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View All NewsKforce revenue rises 4.5% in fourth quarter on tech staffing growth
Kforce Inc. (NASD: KFRC) reported fourth-quarter revenue rose 4.5%, exceeding guidance. The increase was 2.8% on a billing-day basis.
Revenue growth came from technology, the firm’s largest single segment. However, revenue fell 9.0% in finance and accounting, the company’s second-largest segment.
| (US$ thousands) | Q4 2018 | Q4 2017 | % change |
| Revenue | $357,984 | $342,586 | 4.5% |
| Gross profit | $106,556 | $102,627 | 3.8% |
| Gross margin percentage | 29.8% | 30.0% | |
| Net income | $16,356 | $6,140 | 166.4% |
Overall, fourth-quarter flex revenue rose 4.0% and direct-hire revenue rose 10.9% at the Tampa, Fla.-based professional staffing provider.
Government Solutions flex revenue fell 11.9% following an 8.7% increase in the third quarter; the company in December reported its government business would see only minimal impact from the government shutdown in the fourth quarter due to its concentration of business in areas of the government unaffected by any funding delays.
Revenue by function and segment
| (US$ thousands) | Q4 2018 | Q4 2017 | % change |
| Total flex revenue | $341,604 | $328,526 | 4.0% |
| Total direct-hire revenue | $11,275 | $10,170 | 10.9% |
| Technology | |||
| Technology flex revenue | $248,151 | $223,897 | 10.8% |
| Technology direct-hire revenue | $4,599 | $3,919 | 17.4% |
| Total technology revenue | $252,750 | $227,816 | 10.9% |
| Finance & Accounting | |||
| Finance & Accounting flex revenue | $70,951 | $79,098 | -10.3% |
| Finance & Accounting direct-hire revenue | $6,676 | $6,251 | 6.8% |
| Total Finance & Accounting revenue | $77,627 | $85,349 | -9.0% |
| Government Solutions flex revenue | $22,502 | $25,531 | -11.9% |
Gross margin by segment
| Q4 2018 | Q4 2017 | |
| Technology flex | 26.6% | 27.2% |
| Finance & Accounting flex | 28.7% | 28.5% |
| Government solutions flex | 25.2% | 24.7% |
Full-year results
| (US$ thousands) | 2018 | 2017 | % change |
| Revenue | $1,418,353 | $1,357,940 | 4.4% |
| Gross profit | $418,608 | $408,056 | 2.6% |
| Gross margin percentage | 29.5% | 30.0% | |
| Net income | $57,980 | $33,285 | 74.2% |
Quote
“Tech flex revenue accelerated meaningfully towards the end of the quarter due to fewer assignment ends and stronger new assignment starts than anticipated,” Chairman and CEO David Dunkel said. “We believe this is related to the acute labor shortage, especially with highly skilled resources. The pace of digital transformation continues at a rapid pace, forcing organizations across all industries to increase their technology investments. We believe the secular drivers of technology will transcend traditional cyclical patterns as business models are transformed."
Guidance
Kforce forecast first-quarter revenue of $351 million to $356 million, a year-over-year increase of between 1.4% and 2.8%. It expects first-quarter gross margin of 28.2% to 28.4%
Share price and market cap
Kforce shares fell 2.01% to $32.70 at 10:22 a.m. Eastern time; the company had a market cap of $869.80 million, according to FT.com.