SThree Q1 Earnings Call Highlights

Core Insights - The company reported flat permanent net fees, marking its strongest quarterly year-on-year performance in over three years, attributed to strong trading in Japan, the second-largest permanent business for the group [1] - Group net fees declined by 8% year-on-year on a constant currency basis, with contract fees, which represent 83% of total net fees, down by 10% [2] - Management noted ongoing momentum in the U.S. and Japan, with improved year-on-year rates of decline in group net fees, indicating a strong first quarter since FY 2022 [3] Financial Performance - For FY 2026, the company started in line with expectations, with Q1 net fees falling 8% on a constant currency basis, while permanent net fees remained flat [4][6] - The contractor order book stood at £152 million, providing around five months of visibility, with net cash reported at £51 million and a £20 million share buyback program in progress [4][14] - The company experienced a 4% reduction in headcount compared to the end of FY 2025, reflecting cost optimization efforts [12] Regional and Sector Performance - The U.S. saw a 13% increase in contract net fees, marking the third consecutive quarter of growth, while Japan experienced its fourth consecutive quarter of growth [5][11] - The Technology sector faced a 14% decline in net fees, particularly in the Netherlands and Germany, which contribute approximately 60% of net fees [9] - The Netherlands reported a significant 29% decline in contract net fees, attributed to reduced demand for technology and engineering roles [10] Management and Outlook - CFO Andy Beech announced his departure after five years, with a transition period planned to ensure stability [15] - The CEO expressed cautious optimism about future performance, acknowledging ongoing macroeconomic volatility and geopolitical uncertainty [15][16] - The company plans to update the market on its half-year results on July 21 [16]