SThree (STEM) Q3 2025 TU earnings summary

Executive summary

• Q3 saw modest sequential improvement in group net fee performance, driven by growth in the U.S., Middle East, and Asia, despite challenging market conditions.

• Growth in these regions was offset by continued weakness in Continental Europe, particularly Germany and the Netherlands.

• The Technology Improvement Programme (TIP) rollout nears completion, enhancing scalability and productivity.

• Operational efficiencies and investments in future capabilities, including agentic AI, are underway, funded by cost management and TIP-enabled savings.

Financial highlights

• Group net fees declined 12% year-on-year on a constant currency basis, with contract business down 13% and permanent net fees down 5%.

• Group net fees for Q3 FY25 were £81.5m, down from £92.7m in Q3 FY24.

• U.S. contract net fees grew 13% year-on-year, marking a return to growth after two years.

• Contractor order book stood at £156m, down 6% YoY, equating to about five months' net fees.

• Net cash position was £42m at 31 August 2025.

Outlook and guidance

• Over 90% visibility of full-year market consensus net fees, supporting reiterated FY2025 guidance.

• FY25 profit before tax (PBT) is expected to be in line with previous guidance of £25m.

• Persistent macro uncertainty and softness in new business activity expected to impact FY2026 PBT consensus, reducing it from £30m to £10-20m.

• No broad market recovery expected in the near term, but momentum is improving in select markets.

• Further investments in next-generation AI and a new cost optimisation programme are planned for FY26.