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2024 Annual Report Annual Report – Insurance News

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

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 retuhigher 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 retuto $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



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