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View All NewsKforce revenue rises 4% in third quarter, technology temp staffing revenue up
Technology temporary staffing helped fuel growth at Kforce Inc. (NASD: KFRC). Third-quarter revenue at the Tampa, Fla.-based professional staffing firm rose 4.2% year over year. Revenue came in below guidance; it had risen 5.4% in the second quarter.
| (US$ thousands) | Q3 2018 | Q3 2017 | % change |
| Revenue | $355,452 | $341,053 | 4.2% |
| Gross profit | $104,381 | $104,375 | 0.0% |
| Gross margin percentage | 29.4% | 30.6% | |
| Net income | $16,177 | $10,099 | 60.0% |
Kforce’s technology staffing segment saw revenue grow 9.5% in the third quarter fueled by temporary staffing; technology direct hire revenue fell.
Finance and accounting staffing revenue also posted an 11.4% decline in the third quarter. However, revenue rose 8.7% in the company’s government solutions segment; it had risen 22.9% in the second quarter.
Revenue by function and segment
| (US$ thousands) | Q3 2018 | Q3 2017 | % change |
| Total flex revenue | $339,937 | $326,335 | 4.2% |
| Total direct-hire revenue | $10,482 | $12,149 | -13.7% |
| Technology | |||
| Technology flex revenue | $247,154 | $224,148 | 10.3% |
| Technology direct-hire revenue | $3,925 | $5,133 | -23.5% |
| Total technology revenue | $251,079 | $229,281 | 9.5% |
| Finance & Accounting | |||
| Finance & Accounting flex revenue | $68,948 | $78,209 | -11.8% |
| Finance & Accounting direct-hire revenue | $6,557 | $7,016 | -6.5% |
| Total Finance & Accounting revenue | $75,505 | $85,225 | -11.4% |
| Government Solutions flex revenue | $28,868 | $26,547 | 8.7% |
Gross margin by segment
| Q3 2018 | Q3 2017 | |
| Technology flex | 26.5% | 27.0% |
| Finance & Accounting flex | 29.0% | 29.0% |
| Government solutions flex | 21.6% | 31.4% |
Quote
Chairman and CEO David Dunkel noted in a statement that technology temporary staffing revenue represents an acceleration from the second quarter.
“The digital transformation is forcing organizations across all industries to increase their technology investments,” Dunkel said. “We believe the secular drivers of technology will transcend traditional cyclical patterns as business models are transformed.”
Government solutions revenue was lower than anticipated, but management is building a strong pipeline of new business, he said.
“During the third quarter and beginning of the fourth quarter, KGS was awarded business having an aggregate estimated contract value of $180.0 million, which is expected to be recognized over a period of 5 years and should begin to benefit KGS in the first quarter of 2019,” Dunkel said.
Guidance
Kforce forecast fourth-quarter revenue of between $349 million and $354 million, a year-over-year increase of between 1.9% and 3.3%. It expects fourth-quarter gross margin of between 28.8% to 29.0%.
Share price and market cap
Kforce shares were down 6.41% to $32.93 at 10:50 a.m. Eastern time; the company had a market cap of $919.1 million, according to FT.com.