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01/11 18:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A reveal several concerns: declining EBITDA margins, slightly negative revenue guidance, political and economic uncertainties in key markets like France and the U.S., and restructuring efforts in Northern Europe. Despite AI advancements and stable free cash flow expectations, these negative factors overshadow potential positives. The company's market cap suggests it may react moderately, leading to a likely negative stock movement of -2% to -8% over the next two weeks.
Revenue Reported revenue was $4.6 billion, down 2% year-over-year in constant currency. System-wide revenue, which includes our expanding franchise revenue base, was $4.9 billion.
EBITDA Reported EBITDA for the quarter was $74 million. Adjusting for restructuring costs, EBITDA was $96 million, representing a decrease of 22% in constant currency year-over-year. Reported EBITDA margin was 1.6%, and adjusted EBITDA margin was 2.1%.
Earnings Per Share (EPS) Earnings per diluted share was $0.38 on a reported basis, while earnings per diluted share was $0.83 on an adjusted basis. Adjusted earnings per share decreased 39% year-over-year in constant currency.
Gross Profit Margin Gross margin came in at 16.6% for the quarter. Staffing margin contributed a 40 basis point reduction due to mix shifts towards enterprise accounts. Permanent recruitment activity was softer than expected, and the lower contribution resulted in a 20 basis point decline. Lower career transition outplacement activity within Right Management resulted in a 10 basis point margin decrease.
Free Cash Flow Free cash flow was $45 million compared to $67 million in the prior year, reflecting a decline due to declining earnings and large outflows for tax and technology license payments earlier in the year.
SG&A Expense Reported SG&A expense in the quarter was $702 million. SG&A as adjusted, was down 2% on a constant currency basis and 1% on an organic constant currency basis.
Revenue by Region - Americas Revenue in the Americas segment was $1.1 billion, representing an increase of 6% year-over-year on a constant currency basis. The U.S. revenue was $691 million, representing a 1% days adjusted decrease compared to the prior year.
Revenue by Region - Southern Europe Revenue in Southern Europe was $2.2 billion, representing a 1% decrease in organic constant currency. France revenue equaled $1.2 billion, a 5% decrease on a days adjusted constant currency basis. Italy revenue equaled $463 million, reflecting an increase of 4% on a days adjusted constant currency basis.
Revenue by Region - Northern Europe Revenue in Northern Europe was $817 million, representing a 6% decline in constant currency. The U.K. revenues decreased 13% on a days adjusted constant currency basis. Germany revenues decreased 23% on a days adjusted constant currency basis.
Revenue by Region - Asia Pacific Middle East (APME) Revenue in the APME segment was $521 million, representing an increase of 8% in organic constant currency. Japan revenue grew 6% on a days adjusted constant currency basis.
Sophie AI: ManpowerGroup's enterprise-wide AI platform, Sophie AI, is driving measurable gains, with approximately 30% of new client revenue derived from AI-rated probability. It is deployed across 14 key markets and scaling further, enhancing client outcomes and decision-making.
Geographic Performance: Strong momentum in Latin America and Asia Pacific Middle East (APME) offset by softer trends in Europe and North America. Japan and Italy showed strong revenue growth, while Germany and the UK faced declines.
Revenue Trends: After 11 consecutive quarters of revenue decline, ManpowerGroup achieved growth in Q3 2025, with reported revenue of $4.6 billion and system-wide revenue of $4.9 billion.
Cost Management: Decisive actions to contain costs and drive efficiencies, including restructuring and back-office transformation, are progressing well.
Digitization and Standardization: Advancing global business services initiatives, including a new hub in Porto, Portugal, to streamline operations and reduce costs. Plans to optimize recruitment and sales processes using the global PowerSuite platform.
Geopolitical tensions: Elevated geopolitical tensions are creating a complex environment for employers, particularly in Europe and North America, impacting hiring and operational stability.
Economic softening: Economic uncertainties and softening in key markets like Europe and North America are leading to cautious hiring and reduced activity levels, which could impact revenue growth.
Tariff uncertainty: Ongoing tariff uncertainties are affecting demand stabilization in North America and Europe, posing risks to revenue trends.
Extended decision timelines: Major markets are experiencing extended decision timelines among global enterprise clients, which could delay revenue realization and growth opportunities.
Declining EBITDA and margins: Adjusted EBITDA decreased by 22% year-over-year, and gross profit margins are under pressure due to shifts in staffing mix and lower recruitment activity.
Weakness in recruitment and outplacement: Lower demand in recruitment process outsourcing and outplacement services is negatively impacting revenue in the Talent Solutions segment.
Regional revenue declines: Revenue declines in key regions like Northern Europe (6% decline) and Germany (23% decline) are driven by weak market conditions, particularly in sectors like automotive manufacturing.
Currency fluctuations: Foreign currency translation impacts are creating variability in reported revenues and financial performance.
Operational cost pressures: Operational costs remain high despite restructuring efforts, impacting profitability and requiring further cost containment measures.
Seasonal revenue fluctuations: Seasonal patterns, particularly in the U.S. healthcare projects, are expected to contribute to revenue declines in the fourth quarter.
Revenue Guidance: For the fourth quarter of 2025, the company forecasts a constant currency revenue guidance range between a 2% decrease and a 2% increase, with the midpoint representing a flat revenue trend.
Earnings Per Share (EPS) Guidance: The company projects earnings per share for the fourth quarter to be in the range of $0.78 to $0.88, including a favorable foreign currency impact of $0.08 per share.
Market Conditions and Demand: The company anticipates ongoing stability in most markets and a continuation of existing trends. Demand in Europe and North America is expected to hold steady, with gradual stabilization across markets.
AI and Technology Integration: The company is leveraging AI-enabled data insights to track, anticipate, and predict client demand. AI tools are expected to drive measurable gains, with approximately 30% of new client revenue derived from AI-rated probability.
Segment-Specific Projections: - U.S.: Revenue decline similar to or slightly worse than the third quarter due to higher seasonal healthcare projects in the prior year.
Operational Efficiency and Cost Management: The company is focused on disciplined cost control, streamlining operations, and advancing digitization and standardization to enhance EBITDA margin and long-term growth.
Share Repurchase Program: During the third quarter, we did not repurchase any shares. At September 30, we have 2 million shares remaining for repurchase under the share program approved in August of 2023.
The earnings call summary and Q&A reveal several concerns: declining EBITDA margins, slightly negative revenue guidance, political and economic uncertainties in key markets like France and the U.S., and restructuring efforts in Northern Europe. Despite AI advancements and stable free cash flow expectations, these negative factors overshadow potential positives. The company's market cap suggests it may react moderately, leading to a likely negative stock movement of -2% to -8% over the next two weeks.
Despite some positive elements, such as growth in the U.S. Manpower brand and AI advancements, the overall sentiment is negative due to weak financial guidance, including a projected revenue decline and decreased EBITDA margins. Additionally, high tax rates and geopolitical uncertainties in Northern Europe contribute to a negative outlook. The Q&A session highlighted concerns about economic conditions and restructuring, which further dampen sentiment.
The earnings call reveals several challenges: a revenue decline, decreased EBITDA, and lower EPS, compounded by geopolitical risks and regulatory changes. Despite a share repurchase program, the negative financial metrics and cautious market outlook weigh heavily. The Q&A section reflects uncertainty in market conditions and management's cautious stance. The guidance of declining revenue and margins further exacerbates concerns. The market cap suggests moderate volatility, but overall, the sentiment leans negative due to the combination of financial underperformance and external uncertainties.
The earnings call summary shows mixed financial performance with revenue and EBITDA declines, increased tax risks, and cash flow volatility. The Q&A section highlights uncertainties due to tariffs and economic challenges in key markets, while management's vague responses add to concerns. Although share repurchases are positive, weak financial guidance and declining margins weigh heavily. Considering the company's small cap, these factors suggest a negative stock price movement of -2% to -8% over the next two weeks.
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