KFRC Shareholder/Stockholder Letter Transcript:
TO GE TH E R
TOWA R D
TO MO R ROW
ANNUAL REPORT 2024
Kforce is a solutions firm specializing in technology, finance and accounting, and professional staffing
services. Our KNOWLEDGEforce empowers top companies to achieve their digital transformation
goals. We curate teams of technical experts who deliver solutions custom-tailored to each client s
needs. These scalable, flexible outcomes are shaped by deep market knowledge, thought leadership
and our multi-industry expertise.
Our integrated approach is rooted in 60 years of proven success deploying highly skilled professionals
on a temporary and direct-hire basis. Each year, approximately 18,000 talented experts work with
the Fortune 500 and other leading companies. Together, we deliver Great Results Through Strategic
Partnership and Knowledge Sharing .
To our fellow shareholders, clients,
consultants and employees:
We
have been operating in an uncertain macro environment since
the Federal Reserve began rapidly raising interest rates to address persistent
inflationary pressures in March 2022. Since then, the U.S. economy has continued
to defy broad-based recession expectations due to a strong labor market primarily
in government, healthcare and construction, as well as continued strong consumer
spending. The prolonged period of uncertainty has resulted in our clients continuing
to exercise a degree of restraint in the level of their technology investments.
Operating trends in our Technology business stabilized early in 2024 and have
remained stable throughout the year. We are extremely proud of how our
teams have operated in this relatively subdued environment as evidenced by our
industry-leading performance in our Technology business yet again in 2024.
Our teams have continued to persevere and make the necessary adjustments
within our business to maintain high levels of performance and significantly
advance our strategic priorities, which we believe will provide a great foundation
moving forward to return higher levels of profitability as revenues inflect.
We believe that a meaningful by-product of the restraint that our clients have
been exercising in anticipation of a recession, which hasn t materialized, is an
increasingly strong backlog of strategically imperative technology investments.
Conversations with our clients post-election and the preponderance of economic
views suggest to us that the operating environment, as we move through 2025,
may improve as clients generally gain increased confidence in the U.S. economy.
We believe we are ideally positioned to capture this demand, should it improve,
and continue capturing additional market share.
Full Year 2024 Financial Highlights
evenue for the year ended December 31, 2024, was $1.41 billion compared to
R$1.53
billion for the year ended December 31, 2023.
echnology revenue of $1.29 billion decreased 6.6% year over year (7.4% on a
Tbilling
day basis) and now represents 92% of total Firm revenues.
perating margins were 5.0% for the year ended December 31, 2024, which
Odecreased
70 basis points year over year.
iluted earnings per share for the year ended December 31, 2024, were $2.68 per
Dshare,
a decrease of 14.4% year over year.
e returned nearly $65 million of capital to our shareholders through share
Wrepurchases
and dividends during the year ended December 31, 2024, which
represented approximately 75% of operating cash flows.
Our Board of Directors (the Board ) approved an increase in our dividend,
representing the sixth consecutive annual increase, beginning with our first
quarter 2025 dividend.
KFORCE INC. AND SUBSIDIARIES | 1
OUR SERVICE LINES
Technology (92% of Revenue)
Our decision to grow our business organically with a consistent,
refined business model tailored to providing highly skilled
technology talent solutions to world-class companies in the
domestic market has been critical to our success over many years.
From a performance standpoint, our overall Technology business
declined by approximately 7% in 2024 on a year-over-year basis,
due to the impact of the persistent macro uncertainties on the
level of technology investments being made by our clients.
Following unprecedented levels of growth that exceeded 40%
across the two-year period from 2021 and 2022, Technology
revenues have declined in 2023 and 2024. Demand within our
Technology business stabilized in early 2024 and remained stable
throughout the year. Our current KPIs and conversations with
our clients suggest a slightly more optimistic, but still relatively
stable, demand environment as we move into 2025.
Our technology service offering has evolved over the years
beyond traditional staffing assignments to include more
consulting-oriented engagements based on the demand we
are experiencing from our clients. Clients continue to prioritize
efficient access to highly skilled talent and see our services
as a cost-effective solution to meet their technology project
requirements leveraging our superior delivery capability.
The demand for this consulting-oriented offering continued to
contribute positively to the results of our Technology business
inclusive of the stability we have seen for more than two years
in our $90 average bill rate and our Flex margin spreads.
Our clients remain focused on critical technology initiatives
across our digital, cloud, data and AI, application engineering
practices. Our core competency is sourcing quality talent, at
scale, for our clients as demand for various skillsets change and
evolve. We expect this to continue as clients increasingly look
to us to provide data and digital resources to support their data
requirements, integration work and cloud migration activities
that are at the front end of their AI investments. As technology
has evolved over the decades, we have efficiently evolved with
the changing skillset demands of our clients.
Our client portfolio is diverse and is mostly comprised of large,
market-leading companies across virtually every industry. This
portfolio focus continues to be critical in our ability to drive
sustainable, long-term above-market performance.
While the political uncertainty has been resolved with President
Trump and his administration taking office in January 2025, the
impacts from potential policy changes is unclear. In addition, the
prospects for further Fed rate cuts in 2025 appear less certain
with inflation indicators proving a bit stickier and continued
strength in the labor markets. We believe that clients will begin
to incrementally invest in technology initiatives as they gain
additional confidence in the U.S. economy.
Our teams made significant progress in our integrated strategy
efforts to capitalize on the strong relationships we have with
world-class companies by utilizing our existing sales team
members, recruiters, and consultants to deliver on higher value
engagements that effectively and cost efficiently address our
clients challenges. In addition, our teams were hard at work in
2024 establishing a development center in Pune, India, which was
2 | KFORCE INC. AND SUBSIDIARIES
fully operational in January 2025. We believe this facility puts
Kforce in a strong position to compete on client opportunities
that we were precluded from bidding on in the past.
We head into 2025 ideally positioned to capture additional
market share should demand improve and continue delivering
above-market performance as we have for well over a decade.
Finance and Accounting
Our FA business, which represents 8% of total revenues,
declined approximately 24% year over year driven by the impact
of business we are strategically no longer supporting due to
our repositioning efforts combined with a more challenging
macro-environment. Our average bill rate of approximately
$51 per hour has been relatively stable over the past year and
is reflective of the higher skilled areas we are pursuing that are
more synergistic with our Technology service offering.
We took additional steps in 2024 to provide our teams increased
focus over both our Technology and FA business and are well
positioned heading into 2025.
POSITIONING KFORCE FOR THE FUTURE
We continue to make the necessary adjustments within the
business to maintain high levels of performance, while also
maintaining elevated investments on critical initiatives. This
provides a great foundation moving forward to return higher levels
of profitability as revenues inflect. We have made tremendous
progress related to the implementation of Workday as our
future state enterprise cloud application for HCM and financials,
along with the evolution of our nearshore and offshore delivery
capabilities with the opening of our India Development Center
in January 2025. These developments represent the ongoing
integration of all of the Firm s capabilities across the full spectrum
of our service offerings as One Kforce. Each of these strategic
initiatives are transformational in nature and will be a meaningful
contributor to us meeting our longer-term financial objective
of generating greater operating margins when we return to $1.7
billion in annual revenue along with our standing goal of at least
10% operating margins at $2.1 billion in annual revenue.
AS WE LOOK AHEAD TO 2025
As has been the case for the last several years, AI continues to
dominate the headlines, including DeepSeek s AI advancements
and the announcement of the Stargate venture to build new
data centers in the U.S. to provide more computing power to
OpenAI to develop and train their models. As we have previously
articulated, over the long term, we believe that AI and other
innovative technologies will continue to play an increasing role
in powering businesses. We expect their impact will follow the
historic Jevons Paradox pattern, where improved efficiency
ultimately drives greater demand for, rather than replacement
of, technology resources, and that the pace of change will
continue to accelerate.
The strength of the secular drivers of demand in technology
accelerated significantly coming out of the Dot Com Recession
with the foundational internet work by all companies and
the Great Recession, with advancements in mobility, cloud
computing, among many others, and the 2020 Pandemic, with
further digitalization of businesses and the continued headlines
around GenAI technologies. I have seen a lot of economic cycles
in my 35 plus years in this business, and each one behaves a bit
differently. What remains clear to us though is that the broad
and strategic uses of technology, including AI technologies, will
continue to evolve and play an increasingly instrumental role in
powering businesses, and that access to highly skilled and scarce
technology talent to drive this evolution will remain critical.
We continue to make adjustments to associate levels based
upon productivity expectations. We will remain focused on
retaining our most productive associates and making targeted
investments in the business to ensure that we are well prepared
to capitalize on the market demand when it accelerates.
We are fortunate to have one of the most recognized brands
in the market for providing technology talent solutions.
Our reputation has been established over our 60 plus year
operating history, and we continue to carry the highest overall
Glassdoor rating within our peer group. Regardless of the
ultimate environment, we
enter 2025 well positioned
to take additional market
share and continue laying
the foundation to generate
significant long-term returns
OUR CLIENT
for our shareholders.
PORTFOLIO
IS DIVERSE AND
IS MOSTLY
COMPRISED
OF LARGE,
MARKETLEADING
COMPANIES
ACROSS
VIRTUALLY
EVERY
INDUSTRY.
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE (ESG)
Our 2024 Sustainability Report,
published in February 2025,
outlines the progress we made
in our ESG efforts last year. We
continue to make progress in
reducing our environmental
footprint, fostering a diverse
and inclusive workplace
and upholding the highest
standards of governance.
We continuously refine these
initiatives to ensure they
remain effective and impactful.
Investing in our people
remains a top priority. We
created a more holistic view
of employee sentiment by
increasing ongoing feedback
opportunities and expanded
our leadership development
program to include a
series featuring our board
members. We furthered our
strong corporate governance
practices by establishing an
ESG Committee to oversee
our collective efforts and
engaged a third party to
review and validate the
progress of our cybersecurity
and data privacy program.
We stayed focused on making
sound decisions for the Firm
that contributed to our goal of lowering our greenhouse gas
(GHG) emissions. We further reduced our GHG emissions in 2024
by 11% versus 2023 levels and, in total, have reduced our GHG
emissions by approximately 60% compared to our 2019 baseline.
The path to sustainability is a continuous one. We will continue
to listen, learn and adapt as we navigate the complexities of the
ESG landscape.
STEWARDSHIP
Our core values of compassion, unity and fun support
our culture of stewardship. We are passionate about leaving
a lasting, positive impact on the world. Under our guiding
principle, Empowering People Through Knowledge Sharing ,
we focus on programs that help people develop skills, gain
knowledge and pursue meaningful careers.
Our employees lead the way in our community engagement
efforts. Their passion for education, community development
and human services guides our community engagement strategy.
We bring a unified approach to philanthropy by partnering with
four corporate-sponsored charities: Best Buddies Tampa Bay,
Feeding Tampa Bay, Junior Achievement Tampa Bay and Special
Operations Warrior Foundation, but also encourage our people to
support causes and organizations they are passionate about.
Our most significant 2024 activity was the support of disaster
relief efforts after Hurricanes Helene and Milton devastated
Tampa Bay (where our headquarters is located) and surrounding
areas, western North Carolina and other parts of the coast.
We placed special emphasis on aiding those impacted by,
among other support, donating 1.6 million meals and hosting
a warehouse takeover at Feeding Tampa Bay. Additional
donations were made to MANNA Food Bank in North Carolina,
Hope Children s Home and other charities.
IN SUMMARY
We have built a solid foundation at Kforce to advance our
Mission Uniting professionals to achieve success through lasting
personal relationships and Vision To have a meaningful impact
on all the lives we serve .
I want to reiterate how proud I am of the performance and
resiliency of our collective Kforce team through their daily
actions while living out our tagline We Love What We Do. We
Love Who We Serve . Together, we fought through a challenging
operating environment, made some difficult decisions and met
each challenge. We are blessed to have a tenured Executive
Leadership team that has been through multiple economic
cycles together and can quickly adjust to changing market
conditions. We will continue to invest in our strategic priorities
that will help drive long-term growth and achieve our longerterm financial objective of attaining double-digit operating
margins. We enter 2025 well positioned to capture additional
market share and continue creating significant long-term
returns for our shareholders.
Joseph J. Liberatore
President and Chief Executive Officer
KFORCE INC. AND SUBSIDIARIES | 3
3/14/2025 Letter Continued (Full PDF)