Earnings call transcript: Adecco’s Q3 2025 sees strong growth in North America

Adecco Group reported its financial results for the third quarter of 2025, showcasing a revenue increase and notable growth in its North American operations. The company recorded revenues of €5.8 billion, marking a 3.4% year-over-year organic growth, and achieved an adjusted EPS of $0.67. Despite the absence of specific forecast comparisons, the company’s performance and strategic initiatives in AI and digital platforms have been well-received. Adecco’s stock last closed at €53.96, with no significant change reported post-earnings.

Key Takeaways

• Adecco achieved a 3.4% year-on-year organic revenue growth in Q3 2025.
• The company reported a €195 million EBITA, excluding one-offs, with a 3.4% margin.
• North American operations showed strong performance with a 20% revenue growth.
• Investments in AI and digital coaching platforms are driving innovation.
• The company is focused on reducing net debt to EBITDA ratio to 1.5x by 2027.

Company Performance

Adecco’s performance in Q3 2025 reflects strategic gains, particularly in North America, where revenue grew by 20%. The company’s focus on digital transformation and AI-driven solutions has contributed to its competitive edge, gaining 375 basis points in market share. Productivity improvements and cost management, such as reducing G&A expenses to 3% of revenues, have further bolstered its financial health.

Financial Highlights

• Revenue: €5.8 billion, a 3.4% year-on-year organic increase
• Gross profit: €1.1 billion, with a 19.2% margin
• EBITA: €195 million, excluding one-offs, with a 3.4% margin
• Adjusted EPS: $0.67
• Operating cash flow: €200 million, up €79 million year-on-year

Outlook & Guidance

Adecco anticipates Q4 revenue growth to mirror Q3’s performance, maintaining a focus on achieving a 3% EBITA margin for the full year. The company remains committed to reducing its net debt to EBITDA ratio to 1.5x by the end of 2027. Further strategic plans will be detailed in the upcoming Capital Markets Day on November 26th.

Executive Commentary

CEO Denis Machuel expressed confidence in Adecco’s market position, stating, "We believe we are leading a recovery in our key markets." He emphasized the importance of digital advancements, noting, "The way we have digitized our business... with very efficient AI support, is a good thing." Machuel also highlighted Adecco’s market strategy: "Our motto is: I don’t care whether the economy is good or bad. Our markets are fragmented. If you are close to your clients, you can win share."

Risks and Challenges

• Market volatility and economic uncertainty could impact demand for staffing services.
• The ongoing restructuring in Akkodis Germany poses operational risks.
• Competitive pressures in the digital and AI space require continued innovation.
• Challenges in permanent placement markets persist across regions.
• Macroeconomic factors, including potential recessions, may affect client budgets.

Q&A

Analysts inquired about the CFO transition from Coram Williams to Valentina Ficaio, with discussions on its potential impact on financial strategy. Questions also focused on the restructuring progress in Akkodis Germany and expectations for market recovery. Adecco’s performance in various geographic segments and sectors was a key topic, with analysts seeking insights into future growth drivers.

Full transcript - Adecco SA (ADEN) Q3 2025:

Kelvin, Conference Operator: Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Adecco Group Q3 results 2025. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Benita Barretto, Head of Investor Relations. Please go ahead.

Benita Barretto, Head of Investor Relations, Adecco Group: Good morning. Thank you for joining the Adecco Group’s Q3 results conference call. I’m Benita Barretto, the Group’s Head of Investor Relations, and with me are the Adecco Group CEO, Denis Machuel, and CFO, Coram Williams. Before we begin, please take note of the disclaimer on slide two. Today’s presentation will reference both GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements which are based on current assumptions and, as always, present opportunities as well as risks and uncertainties. With that, I will now hand over to Denis.

Denis Machuel, CEO, Adecco Group: Thank you, Benita, and a warm welcome to all of you who’ve joined the call today. Today, I want to share an important leadership update, which also underscores the strength of our succession planning and our commitment to continuity. At the end of this year, Coram Williams will step down as Chief Financial Officer after five years of outstanding service. Coram has played an absolutely pivotal role in guiding the Adecco Group through a period of significant transformation and strengthening our financial foundations. His disciplined approach and strategic insight have been absolutely instrumental in achieving the strong Q3 results we announced today. We warmly thank Coram for his tremendous contribution and wish him every success as he takes on a CFO role in the automotive sector in Germany, a move that reflects his passion for this sector and also brings him closer to his family.

I’m pleased to announce that Valentina Ficaio will succeed Coram as CFO effective January 1, 2026. Valentina is a proven leader with deep knowledge of our business and strong financial and strategic acumen. She’s been part of our global finance leadership team, most recently leading financial planning, controllership, and strategy, and has acted as Coram’s deputy for the past three and a half years. Her appointment follows a rigorous selection process and represents an internal promotion to the CFO role, which is a testament to the strength of our talent pipeline. This leadership transition is well planned, and we remain focused on delivering sustainable growth, improving margins, and creating long-term shareholder value. Let’s now turn to our results, starting with slide four and an overview for the quarter. We gained significant market share this quarter with the Group and Adecco, leading key competitors by 375.

Three hundred basis points, respectively. The Group delivered EUR 5.8 billion in revenues, 3.4% higher year-on-year on an organic trading days-adjusted basis. Revenue trends improved sequentially across all GBUs. Additionally, we observed a strong performance from Adecco US, with revenues increasing by 20% year-on-year. Gross profit reached EUR 1.1 billion, with a gross margin of 19.2%. While this represents a modest year-on-year decrease of 10 basis points on an organic basis, it is a 30 basis points sequential improvement, fully matching our Q3 guidance. Gross margins benefited from reduced pressure in Akkodis, Germany, where the turnaround plan is progressing well. EBITA, excluding one-offs, was EUR 195 million, with a 3.4% margin. Disciplined execution drove good operating leverage, with productivity up 8% year-on-year and higher in all GBUs. Adjusted EPS was $0.67.

Cash conversion was very strong at 110%, and the Group generated a solid operating cash flow of EUR 200 million, up EUR 79 million from the prior year period. In summary, the Group delivered a strong performance this quarter and remains on track to achieve the 3% EBITA margin floor for the full year. Moving now to slide five, the Group delivered a further increase in market share this Q3. In Q2, the Group gained 205 basis points in market share and Adecco gained 130 basis points. In Q3, the Group gained 375 basis points of share and Adecco gained 300 basis points. We have seen a consistent improvement in flex volumes year-to-date across the Adecco GBU. In Q3, we were encouraged to see volumes move clearly into modest growth territory with a meaningful uptick in demand from the largest Adecco countries.

Now, as we move to slide six, you’ll see case studies that demonstrate our strong win momentum in the market. First, in the life sciences sector, Adecco and Akkodis were selected as the preferred suppliers for global solutions due to the Group’s global footprint and breadth of services. The client was impressed by our technology expertise, reporting quality, market insights, all of which are underpinned by strong data analytics. Second, Akkodis was selected as a tier-one supplier to a leading German aerospace company. Our comprehensive suite of advanced system engineering solutions, covering landing gear and system design and installation, supports the client’s strategic need for innovation to improve operational efficiency and sustainability. Akkodis’s global presence, which maximizes responsiveness and cross-fertilization of ideas, was key to be selected. Third, LHH’s Ezra won a multi-year contract with a leading US software provider for AI and human coaching services, beating a major competitor.

Ezra will coach over 27,000 employees, creating a measurable business impact. With that, I will now hand over to Coram for further details on the Q3 results.

Coram Williams, CFO, Adecco Group: Good morning, everyone, and thank you, Denis, for your kind words earlier. It’s been an honor to be the CFO of the Group over the last five years and a real pleasure to work with you and the talented teams that we have around the Group. The Q3 results that we’re announcing today show that the Group is on a good path and affirm my decision to step back and pursue a new role in a sector I’m passionate about in my adopted home country. I’m really delighted that you and the Board have chosen Valentina as my successor. She’s been a strong member of my team, a brilliant deputy, and I have no doubt that she is the right person to drive the Group forward. With that said, I’d like to now focus on the Q3 results. First, let’s discuss GBU developments, beginning with Adecco on slide seven.

Adecco delivered EUR 4.7 billion in revenues, up 4.5% year-on-year on an organic trading days-adjusted basis and up 2.8% sequentially. Flexible placement revenues increased by 4%. On an organic basis, outsourcing remained strong, with revenues up 12%. Permanent placement revenues were 7% lower, while MFP Pontoon revenues rose 5%. By client type, revenue growth from SMEs was strong, up 5%. Gross margin was healthy, reflecting the client and solutions mix, particularly lower firm volumes. Pricing remains firm. Productivity improved by 5%, while selling FTEs decreased by 1%. The EBITA margin improved 50 basis points year-on-year to 3.9%, reflecting higher volumes and operating leverage, aided by G&A savings and agile capacity management. Adecco’s drop-down ratio this quarter was north of 100%, a very strong outcome. Now let’s move to Adecco at the segment level on slide eight.

In Adecco, France, revenues were 2% lower year-on-year, improved sequentially, and outperforming the market, driven by robust growth across large clients. Growth in autos, financial and professional services, food and beverage, and the strategically important construction sector was strong. However, logistics presented some challenges. The EBITA margin of 4% was 80 basis points higher year-on-year, with France benefiting from the execution of G&A savings plans. Adecco EMEA, excluding France, returned to growth, with revenues up 3% year-on-year and taking market share. Looking at the larger markets, revenues in Italy were flat, with strong activity in logistics and food and beverages offsetting weak autos demand. Iberia was strong, with revenues up 13%, reflecting strength in flex and outsourcing, as well as double-digit growth from SMEs. Food and beverage, financial and professional services, manufacturing, and autos were strong.

In the U.K. and Ireland, revenues declined by 4% year-on-year, a resilient result given the challenging market environment. While soft demand in logistics and the public sector impacted performance, the business continues to demonstrate adaptability. Revenues in Germany and Austria were flat year-on-year, reflecting a solid outcome in a demanding market. The manufacturing and automotive sectors performed robustly, supporting overall stability. The segment’s EBITA margin of 4.1% was 20 basis points higher year-on-year. The margin reflects client mix and good operating leverage, with productivity up in all territories and support from G&A savings. Turning now to slide nine. Adecco Americas delivered very strong revenue growth of 20% year-on-year. North America revenues increased by 20% year-on-year, improving sequentially and ahead of market trends. The result was driven by strength in flex across all client segments, including double-digit growth from SMEs.

In sector terms, consumer goods, autos, manufacturing, and food and beverage were notably strong. This growth rate shows the continuing progress we’re making with the turnaround of Adecco US. At the same time, we do have work to do on the business mix and cost to serve to restore margins further. In Latin America, revenues grew 21%, with all countries experiencing double-digit growth driven by demand for flex and outsourcing across SMEs and large clients. By sector, financial and professional services, logistics, and manufacturing were strong. The Americas’ EBITA margin of 2.5% increased 240 basis points year-on-year, reflecting higher volumes and operating leverage. Productivity improved, while the segment continues to optimize costs. Adecco APAC remained strong, with revenues up 9% year-on-year and ahead of the market, led by strong demand from SMEs. Revenues rose 8% in Japan, 18% in Asia, and 14% in India.

In Australia and New Zealand, revenues were 3% lower. In sector terms, financial and professional services, consumer goods, food and beverage, and defense were strong. The EBITA margin of 4.7% reflects higher volumes, G&A savings, and modest investment in capacity to capture future growth opportunities. Let’s now focus on Akkodis and slide ten. Akkodis’s revenues were 3% lower year-on-year on an organic constant currency basis and sequentially improved. Consulting and solutions revenues were 1% lower organically, improving by 4% sequentially. By segment, EMEA revenues were 3% lower. France returned to growth, with revenues up 1% and ahead of the market. Aerospace, defense, and autos were strong. Revenues in Germany were 9% lower, driven by market headwinds in autos and despite good momentum in defense. Italy, Iberia, and the U.K. performed well. North America revenues returned to growth, with revenues up 1%.

The business has seen a modest improvement in tech staffing demand and delivered very strong growth in the strategic consulting and solutions segment, with revenues up 45%. APAC revenues were stable, with Japan and China up 2%. Revenues in Australia were 4% lower, reflecting a slow market backdrop. Akkodis’s EBITA margin was 4.5%, 60 basis points lower year-on-year. Excluding Germany, the margin was 6.5%, an improvement year-on-year reflecting solid utilization rates and good cost discipline. Germany’s turnaround is progressing well. Given the market context, the level of targeted savings has risen to approximately EUR 50 million. To date, an annualized savings run rate of approximately EUR 36 million has been achieved, driven primarily by adjusting consulting headcount, which improves bench utilization and G&A savings. Additional savings are expected in Q4. These actions will enable the unit to return to healthy run rate profitability by year-end.

Let’s move on to LHH and slide eleven. LHH executed well, with revenues returning to growth, rising 4% in the third quarter on an organic constant currency basis. The EBITA margin reached 9%, up 240 basis points year-on-year, driven by higher volumes and strong operating leverage, with a 25% increase in productivity. Turning to LHH’s segments, professional recruitment solutions revenues were 7% lower, with the unit taking share in tough recruitment markets. Recruitment solutions revenues were 5% lower, primarily due to an 8% decline in permanent placement. Gross profit was 6% lower, productivity remained flat, and billing FTEs decreased by 6%. RPO activities remained soft. Career transition performed very well, with revenues up 9%. US revenues grew by 7%, and revenues outside the US increased by 11%. The pipeline remains healthy across all geographies, supporting future momentum. Revenues in coaching and skilling rose 40%.

Ezra delivered outstanding growth, with revenues increasing 59% to another record high. General Assembly returned to growth, with revenues up 48%, driven by strong momentum in its B2B business, which focuses on AI-related offerings. Let’s turn now to slide twelve, which shows the Group’s gross margin drivers on a year-on-year basis. Gross margin was healthy at 19.2%, 10 basis points lower year-on-year on an organic basis. Currency translation had a negative impact of 10 basis points. Permanent placement has a 25 basis point negative impact, with headwinds in both Adecco and LHH. Career transition had a positive impact of 10 basis points. Outsourcing, consulting, and other services had a 10 basis point negative impact due to mix in outsourcing and ongoing pressure in Akkodis Germany. Additionally, training, upskilling, and reskilling had a positive impact of 15 basis points, driven by growth at Ezra and General Assembly.

Let’s look at slide thirteen and the Group’s EBITA bridge. At 3.4%, the EBITA margin, excluding one-offs, was 10 basis points higher year-on-year, driven by a 10 basis point negative impact from currency translation, a 10 basis point negative impact from organic gross margin developments, a 40 basis point favorable impact from operating leverage, and a 10 basis point negative impact from Akkodis Germany. In Q3, SG&A expenses, excluding one-offs, as a percentage of revenues, were 15.9%, 30 basis points better year-on-year, reflecting cost discipline, with G&A expenses at 3% of revenues and agile capacity management. Selling FTEs were 3% lower. Productivity, in terms of direct contribution per selling FTE, rose 8%, with all GBUs improving year-on-year. Let’s turn to slide fourteen and the Group’s cash flow and financing structure. The last 12-month cash conversion ratio was strong at 110%. DSO remains best in class at 53.6 days.

The Group delivered cash flow from operating activities of EUR 200 million in the quarter, a EUR 79 million increase versus the prior year period. The cash result reflects strong working capital management, partially offset by increased working capital absorption resulting from improved revenue performance. CapEx was EUR 30 million, and free cash flow was EUR 170 million, an increase of EUR 88 million compared to the prior year period. The Group benefits from a robust financial structure. We have strong liquidity, including an undrawn EUR 750 million revolving credit facility. 80% of debts have fixed interest rates, and there are no financial covenants on any outstanding debts. The Group also has low interest expenses, with a net charge of EUR 13 million in Q3. At the end of Q3, net debt was EUR 275 million, EUR 220 million lower year-on-year.

Since 2021, the Group’s capital structure has included a EUR 500 million hybrid bond, which rating agencies classify as 50% equity and 50% debt. Management is in the process of refinancing this hybrid bond, reaffirming its long-term role in the capital structure. In light of this planned refinancing and to align with rating agency methodology, the Group will now apply 50% equity treatment to the hybrid bond when reporting its leverage ratio. This adjustment does not impact the Group’s credit rating or the net debt calculation. It does, however, ensure consistency and transparency in how leverage is assessed across stakeholders. Applying this methodology, the Group’s end Q3 leverage ratio was three turns. On an underlying basis, strong cash generation and EBITDA improvement in Q3 has reduced the Group’s net debt to EBITDA ratio, excluding one-offs, by 0.3 times sequentially.

The Group remains firmly committed to bringing the net debt to EBITDA ratio to 1.5 times or below by the end of 2027, absent any major macroeconomic or geopolitical disruption. Our capital allocation policy is clear on options for excess capital once we achieve this target. Let’s move to slide fifteen and the Group’s outlook. Based on Q4 volumes to date, the Group expects revenue growth in Q4 to be in line with Q3’s revenue growth, year-on-year, on an organic trading days adjusted basis. For Q4, the Group expects gross margin and SG&A expenses, excluding one-offs, to be broadly stable sequentially. The Group is focused on managing capacity with agility to balance share gain and productivity in mixed markets, in addition to securing G&A savings. The Group is on track to deliver its full-year EBITA margin commitment. With that, I’ll hand back to Denis. Thank you, Coram.

Let me conclude with slide sixteen and key takeaways. In Q3, the Group delivered a further increase in market share, with revenues improving sequentially across all GBUs. At the GBU level, we were encouraged by the strong growth in Adecco US, evidencing traction with their turnaround plan. Meanwhile, the Akkodis Germany turnaround is progressing well, with the unit expected to return to healthy run rate profitability by year-end. In reaching a 3.4% EBITA margin this quarter, we demonstrated good operating leverage. Cash generation was solid. We thank our teams for yet another quarter of rigorous execution. We look forward to sharing the evolution of our strategy and detailed value creation plans at our Capital Markets Day on 26th of November in London. With this said, thank you for your attention, and let’s open the lines for Q&A. Ladies and gentlemen, we will now begin the question and answer session.

I would like to remind everyone to ask a question. Please press the star button followed by the number one on the telephone keypad. If you would like to withdraw your question, please press star one again. One moment, please, for your first question. Your first question comes from the line of Andy Grobler, BNP Paribas. Please go ahead. Hi, good morning. I’ve got lots, but just a couple to start with, if that’s all right. From a cost-based perspective, a couple of things here. As you move into Q4, what are the incremental savings that you expect to drive? Does that include turning that about EUR 16 million lost in Akkodis Germany into a positive? How should we think about that as the right base going into 2026? If you could chat through that, that would be really helpful.

Also, just added to that, does that guide include the currency headwinds that you’ll see in Q4? Secondly, on cash flow, very strong performance through the quarter. Could you just talk through the drivers of that and whether you’re seeing any pressure on payment terms? Has that been incremental through this year? Thanks very much. I think I’ll let Coram answer most of these questions. I’m just going to say a word on payment terms. Yeah, definitely, I think we have pressure from our clients on payment terms. We resist actively to this pressure. I think we are very focused with our teams on managing these kinds of negotiations. We see also our DSO remaining relatively solid. I think we are able to, thanks to the strong relationship that we have with our clients, resist to the maximum on the payment terms.

Requests from our clients. For all the other questions, Coram. Thank you. Thank you, Denis. Thank you, Andy. Actually, let me start with cash, therefore, and build on Denis’s answer. I mean, yes, we do see pressure on payment terms, but our DSO is at 53.6 days. It is quite clearly best in class at a moment where our peers see their DSOs going in the wrong direction. I think it is very clear that we are managing that and managing it very effectively. On the cash flow itself in Q3, I mean, we tried to unpick the drivers. Fundamentally, you have good working capital management, which includes the point I am making about keeping DSO very stable, but also payables, where we have been managing those very tightly and have done for a number of.

Quarters, which is partially offset by the working capital absorption that you see because of the growth that the business is delivering. We know that’s a feature of the way this operates. When you put all of that together, we are very pleased with the operating cash flow of EUR 200 million. It’s up year-on-year, and it has obviously helped us deliver that rolling 12-month cash conversion of 110%. On the cost side, yes, the guide includes FX movements. If you step back and look at what we’re saying, we’re guiding to SG&A being broadly stable. Typically, a seasonal movement between Q3 and Q4 actually increases SG&A a little bit, usually between EUR 10-EUR 20 million. You can see by saying that we will hold it stable, we are confident we will continue to deliver savings. Part of that comes from Akkodis, as you mentioned. We have.

Real estate optimization, which will flow through. We also have further savings in other parts of the business that we have been activating through the year. You saw the benefits, for example, on the margins in France. There are other territories where we continue to manage this. By the end, and I am now just moving on to Akkodis Germany, the restructuring there is progressing well. We have EUR 36 million of run rate savings locked in. We have clear plans for how we get to a run rate of EUR 50 million. That will deliver healthy run rate profitability for that business by the end of the year. I think it is important to make the point that we are not presupposing an improvement in the top line of that business in the short term.

We’re managing the restructuring to make sure that we see healthy profitability based on the market conditions that we now see. Maybe one last word. The top line in Akkodis Germany is being stabilized. I mean, we can go in details around what we do very actively in Germany on our turnaround plan, but there’s also an element of stabilization of top line, of course. Thanks, Andy, for your questions. Thank you. Just to add, Coram, best of luck with the new role. Thank you, Andy. I appreciate it. Your next question comes from the line of Remi Granier of Morgan Stanley. Please go ahead. Morning, Denis. Morning, Coram. A few questions on my side, if I may. First, taking a step back and looking at your outlook for stable growth on the same com base.

It feels like, similarly to some of your competitors, you are assuming that the recovery of organic growth we’ve seen over the last few quarters is stalling a bit or kind of stabilizing. What makes you slightly more cautious compared to the sequential improvement we’ve seen over the last few quarters? I just wanted to understand if there was anything there. If so, what part of the business, which divisions do you think could improve, remain stable, or deteriorate in Q4? Just to have a little bit of breakdown of that stable organic growth comment for Q4. The second question is on the US organic growth. Obviously, I mean, very impressive. Can you just elaborate a little bit on this? What are the drivers in terms of type of clients?

If you think it is a broad-based recovery or has it been driven by any specific contract win and on the market share gains in that country, why do you think it is the case that you are winning volumes away from your competitors? The last one would be just maybe a little bit of a teaser on end of November, Denis, if you wanted to share with us a few of the topics you think could be important to address during the CMD. Thanks. Thank you, Remi. I think I am going to take the three questions. On the outlook, actually, we are pragmatic. We are looking at our flex volumes data. Let us say they are nicely up year on year. They continue to do so, but we have only a few weeks of data. We are definitely, we see some momentum. We see an improving momentum in Akkodis.

We have always been, I must say, we have always been relatively cautious. When we see a trend, we talk about it, but I do not want to overpromise and create expectations. We have volumes, as I said, nicely up, but it is not stalled, definitely. It is not stalling. It is just improving nicely, but this is reasonable. It is not. I am continuing to be positive about what we have ahead of us. As far as the U.S., yeah, actually, it is broad-based. It is also the result of our turnaround. There is so much more to do, let us be clear. We are pleased with the growth. We were plus 10% in Q2. We are now plus 20%. We have returned the U.S. to be profitable, which is good. We are growing ahead of the market. It has been systematic.

It’s been rigorous execution on how we improve branch profitability, how we see that the incentives that we’ve put in place in the branches that are boosting both flex and perm are delivering results. We’re focusing on increasing the traction with MSP business. We are really, really focused on cutting our cost to serve to preserve our competitiveness. We’ve moved into more centralized delivery, nearshore, offshore delivery. We have adjusted also our G&A costs. So, I mean, all that. It’s a series of things that we’ve applied rigorously and systematically for now almost three years. And it starts to deliver results, which is good. The sales growth is broad-based. We grow large accounts, plus 36% this year. We also grow SME, plus 12%. So that means both drivers are executing nicely. We have a nice development of new accounts in branches.

If I look at the number of new accounts that we had in Q3 versus Q2, it’s plus 19%. We also have a healthy development of new clients in branches, okay? We’re not there yet. Let’s be clear. We start from a low base because what we’ve been through. Encouraging, good, people deliver. As I said, it’s encouraging, but I wouldn’t call it impressive. It’s good numbers. We’ve got to confirm over time, but I’m confident in what we’re delivering. Now, as far as the CMD, I think we’re going to deep dive on some of the drivers that show that, the proof points of the way the strategy is delivering results. To give you more insights, more granularity in what the things that you do. And also, of course, we’re going to focus on.

Some of the transformative actions that we are layering on top of the way we run the business. We also, of course, as you can imagine, have a deep dive on Akkodis because it is going to be Yoko on stage to explain his value creation plan and how confident he is to improve both the top line and the margins at Akkodis. This is what we are going to talk about. Great. Thank you very much. Thank you, Remi. Your next question comes from the line of Suhasani Varanasi of Goldman Sachs. Please go ahead. Hi, morning. Thank you for taking my questions. Just a few for me, please. On perm trends, the declines have been easing for a couple of quarters now. Can you maybe give some color on whether you are seeing things stabilizing at these low levels?

The second one, just to clarify again on working capital, the strengths that were seen in Q3, was there any timing effect that helped, especially on the payable side that is potentially going to unwind in Q4? The last one on Akkodis restructuring, how much more should we expect on restructuring costs in the next quarter, please? Thank you. Thanks, Christina. I’ll take the question on perm and then Coram will go on working in Akkodis Germany. On perm, yes. I mean, we’ve been, and it’s an industry, it’s a global industry challenge, and we see it both in Adecco and LHH. Adecco is minus 7% on perm. LHH is minus 8%. I would not call it yet stabilized, definitely. I think it reflects fundamentally, it reflects the fact that there’s little visibility for many of our clients.

When you do not have visibility because of the, let’s be clear, the unpredictability of geopolitics and some tariffs and things like this, clients do not dare to recruit permanently. When you recruit permanently, it is because you are confident on the things that you have ahead of you. Because even in markets like the U.S., where it is relatively easy to recruit and lay off, you do not do that if you do not have visibility. I think an interesting point is we see this momentum on perm coming up. That says something about the mindset of our clients. Though we have seen a little bit of pickup in September, particularly in the U.S., there are pockets here and there in the finance sector, particularly where we have seen a pickup. It is still not massive. I would not call it a change in the trend.

Of course, on the mid-long term, I’m confident that perm will come back because we will. This is a market that we like. Companies, even with AI, that we need people and that we need experts to recruit permanently. This is a moment where we’re a bit low on that business. Progressively, I believe it will recover, but not now. Coram? I’ll pick up on your other two questions. On the working capital side, we had timing effects in Q3 2024, if you remember, which did work against us and then helped in Q4 2024. There are no material timing effects in Q3 2025 that will unwind in Q4. This is a pretty clean set of numbers in cash terms in Q3. I think to the point I made earlier, it’s really all about tight working capital management.

Payables, obviously, we’ve mentioned, but also really ensuring that we manage that DSO in a best-in-class way. On the one-off costs, we’re forecasting EUR 25 million in Q4. Almost all of that will be related to Akkodis Germany. It is a sign of how rapidly we are moving on this restructuring plan so that we can make sure that we get that business back to healthy run rate profitability by the end of the year. Thank you very much. Your next question comes from the line of Simon Van Aken of Kepler Cheuvreux. Please go ahead. Hi, good morning. I have a question on the gross margin contribution from your adjacent services. We saw that training, upskilling, and reskilling was up only 1% organically but drove a 15 basis point margin improvement. If I’m correct, then this segment has a gross margin of roughly 60% historically.

Would you please elaborate how this segment is contributing to this improvement in gross margin? Has the gross margin in this segment moved up, or where do you see the long-term potential for the gross margin of this segment? Sure. I will pick that one up. It is really important to understand the underlying growth number that you have highlighted, Simon, because there is actually an exit in that number of something called the US Acoutis Academy. It is relatively small in the context of the group, but it does impact the growth rate in this segment. On an underlying basis, training, upskilling, and reskilling is up 28%, which I think gives you a real sense of how strong the growth is in Ezra, in GA, and in the other parts of our business, which contribute training services, etc. They do all, and certainly GA and Ezra have strong gross margins.

This is very much a characteristic of this type of business. I think it gives you a real sense of how much value is created there. Because of the growth rates, because those businesses are becoming material in the context of the group top line, they are having a material impact on the gross margin, and that is what is dropping through in Q3. I would expect those businesses to continue to contribute to positive gross margin. Yeah. To your point, Coram, I think I am very pleased with the momentum that we see in GA. GA is having great pipeline and great development in how we can accompany our clients on their own AI evolution. There is a lot of appetite for the type of services that GA provides in terms of how we can, how we focus on.

Specialties, roles that are impacted by AI, and we can embark our clients on the journey. In Ezra, I mean, there is a significant market potential, and we are scaling this platform. It is really a platform business that we are scaling now with a really high gross margin. Ezra has become extremely relevant in most of our client transformation, the cultural transformation, the AI transformation. We have great expectations for the growth of that business moving forward with very, very healthy gross margins. Yes. Thank you very much. Your next question comes from the line of Rory McKenzie of UBS. Please go ahead. Good morning. It is Rory here. First, we want to ask about the growth outlook for both career transition and the training businesses after a very strong quarter.

Career transition, in particular, had been bumping up against high competitors for a while, and clearly, it’s now jumped past that. Is that new contracts ramping up or anything else one-off in there? Should we expect similar growth in Q4 and into the start of next year? Secondly, given the other announcements today, I feel like I have to ask Coram about trends in autos specifically. When you look at the Adecco GBU and the strength this quarter, can you just talk about the performance of the global verticals like autos, logistics, manufacturing? Given all the contract wins you’re kind of talking about, are there any commonalities in sectors you think you’ve targeted well or are doing well in? What lessons can you draw from that? Thank you. Thanks, Rory. As far as the growth outlook, I think we have.

We grew 9% this quarter in CT. We have a bit of a difference. The US is growing 7%. The rest of the world is growing 11%. It is still very high numbers. The pipeline is still quite healthy. To your question, it is mostly new clients that we win. I mean, we have a constant sales team on the field. I remind you that we are the world leader by far, and we have an excellent reputation. The way we have also digitized our business, the way we have now people on the platform, all the people that we accompany on the platform with very efficient AI support, and that is a good thing. As I said, in training and upskilling, GA is growing 48%. Ezra is growing 59%. Are we going to sustain this super high level?

I cannot promise, but definitely strong double-digit growth for Ezra and GA. No problem. I would say for the moment, given the pipeline that we have in CT, I think we can expect modest growth, maybe mid-single digit or low single digit. Let’s be clear, we are on very high levels, and we’ve sustained these very high levels of revenue for quite some time. I pass over to Coram to speak about autos. Thank you, Denis. You did make me smile, Rory. Thank you. To be clear, I would have been happy to answer a question on autos at any point during our discussions. A couple of points on this. Firstly, when we look at Adecco, the growth is very broad-based. We have a number of sectors which are all up across multiple countries.

I think it is a sign of the momentum that we have, the share that we are taking, and the way, as you know, that we have been managing the business with agility to really identify growth wherever we can. On autos, in Adecco, it represents about 8% of the Adecco GBU. It is up 10% year on year. We see growth in France, Spain, US, and Germany. Germany is up 3%, which is encouraging for me, but partially offset by the one area, the one country where we do see a bit of pressure right now, which is Italy. I think the key to this is that cars are still being produced. There is obviously impact from all of the changes that are happening, but there are still models that are doing well.

Our teams are very effective at identifying which manufacturers to partner with, which sites they should be targeting, and in particular, therefore, which models have momentum and will require flexible labor. I think that is really strongly demonstrated by that Adecco Germany +3% number. Obviously, the other side of the autos coin for us is Akkodis. That is down 7% year on year. Interestingly, and I’ll focus on the two big markets, France is up. We have had some really strong successes with a number of French manufacturers, which I think demonstrates the strength of the offering. In the short term, there continues to be pressure in Germany as the German OEMs are reconfiguring their product plans and looking to move more of their R&D work outsourced and offshored. That is what gives us confidence that longer term, the demand for the Akkodis services is there.

France is a really good proof point for that because that expertise is required. In Japan, with the also Japanese carmakers, Akkodis is also growing nicely. It is also a complement. We said something about the problem being more focused on the German OEMs than the rest of the whole industry. Now, look, we manage these sectors, as you know, very forensically. I think we’re pleased with the progress that we see. The final comment I’ll make is on logistics, which you flagged. That is around 9% of the Adecco GBU. It is down year on year, around 8%. That is almost a one-percentage point headwind to the group as a whole. This is the nature of this sector. Logistics partners manage demand very carefully. They go through periods where actually they increase the number of temps that they use.

They go through periods where they reduce and they insource. Actually, if we look at Adecco, there are some of our countries which are growing in logistics, for example, Italy and Japan. There are several countries where right now we’re declining slightly, such as France, Germany, and Spain. That very much is the nature of that sector. We’re well-positioned, and it will be healthy in the medium to longer term. My final point, please remember the broad-based nature of what’s happening in Adecco. It’s really important. Great. Thank you, Coram. All the best. Thank you, Rory. I appreciate it. Your next question comes from the line of Michael Roth of Van Lanschot Kempen. Please go ahead. Yes. Hi, good morning. I just have a follow-up on the training, reskilling, and upskilling business. You said it’s up 28% when you exclude the inorganic effect there.

But still, coaching, skilling, LHH is up 40%, and Ezra or G&A up 48%. What’s actually dragging the whole thing down? I’m missing some part of that business. That would be the first one. The second question is regarding U.S. You said manufacturing is a driver. I was just wondering which type of manufacturing activities you’re talking about and whether that’s a trend that we should expect to continue in light of the whole repatriating of manufacturing to the U.S. And then finally, if you can make a comment on the Akkodis defense exposure and how that’s working. Thank you. I think, Coram, we take the first question, and I’ll take the other two. Yeah. Very quickly on this one because I think we are very pleased with 28% underlying growth.

I think there is real strength in Ezra and GA and this offering as a whole. There are two pieces which are bringing that growth rate down from the 40-50% that you see in Ezra and GA. There is some more traditional coaching business, which is effectively being substituted by Ezra. That is an opportunity for us long-term because the digital nature of Ezra’s coaching platform actually expands the addressable market. As we have talked about before, there is still a small piece of B2C business in General Assembly, which we are sunsetting, and in the short term, brings the growth rate down. Those are the two other pieces. I think you will agree the 28% underlying growth is a strong number. As far as the manufacturing is concerned, we are growing in the U.S., we are growing 11% on overall manufacturing, I would say, in.

The U.S., which is good. It’s broad-based. I mean, there’s a lot of, from the sort of mid-size manufacturer that can serve a variety of industries to the larger piece. We exclude, if you want, in that category, we exclude the manufacturing that are purely sector-related, like automotive or aerospace or others. So far, we’ve seen it’s a series of quarters where we’ve seen manufacturing relatively solid in the U.S. Is it related to reshoring? I am not fully sure. We have seen some announcements, but before you build a new factory or before you change your production strategy, it takes a bit of time. Probably over time, given the promises that we’ve heard from so many companies to increase their investments in the U.S., this will be supportive of our manufacturing business. I would say it’s probably a bit early to link it to reshoring.

It’s just like we have, as I said, we have our salespeople really, really on the field, close to our clients, and making sure that we fill every job requisition that we receive. That’s the point. The motto that we’ve had for several years now is, "I don’t care whether the economy is good or bad. Our markets are fragmented. If you are close to your clients, you can win share. And if you deliver faster than your competitor, then you gain share." That’s how we win. Now, on the Akkodis defense, yes, we see momentum. It’s the overall, the aerospace and defense sector overall is growing 11% year on year. It’s supported both by the aerospace dynamic and also with the pickup in defense. We say, "I see it across the board." It’s not yet, I mean, the.

Full investment that has been announced, for example, in Germany is not fully in place, but we see a pickup. Let’s be clear, we are a key tier-one supplier for engineering services to all the major players, particularly in Europe. That puts us in a very good place. They also want to consolidate their tier-one list, and we are in a very, very good place to continue to grow there. Okay. Perfect. Thank you. Thanks, Coram, for the very transparent and clear communication over the years, and all the best. Thank you. I appreciate it very much. Your next question comes from the line of Will Kirtner of Bernstein. Please go ahead. Thanks very much. I just had two questions, please. Just on Akkodis.

In terms of the U.S. and France, is there anything to do on cost there, or is that just the case of waiting for end markets to get better, to continue to improve? The second question was just the clarification on the 1.5 times leverage target by the end of 2027 and how we think about that with the new hybrid definition. Whether that, when we start to think about return of surplus capital, just which calculation you’ll use related to the hybrid. Thanks. I’ll take the first one, and then Coram would be super happy to talk about the second one. Yeah. U.S. and France, I mean, first of all, we are laser-focused on our cost base to ensure our competitiveness. We are also accelerating, and you will talk about that at the CMD, accelerating our offshoring capacity to make sure that.

We provide the best possible service to our clients. There’s a big need from our clients for us to go offshoring. That’s good. We are super focused on the cost base. France is back to growth, right? 1%, which is good. The U.S., I mean, we have a great dynamic with consulting and solutions. We grow 45%, and the tech staffing is improving. It’s sequentially okay. If you go back to North America, Akkodis was minus 9% in Q1, minus 4% in Q2, and now plus 1% year on year. It is improving. We’re still working on our cost base. It’s too high. We are accelerating, particularly on the tech staffing. We are accelerating the way we use offshore to recruit faster and at more competitive costs. This is what we’re doing. I think I’m positive on both markets.

Let me pick up on the net debt to EBITDA question. Just to reiterate why we’re doing this. We introduced the hybrid in 2021 as part of our capital structure. Obviously, the rating agencies from day one have given us the equity credit on 50% of it. We are in the process of refinancing, which very much reinforces the long-term nature of this instrument in our capture. It is the moment to align our reporting with rating agency methodology. It makes sense to do it. It is common practice. Many companies do this. As you can see in the press release, we’ve been very transparent in terms of the numbers, both before and after the change on the leverage ratio. The target remains at or below 1.5 times net debt to EBITDA. It is important to remember it is at or below.

We are leaving it there for two reasons. One, it reflects our commitment to the investment-grade credit rating. Obviously, that credit rating is assessed and calculated, including the hybrid, so it makes sense. As we know, for a business of this size and this nature, the 1.5x is a good point where you reach efficiency on cost of capital. We will leave the target where it is. We have been transparent in the move on the reporting change, and we are very committed to achieving that target. Perfect. Thank you. Your next question comes from the line of James Rowland Clark of Barclays. Please go ahead. Hi there. Thank you.

Just on the very strong North American performance, which is obviously well ahead of market growth rates at the moment, does this sort of normalize back to market growth rates in the second half of next year or even lower on the tough constant? I guess could you just express your confidence that you could outperform the market on a sustainable basis there beyond that? Just on the CFO change, I’d just like to know whether this maybe presents an opportunity for any slight changes to how to think about the financial guidance or use of capital in the future. And then finally, are you confident you can hold on to the broader cost savings, the structural cost savings in the business to deliver ahead of the market organically next year? Thank you. Thank you, James.

Yeah, I think the North America, as I said, I mean, I do not think we will grow 20% every quarter for the years to come. The objective is to always be ahead of the market. Is it going to—are we going to normalize a little bit of growth, probably? Do we want to be ahead of the market? Yes, that is the objective. You know that the incentives of our executives and people are linked to doing better than the competition. Definitely, we will push hard to always be ahead of the market. Sometimes we get there, sometimes we do not, but that is the absolute focus of our teams. It is not only North America. It is everywhere. As far as the CFO change, I mean, we will go in depth on the financial strategy and the guidance.

In the capital markets today, but you can expect continuity because this is what we’ve been told. I think. What we’ve been—sorry, what we have been saying. You’ve understood that this was a very smooth transition. It was well prepared. That is the idea. It is all about the continuity. Yes, I mean, the structural cost savings, we will continue to be laser-focused on cost. Both to achieve and to secure our gross margins. Cost to serve is an absolute obsession because this is how we deliver our competitiveness. That is why, and Christophe will talk about that in the CMD, that is why we have accelerated our talent supply chain delivery because that works. Of course, we are absolutely laser-focused on the G&A. As you could see, we delivered on our promise to deliver the full savings, EUR 174 million net of inflation, and we have kept that line really strictly.

Moving forward, our G&A will be less than 3.5% of revenue. That is the sort of the line we have set, and we will stick to it. Thank you. Thank you, James. There are no further questions at this time. With that, I will turn the call back to Denis Machuel, CEO, for closing remarks. Please go ahead. Thank you very much. Thanks again to all of you for having attended this call where I think we presented strong quarterly results. These results evidence further the strength of our execution. We believe we are leading a recovery in our key markets. That is encouraging. While there is still a lot to do, all our turnaround plans are delivering according to our expectations. That is encouraging for the future.

We are on track, as you understood, to meet our margin commitment for the full year, and that was very important for us. We are looking forward to seeing you at the CMD in London. I mentioned what we are going to talk about. It is going to be also the opportunity for you to say goodbye to Coram and also to meet Valentina. They will be both on stage, as you can imagine. You will also see with your eyes how we are living through a very smooth transition that we ensure the full continuity. As you could hear, I am confident in the future. We are building a very strong group. We will talk a lot about that in the CMD. See you there. Thank you so much. Have a great day. Ladies and gentlemen, this concludes today’s call. Thank you for participating. You may now disconnect your lines.

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