SThree (STEM) Q1 2026 TU earnings summary

Executive summary

• Q1 FY 2026 net fees declined 8% year-on-year, with performance stabilizing and expectations for the full year reiterated.

• Productivity reached its highest level since FY 2022, with more placements per head despite a lower headcount.

• Growth in the USA and Japan partially offset declines in other regions, with the USA up 8% and Japan up 57% year-on-year.

• The business is leveraging a scalable tech platform and evolving its operating model to address workforce consulting and digital transformation needs.

• CFO Andy Beach is stepping down after five years, with a transition process underway.

Financial highlights

• Group net fees for Q1 FY26 were £71.7m, down from £78.4m in Q1 FY25, reflecting an 8% year-on-year decline on a constant currency basis.

• Contract business, 83% of group net fees, declined by 10% year-on-year; permanent net fees were flat, marking the strongest quarterly year-on-year performance in over three years.

• U.S. Contract net fees rose 13% year-on-year, while overall USA net fees grew 8%, offsetting weaker performance in the Netherlands.

• Contractor order book at £152 million, down 7% year-on-year, equating to about five months of net fees.

• Net cash position of £51 million at period end; share buyback program of up to £20 million launched, with £1.6 million purchased to date.

Outlook and guidance

• FY 2026 performance expected to align with previous guidance of approximately £10 million profit before tax.

• Guidance underpinned by cost optimization, strong order book visibility, and stable extensions and new placements.

• Cost optimization program on track, with savings anticipated from H2 FY26.

• Cautious optimism for the remainder of the year, with stabilization but no broad-based recovery yet.