What happened

Shares of Kforce (KFRC -1.26%) were falling today after the staffing agency posted disappointing top-line results in its second-quarter earnings report, and offered weak guidance.

As of 1:28 p.m. ET, the stock was down 7.9%.

So what

Kforce, which specializes in recruiting temporary workers in the tech industry, said revenue fell 10.8% from the quarter a year ago to $389.2 million, which missed estimates at $395.9 million.

The company blamed uncertainty in the economic environment as many of its clients have implemented layoffs and are preparing for a potential slowdown or recession. 

Further down the income statement, Kforce's operating margin shrank from 7.8% to 6.7%, and earnings per share fell 16% to $0.95, essentially matching expectations at $0.96.

Kforce CEO Joseph Liberatore acknowledged the macroeconomic headwinds, but expressed long-term optimism, saying, "While clients are acting with heightened caution today, we believe this is resulting in a tremendous backlog of desirable investments that will be prioritized once the macro uncertainties begin to clear."

Kforce also said it was reducing annualized costs by about $14 million in response to the slowdown in demand.

Now what

Looking ahead to the third quarter, Kforce expects revenue of $359 million to $367 million, reflecting a 16% decline at the midpoint from revenue a year ago, and much worse than analyst estimates at $399 million.

On the bottom line, it projected earnings per share to fall from $1.09 to between $0.60 and $0.68, or between $0.82 and $0.90 after adjusting for charges related to cost reductions. That was still worse than the consensus at $0.98.

With headwinds remaining in the tech sector, a recovery seems likely to take time for Kforce, and the disruption from artificial intelligence could put further pressure on the company.