ManpowerGroup Inc. Q2 FY2026 earnings call

### Overall Q2 2026 Performance - Delivered stronger-than-expected results, with reported revenue of $4.9 billion (6% constant currency growth) and systemwide revenue (including franchise revenue) of $5.3 billion. Adjusted EBITDA was $103 million, a 15% constant currency increase year-over-year, with an adjusted EBITDA margin of 2.1% (up 10 basis points year-over-year). Adjusted EPS was 99 cents, above guidance midpoint. - Completed the sale of the Jefferson Wells U.S. business during the quarter, as part of portfolio optimization to prioritize higher-return core opportunities.

### Global Strategic Transformation Program - Launched an expanded global transformation program earlier in 2026, targeted to deliver $200 million in permanent annual cost savings by 2028. The program is on track, with $20 million in savings expected to be realized in 2026, $80 million in 2027, and full $200 million annual savings in 2028. Restructuring and transformation costs are expected to remain between $10 million and $15 million per quarter through the end of 2026. - The program focuses on creating a more efficient cost structure, redesigning front-office sales and recruitment processes to boost productivity, and aligning capacity with current client demand.

### AI Integration & Commercial Strategy - **Internal AI productivity improvements**: Scaling AI-powered sales targeting to pinpoint high-conversion opportunities, on track to reach 70% of company revenue by the end of 2026. Also scaling AI-powered screening and automated interviews, which has delivered a 67% reduction in time-to-fill and improved candidate access (30% of interviews are now conducted outside standard business hours), also on track to cover 70% of revenue by year end. - **New commercial AI opportunities**: Leveraging strategic partnerships with AI and technology leaders (including SoundHound AI, IBM, Accenture, SAP, and Microsoft) to deliver end-to-end AI solutions for clients. Launched *Accelerate Workflow* built on IBM Watson X Orchestrate, which combines AI technology implementation, workforce transformation, specialized AI talent, and ongoing managed services to help clients move beyond AI pilots to scalable deployment. The company expects $50 million to $100 million in partnership-driven revenue in 2026, with a strong pipeline of qualified new leads.

- Focused commercial strategy on prioritizing high-demand verticals (manufacturing, automotive, aerospace, logistics, retail, and AI/technology services) and geographies, to capture market share and drive profitable growth. The company maintains disciplined pricing and client selection to support stronger long-term returns.

### By Business Segment - **Manpower Brand**: 8% year-over-year organic constant currency revenue growth, accelerating from 6% growth in Q1 2026. It comprises 65% of total consolidated gross profit, with 5% year-over-year organic constant currency gross profit growth (up from flat growth in Q1). - **Experience Brand**: 2% year-over-year organic constant currency revenue decline, an improvement from the 9% decline in Q1. It comprises 19% of total consolidated gross profit, with a 6% year-over-year organic constant currency gross profit decline (improving from an 11% decline in Q1). - **Talent Solutions Brand**: Flat year-over-year organic constant currency revenue, improving from a 1% decline in Q1. It comprises 16% of total consolidated gross profit, with a 4% year-over-year organic constant currency gross profit decline (improving from a 5% decline in Q1). Within the segment: RPO revenue was stable sequentially, MSP delivered solid growth, and Right Management saw a slight decline.

### By Geographic Segment - **Americas**: 25% of total consolidated revenue. Q2 revenue was $1.2 billion, representing 14% year-over-year organic constant currency growth. Adjusted OUP was $45 million, with an OUP margin of 3.7%. The U.S. (the segment's largest market, 59% of segment revenue) delivered 8% organic revenue growth, with 16% revenue growth for the Manpower brand, flat revenue for Experience, and 6% revenue growth for Talent Solutions. - **Southern Europe**: 47% of total consolidated revenue. Q2 revenue was $2.3 billion, representing 4% constant currency growth. Adjusted OUP was $79 million, with an OUP margin of 3.4%. France (51% of segment revenue) was flat year-over-year, while Italy delivered 6% days-adjusted constant currency growth. - **Northern Europe**: 17% of total consolidated revenue. Q2 revenue was $825 million, representing 2% organic constant currency growth. Adjusted OUP was $2 million, marking three consecutive quarters of year-over-year OUP improvement after prior restructuring actions. The UK, the segment's largest market, returned to 2% revenue growth. - **Asia-Pacific Middle East (APME)**: 11% of total consolidated revenue. Q2 revenue was $519 million, representing 5% constant currency growth. Adjusted OUP was $24 million, with an OUP margin of 4.6%. Japan, the segment's largest market, delivered 4% days-adjusted constant currency growth.

- **Q3 2026 Organic Revenue Growth**: Guidance midpoint of 6% organic days-adjusted constant currency growth, matching the rate achieved in Q2 2026, with a range of 3% to 7% constant currency growth (5% at the midpoint before adjusting for business days and the Jefferson Wells disposition). The U.S. and Japan are expected to see similar growth rates to Q2, France is expected to be flat to slightly up, and Italy is expected to deliver low-to-mid single-digit growth. - **Q3 2026 Earnings**: Adjusted EPS is guided to a range of $0.96 to $1.06, including a 2 cent per share unfavorable foreign currency impact. EBITDA margin is projected to increase 10 basis points year-over-year at the midpoint. - **Q3 2026 Gross Margin**: Expected to be stable at a midpoint of 16%, including the full-quarter impact of the higher-margin Jefferson Wells disposition. Gross margin has remained stable between 16.0% and 16.1% through the first three quarters of 2026, indicating underlying margin stability. - **Free Cash Flow**: Management expects strong free cash flow generation in the second half of 2026, following significant year-over-year improvement in the first half.

- Forward-looking results are subject to known and unknown risks from ongoing economic and geopolitical uncertainty, which could cause actual results to differ materially from projected guidance. - Revenue and margin performance can be impacted by ongoing shifts in business mix during the early stages of demand recovery, which has driven gradual year-over-year staffing margin declines to date. - Sourcing enough skilled talent for high-demand AI and infrastructure-related roles could create capacity constraints, though the company notes its existing upskilling academies are helping meet current demand.

Q: Can you share quarterly demand trends in your largest markets (U.S. and France), and have you seen tangible improvements in fill rates and time-to-hire from your AI-powered screening tools? A: The U.S. saw strengthening revenue momentum throughout Q2, with 16% Manpower brand growth and eight consecutive quarters of growth, while Experience returned to flat revenue after prior declines. France was stable throughout the quarter, in line with broader industry trends, and Italy and Japan also saw steady growth. The company has recorded a 67% reduction in time-to-fill after nine months of rolling out AI screening tools, with scaling on track to reach 70% of revenue by year end.

Q: How much of Manpower's five consecutive quarters of growth comes from underlying market recovery versus company-specific actions, and how will this balance evolve next year? A: Management notes the company is outperforming broader market growth across most key markets, driven by deliberate company actions. These include strategically shifting focus to high-growth verticals and geographies, and improving productivity via AI tools that enable more targeted sales efforts. The company's disciplined cost structure and portfolio optimization also support stronger performance independent of broader market cycles.

Q: When will gross margin stabilize and begin improving, after the recent sequential decline driven by mix shifts? A: The year-over-year staffing margin decline narrowed from 70 basis points in Q1 to 60 basis points in Q2, with sequential gross margin improving from 16.0% to 16.1% even after absorbing the 10 basis point impact from the Jefferson Wells disposition. Pricing remains stable and rational, with permanent recruitment margin already improving. Management expects gross margin to remain stable around 16.0-16.1% through Q3, and will see improvement as higher-margin segments like Experience and permanent recruitment continue their recovery.

Q: What is the timing of the $200 million in permanent cost savings from the transformation program? A: The program remains on track: $20 million in annual savings will be realized in 2026, with slightly more savings weighted to the second half of the year. $80 million in annual savings is expected in 2027, with savings weighted more heavily to the second half of that year. The full $200 million in annual permanent savings will be realized in 2028, with quarterly transformation costs remaining between $10-15 million for the rest of 2026, in line with prior guidance.