REG - SThree plc - FY25 Q3 Trading Update

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RNS Number : 4227Z  SThree plc  16 September 2025

16 September 2025

 

SThree plc

 

FY25 Q3 Trading Update

 

 Modest sequential improvement, FY25 guidance reiterated;

Overall new business activity remains challenging into FY26

 

SThree plc ("SThree" or the "Group"), the global STEM workforce consultancy,
today issues a trading update covering the period 1 June 2025 to 31 August
2025.

 

Q3 Highlights

 ·             Group net fees down 12% YoY((1)), with a modest sequential improvement
               quarter-on-quarter in Q3 supported by a return to growth in the US during the
               period.
 ·             Contract (83% of net fees) down 13% YoY, whilst Permanent down 5% YoY.
 ·             Contractor order book((2)) of £156 million, down 6% YoY, continuing to
               represent sector-leading visibility with the equivalent of circa five months'
               net fees.
 ·             Robust balance sheet with net cash of £42 million at 31 August 2025 (31 May
               2025: £48 million).
 ·             Technology Improvement Programme (TIP) rollout nearing completion, with 10 of
               11 markets now actively using the platform, following the onboarding of two
               additional markets((3)).
 ·             Realisation of further operational efficiencies to drive £6 million of
               in-year net savings on track.

 

 

Outlook

 ·             Performance for FY25 expected to be in line with previously announced £25
               million PBT guidance((4)).
 ·             Although the Group has seen positive momentum in certain markets and
               verticals, macro uncertainty has persisted for longer than expected, impacting
               levels of new business activity. As a result, the Board is now taking the
               prudent view that this subdued activity will continue into FY26.
 ·             To build on the foundations created by TIP, and following the ongoing
               evaluation of the use of agentic AI, the Board has decided to further invest
               in next generation AI to capitalise on the new opportunities emerging in our
               industry.
 ·             Additionally, following the initial benefits materialising from TIP, the Board
               has committed to invest in a further cost optimisation programme in FY26 to
               deliver future benefits thereafter.
 ·             Persistent softness in new business activity is expected to impact FY26 PBT
               consensus((5)) by c.£20 million due to the Group's operational gearing. This
               alongside our investment initiatives, which are fully funded through careful
               cost management in FY25, is expected to result in a FY26 PBT of c.£10
               million.
 ·             The Board is confident that the planned investments will provide an optimised
               cost base for greater efficiency and scalability, and position the Group at
               the forefront of the AI opportunity within our industry.
 ·             The Board intends to commence a further share buyback programme in FY26 in
               line with our capital allocation policy, and will provide a further update in
               early FY26.

 

 

Timo Lehne, Chief Executive, commented:

 

"Our Q3 performance demonstrates a continuation of the positive momentum as
reported at the half year across certain segments and markets. The Group
delivered a modest sequential improvement in net fee performance, driven by
growth in our US and Middle East & Asia regions, and supported once again
by strong extension rates. A key factor currently offsetting this growth, is
the challenges within our two largest markets in continental Europe, Germany
and the Netherlands, and our focus is on ensuring we are well placed for when
these markets turn.

 

More broadly, new business remains challenging, however, with a disciplined
cost base reinforced by operational efficiencies, we remain confident in our
ability to deliver on our FY25 PBT guidance. As we look further ahead, we are
encouraged by pockets of improving momentum, however we have not yet seen a
broader market recovery and, prudently, do not think this will start to
materialise near-term, albeit not worsen.

 

With the TIP nearing completion as planned, we are now well advanced in our
journey of embedding agile, future-ready technology deep within the
organisation. This new digital backbone is already helping to unlock early
signs of scalability with the efficiencies realised to date. It is also
enhancing productivity, including improved placement levels among our most
junior cohorts and a reduction in time to first interviews in our early
adopter markets. At the same time, we are now benefiting from actionable,
data-driven insights through a unified platform, positioning us to seize
rapidly emerging opportunities in our markets.

 

Our tech-enabled model gives us the platform to invest in agentic AI
functionality, to deliver quality STEM candidates quicker and more
efficiently, which when coupled with certain investment initiatives and
further cost optimisation, will result in a stronger, more agile business.
Together with our specialist expertise in delivering STEM workforce solutions,
we have the digital foundations, scale, and differentiated value proposition
to be the market leader in an evolving STEM talent landscape."

 

Business performance highlights

 

Against a backdrop of prolonged challenging trading conditions, the Group's
net fees declined by 12% YoY. Our Contract business declined 13% YoY,
reflecting continued softness in new placements, though this was partially
offset by resilient contract extensions. Notably, Contract in the US returned
to growth this quarter, helping to partially mitigate softer performances in
both Germany and the Netherlands. Our Permanent business declined 5% YoY, but
showed a strong sequential improvement in the rate of decline compared to Q2,
driven by growth in both the US and Middle East & Asia regions.

 

Within our skill verticals, the Group's Engineering net fees were down 1%
YoY, supported by strong demand in the US. Whilst Life Sciences declined 12%
and Technology by 22% YoY, reflecting ongoing market uncertainty.

 

Regionally, the Group delivered strong net fee growth in the Middle East &
Asia, with both Japan and Dubai contributing positively. Among the Group's
three largest markets, accounting for 70% of net fees, the USA notably
returned to growth, underpinned by strong demand for skills in Energy.
Meanwhile, the performance in Germany primarily reflected levels of demand
for Technology skills, relative to Germany's strongest quarter in the prior
year. In the Netherlands, results were impacted by reduced demand for
Technology and Engineering skills.

 

Group period-end headcount was down 16% 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, and the realisation of further
operational efficiencies.

 

                                  Q3          Q3          Q3 2025    Q2 2025             Q1 2025
 Net fees                         2025        2024        YoY ((1))  YoY ((1))           YoY ((1))
 Contract                         £67.9m      £78.1m      -13%       -13%                -15%
 Permanent                        £13.6m      £14.6m      -5%        -13%                -13%
 GROUP                            £81.5m      £92.7m      -12%       -13%                -15%

 Regions
 DACH ((6))                       £26.8m      £33.4m      -21%       -16%                -14%
 Netherlands (incl. Spain) ((7))  £13.3m      £19.0m      -31%       -24%                -16%
 Rest of Europe ((8))             £12.9m      £15.3m      -16%       -17%                -18%
 USA                              £22.5m      £20.1m      17%        -                   -9%
 Middle East & Asia ((9))         £5.8m       £4.9m       22%        9%                  -26%
 GROUP                            £81.5m      £92.7m      -12%       -13%                -15%

 Top five countries
 Germany                          £23.6m      £29.6m      -21%       -14%                -13%
 Netherlands                      £11.3m      £16.9m      -35%       -26%                -18%
 UK                               £7.0m       £9.6m       -27%       -27%                -30%
 USA                              £22.5m      £20.1m      17%        -                   -9%
 Japan                            £3.8m       £3.2m       20%        34%                 -7%
 ROW ((10))                       £13.3m      £13.3m      -1%        -13%                -12%
 Group                            £81.5m      £92.7m      -12%       -13%                -15%

 Service mix                      Q3 2025     Q3 2024
 Contract                         83%         84%
 Permanent                         17%         16%

 Skills mix                       Q3 2025     Q3 2024
 Technology                       44%         49%
 Life Sciences                    16%         16%
 Engineering                      31%         28%
 Other                            9%          7%

 

 

((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)) Dubai and Belgium

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

((5)) Current consensus PBT expectation is £30.5 million for FY26. Source:
SThree compiled consensus.

((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 calls

 

SThree is hosting a conference call for analysts and investors today at 8.30am
to discuss the FY25 Q3 Trading Update. If you would like to register for the
conference call, please contact SThree@almastrategic.com.

 

 

Forward looking dates

 

The Group will issue its trading update for the year ending 30 November 2025
on 16 December 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

 Rose Docherty

 

 

 

Notes to editors

SThree plc brings skilled people together to build the future. We are the
global STEM workforce consultancy, placing highly skilled, STEM specialist
workers in the industries where they are needed most. We advise businesses,
build expert teams, and deliver project solutions for our clients. With more
than 38 years of experience in pure-play STEM and a global team with local
expertise across 11 countries, we cover high-demand skills across Engineering,
Life Sciences and Technology roles.

 

We provide permanent and flexible contract talent to a diverse base of around
6,000 clients. By combining advanced technology with expertise, we push beyond
traditional boundaries to deliver tailored solutions, leveraging data and
insight from our world-class operating platform.

 

Outpace tomorrow, together

 

 

 

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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