d | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on May 17, 2000.
3.1e | Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on March 29, 2002.
3.2 | Amended & Restated Bylaws, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on April 29, 2013.
1 0.1* | Kforce Inc. 2025 Stock Incentive Plan, incorporated by reference to the Registrant’s Registration Statement on Form S-8 (File No. 333-286770) filed with the SEC on April 25, 2025.
1 0.2*² | Form of Restricted Stock Agreements under the 2025 Stock Incentive Plan.
31.1 ² | Certification by the Chief Executive Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 ² | Certification by the Chief Financial Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 | Certification by the Chief Executive Officer of Kforce Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 as furnished herewith.
32.2 | Certification by the Chief Financial Officer of Kforce Inc. pursuant to 18 U.S.C. Section 2350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 as furnished herewith.
101.1 | The following material from this Quarterly Report on Form 10-Q of Kforce Inc. for the period ended March 31, 2025, formatted in XBRL Part I, Item 1 of this Form 10-Q formatted in XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statements of Operations; (ii) Unaudited Condensed Consolidated Balance Sheets; (iii) Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity; (iv) Unaudited Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements.
104 | Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101.

² | Filed herewith.
* | Management contract or compensatory plan or arrangement.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  | KFORCE INC.
Date: | April 30, 2025 | By: |  | /s/ JEFFREY B. HACKMAN
|  |  |  | Jeffrey B. Hackman
|  |  |  | Chief Financial Officer
|  |  |  | (Principal Financial and Accounting Officer)

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