REG - SThree plc - FY25 Q1 Trading Update

SThreeAnnouncement

18/03/2025 07:00

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RNS Number : 0222B  SThree plc  18 March 2025

18 March 2025

 

SThree plc

 

FY25 Q1 Trading Update

 

 Stable performance in challenging conditions

 

SThree plc ("SThree" or the "Group"), the only global specialist talent
partner focused on roles in Science, Technology, Engineering and Mathematics
('STEM'), today issues a trading update covering the period 1 December 2024 to
28 February 2025.

 

Q1 Highlights

 

 ·             Group net fees down 15% YoY((1)), consistent with Q4 FY24 performance against
               the backdrop of the ongoing challenging market conditions.
 ·             Contract (84% of net fees) down 15% YoY, whilst Permanent down 13% YoY.
 ·             Contractor order book((2)) of £168 million, down 7% YoY, a reduced rate of
               decline versus FY24 year-end, continuing to represent sector-leading
               visibility with the equivalent of circa five months' net fees.
 ·             Robust balance sheet with net cash of £45 million at 28 February 2025 (30
               November 2024: £70 million), reflective of the buyback programme, and as
               previously disclosed, temporary impact from clients' payment processes
               transitioning to our new billing system. Net cash expected to return towards
               normalised levels over coming months.
 ·             Share buyback programme of up to £20 million launched in December, with
               £10.5 million purchased as of 17 March 2025.
 ·             Technology Improvement Programme (TIP) remains on track and on budget, with a
               key focus this quarter on enhancing functionality and the productivity of our
               sales consultants.
 ·             Performance for FY25 expected to be in line with previously announced £25
               million PBT guidance((3)).

 

Timo Lehne, Chief Executive, commented:

 

"The Group has delivered a stable Q1 performance consistent with Q4 FY24
despite the anticipated challenging market conditions driven by the ongoing
global political and economic conditions. New business continues to be soft,
however extensions remain robust across our core STEM Contract service
offering, providing sector-leading visibility. Our Employed Contractor Model
business, which represents 47% of our Contract focus continues to outperform
Independent Contract, and we continue to see good opportunities in this space
to leverage our global scale, skills focus and first-mover advantage to
deliver flexible solutions to our customers. Within Permanent, we have seen a
sequential improvement, particularly in the US.

 

A key focus in the period has been further embedding our state-of-the-art
technology infrastructure through our Technology Improvement Programme across
our live regions, representing 80% of our global operations. As a result, we
have been able to refine backend processes and client integrations, and
deliver significant enhancements to the platform, including the launch of a
range of new features and AI-enabled tools to help drive further efficiencies
and the productivity of our teams.

 

"As we look ahead, business leaders are continuing to navigate an evolving
macro-economic backdrop which is weighing on investment decisions. Despite
this, we are highly confident, supported by independent industry
analysis((4)), that the future economy is based on hard-to-find STEM skills,
and we are ensuring SThree is in the best place to deliver on this demand."

 

Business performance highlights

 

Amid the persistent challenging trading conditions, Group net fees were down
15% YoY reflecting the continued softness in new business across Contract and
Permanent, partially offset by strong Contract extensions. The sequential
improvement in Permanent versus Q4 FY24 was led by a lower rate of decline in
Germany and growth in the USA.

 

The Group's Life Sciences net fees were down 11% YoY, whilst Engineering net
fees were down 15% YoY against a record prior year performance. Technology
declined 17% YoY reflecting the tough market conditions.

 

Regionally, the challenging macro-economic conditions resulted in declines
across the Group's three largest markets, which now represent 73% of net fees.
However, our two largest markets, being Germany and the USA, delivered a lower
rate of decline versus Q4 FY24. The performance in the Netherlands reflected
lower levels of demand for Engineering and Technology skills versus record
levels in the prior year.

 

Group period-end headcount was down 5% from the end of the last financial year
attributable to the careful management of natural churn, whilst being highly
selective about where we choose to hire.

 

The Group continues to maintain a robust balance sheet with net cash of £45
million at 28 February 2025 contributing to total accessible liquidity of
£100 million((5)). This is reflective of the buyback programme, and as
previously disclosed, temporary impact from clients' payment processes
transitioning to our new billing system, including the impact of the recent
roll-out of TIP to the Netherlands. Net cash is expected to return towards
more normalised levels over the coming months.

 

                                  Q1       Q1          Q1 2025              Q4 2024           Q3 2024             Q2 2024           Q1 2024
 Net fees                         2025     2024        YoY ((1))            YoY ((1))         YoY ((1))           YoY ((1))         YoY ((1))
 Contract                         £65.8m   £78.9m      -15%                 -12%              -8%                 -6%               -2%
 Permanent                        £12.6m   £14.8m      -13%                 -26%              -9%                 -15%              -21%
 GROUP                            £78.4m   £93.7m      -15%                 -15%              -8%                 -8%               -6%

 Regions
 DACH ((6))                       £26.2m   £31.5m      -14%                 -18%              -8%                 -10%              -13%
 Netherlands (incl. Spain) ((7))  £16.2m   £19.8m      -16%                 -10%              -10%                +5%               +8%
 Rest of Europe ((8))             £12.6m   £15.6m      -18%                 -14%              -13%                -10%              -10%
 USA                              £19.4m   £21.1m      -9%                  -13%              -10%                -15%              -10%
 Middle East & Asia ((9))         £4.1m    £5.7m       -26%                 -18%              +20%                +1%               +20%
 GROUP                            £78.4m   £93.7m      -15%                 -15%              -8%                 -8%               -6%

 Top five countries
 Germany                          £23.1m   £27.6m      -13%                 -17%              -7%                 -11%              -14%
 Netherlands                      £14.6m   £18.4m      -18%                 -13%              -15%                -                 +6%
 UK                               £6.9m    £10.0m      -30%                 -21%              -17%                -11%              -7%
 USA                              £19.4m   £21.1m      -9%                  -13%              -10%                -15%              -10%
 Japan                            £2.3m    £2.5m       -7%                  -1%               +60%                +16%              +41%
 ROW ((10))                       £12.1m   £14.1m      -12%                 -12%              -6%                 -2%               -4%
 Group                            £78.4m   £93.7m      -15%                 -15%              -8%                 -8%               -6%

 Service mix                      Q1 2025  Q1 2024
 Contract                         84%      84%
 Permanent                        16%       16%

 Skills mix                       Q1 2025  Q1 2024
 Technology                       46%      47%
 Life Sciences                    17%      16%
 Engineering                      30%      29%
 Other                            7%       8%

 

 

((1)) All YoY growth rates expressed at constant currency.

((2)) The contractor order book represents value of net fees until contractual
end dates, assuming all contractual hours are worked.

((3)) As guided on 12 December 2024, the Board expects FY25 profit before tax
to be c.£25 million.

((4)) World Economic Forum, Future of Jobs Report 2025.

((5)) Group total accessible liquidity of £100 million, made up of £45
million net cash, £50 million revolving credit facility (RCF), and £5
million overdraft facility (RCF and overdraft fully undrawn).

((6)) DACH - Germany, Austria and Switzerland.

((7)) Netherlands (incl. Spain) - Netherlands and Spain, which is managed from
the Netherlands.

((8)) Rest of Europe - UK, Belgium, France.

((9)) Middle East & Asia - Japan and UAE.

((10)) ROW - All other countries we operate in.

 

 

Analyst conference call

 

SThree is hosting a conference call for analysts and investors today at 8.30am
to discuss the FY25 Q1 Trading Update. If you would like to register for the
conference call, please contact SThree@almastrategic.com.

 

The Group will issue its trading update for the six months ended 31 May 2025
on 24 June 2025.

 

 Enquiries:

 SThree plc
 Timo Lehne, CEO                                  via Alma

 Andrew Beach, CFO

 Keren Oser, Investor Relations Director

 Charlie Hildesley, Investor Relations Manager

 Alma Strategic Communications                   +44 20 3405 0205

 Rebecca Sanders-Hewett                          SThree@almastrategic.com

 Hilary Buchanan

 Sam Modlin

 Will Ellis Hancock

 

 

Notes to editors

SThree plc brings skilled people together to build the future. We are the only
global specialist talent partner focused on roles in Science, Technology,
Engineering and Mathematics ('STEM'), providing permanent and flexible
contract talent to a diverse base of around 6,000 clients across 11 countries.
Our Group's c.2,700 staff cover the Technology, Life Sciences and Engineering
sectors. SThree is part of the Industrial Services sector. We are listed on
the London Stock Exchange's Main Market, trading with ticker code STEM.

 

Important notice

Certain statements in this announcement are forward looking statements. By
their nature, forward looking statements involve a number of risks,
uncertainties or assumptions that could cause actual results or events to
differ materially from those expressed or implied by those statements. Forward
looking statements regarding past trends or activities should not be taken as
representation that such trends or activities will continue in the future.
Certain data from the announcement is sourced from unaudited internal
management information and is before any exceptional items. Accordingly, undue
reliance should not be placed on forward looking statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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