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View All NewsKforce revenue up 3%; tech growth offsets decline in finance and accounting
Kforce Inc. (NASD: KFRC) reported first-quarter revenue rose 2.9%. The increase was 4.6% on a billing-day basis.
Revenue growth came from technology, the Tampa, Florida-based firm’s largest segment. However, revenue fell 12.2% in the finance and accounting segment.
Gross margin narrowed to 28.5% from 29.2% in the prior-year period, primarily as a result of a decline in flex gross profit percentage.
| (US$ thousands) | Q1 2019 | Q1 2018 | % change |
| Revenue | $326,738 | $317,441 | 2.9% |
| Gross profit | $93,176 | $92,537 | 0.7% |
| Gross margin percentage | 28.5% | 29.2% | |
| Net income | $26,855 | $9,175 | 192.7% |
Kforce on April 1 completed the sale of its federal government solutions subsidiary, Kforce Government Solutions Inc., to ManTech International Corp. for an aggregate cash purchase price of $115.0 million. In a conference call with investors, Chairman and CEO David Dunkel said the company is also “making good progress” pursuing strategic alternatives for TraumaFX, its federal government product business. All the company’s revenue is now derived from domestic professional and technical staffing services and solutions.
KGS and TraumaFX comprised the company’s Government Solutions segment, which has been reported as discontinued operations for the first quarter and 2018 and assets held for sale as of March 31, 2019, and Dec. 31, 2018.
Revenue by function and segment
| (US$ thousands) | Q1 2019 | Q1 2018 | % change |
| Total flex revenue | $314,981 | $306,046 | 2.9% |
| Total direct-hire revenue | $11,757 | $11,395 | 3.2% |
| Technology | |||
| Technology flex revenue | $250,216 | $231,496 | 8.1% |
| Technology direct-hire revenue | $5,427 | $5,001 | 8.5% |
| Total technology revenue | $255,643 | $236,497 | 8.1% |
| Finance & Accounting | |||
| Finance & Accounting flex revenue | $64,765 | $74,550 | -13.1% |
| Finance & Accounting direct-hire revenue | $6,330 | $6,394 | -1.0% |
| Total Finance & Accounting revenue | $71,095 | $80,944 | -12.2% |
Gross margin by segment
| Q1 2019 | Q1 2018 | |
| Technology flex | 25.3% | 26.1% |
| Finance & Accounting flex | 27.8% | 27.9% |
Quote
“Our Tech Flex business continues to benefit from improving bill rates and longer assignment durations, which we believe is related to the acute labor shortage, especially with highly-skilled resources,” Dunkel said. “The pace of digital transformation continues to be rapid, forcing organizations across all industries to increase their technology investments. We believe the secular drivers of technology are transcending traditional cyclical patterns as business models are transformed.”
Guidance
Kforce forecast second-quarter revenue of $338 million to $343 million, a year-over-year decrease of between 5.8% and 4.4%. It expects first-quarter gross margin of 29.7% to 29.9%.
Share price and market cap
Kforce shares fell 3.78% to $34.66 at 10:43 a.m. Eastern time; the company had a market cap of $932.06 million, according to FT.com.