SThree (STEM) H1 2026 earnings summary

Executive summary

• Net fees declined 7% year-over-year to £147.7m, with revenue down 8% to £598.8m, reflecting ongoing macroeconomic and geopolitical uncertainty but improving business momentum, especially in the USA and Japan.

• Operating profit fell to £3.4m (down 65%), impacted by lower net fees and £6.4m in non-recurring costs from a cost optimisation programme; underlying operating profit was £9.8m.

• Contractor order book returned to growth, up 3% year-over-year to £157.2m, with six out of 11 contract countries delivering growth.

• TIP technology platform is fully embedded, driving efficiency, higher quality execution, and faster client delivery, with a 69% increase in client meetings per consultant and a 6% increase in placements per consultant since HY23.

• Celebrating 40 years, the business has evolved into a global STEM workforce consultancy embedded in client operations across Europe, the USA, Middle East, and Asia.

Financial highlights

• Revenue: £598.8m (down 8% YoY); Net fees: £147.7m (down 7% YoY); Operating profit: £3.4m (down 65% YoY); Profit before tax: £2.7m (down 73% YoY); Basic EPS: 2.1p (down 63% YoY).

• Net cash at half-year was £43.0m after share buybacks and dividend payments; total accessible liquidity of £98.0m.

• Contract margins increased to 21.7% due to disciplined pricing, especially on extensions.

• Interim dividend maintained at 5.1p per share.

• Free cash flow conversion ratio was -171% for HY26, reflecting negative free cash flow of £5.8m.

Outlook and guidance

• Board remains cautiously optimistic, with full-year profit before tax guidance reiterated at approximately £10m, supported by improving new business activity and growth in the contractor order book.

• Cost optimisation benefits expected to support a return to more historic profit levels in H2.

• Tech-enabled operating model and AI sales tools expected to drive further efficiencies and productivity.