Executive Summary

Q3 2025 revenue was $26.9M, down 9.8% year over year but up 14.4% sequentially on seasonal strength; gross margin held steady at 35.9% .
GAAP net loss from continuing operations improved to $0.28 diluted EPS loss vs $0.44 loss in Q2; Adjusted EBITDA turned positive to $1.0M (3.6% of revenue) and Adjusted EPS was $0.08 .
Board authorized a $5M stock repurchase program; a $2.00 per share special dividend was paid on Sep 30 following the Professional division sale and debt paydown .
Management reiterated a Property Management–focused strategy, cost takeout post-TSA, and AI-enabled sales/recruiting tools; expects 2026 revenue growth vs 2025 as initiatives execute .

What Went Well and What Went Wrong

What Went Well

Sequential reacceleration and margin stability: Revenue +14.4% vs Q2 to $26.9M; gross margin steady at 35.9% .
Non-GAAP profitability improvement: Adjusted EBITDA turned to +$1.0M (3.6% margin) vs a $(1.1)M loss in Q2; Adjusted EPS improved to $0.08 vs $(0.10) in Q2 .
Strategic capital actions and confidence: “Today we are announcing a stock buyback plan of up to $5M… reflects our confidence in BGSF’s long-term strategy” — Keith Schroeder .

What Went Wrong

Year-over-year decline: Revenues fell 9.8% YoY amid cost pressures on property owners and heightened competition; gross profit dollars declined to $9.7M from $10.7M .
Continuing GAAP losses: Q3 GAAP net loss from continuing operations was $3.1M (diluted EPS $(0.28)), though improved from Q2 $(0.44) .
Transitional “noise” and restructuring costs: TSA and integration activities extended overhead and included $482K in strategic restructuring costs in Q3 .

Financial Results

Metric (USD)	Q1 2025	Q2 2025	Q3 2025
Revenues ($MM)	$20.883	$23.506	$26.895
Gross Profit ($MM)	$7.560	$8.410	$9.660
Gross Margin (%)	36.2%	35.8%	35.9%
Operating Income (Loss) ($MM)	$2.476 (Property Mgmt segment)	$(4.425)	$(0.937)
Net Loss from Continuing Ops ($MM)	N/A (not carved out in Q1)	$(4.862)	$(3.078)
Diluted EPS – Continuing Ops ($)	N/A	$(0.44)	$(0.28)
Adjusted EBITDA ($MM)	N/A – continuing ops	$(1.145)	$0.980
Adjusted EBITDA Margin (%)	N/A – continuing ops	(4.9%)	3.6%
Adjusted EPS – Continuing Ops ($)	N/A	$(0.19)	$0.08

Segment breakdown – Property Management (Revenue mix)

Metric (USD Thousands)	Q1 2025	Q2 2025	Q3 2025
Contract Field Talent	$20,279	$23,000	$26,341
Contingent Placements	$604	$506	$554
Segment Revenue	$20,883	$25,726 (includes prior-year Q2 YoY ref)	$26,895
Segment Gross Profit	$7,560	$8,410	$9,660

Selected KPIs and cash items

KPI (USD)	Q1 2025	Q2 2025	Q3 2025
Adjusted EBITDA Margin (%) – Continuing Ops	N/A	(4.9%)	3.6%
Capital Expenditures ($ Thousands)	$23	$13	$117
Cash & Cash Equivalents (End of Period, $ Thousands)	$2,050	$2,777	$41,170

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Stock Repurchase Program	Open-ended	None	Authorized up to $5M buyback; timing/amount subject to market/alternatives	New
Special Dividend	Q3 2025	None	$2.00 per share paid Sep 30 (total $22.4M)	New (Completed)
Overhead Reduction Target (Head Office G&A)	Post-TSA (early 2026)	None	Target ≈$11M annually (incl. ~$1.5M public company costs)	New
Revenue Outlook	FY 2026 vs 2025	None	Management “anticipate revenue growth in 2026 versus 2025”	New (Qualitative)
TSA Execution/Compensation	~6 months	Not previously applicable	TSA in place; services compensated, reduces G&A reported	New (Operational)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
AI/Technology Initiatives	AI-powered sales/recruiting tools to be operational by mid-Q4 2025	“On track to be operational over the next couple of quarters… seeing early signs of improved efficiency”	Continued rollout; scope expanding
Cost Structure/Overhead	Re-baselining Property Mgmt costs to align with revenue	Aggressive head office G&A reduction post-TSA; target ≈$11M annually	Accelerating cost takeout
Macro/Client Cost Pressures	Seasonally soft demand; clients cautious on talent acquisition	Lower demand and increased competition driving YoY decline; seasonal normalization sequentially	Persistent headwinds; sequential stabilization
Capital Allocation	No buyback; regular dividends historically	$2 special dividend paid; $5M buyback authorized	Shareholder returns prioritized
Segment Focus/Portfolio	Diversified segments pre-divestiture	Professional division sold; single reportable segment (Property Management)	Portfolio streamlined
Market Opportunity	Not quantified	External study supports $1B+ addressable market; roadmap refined	Strategic focus areas identified

Management Commentary

“We announced and delivered a $2 per share special dividend… today we are announcing a stock buyback plan of up to $5M… reflects our confidence in BGSF’s long-term strategy.” — Keith Schroeder .
“Our AI-powered sales and recruiting technologies are on track to be operational over the next couple of quarters, and we are already seeing early signs of improved efficiency.” — Kelly Brown .
“We engaged an independent consulting firm… assessment of our business and the broader property management workforce solutions market… refined our strategic roadmap… anticipate revenue growth in 2026 versus 2025.” — Kelly Brown .
“We are taking aggressive actions to reduce head office G&A expenses when the TSA period ends… target of approximately $11 million annually.” — Keith Schroeder .

Q&A Highlights

Consultant engagement scope and learnings: Multi-pronged research (client surveys, competitive interviews) validated addressable market sizing and consumption preferences for talent; informs geographic and strategic planning and partnering with client acquisition teams .
Industry evolution and technology levers: Management emphasized evolving client preferences and using technology/AI to attract talent and deepen engagement .
Closing tone: Management reiterated focus on execution, cost alignment, and quarterly updates amid transitional “noise” .

Estimates Context

Coverage and comparability: Post-divestiture, consensus appears limited and focused on continuing operations, constraining Q3 estimates. Revenue and EPS estimates for Q3 were not available in our S&P Global pull; consensus existed for prior quarters.
Prior quarters comparison:
- Q2 2025: Revenue estimate $23.506M vs actual $23.506M; Primary EPS estimate $(0.44) vs actual $(0.44)*.
- Q1 2025: Primary EPS estimate $(0.11); Revenue estimate $65.250M vs actual total revenue $63.234M (note: estimates and some “actuals” in datasets may reflect continuing ops vs consolidated, creating mismatch)* .
  Values retrieved from S&P Global.*

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus Mean ($MM)	$65.25*	$23.506*	N/A*
Revenue Actual ($MM)	$63.234	$23.506	$26.895
Primary EPS Consensus Mean ($)	$(0.11)*	$(0.44)*	N/A*
Primary EPS Actual ($) (Continuing Ops)	N/A	$(0.44)	$(0.28)
EBITDA Consensus Mean ($MM)	$1.83*	N/A*	N/A*

Values retrieved from S&P Global.*

Implication: With limited Q3 estimates, the key comparison is sequential improvement and non-GAAP return to positive Adjusted EBITDA, while YoY revenue softness persists .

Key Takeaways for Investors

Sequential recovery with margin stability suggests seasonal normalization and early traction from commercial initiatives despite YoY demand pressure .
Non-GAAP profitability inflected positive (Adjusted EBITDA $1.0M), signaling better cost control and operating leverage on seasonal volumes .
Capital returns (special dividend + buyback) and debt paydown reset the balance sheet and may support multiple expansion as the Property Management–only profile matures .
Structural cost reductions (≈$11M G&A target post-TSA) should enhance earnings power into 2026; track quarterly progress and TSA offsets .
AI-enabled sales/recruiting tools rolling out over the next two quarters could drive throughput and win rates; monitor KPIs (fill rates, client retention) as management reports .
Execution risk remains amid competition and client budget pressures; watch gross margin resilience and SG&A mix as indicators of sustained discipline .
Near term, the narrative centers on clean separation, cost alignment, and tech-enabled growth; medium term, management’s 2026 revenue growth expectation frames estimate resets and valuation debate .

BGSF, INC. (BGSF)·Q3 2025 Earnings Summary