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eWork Group AB (STO:EWRK) presented its first quarter 2025 results on May 14, showing a significant revenue decline offset partially by improved gross margins as the company continues to execute its strategy of phasing out unprofitable contracts and expanding into new European markets.
Introduction & Market Context
eWork Group, a Nordic-based total talent solutions provider celebrating its 25th anniversary, reported mixed market momentum across its operating regions. The company’s presentation highlighted challenging conditions in Sweden and Norway, contrasted with strong growth in Denmark and Poland.
The company’s stock has shown resilience despite the revenue decline, with shares trading at 102.2 SEK as of June 25, up 1.96% for the day and recovering from earlier lows. The stock has traded between 100-155 SEK over the past 52 weeks.
eWork’s global presence now spans multiple European countries with a network of over 200,000 consultants and partnerships with more than 29,000 companies. The company primarily focuses on IT and engineering talent solutions, with an 80/20% split between these sectors.
As shown in the following global reach and key figures slide:
Quarterly Performance Highlights
eWork Group’s Q1 2025 financial results showed significant year-over-year declines in several key metrics:
- Net revenue decreased 16.9% to 3,511 MSEK (from 4,255 MSEK in Q1 2024)
- EBIT fell 23% to 34.3 MSEK (from 44.7 MSEK)
- Earnings per share dropped to 0.98 SEK (from 2.11 SEK)
- Average number of consultants on assignment decreased to 10,850 (from 12,290)
However, the company did achieve a positive trend in gross margin, which increased to 4.1% from 3.8% in the previous year, driven by add-on services.
The following slide summarizes the first quarter highlights:
The revenue decline was attributed to several factors, with the company’s strategic decision to phase out non-profitable client contracts accounting for approximately 8 percentage points of the 17% decline. One less working day in the quarter contributed another 2 percentage points, with the remainder due to fewer consultants on assignment.
The detailed financial breakdown shows how various factors contributed to the revenue decline:
Similarly, the EBIT reduction was primarily driven by lower revenue, partially offset by improved margins:
Geographic and Industry Analysis
eWork Group’s performance varied significantly by geography, with the company’s traditional Nordic markets showing weakness while newer markets demonstrated growth. Sweden remains the company’s largest market, accounting for 67.8% of gross profit (down slightly from 68.9% in Q1 2024), while Poland & Slovakia increased to 10.9% (from 9.5%).
By industry, automotive represented the largest segment at 23% of gross profit (up from 21%), followed by public sector at 22% (down from 24%) and manufacturing at 18% (unchanged). The company noted particularly good development in automotive, life science, and banking/finance/insurance sectors, while public sector and telecom remained restrained.
The following slide illustrates the industry and market development:
Order intake declined 6.3% to 4,203 MSEK, with mixed demand between market units. The company noted that the average contract length increased by 11%, suggesting a trend toward longer-term engagements despite the overall volume reduction.
The momentum and order intake trends are shown in this slide:
Strategic Initiatives
During the quarter, eWork Group launched a new internal digital platform designed to enable further scalability and efficiency over time. This investment contributed to higher IT costs in the quarter but is expected to support long-term growth.
The company also continued its geographic expansion, starting operations in Belgium and exploring additional opportunities for expansion in Europe. This aligns with increased client interest in nearshoring, driven by cost focus and geopolitical considerations.
eWork is positioning itself as a " Total (EPA:TTEF) Talent Solutions Powerhouse," offering a comprehensive approach to talent management that includes consulting services, project delivery, talent network services, and managed service provider capabilities.
The company’s value proposition is illustrated in this slide:
Market trends highlighted by the company include:
- Network expansion within the engineering domain
- High demand for IT and engineering talent
- Growing interest in nearshoring
- Rising demand for AI expertise across industries
Forward-Looking Statements
Looking ahead, eWork Group acknowledged the difficulty in making meaningful statements about the market due to geopolitical uncertainties. The company remains focused on executing its long-term strategy, with emphasis on:
- Continuing to improve gross margins
- Geographical expansion across Europe
- Broadening its talent network, particularly in AI expertise
- Leveraging its new digital platform for scalable and profitable growth
The earnings call transcript revealed that executives are cautious about meeting the company’s 30% EPS growth target given current market conditions. CEO Karin Schreil emphasized the company’s commitment to "drive a good business for eWork," while CFO Johanna Eriksson noted, "The market is very uncertain, and we do need the volumes as well."
Despite the challenges, eWork Group’s presentation highlighted several positive trends, including the improved gross margin and growth in strategic markets like Denmark and Poland, suggesting the company is making progress on its strategic transformation while navigating a complex market environment.
Full presentation:
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