Monday, May 11, 2026
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Overview. First quarter revenue exceeded management expectations, and adjusted EBITDA was in line with the outlook, driven by sequential improvement in ETM and pockets of growth in SET. More than offsetting these items are continued lower demand in the other specialties within the SET segment, largely the technology specialty, and a decline in the Education segment driven by delayed contract decisions, elevated weather-related school closures, and declines in student enrollment in key markets. Nonetheless, we believe management is taking the right steps to position Kelly to capitalize on any upturn.
1Q26 Results. Net revenue for 1Q26 was $1.0 billion, down 10.7% y-o-y. Discrete impacts associated with the previously disclosed reduced demand for U.S. federal government contractors in the SET segment and from three large commercial customers in the ETM segment totaled approximately 7.4%, resulting in an underlying revenue decline of approximately 3.3%. Adjusted EBITDA was $15.8 million, or a margin of 1.5%, versus $34.9 million and 3.0%, respectively, a year ago. Adjusted EPS declined to $0.03 from $0.39.
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