ManpowerGroup Inc. Q3 FY2025 earnings call

• After 11 consecutive quarters of organic constant currency revenue declines, Manpower Group crossed back over to growth during the third quarter. The stabilization of demand in recent quarters in North America and Europe, despite ongoing tariff uncertainty, was a key factor. - Manpower brand had growth in North America, Latin America, Italy, Spain, Belgium, Poland and APME. Experis is beginning to see early signs of stabilization in professional and IT hiring, with margin improvement supported by modernization. Talent solutions trends are improving with managed service provider offering driving revenue growth. - Advancing digitization and standardization agenda across back and front office, with global business services initiatives streamlining operations. Preparing to apply disciplined approach to front office to optimize processes. - Sophie AI platform is driving measurable gains, with 30% of new client revenue derived from AI rated probability, and recognized for market leadership.

Reported revenue for the quarter was $4.6 billion, down 2% year-over-year in constant currency. System-wide revenue was $4.9 billion. On an organic constant currency basis, the Manpower brand had growth of 3% in the quarter, the Experis brand declined by 7%, and the Talent Solutions brand declined by 8%. The Americas segment comprised 24% of consolidated revenue, with revenue of $1.1 billion, an increase of 6% year-over-year on a constant currency basis. Southern Europe comprised 47% of consolidated revenue, with revenue of $2.2 billion, a 1% decrease in organic constant currency. Northern Europe comprised 18% of consolidated revenue, with revenue of $817 million, a 6% decline in constant currency. The Asia Pacific Middle East segment comprised 11% of total company revenue, with revenues of $521 million, an increase of 8% in organic constant currency.

• Forecasts earnings per share for the fourth quarter to be in the range of $0.78 to $0.88. - Constant currency revenue guidance range is between a 2% decrease and a 2% increase, midpoint is flat revenue trend. - EBITDA margin for the fourth quarter is projected to be flat at the midpoint compared to the prior year. - Effective tax rate for the fourth quarter is estimated to be 46.5%.

• Geopolitical tensions remain elevated, economic and geopolitical uncertainty pose risks to actual results differing from forward-looking statements. - Uncertainty regarding policy environment, consumer sentiment, and tariff uncertainty in Europe and North America. - Political turmoil in France and its impact on employer sentiment and business decisions.

Q: My first question is about when business confidence improves. So this is like beyond what you just guided for fourth quarter '25, would you expect kind of more of an early cycle pickup in flexible staffing volumes? And then also, Jack, if you could just comment on the gross margins that you talked about in the prepared remarks. Like is it this kind of an odd time where we're seeing softer outplacement and softer perm at the same time?

A: Andrew, and yes, no, it is a bit of a strange time in many labor markets in Europe and North America. As you heard me characterize it in our call, it's like a frozen labor market. There's very little hiring going on, and there's very little workforce reductions going on. And we see that, of course, reflected in both our perm and RPO numbers as well as in the Right Management business also. But what's been very encouraging to us, though, is that despite this and despite PMI still being below 50 in many of our major markets, we're starting to see a distinct stabilization and growth in Manpower, which is what we would hope to see when the markets bottom out. And to your question, if employer confidence returns, we are hopeful that, that then would mean that we see a return to industry dynamics where we expect to see better Manpower growth and the rest of the brands also benefiting from that improved environment.

Q: Maybe, Jack, if you just talk about the trends you saw in the quarter. And I guess I'm wondering if the quarter was even throughout or if you saw any volatility because of kind of what's happening in the economy?

A: Sure, Kartik, I'd be happy to talk to that. So I think if we look across our major markets, probably starting with the biggest one being France, in line with what I referenced in my prepared remarks, we actually saw improvement in the trend during the course of the third quarter in France, where you see on an overall basis, the revenue at that minus 5%. But as we exit it, it was minus 4%. So we did see it start to improve in the month of September. You actually saw that in some of the industry data that was published as well. And that's a positive sign. And I would say as we look at October data, it continues to hold in that space as well. So a slightly improving trend from where we started the third quarter here into the fourth quarter. And I'd say, similar with Italy as well, I think Italy, we saw an improving trend in the month of September as well as we went through the course of the quarter. And as we look to the fourth quarter, we would expect that rate of revenue growth to improve in Italy as we go forward. And then I'd say in the U.S., I'd say there was probably a little more stable. I think there's a little bit more volatility in the U.S. just due to some of the year-over-year. We had -- as I've talked about previously, we had some very large RPO volumes from select projects from select clients in the year ago period that completed. So that created a little bit of volatility in the year-over-year. But overall basis, I'd say the U.S., the Manpower business grew very steadily during the entire quarter. And I'd say the Experis business was more stable-ish in terms of activity levels during the quarter. I'd say those big ones that I referred to, and it kind of reflect what we saw on an overall basis in terms of the overall revenue trends.