Adecco SA Stock

Hello, everyone, and thank you for joining us. Welcome to the Adecco Group Third Quarter 2026 Results. [Operator Instructions] I will now hand the conference over to Diego Chantrain, Head of Investor Relations and Portfolio Strategy. Please go ahead.

Thank you. Good morning, and thank you for joining the Adecco Group's Conference Call today. I'm Diego Chantrain, the Group's Head of Investor Relations and Portfolio Strategy. With me are the Adecco Group CEO, Denis Machuel; and CFO, Valentina Ficaio. Before we begin, please take note of the disclaimer on Slide 2. Today's presentation will reference both GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements, which are based on current assumptions and, as always, present opportunities as well as risks and uncertainties. With that, I'm happy to hand over to Denis.

Thank you, Diego, and a warm welcome to all of you who joined the call today. Let me begin with Slide 3, which provides an overview of our strong performance this quarter. The group maintained its positive trajectory and our growth momentum and operating leverage drove margin expansion and further deleveraging. In the third quarter, revenues were EUR 6 billion, up 3.7% year-on-year on an organic, trading days adjusted basis.

Flexible placement continued to grow and permanent placement returned to growth, building on the sequential improvement that we've seen in recent quarters. Gross profit was EUR 1.1 billion with a solid gross margin of 18.9%, a sequential improvement of 30 basis points, reflecting business mix and firm pricing. The group EBITA, excluding one-offs, was EUR 213 million, up 10% year-on-year on an organic constant currency basis, driven by consistent profitable growth.

The EBITA margin increased by 20 basis points to 3.6%, supported by strong operating leverage, disciplined capacity management and productivity growth of 5% year-on-year. And the organic drop-down ratio remained strong at 64% this quarter. Basic EPS increased by 23% to EUR 0.65, while adjusted EPS increased by 17% to EUR 0.79. The net debt-to-EBITDA ratio, excluding one-offs, was 2.5x, and this is 0.6x lower year-on-year and 0.2x lower sequentially.

We are confident in achieving our target of being at or below 1.5x net debt to EBITDA by the end of 2027. We are very pleased with this encouraging progress. And today, we're also taking the next step in simplifying our organization, bringing related services together to most efficiently deliver the group's full value to clients and capture growing demand. And I'll come back to this shortly.

So now moving to Slide 4. The group's growth trajectory continues against challenging comparables, as shown on the left-hand side. Our consistent execution and focus on gaining market share have enabled us to outperform our main competitors over the last -- over the past 4 years, gaining around 200 basis points over the last 4 quarters. On the right-hand side, we are particularly encouraged by the return to growth in permanent placement with gross profit returning to growth, up 1% organically year-on-year.

This builds on the sequential improvement we've seen since the start of the year and is a positive sign of improving demand for permanent talent and flexible placement also maintained its good momentum. Together, these underlying market developments support our confidence that the group's disciplined capacity management will continue to drive operating leverage.

Slide 5 now. It shows some of the recent client wins across different end markets, which demonstrates how the group capabilities add value for our clients. So let me pick 2 of them. The first example, Akkodis secured a multiyear contract with a major French defense company to support the development and maintenance of critical air defense systems. Akkodis was selected due to its software and configuration management expertise, proven validation capabilities as well as the ability to ensure a secure transition, replacing 2 existing providers.

Second example, Akkodis and Adecco expanded an existing partnership with a global technology company in Japan, provided integrated managed services for autonomous-driving testing and data collection. The client valued our comprehensive solution that combines Akkodis' technical and program management expertise with Adecco's local workforce capabilities, building on a proven delivery model that we have already deployed in the U.S.

These wins demonstrate the combined value of the group's portfolio, bringing together broad delivery capabilities and specialized expertise to meet increasingly complex client needs. Turning to Slide 6. We continue to deploy leading-edge AI solutions at scale, both in client-facing offerings and for our core operations. AI is an integral part of how we serve our clients and support our candidates more and more. It creates opportunities to improve productivity and simplify our internal processes.

And a good client-facing example is EZRA Loop, a new product that we launched in October, which combines human coaching with an AI development partner in one connected experience. It demonstrates our approach to AI, combining technology with human expertise and judgment to make the benefits of coaching available to more people in an innovative way. Also at Akkodis, we are launching AI Factory, centralized processes and technology to industrialize and scale AI solutions for our clients. It connects our AI expertise and capabilities globally so that a successful solution developed in one market can be reused and adapted elsewhere.

This effectively turns our best use cases into scalable product and accelerate the path from client needs to measurable value. And internally, we also continue to make rapid progress to unlock the growth and efficiency potential of AI. Our recruiter agents are now live in 19 countries, up from 10 countries in Q2. Over 80% of our revenues at Adecco are now enabled by AI, exceeding our target of 70%, a target that we had already increased just last quarter. So we've now reached over 3.7 million agent conversations this year, up 66% since Q2. This translates into measurable efficiency improvements that we see everywhere these technologies have been deployed.

We are able to submit candidates profile to our clients 40% faster and with a 10% higher fill rate. And today, in countries where the technology is available, over 70% of queries from our associates are solved by AI agents with great satisfaction. While this is still early days, we are excited by the progress and efficiency gains. Combining innovative solutions, a responsible AI approach, human expertise and our operational discipline means we can lead the human side of the AI transformation and drive profitable growth.

Let me now turn to Slide 7. From January 1, 2027, we are taking another step in simplifying the group, aligning our activities through 3 global business lines. Workforce Solutions, which will be led by Ian Lee, who is currently President of Geographic Regions; Talent Transformation Solutions will continue to be led by Ranjit de Sousa; and Technology Solutions will also continue to be led by Jo Debecker. Christophe Catoir who is currently running the Adecco GBU today, will take the role of Chief Innovation and Business Development Officer within the Executive Committee.

The objective of this adjustment is straightforward, to make the organization simpler to most efficiently deliver the group's full value to our clients and capture growing demand. The main organizational change is that professional recruitment and RPO, which today sits within the LHH Global business unit, will move into Workforce Solutions alongside staffing, tech staffing, MSP and outsourcing. This brings all our recruitment activities together within one global Workforce Solutions business line. The Talent Transformation Solutions business line will focus on career development through career transition and mobility, coaching and skilling.

And our Technology Solutions business line will continue to deliver digital engineering and technology consulting. This clearer alignment will strengthen commercial coordination, improve delivery efficiency and fundamentally support profitable growth and margin expansion. We expect this simplification to deliver significant benefits, which you can see in Slide #8. This simplification will deliver EUR 75 million of additional run rate SG&A savings by Q3 2027.

We will simplify the organization, eliminate duplicated structures, optimize our go-to-market, rationalize global sales and further improve IT and digital efficiencies. The full run rate will be reached by Q3 2027. And this will come in addition to the EUR 200 million in annualized G&A savings already achieved over the past 3 years. To achieve this, we anticipate one-off costs of approximately EUR 75 million with approximately EUR 20 million of these in Q4 this year. This organizational adjustment is designed to improve how we serve clients to unlock the full value of the group and create a more scalable platform for profitable growth. And with this, I'm happy to hand over to you, Valentina.

Thank you, Denis, and good morning to all. I'm very pleased to present another quarter of strong performance where our growth momentum and operating leverage drove margin expansion and further deleveraging. Let's now discuss the development within each global business unit, beginning with Adecco on Slide 10. Revenues were 4.7% higher year-on-year, reaching EUR 5 billion.

Growth was led by the Americas, EMEA, excluding France and APAC. By service line, on an organic basis, flexible placement grew 5%, outsourcing grew 12% and MSP 14%, while permanent placement was stable. Excluding France, flexible placement grew in all our regions with SMEs increasing 4%. Growth was broad-based across sectors, led by automotive, financial and professional services, consumer goods, retail and logistics. EBITA increased 5% year-on-year to EUR 190 million with a margin of 3.8%, sequentially improving by 50 basis points.

This result mainly reflects volume growth and higher productivity with direct contribution per selling FTE up 5%. Let's now move to Adecco at the segment level. In Adecco France, revenues were 4% lower, reflecting challenging market conditions. In sector terms, manufacturing and aerospace were strong, while logistics, professional services and healthcare were soft. The EBITA margin was 3%, lower year-on-year, reflecting volumes and business mix. We have taken actions to improve mix, including exiting certain dilutive contracts.

We have also streamlined costs to support future profitable growth. In Adecco EMEA, excluding France, revenue growth was strong at 8% year-on-year and broad-based across the region. When we look at the larger markets, revenues grew 4% in Italy, driven by strength in logistics, automotive and technology, which more than offset headwinds in the energy and public sectors. Revenues from SMEs in Italy were 4% higher. In Iberia, revenues rose 15% with permanent placement up 17% and SME growing 8%.

In sector terms, growth was broad-based, led by automotive, financial and retail. In DACH, revenues were 5% higher with Germany up 6%. Revenues from SMEs were also 6% higher. Logistics, mobility and financial, professional services were strong. In the U.K. and Ireland, revenues were up 8%, led by strong performance in utilities, professional services and the public sector, partially offset by headwinds in consumer goods.

In Northern Europe and in EEMENA, revenues rose 11%, where EEMENA grew 24%, the Nordics 7%; and Benelux 1%. Among sectors, growth was driven by logistics, financial and professional services as well as mobility. Revenues from consumer goods were lower. EBITA margin in EMEA, excluding France, improved by 20 basis points year-on-year to 4.3%, driven by strong operating leverage and agile capacity management. Turning now to Adecco Americas. The region delivered 9% growth. North America revenues grew 6% year-on-year with permanent placement up 36% and SME growing 22%.

Growth was led by technology, healthcare and manufacturing with a pipeline that remains very solid. In Latin America, revenues rose 13% and SME increased by 8%. Revenue growth was broad-based across the region, led by Brazil, Argentina and Colombia. Looking at the sectors, logistics, consumer goods, retail and professional services were all strong. The Americas EBITA margin improved by 50 basis points to 3%, driven by higher volumes, improving mix and productivity actions.

Turning now to APAC. Revenue growth was also strong, up 5% year-on-year with positive momentum across most markets, led by Japan and Asia growing 9% and 5%, respectively. Permanent placement in APAC grew 10% and SME revenues rose by 3%. Growth was led by the public sector and manufacturing as well as technology, while logistics remained soft. At 4.7%, APAC's EBITA margin was stable, reflecting higher volumes and strong productivity, offsetting FESCO joint venture income timing.

Let's now move to the Akkodis GBU. Revenues in Akkodis were EUR 714 million, flat year-on-year organically, with Consulting and Solutions up 1%. In EMEA, revenues increased 1%. France was also up 1%, supported by double-digit growth in aerospace and defense. Spain and Italy delivered double-digit strong growth at 14% and 10%, respectively. In Germany, revenues were 4% lower. In sector terms, aerospace and defense and manufacturing activity remained strong, partly offsetting the continued headwinds in automotive.

Importantly, Akkodis Germany returned to profitability. Revenues in North America grew 3%, with consulting & solutions up 11% organically, continuing its strong growth trajectory. This was led by aerospace and defense, technology and life science. In APAC, revenues declined 4% with 3% growth in Japan, offset by continued market softness in Australia. Akkodis' EBITA margin of 5.6% improved by 110 basis points year-on-year. This reflects Germany's return to profitability, higher project margins and good performance in Southern Europe and Japan.

Utilization rate was strong, improving 100 basis points sequentially to 92%. Turning now to LHH where in the third quarter, revenues rose 1% to EUR 322 million. Professional Recruitment Solutions delivered strong growth of 6% and continued to improve sequentially with the U.S. up 8%. Permanent placement returned to growth at 5% and flexible placement grew at 2%. Overall, productivity that we measure as direct contribution per selling FTE was very strong, up double digits. Career transition & mobility was resilient against a very tough comparable in Q3 last year, with strong performance in APAC, the U.K. and the rest of the world, partially offset by the U.S., where the pipeline remains very healthy.

Coaching and Skilling declined 11%. EZRA was flat against a very demanding comparison but maintains a solid pipeline, while General Assembly results continued to reflect the ongoing exit from its B2C activities. Overall, LHH delivered very strong margin expansion with EBITA up 30% to EUR 38 million, and the EBITA margin increased -- apologies, 260 basis points to 11.6%. This result reflects the strong performance in Professional Recruitment Solutions, continued productivity gains and disciplined cost management.

Let's now move on to the group's gross margin bridge. On a year-on-year basis, the group's gross margin of 18.9% was driven by a 10 basis point impact from FX and M&A, a 15 basis point impact from flexible placements, reflecting large client outperformance with firm pricing, while SME's growth continues to improve. A 5 basis point impact from permanent placement supported by the recovering trend in perm, 5 basis points impact from career transition resulting from lower growth in the group's outplacement activities, a 15 basis point positive contribution from outsourcing, consulting and other services, driven by the strong growth in outsourcing as well as improving performance in Akkodis Germany and a 10 basis points impact from training up and re-skilling mainly as EZRA faced a tougher comparison.

Overall, the result is healthy, 20 basis points lower organically, while improving by 30 basis points sequentially. Turning now to the group's EBITA bridge. The EBITA margin, excluding one-offs, was 3.6%, 20 basis points higher year-on-year. The result was driven by a 5 basis point impact from FX, a 20 basis point impact from lower gross margin, as just outlined, a 50 basis point favorable contribution from operating leverage, including the positive effect of SG&A savings and a 5 basis point impact coming from FESCO joint venture income timing.

Productivity measured as direct contribution per selling FTE increased 5%. SG&A as a percentage of revenues improved by 50 basis points, reflecting disciplined cost management. Importantly, the organic drop-down ratio was 64% in Q3 and 83% over the last 4 quarters, again, demonstrating the group's strong operating leverage. Moving now to the group's cash generation and robust financial structure. The last 12-month cash conversion ratio at 84% was strong. In Q3, cash flow from operating activities was EUR 213 million compared with EUR 200 million in the prior year period, driven by higher profitability and disciplined working capital management.

DSO remained best-in-class at 53.4 days. CapEx was EUR 31 million, resulting in free cash flow of EUR 182 million, EUR 12 million higher year-on-year. The group maintains a robust financial structure with 82% of gross debt at fixed rates, no financial covenants and strong liquidity.

At the end of Q3 '26, net debt was EUR 249 million lower versus the prior year period. Net debt-to-EBITDA ratio reduced by 0.6x year-on-year and 0.2x sequentially, driven by improved profitability and cash generation. We are on track to deliver on our commitment to bring the net debt-to-EBITDA ratio to 1.5 or below by the end of 2027.

Let me now turn to our near-term outlook. In Q4, the group continues to see positive momentum in volumes. Gross margin is expected to be slightly higher sequentially. SG&A expenses, excluding one-offs, are also expected to be slightly higher sequentially, in line with normal seasonality and modestly lower year-on-year as a percentage of revenues. Management continues to execute with discipline, balancing profitable growth with rigorous cost and capacity management. And with that, back to you, Denis. Thank you.

Thank you, Valentina. And let me conclude with our key takeaways on Slide 19. Firstly, the group continues to deliver profitable growth. Flexible placement maintained good momentum and permanent placement has returned to growth. The strength of our business is reflected in our margin expansion. Secondly, we are further simplifying the organization to deliver the group's full value to clients more efficiently and capture growing demand.

The new business line structure will support profitable growth and margin progression while delivering EUR 75 million of additional run-rate SG&A savings by Q3 2027. And finally, strong cash generation and improved operating performance are driving further deleveraging, a clear priority for the group. And as Valentina just said, we are on track to achieve our net debt-to-EBITDA target of 1.5x or below by the end of 2027. And with that, we'd like to thank you for your attention and open the lines for Q&A. We are ready for the first questions.

[Operator Instructions] Your first question comes from the line of at Andy Grobler at BNP.

Can I...

Breaking up, Andy. We can't hear you?

Please standby while we sort this out.

Maybe we can circle to the next caller and then [indiscernible] Andy back in afterwards.

Your next line -- question comes from the line of Harshita Bhatter at Goldman Sachs.

So the first question is, could you provide a little more color on the early trading trends in October across key geographies? And then specifically on France, are you seeing any signs of stabilization or inflections into 4Q?

So -- thank you for your question. So we -- as you could see, we have seen a growth coming quite across all our geographies, except France. We are quite pleased with that. We are growing -- [ and that too, ] we're growing in all regions, except France. And we have gained share in multiple markets. So this is trending nicely. And as we said, the volumes continue to keep the momentum that they had when we exited the quarter. So this is encouraging.

France is a little bit of a challenging market with a mix of a, first of all, the country context with macroeconomics that are not very good and the political situation that doesn't help and a soft market in which we have some decreasing volumes from large logistic clients, and we've also chosen not to renew large clients that were dilutive. So we are taking action.

So we believe that we should see an improvement in margin as early as Q4. The actions that we are taking to industrialize the delivery to large clients through our centralized talent supply chain, we accelerate the specialization of our branches. We have a big focus on SME. And of course, we continue to work on our cost base. So I think we are -- we will be seeing this margin improvement as early as Q4. We had a tough comp in Q3. So we are -- we'll see it improving, but it's going to take time.

Your next question comes from the line of Andy Grobler at BNP Paribas.

Just I wanted to ask initially around technology and some of the rollout of your agentic AI capabilities, which you talk about on Slide 6. You mentioned some quite significant improvements in productivity, fill rates, time to market and so forth. And with productivity at about 30% at the midpoint improvement, just to understand how much of the business is impacted by those gains because that is significantly faster than the group improvement. So where we are now and where you think you will be in a year or 2 years' time would be great.

Yes. Thank you, Andy. Definitely, we are very pleased with what we see in terms of impact of AI. Now let's be clear, we've -- as we've explained before, we are -- we've scaled this agentic AI into our U.K. career center for Adecco, and we are now progressively deploying it in different career centers across the country. So it's now pluggable in 19 countries, as we said, into the platform that we explained a year ago that we brought across most of our geographies.

So we have the platform, which allows us to put the agents on top. And we do that when we have centralized processes and then we scale the agents on the centralized processes. So this is -- it takes time, of course, to align all the processes and then to scale the agents on top, but we have now the technology that allows to do that. In the U.K., what we see as well -- and we're scaling at the moment on the 42 large clients. So it's not yet deployed at its full scale, but we see very good impact like -- of course, we see the productivity and higher fill rate. We also see that we do not -- when there is attrition in the career center, we don't need to replace recruiters because we have the productivity coming in.

And actually, our recruiters enjoy more what they do because they focus on the most added value tasks that they are doing. We also see in the U.K., as we are starting to deploying this agentic into branches, what we call the branch of the future, we are seeing now that we are growing in the SME segment in the U.K., which was not the case before. And we're growing not adding recruiters.

So that's -- this is a good sign. This is trending positively, but we are -- we believe that we can scale that from 42 clients to probably 100 large clients and then through the branches. You can imagine that scaling that through the hundreds of branches that we have across the group will take time. I don't give yet a clear sort of -- clear phasing, but we'll give you more information as we progress. But the indicators, as you said, as you rightly said, are very encouraging.

Can I ask one follow-up just from the previous question. You mentioned that you were exiting some contract in France. Could you just quantify the impact of that on short-term numbers, both, I guess, in terms of margin, if possible, and particularly on organic growth?

What I would say -- Andy, what I would say is that when you look at the year-on-year decrease in France, a material portion of that decrease comes from these couple of clients that Denis was mentioning. And that also represents a hit on our EBITA short term because as you can imagine, we have some direct costs on this client that needs to be absorbed, which we are doing. It's part of the actions that Denis was mentioning before. So you do have an important headwind currently in the 3% margin that you see in Adecco France in Q3 coming from this.

Q4 will be better.

Q4 will be better, exactly.

Margin Q4 will be better, yes.

Next question comes from the line of Annelies Vermeulen at Morgan Stanley.

So first question is just on the one-off charges, which you now expect at EUR 80 million for this year. Could you break down what's in the additional EUR 20 million relative to the EUR 60 million you were talking about at Q3? I assume a large part of this is the additional cost savings you've announced, but if you could give a breakdown. And can we assume that those will continue at least through the first part of next year given those additional cost savings plans you've announced?

Annelies. So the -- when we -- we moved the full year guidance of one-offs from EUR 60 million to EUR 80 million, as you rightly point out, so the previous guidance included EUR 5 million of one-offs in Q4 that are still included some of the actions that were taken, the vast majority in France. So the actual increase that relates to the new program that we are talking about this quarter, so the EUR 75 million additional SG&A savings relates to this additional EUR 20 million that we had included now in Q4 because we are taking actions already in Q4 to ensure that we can accelerate as much as possible the plan.

The rest of the actions will be implemented in H1. So you would assume that the rest of the cost, EUR 55 million of one-off will be for the vast majority in H1 next year. I hope that gives you a sense in terms of how would you sequence the one-offs in terms of the benefits, they will come by Q3 2027. We are happy to report that the actions that we're taking are going to be quite quick when it comes to the return, and there will be additional savings to the EUR 200 million that the group already delivered in G&A over the last 3 years.

Very clear. And then just a quick follow-up again on France, apologies. So you said you expect the margin to improve into Q4. But just so I understand correctly, given the contracts that you're exiting and the stuff that you're not renewing, would -- we can still expect a further headwind to growth in Q4. So should we sort of expect margins to improve first and then growth to come later?

Yes, you think right. Yes. First of all, the market is not very supportive. And so there's the clients that we've exited. There's also a few clients that have decreasing volumes also in logistics. So yes, you think right. I mean we're focusing on profitable growth. That means improving profitability, working on our cost base. And then you have to think about first improvement in profitability versus Q3 and then growth coming back progressively. It's going to take a few quarters.

Yes, consider that only the client exit, you need to anniversary them before they stop becoming -- being a headwind, right? So you have to take that into consideration.

Your next question comes from the line of Virginia Montorsi at Bank of America.

I just had 2 quick ones. One is a follow-up to the restructuring -- the new cost saving program and the restructuring charges. If I look at the phasing you've given and the commentary on SG&A, is it fair to assume that the math behind it basically implies SG&A growing roughly 1.5%, 2% into next year? I think this is a little bit below what consensus has. So I just wanted to make sure that my math is right. And then just as a second follow-up question, North America, obviously, was quite resilient despite tougher comps. Can you give us a little bit more color on how to think about Q4 and next year in this specific geography?

So I'm going to take U.S. and...

I'll start with the one-off.

Happy with the one-off, yes.

So maybe just to clarify to ensure that we don't mix the 2 things. I believe that when you look at S and productivity, it's one story, and we will continue to drive productivity improvement every quarter as we have done. The savings that we are announcing EUR 75 million, they have a component of S, a component of G&A, a component of IT because they come from simplification of the organization, taking out duplication of layers, rationalizing global sales, having efficiencies in IT and digital structures.

So I think you have to separate it when you think about the near future, how we drive continuous productivity when it comes to SG&A and S more specifically and then the savings comes from organizational structure that we are going to basically take out, right? So I understand that your question was more to model in the future. I think that that's how you have to think about it. I would not mix the 2 because we will continue driving both elements. I hope that's clear. Otherwise, feel free to ask another follow-up.

All right. Now regarding the U.S., we continue to see the U.S. as a market with big potential, and I am pleased on the progress of the turnaround plan in Adecco. We're not done yet. I said, but we see continuous progress. If you think about that, we have a revenue in Adecco that's growing 6%. And last year, the comparative base was super high. Q2 last year was 10%. Q3 last year was plus 20%. So we have a high comp base, but Q3 was at plus 6%.

And we have some good traction. Remember, I spoke about the importance of reenergizing our SME business, our branch effectiveness and then SME is growing plus 22% this quarter, which is great. And we see the trend continuing. Permanent recruitment in Adecco is at plus 36%, we've improved our gross margin by 27 basis points. Our productivity, GP per -- the gross profit per selling FTE has improved 8% year-on-year. So all that is good. The construction sector is growing 31%. Healthcare is growing 26%. Manufacturing is growing 8%. We have a good pipeline.

We're boosting MSP. We're accelerating central delivery. So all that kind of signs tell me that we can be really confident about Q4, but also next year. So that's good. And on top, we have Akkodis consulting & solutions growing 11%. We have recruitment solutions, which now -- which is going to move next year into Workforce Solutions, but it's growing at 8%, so the white-collar recruitment, the permanent recruitment grows 8%. So all this confirms the potential that we see in North America as well as our capacity to capture that potential because we are in a much better place now, even though we're not there yet, but we're in a much better place in the U.S.

Your next question comes from the line of Simon LeChipre from Jefferies.

On the organic growth performance, so around 4% in Q3 at group level, so some deterioration given tougher comps. How to think about like organic growth for the coming quarters given comps will get increasingly tougher, particularly like into Q1 and Q2? So I mean, do you think like sort of underlying volume improvement will help offset this comp effect? Or do you see like further deceleration of the organic growth rate?

Yes. Thanks, Simon. I think we are very focused on -- in fragmented markets, we are very focused on growing and capturing market share and ensuring that we do it profitably, okay? As you remember, for the past 4 years, we've consistently gained share. We've done that profitably 14 quarters out of 17, we've gained share. And since the beginning of 2025, we are in positive growth. I see this continuing. This quarter, Adecco was growing in all regions, except France, as I said, and we've gained share in multiple markets. So there's nothing that changed in our strategy in the way we are acting on the market.

We are managing capacity very precisely. Of course, we add capacity where necessary. If we see Iberia, EEMENA, APAC, we're just moving, right? If we automate also, as I'm mentioning earlier with Andy, we automate more and more as we can, and this is going to bring also additional growth, but it's not fully scaled yet, let's be clear. And yes, so I see -- and you heard me say as well, yes, we might have a tough comp, but we have demonstrated again, again, a very tough comp of last year that we were still able to grow. The agenda doesn't change. It's all about profitable growth, gaining market share, running faster than the others. And the markets are there to sustain that.

Okay. And a quick follow-up on your comment on like focusing on market share gains. I mean how to reconcile this with the flex gross margin keep going backward. And I mean, despite -- since you are now doing well with the SMEs in some markets, so I guess the client mix is becoming, let's say, less negative or is improving. So how to think about this?

To me, Simon, specifically on flex, I think that what we're really pleased to see is you remember our Q2 gross margin, flex represented a 25 basis point headwind, now represents 15 basis points. This tells me 2 things. On the one hand, as recovery comes, you can see in the gross margin how large continues to grow, but now SME is growing, right? And so that is what's helping us, right? And the growth that comes is coming with very firm pricing because our gross margin continues to sequentially improve.

Now there's other elements, right, that are helping on our gross margin beyond flex. Perm is becoming less of a headwind, right? So to me, the sequential improvement is really what gives us confidence when it comes to how the business from an underlying perspective is performing. And then it's the operating leverage, right, because the growth is coming with sequentially improved gross margin, but even more importantly, with the growth that we generate we have a 50 basis points SG&A over revenue impact that is really driving our drop-down ratio and margin expansion. So this is what we are going after successfully, and that's what we want to continue doing.

And we're very focused on the firm pricing. Our spread, the bill rate, pay rate spread has increased 5% year-on-year. So it's solid, right? So we continue to do a good job in -- on that profitable growth agenda.

But like the -- if you look at the Adecco GBU, the [ EBITA ] margin year-to-date is flat year-on-year despite 5% plus organic growth and all the productivity gains from AI. So why don't we see more operating leverage on sort of peak top line momentum?

I think I understand your point. To me, when you look at the Adecco GBU, EBITA margin, you have some regions that are doing really good, both on growth and operating leverage. Denis has mentioned North America. He has mentioned Iberia, EEMENA, Italy. But we have to consider that there's a couple of headwinds on this quarter. One is more modest, it's FESCO, but it hits the Adecco GBU margin. And one is a bit more material, and it's the client exit that we have performed in Q3 in France and Australia. So these 2 have represented a specific headwind in Q3 despite the fact that the vast majority of the regions are actually improving with strong operating leverage. So you have to look at this.

Your next question comes from the line of Michael Foeth at Vontobel.

I have a question on if you can already comment on the target EBITA margin ranges for the new structure or at least in which of the GBUs do you expect to see the most gains in terms of margin from the additional savings that you plan for next year?

Michael, so you've seen that we discussed during the presentation that we will give visibility on the pro forma of the new business line ahead of Q1. So you will have all of the details well ahead of it. Yes, we will have some business moving. The most important move would be recruitment solutions under Workforce Solutions. So you will get all of the visibility pretty much aligned with the same level of granularity that we give today on GBUs, on the new global business lines. So it will come ahead of Q1.

Okay. Perfect. And then a follow-up maybe for Denis. You prominently participated at Dreamforce, and I was just wondering if you can comment on the progress that comes out of that and how this can be seen or will be seen in the future in your business.

Thank you, Michael. Well, yes, it was great to be featured in Marc Benioff's keynote alongside Dario Amodei, Jensen Huang and Roland Busch. So that was pretty nice that the Adecco Group was featured as one of the 4 key cases that they wanted to demonstrate. It shows, I think, first of all, the very strong partnership that we have with Salesforce. And we are able to move at speed on our agentification, thanks to these very strong connections that we have with a prominent tech player that sees what we do as helping them advance their own way to provide agents to their clients.

So that's what I said earlier. I think we will see the rollout of the agents going more and more. We'll do that with cautious, okay, because we -- with caution because agents are -- have to be trained and properly adapted to every culture, every type of interaction with people. So we do this in the framework of, of course, responsible AI, but I am very positive. We are now, of course -- we have doubled down our AI agentification on our core process.

And we're, of course, now thinking -- looking at the way we can improve more internal processes like in finance, Valentina is looking at that, like in HR. So there's other things that we're bringing. But we know that the biggest bang for the buck, if I may say, is going to be on that full agentification across the board of the recruitment process, and it's trending nicely. More to come. I'm always -- I like to present further KPIs when they have really demonstrated over time. But I'm very positive.

Your next question comes from the line of Vasia Kotlida at Barclays.

So one question from me. With perm now back in positive territory, what are the key drivers by region and vertical? And how broad-based is the recovery?

Well, actually, it's pretty broad-based. So we're definitely pleased with the progress in perm. And we have -- in some markets, we have some very strong results. Overall, as we said, perm is growing 2%, which is good for the group. In Adecco, we see some sectors that are very strong. Auto and mobility is growing 43%. Logistics, plus 15% even though manufacturing is flat. And if you look at the regions, North America is growing 36%; Iberia 17%; APAC plus 10%.

So you have some large regions that are trending nicely. The 2 -- the main pressure points that we have at the moment in perm in Adecco is France and Germany. And France, back to what I was mentioning about the overall context. In LHH, so the white-collar perm, we are accelerating. I mean we had -- we were minus 2% in Q2. We are plus 5% in Q3. So that's nice. U.S. is plus 8%, as I said. Rest of the world is also 8%, with a particular hats off to Italy, which is at plus 21%. Same thing here also for white collar, the pressure point is France. So overall, on perm, what we see is we anticipate a continuation of the positive momentum this Q4.

Your next question comes from the line of Rory McKenzie at UBS.

It's Rory here. Yes, my question is on gross margin, please. Can you say what was the benefit from the Akkodis restructuring, which I think was mostly around reducing bench costs within COGS this quarter? Should we think that all of the 15 bps benefit to the outsourcing, consulting and other line? And then in terms of outlook, I think over the past 15 years, gross margins on average, I know there's a wide range, but they've been normally sequentially stable Q3 into Q4. So just wondering what was driving that? Is it again savings, benefits ramping up from Akkodis? Or are there other things that are coming in?

Rory, I'll take both. So out of the positive contribution of consulting, outsourcing and others, you're right, Akkodis is there. It's an element of it. It's not the only element because the strong growth also in outsourcing in Adecco plays an important role. So you have to consider that both types of outsourcing are reported in that 15 basis points improvement year-on-year.

And when you look at the outlook, indeed, the fact that it's sequentially up is actually quite positive because you wouldn't expect it according to normal seasonality. What we see stepping into Q4 is a continuation of the good sequential performance that you've seen in Q3, right?

So yes, we still foresee slight headwinds on FX, probably to the same amount that you've seen in Q3. But we also see continuation of sequential improvement in flex and perm and outsourcing, consulting and other. So is part of it the fact that the restructuring is kicking in? Yes, it's also, a part of it is there. It also comes in the SG&A, right? So we have positive sequential impacts coming in both lines.

Okay. And can I follow up on the questions around the reorganization to be clear on just what's changing? Because as I understand it, you're still keeping the different brands within Workforce Solutions. But does this mean you'll have a new kind of single sales organization for all those brands? Because I guess, historically, you've seen advantages in having the separate brand approaches. So what's changing? And is it maybe to do with what we've been discussing around leveraging the agentic platforms and getting the business more ready for that kind of scalability, I guess?

Yes, exactly. First of all, this move from GBUs, if you want, to global business lines is a confirmation of our strategy. 5 years back, we moved -- 6 years back, we moved from a federation of countries into 3 verticals that have been able to provide -- to work on clear strategies to serve large clients, to deploy systems more efficiently and develop this growth agenda. So we retain all the benefits of the global organization by adjusting the verticals, simplifying how we best serve the clients and increase the synergies.

So that exactly to your point, bringing all the recruitment business lines together -- recruitment services together will help us to deploy tech faster, develop more synergies across the board. We will continue to keep operating with the brands, the Adecco brand on the sort of the blue-collar space. The LHH brand will remain only for career transition. So we will probably work a little bit on some of the white-collar recruitment brands. But overall, we will -- and particularly in the sales activity, we will ensure that the clients have facing them the full scope of the group and making sure that the synergies between the 3 business lines are very efficient. So yes, the global go-to-market brands will stay because they have great recognition on the market.

Your next question comes from the line of Konrad Zomer at ODDO BHF.

I have a question on the EUR 75 million of SG&A savings. I'm still a little bit intrigued about the timing of it because you've done a great job in getting the EUR 200 million savings in. You're currently looking at a company that gains market share in, broadly speaking, growing markets. Your costs are under control, your working capital management is very good. So what decided you to put another restructuring through your organization, whereas you could argue the operating leverage is already there, so let's try to gain maximum advantage. And as a follow-up before you answer the first one, according to your analysis, what could be the potential benefit to your net debt-to-EBITDA multiple once this has all gone through?

Thanks, Konrad. Just one thing. This -- the savings are -- yes, and thank you for acknowledging the EUR 200 million that we have delivered net of inflation. We continue to be very focused on that. Still in what we've identified is some duplication of roles in several places. We felt that some of our global sales were not necessarily fully with the efficiency that we wanted. So there's a lot of elements that we can activate without -- and I insist without -- and you mentioned it, without losing the growth momentum and the market share gains. This is fundamental.

So the capacity management that we see in terms of sales has nothing to do with the EUR 75 million. We're talking optimization of the organization. And we also -- we know that also thanks to AI, we believe that we can have efficiencies in IT. And we can -- we believe that by accelerating the synergies, particularly within the Recruitment business line, Workforce Solutions, we can serve clients better and accelerate our profitable growth. So all that is -- it's a surgical work. It's very close. We have -- we are working on all the data that we have. And we absolutely do not want to sort of slow down the growth momentum that we have.

And building on what Denis is mentioning and just bridging to the second part of your question, Konrad, I think what is really important, as I was mentioning before, we have elements that constitute the building blocks to our margin expansion, right? Productivity is there. And clearly, it's mainly sales productivity. The EUR 75 million plan has nothing to do with productivity, right? The EUR 75 million plan has to do with more global structure, duplication of layers where we believe without impacting productivity, if anything, improving it, we can go after.

But there's a material element of those EUR 75 million actually also on G&A and IT. So you should not think about, okay, this is all coming out of S and it will be disruptive. That's not what we're going after because the elements that we go in terms of margin expansion is productivity on the one side, but then cost control also on G&A and IT. And it is all part of the margin expansion that we have been implemented. And this additional piece is part of the expansion that we foresee in '27, '28.

And technology will help as well. Technology is definitely already bringing efficiency. We see it.

Yes. No, just to conclude because I think you were also asking about net debt to EBITDA. We are on track. I think you've seen how the progress in Q3 is very good, deleveraging not only from a year-on-year perspective, but also sequentially. We expect further deleverage in Q4. You know that our cash generation profile is very back-end loaded. So we are happy with the deleverage where we are today in Q4, more will come and more also next year to deliver 1.5 or below. So we feel very confident.

Right. And how much do you think the additional restructuring will bring down your leverage ratio next year?

So I think that we will reach 1.5 or below by the end of next year. What I will remind you is what we have said is that the EUR 75 million are run-rate savings that will be executed by Q3 next year. So you have to consider that it's an annualized number, right? So the flowing into the P&L will begin effectively from Q4. And with that, I will not give you another number.

Your next question comes from the line of Simon Van Oppen at Kepler Cheuvreux.

I have a question on your SG&A outlook. Your outlook suggests quite an uplift in your SG&A expenses quarter-over-quarter. Can you please explain the uplift in your SG&A expenses beyond the seasonal uplift? And would you say that Q3 was a bit of an outlier in terms of SG&A cost control? Just to get a better understanding of the quarterly dynamics in SG&A between Q3 and Q4 and if there's anything beyond the seasonal uplift.

Thank you, Simon. I'll take this one. There's nothing beyond the seasonality. So Q4 is the biggest quarter, as you know. And so it is normal that it comes from an absolute amount perspective with slightly higher SG&A Q-on-Q. What I think is actually much more important than that is that our ratio of revenue will continue to go down from a year-on-year perspective, continuing to show operating leverage. So yes, slightly up sequentially from an absolute amount only due to seasonality, but modestly down year-on-year as a percentage of revenue.

There are no further questions at this time. I'll now turn back to Denis Machuel, CEO.

Thank you, and thanks to all of you to have attended this call. As you could see, we have a positive perspective on the state of the business on how we see Q4 and how we will enter into 2027. We are laser-focused on profitable growth. We are laser-focused on, of course, our cost control. And we believe that the technology that we are deploying is going to bring a lot of good things moving forward.

We also believe that the adjustment in organization that we're doing is going to help us even better serve the clients. So we are in a good place. I look forward to exchanging with you in our next call at the end of Q4. So thank you very much to all of you, and talk to you soon. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and welcome to the Adecco Group Second Quarter 2026 Results Call. Please note that this call is being recorded. [Operator Instructions] I'd now like to hand the call over to Diego Chantrain, Head of Investor Relations and Portfolio Strategy. Please go ahead.

Good morning, and thank you for joining the Adecco Group's conference call today. I'm Diego Chantrain, the Group's Head of Investor Relations and Portfolio Strategy. With me are the Adecco Group CEO, Denis Machuel; and CFO, Valentina Ficaio.

Before we begin, please take note of the disclaimer on Slide 2. Today's presentation will reference both GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements, which are based on current assumptions and as always, present opportunities as well as risks and uncertainties.

With that, I will now hand over to Denis.

Thank you, Diego, and it's great to have you with us for your first quarterly results in your new role. And of course, a warm welcome to all of you who've joined the call today.

Let me begin with Slide 3, which provides an overview of the quarter. Organic revenue growth remains strong. In the second quarter, the group's revenue rose 5.6% year-on-year on an organic trading days adjusted basis. We're also pleased to report that Akkodis returned to growth this quarter, and Valentina will elaborate on the good progress of the transformation program.

The group delivered gross profit of EUR 1.1 billion, achieving a healthy gross margin of 18.6%. On a year-on-year basis, organic gross margin was 20 basis points lower. Importantly, this was an improvement compared to 40 basis points lower in Q1. This progress is due to firm pricing, current client and country mix and improving underlying trends. The group's EBITA, excluding one-offs, was EUR 165 million and 21% higher year-on-year on an organic constant currency basis, driven by consistent profitable growth. In turn, the EBITDA margin expanded by 30 basis points year-on-year to 2.8%, reflecting strong operating leverage and disciplined capacity management. The group delivered an organic drop-down ratio of 64% and adjusted EPS increased by 31% year-on-year. We remain firmly committed to deleveraging. The net debt-to-EBITDA ratio, excluding one-offs, was 2.7x, a 0.5x improvement compared to the prior year period, driven by improved profitability.

Moving to Slide 4. The group's disciplined execution continues to drive further market share gains, also supported by improving market conditions. On the left-hand side, we show relative revenue growth. We have outperformed our main competitors consistently over the last 4 years. In the last 4 quarters, we have gained 320 basis points. And this quarter, we have delivered an additional 160 basis points of market share gains. Moving to the right-hand side. We have started to see the first signs of stabilization in permanent placement with the gross profit gradually improving since the start of 2023 and more recently, stabilizing from minus 7% in Q1 '26 to minus 1% in Q2 '26.

In terms of operational KPIs, we see activity levels improving as evidenced by placements per FTE. We have seen this progress across several countries, including the U.S., Spain and APAC, where permanent placement gross profit grew positively in Q2. I am encouraged by the signs of stabilization in permanent placements. If this trend continues, we would expect consultant productivity and placement volumes to drive positive operating leverage within the existing cost base.

Let's turn to Slide 5 now, which showcases recent client wins, reflecting the group's ability to expand our end market penetration and capture new growth opportunities. First, Akkodis signed a contract with a major player in the French defense sector, becoming the strategic partner for systems validation and qualification, cloud infrastructure and security services. The client selected Akkodis over the incumbent provider, valuing our deep account knowledge and global access to specialized digital and engineering talent.

Second, the group strengthened its position in a large-scale data center buildup by becoming the primary supplier and master vendor for major manufacturing and technology clients in the U.S. The client valued Adecco and Akkodis' technology-enabled workforce solution and rapid talent development capabilities to support the expansion of new facilities with demand expected to exceed 1,500 engineering and technical roles over the next 18 months. Overall, the group's revenue in the U.S. data center end market has grown by 38% year-to-date.

Third, NHH was selected by a global telecommunications client to deliver an AI reskilling program for over 1,000 former employees supporting career transition at scale. The client value General Assembly's proven delivery model, AI expertise aligned with workforce needs and its scalable online platform.

And fourth, Adecco secured a significant win with a global automotive client, expanding its on-site workforce and optimizing operations. The client selected Adecco as its sole workforce management partner, recognizing our embedded on-site solution, local regulatory expertise and digital capabilities. Collectively, these wins demonstrate the group's ability to help clients accelerate their AI and digital transformation agendas, leveraging our expertise, scale and broad portfolio.

Turning to Slide 6. AI is increasingly embedded into our core offering and day-to-day processes. It is now an integral part of how we serve clients, support candidates and improve productivity across our organization. In Agent TKI, we're making strong progress. Our initial target was to reach 50% of Adecco revenue enabled by agents by year-end. We achieved that target already at the end of Q2 with end-to-end agents live in 10 countries and have now raised our target to 70% of our revenue by the end of 2026. The impact is visible in our operating metrics. To date, our agents have completed 2.2 million conversations. We are seeing a 10% improvement in overall fill rate, a 40% reduction in time to submit and 25% to 35% productivity benefits through recruiter time saved.

Right from the start of our AI deployment, we introduced a responsible AI framework built around 5 principles: human centricity, safety, ethics, lawfulness and transparency. Our own research highlights that trust is a critical differentiator for successful AI implementation. This is why we remain strongly focused on responsible deployment and work closely with policymakers to support robust frameworks in our sector. By combining innovative solutions, responsible AI, operational discipline and human expertise, we are accelerating our profitable growth, and we're leading the human side of the AI transformation.

Let me now hand over to Valentina to share more details on the quarter's performance.

Thank you, Denis, and good morning to all. I am very pleased with the group's strong performance in Q2. Let's now discuss the developments within each GBU, beginning with Adecco on Slide 7. Revenues were 6.6% higher year-on-year, continuing to outperform the main competitors. By service line, flexible placement revenues were 6% higher. Outsourcing was up 15%. MSP grew 11% and permanent placement was flat, stabilizing sequentially. On a sector basis, revenue growth was driven by strength in automotive, logistics, financial services and aerospace and defense. Adecco's gross profit improved. The gross margin was solid, reflecting strong growth from large clients and outsourcing, along with more moderate growth from SMEs. EBITDA rose 10% with a margin of 3.3%, mainly reflecting higher volumes and strong productivity with direct contribution per selling FTE rising 10%, while selling FTEs were stable compared to the prior year period.

Let's now move to Adecco at the segment level on Slide 8. In Adecco Funds, revenues were modestly lower, declining 1% year-on-year, a resilient performance in a mixed market. In sector terms, manufacturing and automotive were strong with headwinds in logistics and health care. The EBITDA margin of 3% mainly reflects lower volumes and actions to reduce SG&A expenses. Management remains focused on accelerating these improvements to support future profitable growth.

In Adecco EMEA, excluding France, revenue growth was strong and broad-based, up 8% and sequentially improved, resulting in market share gains in most segments. If we look at the larger markets, revenue rose 6% in Italy, driven by strength in logistics, automotive and technology, more than offsetting headwinds in the energy and public sectors and SMEs grew by 3%.

Revenues in Iberia were up 22%. Growth was broad-based, led by the automotive, financial and retail sectors. Importantly, growth from SMEs was up 12% in the quarter. DACH revenues were 3% higher, reflecting growth in logistics, aerospace and defense, financial services and automotive, while manufacturing was strong [indiscernible]. In the U.K. and Ireland, revenues were up 6%, led by strength in utilities, professional services and the public sector, partly offset by decline in Food and Beverage. The segment's EBITDA margin improved by 20 basis points year-on-year to 3.2%, reflecting higher volumes across the region and agile capacity management.

Let's now move on to Slide 9. Adecco Americas delivered 12% revenue growth. North America revenues grew 9% year-on-year, a strong result despite a challenging comparison base with growth across all client segments and SME revenues up 23%. In sector terms, performance was led by the consumer goods, automotive and manufacturing sectors. Latin America revenues remained strong, up 18% with broad-based growth across markets, led by Brazil, Argentina and Colombia. By sector, logistics, consumer goods and retail were very strong. The Americas delivered an EBITDA margin of 2.6%, up 90 basis points year-on-year, benefiting from strong volume growth and operating leverage. We are pleased to see that North America is now consistently contributing to the margin improving, reflecting success in the turnaround.

Turning to APAC. Revenue growth remained strong at 10% year-on-year with broad-based momentum across the region and ahead of market. Revenues rose 9% in Japan, 11% in Asia, 13% in Australia and New Zealand and 9% in India. [indiscernible], growth was led by Aerospace and defense, manufacturing and professional services. APAC delivered an EBITDA margin of 4.8%, 20 basis points higher year-on-year, reflecting volume growth and disciplined cost management.

Let's now move to Slide 10 and Akkodis. The [indiscernible] is back to growth with revenues up 1% year-on-year on an organic basis. Consulting & Solutions revenues were 1% higher organically, supported by solid demand for project-based solutions and digital engineering expertise. Talent revenues also increased 1% organically. In sector terms, Aerospace and Defense remained strong, increasing 20% year-on-year.

Looking at key countries, revenues in France were 4% higher, improving sequentially with strong momentum in Aerospace and Defense. Spain and Italy achieved 8% growth, driven by strength in automotive. Revenues in Germany were 3% lower, stabilizing sequentially from 5% lower in Q1. In sector terms, aerospace and defense and manufacturing were strong, which partially offset ongoing headwinds in automotive. North America revenues grew 4% year-on-year. Consulting & Solutions continued its growth trajectory, increasing 3% organically. Sector performance was led by aerospace and defense, energy and automotive. In APAC, revenues were 5% lower, weighed by challenging market conditions in Australia. Japan remained strong with revenues up 3%.

Akkodis EBITDA rose 23%, and EBITDA margin improved by 180 basis points year-on-year to 3.4%. Akkodis profitability is improving, driven by growth in Consulting & Solutions and higher project margins as well as the results of our turnaround efforts in Germany and an increasing utilization rate, which stood at 91%.

Let's now move to Slide 11 and review the progress Akkodis is making on its transformation program, as Denis outlined [indiscernible]. The actions taken across the business are delivering results. As outlined in the previous slide, Akkodis has returned to revenue growth in both the Consulting & Solutions and talent service lines. This reflects the work done to strengthen the portfolio capabilities, improve execution and focus capacity on end markets with stronger growth.

Aerospace and defense is a key growth driver for Akkodis, with revenues up 20% in the quarter, driven by strong growth in France and Germany. This is a good example of how Akkodis is focusing on attractive end markets where we have differentiated engineering and technology capabilities. In Germany, the turnaround work has been ongoing for several quarters. We are starting to see signs of stabilization, supported by actions to rightsize the business and reposition capabilities towards higher growth end markets, including aerospace and defense to offset the automotive softness.

We're also making progress on commercial execution. Global accounts revenue grew 3%, and the global delivery transformation continued to accelerate, reaching more than 3,000 FTEs organically. This gives Akkodis critical scale in global delivery, enhancing its competitiveness and strengthening its ability to serve large international clients.

We have strengthened our portfolio, acquiring some differentiated capabilities in the fast-growing aerospace engineering end market and to further reinforce our global delivery footprint, doubling our presence in India. This positions Akkodis for profitable growth, particularly with key clients ahead of anticipated new aircraft programs. These acquisitions were partly funded by redeploying capital through divestment of noncore assets.

Finally, Akkodis is also building new growth platforms. The [indiscernible] launched earlier this year is already gaining strong traction in automotive and high-tech, reinforcing Akkodis' position at the intersection of engineering, digital and AI-enabled innovation. Overall, the transformation program is progressing well. The focus remains on strengthening the business, accelerating change and better positioning Akkodis for profitable growth in attractive end markets.

Moving now to Slide 12, with LHH delivering another quarter of high profitability. Overall, LHH revenues were flat. Professional Recruitment Solutions, however, was back to growth, up 1% and improving sequentially, with U.S. revenues growing 7%. Gross profit in both Permanent and Flexible Placement improved sequentially. Productivity rose 30% with selling FTEs 15% lower. In Career Transition, revenues were up 2%, driven by market share gains. U.S. revenues were 1% lower, a robust result in a softer restructuring environment. And APAC, U.K. and Spain grew strongly. The pipeline remains healthy.

In Coaching and Skilling, revenues were down 10% as General Assembly continues to pivot from B2C to B2B activities, which grew 19%, driven by a strong pickup of AI training offerings. [indiscernible] revenues grew 3%, a solid performance against a demanding comparison base, and its pipeline remains strong. LHH delivered an EBITDA margin of 11%, up 150 basis points year-on-year, reflecting growth in both Professional Recruitment Solutions and Career Transition, higher productivity and disciplined cost management. Direct contribution per selling FTE increased 15%.

Let's now turn to Slide 13 and the group's gross margin bridge. On a year-on-year basis, the group's 18.6% margin was driven by a 10 basis point impact from FX, a 25 basis point impact from flexible placement. While we have seen SMEs improving in some countries, large clients continue to grow faster and pricing remains firm. A 15 basis point impact from permanent placement, although the impact is still negative, we start to see the first signs of stabilization in permanent placement activities and a 20 basis point favorable contribution from outsourcing, consulting and other services, driven by our strong growth in outsourcing as well as the improvement in performance of Akkodis Germany. Overall, the result is healthy, 20 basis points lower on an organic basis and sequentially improving from 40 basis points lower in Q1 2026.

Let's now look at Slide 14 and the group's EBITDA bridge. The EBITDA margin, excluding one-offs, was 2.8%, 30 basis points higher year-on-year and improved sequentially. This result was driven by a 10 basis point impact from FX 20 basis points impact from gross margin, as just outlined and a 60 basis point favorable contribution from operating leverage, including the positive effect of the strong growth in large clients and SG&A savings. Importantly, productivity rose 6% year-on-year and selling FTEs were 2% lower.

G&A costs represented 3.2% of revenues, well below our target of 3.5%. In absolute terms, SG&A expenses were stable year-on-year. And as a percentage of revenues, SG&A expenses were 60 basis points lower. This outlines disciplined cost management. Notably, the organic drop-down ratio was 64% in Q2, evidencing strong operating leverage. These good results give us confidence in continued year-on-year EBITDA margin improvement into H2.

Moving to Slide 15 and the group's cash flow and robust financial structure. The last 12-month cash conversion ratio was 83%, a strong result considering the working capital absorption for the growth that we delivered. In Q2, the group's cash flow from operating activities was EUR 23 million, down EUR 58 million versus the prior year period. This was driven by working capital absorption due to improved revenue performance and normal seasonality. The group's DSO remained best-in-class at 53 days. Including capital expenditures of EUR 37 million, the free cash outflow was EUR 14 million. As a reminder, the group's cash flow generation is weighted to the second half. The group's financial structure is strong. At the end of Q2 '26, net debt was EUR 235 million lower versus the prior year period. The net debt-to-EBITDA ratio reduced by 0.5x year-on-year, driven by improved profitability. These results demonstrate continued progress towards the group's commitment to bring the net debt-to-EBITDA ratio to 1.5x or below by the end of 2027.

Moving now to Slide 16, where we provide our near-term outlook. Positive momentum in volumes has continued this quarter to date. For Q3, the group expects a modest sequential improvement in gross margin. It expects SG&A expenses, excluding one-offs, to be lower sequentially. Management is rigorously executing the group's strategy and run and change priorities, focusing on market share gains while actively controlling costs and managing capacity to continue driving profitable growth and deleveraging.

And with that, I hand it back to you, Denis.

Thank you, Valentina. And let me conclude with our key takeaways in Slide 17. First, the group delivered another quarter of strong growth and sustained market share gains. Akkodis returned to growth, marking a positive inflection in the business. This reflects the rigorous execution of our strategy, our focus on fast-growing end market penetration and our successful deployment of [indiscernible]. Second, the group's operating leverage and rigorous cost management continued to support profitability, a healthy gross margin and further improvement in EBITA margin year-on-year. And third, we continue to make solid progress on deleveraging, further strengthening our group's balance sheet. Deleveraging remains a clear priority for the group.

And with that, we would like to thank you for your attention and open the lines for Q&A. Operator, we're ready for the first question.

[Operator Instructions] Your first question comes from the line of Suhasini Varanasi of Goldman Sachs.

A couple from me, please. Just on the outlook, when you talk about the positive momentum continuing into the third quarter, I appreciate you have 2 percentage points tougher comps. But given the sequential improvement you're seeing, can you maybe perhaps overcome a little bit of the tougher comps? How are your expectations for Q3? I would love to get a bit more color there, please.

And secondly, when you're talking about the AI investments and the 70% of revenues going to be AI-enabled, can you talk about the incremental costs that are going into that as well, please? Because I note that your corporate and other line is up 15% in this particular quarter. So just trying to understand the potential for upside on margins as well as the incremental costs that are going into the business.

So I'm sure would be happy to talk about the momentum, and I'm going to talk about AI investments.

Thank you for your questions. On the momentum, I think what is really encouraging is that we have seen continued momentum up to the beginning of August. The exit rate, when I look at Q2, was very much aligned also with the average of the quarter. So it's really consistent. And it is true, as you outlined, that the comp gets tougher, 300 basis points, but we feel comfortable that we can compensate some of these headwinds because we see the volumes continuing to behave strong.

Yes. And with regards to AI, we are now deploying our agents. As I said, now it's already deployed in 10 countries, representing 50% of Adecco revenue. We have achieved our target that we had set for next -- for the end of this year, we have achieved it at the end of Q2. Now we have this target of 70% agents deployed. So this is progressing well. We are -- and we have -- to be clear, we have -- in our history, we've never deployed a product as fast as we now do with our AI agents, which is very promising. In terms of cost, actually, we have a very good contract with our AI provider with a fixed cost for unlimited volumes. So this is great because it drives adoption and with costs remaining under control. That's very positive for us.

Your next question comes from the line of Andrew -- Andy Grobler of BNP Paribas.

Just 2 from me as well, if I may. Firstly, in terms of gross margin, you noted some of the latest cyclical elements of your business getting a bit better, so SMEs, professional, perm and so forth. At what point do you think that works through to where we can see gross margins going up year-on-year? I know that's difficult, but sort of broadly speaking, where you think that can happen?

And then secondly, just following up on the earlier question about growth into Q3, you said that momentum continued into August. I know comps are difficult, but looking at your peers, the expectation is that sequential growth, so the 2-year stack will be about 2% higher in Q3 versus Q2. Do you think that Adecco will keep pace with that? Or are you going to begin to lose some of that momentum relative to your peers?

Valentina?

So let me start -- Andy, let me start with the gross margin. I think what you're outlining is exactly what you're seeing, right? The behavior of the components of our service lines really point to the signs of a recycle recovery, right? And to me, what is really important is that there is clear sequential improvement in our gross margin performance. We were down 40% in Q1, but down 20% in Q2. And if you look at each component, FESCO was down 30% in Q1, it was down 25% in Q2. Perm was down 20% in Q1. It was down 15% in Q2. And also notably outsourcing, consulting and other was up 10% in Q1 and it was up 20% in Q2. So to me, each piece is really important and speaks to cycle, but speaks also to underlying performance of the business. If I think about what's going to happen moving forward, to me, the most important point is that we are clearly talking about a sequential improvement again. And you've seen that in our outlook, we talk about a modest sequential improvement. And from a year-on-year perspective, I would expect the components of each of the elements of the gross margin to behave similarly to what we've seen in Q2.

And as far as the momentum is concerned, I cannot bet on what our competitors are going to do. What I know is we are on a growth path. Yes, we have a -- we grow from a bigger base. The comp is high, but we continue to drive momentum to drive growth to gain market share. We have gained market share 14 quarters out of 16 past quarters. And we see the momentum on volume continuing. So there's no reason for us not continuing to really be -- and the incentives that we've put in place are based on relative revenue growth. So we want to continue to access the growth. And actually, the agentic AI deployment the competitiveness that we've put in place, which -- because -- thanks to improved cost to serve, the efficiency, the firm pricing and not to forget that we are in fragmented markets, all that gives us a very good perspective to continue momentum in the next quarter.

Can I ask one quick follow-up just on one-off charges that were up again in Q2. And it's been kind of almost 100 straight quarters of one-off charges. Do you think they will start to come down into the second half of the year? And is there a point at which we can expect that number to be 0?

I'll take this one, Andy. I think we've been quite disciplined in ensuring that our one-offs start to come down. You've seen that last year. You've seen it in Q1. There are 2 important areas that we have decided to address in Q2. On the one hand, we've taken action in court of Germany to address the further softness in the automotive industry. And so we have further streamlined structural cost to also accelerate the pivot to higher growth end markets.

And the second area is that in Adecco France, we've taken actions to support the talent supply chain deployment to ensure that we can accelerate the fact that we are lowering cost to serve in large clients. What is important to me is that we're really disciplined in this approach. We only treat these costs as exceptionals when they relate to structural changes, not just managing the cycle. And these are actions that will support the improvement of margins in [indiscernible].

And this is something which is a very important point for us. It's to continue this discipline next year to return to much more normal levels. We are extremely strict with our teams. It's true that Akkodis Germany has seen signs of stabilization. However, we had the softness in autos forced us to do a further restructuring plan. But we -- as I said in the past, we want to bring that level of formal one-off down over time for sure.

Your next question comes from the line of Konrad Zomer of ODDO.

I'd like to press you a little bit more on the restructuring charges you just talked about to Andy because I remember that your Akkodis Germany business was very close to completing the restructuring a few quarters ago. And it doesn't seem to me, except for maybe some OEMs that the market environment has worsened a lot since then. Can you maybe explain to us again why these charges were up sequentially in Q2, but particularly what are the geographic areas where you might see some more restructuring charges going forward? And then my second question is on the 70% of revenue target for agentic AI. Can you just explain to us in a bit more detail what that actually means in terms of how it has changed the way you complete your contracts with your candidates and the corporates?

Sure. Thanks, Konrad. So just 2 things with regards to Germany. Germany is an interesting environment. We have growth in Adecco, okay, in autos. And we have a decline and a further decline that more than what we had expected. When we sort of went through the second half of 2025, we were seeing signs of stabilization in -- particularly in the number of R&D projects that we are running. It turns out that with 2 main OEMs, we had further projects that have been stopped or slowed down. And then this has created a level of bench that we hadn't anticipated at the end of 2026. And so the restructuring wave that we are executing now that has this consequence on one-offs is linked to this bench that was not expected. Now let's be clear, the volumes in autos in Akkodis is definitely reducing. So the exposure is less. Autos is minus 19% in Germany, but in Akkodis, but it's plus 2% in Adecco. We have -- and in Akkodis, we also have a very nice growth in aerospace and defense, plus 9%. We have growth in energy, plus 19% in manufacturing, double digit as well. So we're moving talent, but some -- we have to take these actions and to adjust.

Just to compensate on what Denis is mentioning about bench that is, I believe, particularly relevant. The fact that we have taken the restructuring actions has given us the opportunity to land on utilization ratio at very healthy levels in Akkodis in a quarter that is the small from a working day perspective, 91% utilization ratio is very healthy. And this is important stepping into Q3 where the working days amplifies and that is actually quite beneficial and favors the Akkodis margin evolution. So it was important to us looking at this trend, taking the right actions to ensure that then we can step into Q3 with a lower cost base and a higher utilization rate.

And again, Adecco is growing 2% in autos, which is quite an interesting perspective. And overall, what's interesting also in Akkodis is that the auto sector is growing in Spain, is growing in Italy, is growing in North America. So it's really mostly linked to one particular OEM, you probably guess who that is, that is struggling at the moment. And that was our biggest client there.

Now if I move to AI, okay? The agentic AI that we are deploying is linked to the identification of our recruitment process. We have created an environment, and we started in the U.K. We are now deploying in several countries, as I said, to really reinvent the workflow of the recruitment to concentrate the recruiters on where they're best at, which is the sort of the human touch, the human-to-human connection, but to automatize and do a zero touch on all the search and match and first contacts and first selection and also on the onboarding process. So we now have a much lighter touch on the human side, but a fundamental one to make sure that our recruiters validate the candidates, but also have the proper understanding of the client context. So from that, we are -- we have created that capability.

And then we are deploying it in -- we've deployed over 10 countries, and these 10 countries represent 50% of revenue. That means the revenue is enabled by Agent AI. We now have to scale in each of these countries, all these agents, okay? And then cover new countries. So that's why we said that we are deploying it enables the business and then we progressively scale with more and more candidates and more and more clients. We serve first the large clients, and then we are progressively deploying into what we call the branches of the future that are also progressively being agentic AI-enabled. What it means for candidates, it's better interaction. They can -- they have much more flexibility in when they interact with us in terms of the time of the day, in terms of the question they can ask, the attention that is given to them. And for clients, it means better quality, better selection, better fill rates, faster time to fill, and that helps us win market share. So it's both a productivity gain for us, but also a quality -- better quality service for our clients and our candidates.

Our next question comes from the line of Virginia Montorsi of Bank of America.

I just had a follow-up on Akkodis and the comments you made about aerospace and defense. So I think we've understood and we've discussed in detail Akkodis, but you've highlighted a couple of times in your presentation the strength you're seeing in aerospace and defense and the pivoting you're doing within Akkodis. So can you give us a little bit more color of that and what exactly within Aerospace and Defense is driving the good demand and how you're thinking about the time line of this ramp and this pivoting?

Yes. So this is definitely a sector where we're doubling down. What's interesting, we see very nice growth. You mentioned Akkodis, but Adecco is also growing 20%, 22% actually from a lower base, but it's growing nicely. So Akkodis is growing Akkodis -- yes, it's growing 15% in Aerospace and Defense in France, 9% in Germany, 12% in Spain, 9% in Italy, high double digit in North America, 20% in the U.K. This is very nice.

We work with all the major clients, the Airbuses, the [indiscernible] of this world, we work with all of them. And we have -- we are bringing very strong across-the-board engineering capability. And that's -- we see a great perspective. If you look at the order book that these clients have, they are massive. They require immense support as they have to develop new products, they have to produce more. So we are doubling down because there is a decade of runway in these sectors, and we are extremely placed. We are a strategic supplier in almost all of the names I mentioned.

To me, this is also particularly relevant when I think about our margin because among the many end markets we operate in. Clearly, aerospace and defense is one of those that has a higher profile when it comes to gross margin. And also when I think -- and this is both for Adecco and Akkodis. And then when I think about Akkodis, there's also the material improvement that we will be able to tap into as we scale global delivery.

This is very clear. Maybe just as a follow-up because I'm trying to reconcile the organic growth of Akkodis and the kind of internal split between A&D, autos and the other markets. Is A&D right now already quite meaningful in size in terms of the support it's providing to the divisions as opposed to the weakness in autos? Or is there any other maybe subsector that we're not thinking of that's quite meaningful in the weight when you think about organic growth?

Yes. Well, yes, ASD represents 17% of Akkodis revenue. So it's growing nicely. We're also strong in logistics. We have some good dynamics there. As I said, the pressure point is in autos, but in all those Germany, but we also continue to grow, as I said, in important geographies like Spain and Italy and North America. So we are growing across several sectors. The energy sector is promising. The railway sector is promising. We believe that there is a broad cross-sector growth perspective for Akkodis.

Your next question comes from the line of Will Kirkness of Bernstein.

Two questions, please. Firstly, just on market share gains. You gave a bit of color on what's driving that. I just wondered if you could talk about the spread between bill rates and wage rates. It sounds like it's still positive. And then secondly, on Akkodis, I wondered if you could give a bit more color on margins in regions where the growth is better. I'm just trying to think about the probability and time lines towards that 10% medium-term target.

Thanks, Will. I'll take the questions. So on the spread, the pricing is very much firm across all segments, and we do track the spread. It is positive. We've actually seen also slight improvement Q-on-Q. So we're very pleased to see that as the business mix gets better, as you've seen in our gross margin.

On the Akkodis, I think when you think about growth and where the profitability margins are different, it's very positive for us when growth comes in APAC, in Iberia, in Italy, those are the areas where we have higher profitability levels. When you look at our full year, they reach also double digit, whereas we have other areas like France, like in the U.S. that are more normalized towards mid- to high single digit. And Germany, of course, is more on a softer ground, although we expect profitability also in Germany from a run rate perspective in H2.

And as we also move quite significantly the business towards -- from time and material to statement of work and work packages, we know also that this is helping us improve the margins. So I won't give you a precise time line towards the 10% target, but we have it in the ahead of us, and we're doing everything that we can to continue to improve utilization, win large projects that are accretive to margins. And you will continue to see that productivity improvement and profitability improvement coming in. And let's be clear, the second half of the year is always significantly better in profitability than the first half. So we have some good perspective there. We've also...

[indiscernible]

Go ahead.

No, sorry, [indiscernible].

No, go ahead. Go ahead.

I was just going to say with regard to Germany, then that's still loss-making within Akkodis.

In Q2, we've seen -- from a run rate perspective, they were close to breakeven. But we would expect a run rate profitability in H2.

Again, we were on -- at the end of 2025, we're on a healthy margins run rate. And then that dip with autos has sort of delayed a little bit. But as I said, we are back to a good perspective there.

Your next question comes from the line of James Rowland Clark of Barclays.

Three questions, please. I think one of the slides about EMEA, you spoke about SMEs up 12% in Q2. And you sort of referenced that SMEs have picked up in certain cases. Can you just provide a little bit of color on SME performance across the group in Q2? And perhaps any key reasons that have picked up and why and what you're seeing there? Secondly, on one-offs, obviously, much higher in Q2 and it's to do with the Akkodis Germany restructuring. But does that charge run into Q3 as well? And also, can you just sort of lay out how much of that is cash related? And then finally, maybe it would be helpful just to understand how big is autos now in Akkodis Germany and Germany within Akkodis [indiscernible]?

So regards to the SME, we have good traction in really several parts of the world. We have -- overall, it's plus 3%, but we have North America driven at 23%, EMEA driving double digits, et cetera. The reason for that is we have reinforced our focus on our branches. And at the same time, we are deploying our digital tools that makes us much more efficient in addressing the local market. It's still the beginning. We are -- we have a project, which is called branch of the future, where we inject -- just like we've done for large clients, where we inject the full agentic suite, and this helps us win market share. So this is good. There's more to come. I'm not yet satisfied of the performance that we have in SMEs. We are -- this is a big, big focus for us, and we're pushing hard. As far as the one-offs?

On the one-offs, James, there is a little bit of a spillover in Q3. You've seen our guidance of 15%. So that's what we see in Q3. And it's a little bit of a spillover both of the Akkodis and the Adecco funds. From a cash perspective, this is not fully cash. There's also a piece that is related to structural costs that are not people. So that's noncash. And even for the fees that is related to personnel, the cash timing is very different than the P&L one because we do account for the one-off when we communicate the restructuring. But typically, the way that we pay is much more of a longer period, how people apply for the restructuring of that. So cash -- you have to consider both elements as you think about the impact on cash.

And as far as the size of autos in Akkodis overall, it's around 20%, and it's a bit higher than that in Germany. Let's be clear, we started at more than 40%. And because we diversify, we are rebalancing, but it's still relatively high. Think about autos in Germany being sort of midway between 20% and 40%.

Your next question comes from the line of Simon LeChipre of Jefferies.

First of all, looking at North America within the Adecco GBU, which is sort of leading the pack in terms of recovery. You mentioned strong growth of SMEs. So can you comment on the implications for gross margin? Does that mean that the gross margin in North America is now going up on a year-on-year basis with a more favorable mix of growth?

Secondly, looking at the EBIT margin at the group level, you are going to face some slightly tougher comps in the second half. So do you still expect the pace of margin improvement at the group level in H2 to be similar to H1, which was sort of plus 25 to 30 bps year-on-year? Or should it moderate? And lastly, free cash flow is below last year for the first half. Do you expect a catch-up in H2, which would drive free cash flow up for the year overall?

So yes, we are pleased with North America. We are still not out of the wood, still a lot to do. but the turnaround plan continues to deliver as per the expectations. The overall revenue in Adecco is growing plus 9% year-on-year. We have good traction in consumer goods, in auto, in manufacturing. And yes, we're pleased with SMEs at plus 23% because in Q1, we were at plus 7%. So we've gradually improved over the past quarters. This is due to the big focus that we put on the branch profitability, the branch efficiency.

We've changed quite a lot of people to just reinforce the muscle that we have there. And yes, it comes with better margins, gross margin. And definitely, this helps sustain the gross margin improvement that we see progressively in the U.S. So this is good. But let's be clear, the size of the SME business within U.S. is still subscale versus what we should be -- where we should be, which gives us a lot of space to improve compared to also the dynamic that we have with large accounts. But this is trending very nicely.

And I'll take maybe the other 2 questions, Simon. On EBITDA, yes, we are confident that the year-on-year improvement that you've seen in H1 will continue into H2. And if I think about the levers that we are capturing is continued sequential gross margin improvement, it's business mix. You've seen how our CH are contributing positively with growth in service lines that comes with higher gross margin. We see continued operating leverage, continued cost control. So we are confident that the year-on-year improvement that you've seen in H1 will continue in H2. And on free cash flow, the -- actually, the performance of Q2, we are happy about it. It's a good performance.

When I look at Q2 this year in comparison with Q2 last year, Q2 last year, our revenues were flat. Q2 this year, our revenues are up almost 6%. This comes -- we know that very well. In this industry, this comes with working capital absorption. However, having an 83% cash conversion ratio last 12 months in a period of this type of growth is a good outcome. And to me, knowing that I have this cash conversion at this point in time in a moment where cash is at its lowest because Q2 is the lowest quarter because of dividends payout, bonus payout as a step into H2, where our free cash flow is heavily weighted into H2 and Q4, clearly, the cash performance is going to get much better.

And I want to insist on the discipline that we've put on the cash collection, on the payment terms that we have with our clients. This is -- it's also -- it's not easy, okay? But we have a DSO, which is best-in-class we've really -- we're pushing hard there. And the whole company is focused on optimizing our cash to continue to deleverage because this is one of our key priorities.

Your next question comes from the line of Rory McKenzie of UBS.

Just 2 questions left. Following up on all the comments around the agentic AI progress, covering half of the group and your slides say there's a 25% to 35% productivity saving. I guess gross profit per FTE was only up about 2% compared to last year. So just how do we connect all this together for business benefits? And I guess it is one of the conclusions that you will need to significantly restructure the group in the future to unlock the benefits, which I guess goes back to some of the earlier questions about one-off costs over the medium term.

And then secondly, I think you made a small disposal this quarter. Can you just talk more about the business you exited, how you came to that decision? And given you haven't done any disposals, I think, for the past 5, 6 years, is there any kind of portfolio evaluation or review underway?

Let me start by the -- your last question on the disposal. Yes, we've disposed of a business in the U.S. in Akkodis, which was noncore, which was dilutive to margin. We had no particular synergies. So we disposed of that business. And the proceeds of that helped us to partly fund 2 bolt-on acquisitions that we've made that were great strategic fit to our positioning in the aerospace and defense, one in India, where on airframe engineering, where we doubled our presence in India with that.

And then the other one on cabin engineering in France with a mix of onshore and nearshore. All that -- these bolt-ons really help us accelerate and strengthen our positioning in the aerospace sector. So this is what we've done. In terms of -- we are constantly reviewing our portfolio. So -- and if you remember, we have done some disposals, particularly in Germany, particularly linked to autos, we've done several disposals to streamline our portfolio. So we're constantly looking at the relevancy of our offering and make the decisions when they are necessary.

Now on agentic AI, we see productivity gain, okay? What we are quite pleased with the way we are scaling, as I said. I think what's going to be very important is we see AI as a growth play. Because our markets are fragmented, we can have -- we can take market share in a much better way with our clients. We serve them better. We serve them faster. And that's really the power that we can do. So with the same number of FTE, we can really serve more clients and generate more revenue. This is particularly true as we will progressively deploy agentic AI also in the branches to serve the SMEs.

And I have maybe one follow-up from me on the productivity point you were making, because I understand where you're coming when you look at the gross profit improvement. However, to me, you have to look when it comes to productivity at the level of revenue growth that we have and the level of EBITDA improvement that we have, right, 5.6%, 21%. And the reason because of that is because clearly, the growth that we are bringing is profitable because we have operating leverage, right? Yes, we continue to see some mix because of the large client growth.

However, the drop-down ratio is 64% also because of this growth because our SG&A go down over revenue. So it is important when you look at productivity -- of course, gross profit is one ratio. But to me, it's also extremely important to look at drop down and look at EBITDA improvement. And at the fact that our productivity is once again this quarter up in all business units. Adecco up 10%, LHHRS up 30%. And as we discussed previously, very healthy utilization in Akkodis at 91%.

Your next question comes from the line of Jacques Poruti of Morgan Stanley.

I have 2 quick questions, please. Firstly, on Adecco France, the margin declined at a similar rate to Q1 despite the cost actions underway. Do you think volume improvement is still required for the margin to recover? Or can those restructuring actions drive some improvement even if market conditions remain broadly unchanged?

And then secondly, just one more quick follow-up to the questions on restructuring costs. Can you quantify the associated annualized cost savings you expect and when you would expect those to land in the P&L?

Let me address the France question and then Valentina will talk about restructuring costs. So well, actually -- so yes, France is a bit of a pressure point. Our performance is sort of aligned with last players in terms of growth at minus 1%. But -- and we have a good traction in manufacturing and autos. We're suffering in logistics and health care. We have a large client in the logistics sector that is suffering at the moment that was our largest client. So we are really doing a few things. We are pushing hard to grow SMEs. We are grow permanent recruitment because we see a little bit of traction there.

Scaling talent supply chain. I'm insistent on that because we've scaled our talent supply chain strategy in several geographies. We see improvement in cost to serve. We see better drop-down ratio. So -- and of course, we are working on optimizing SG&A. Our G&A is minus 10% year-on-year. Our S is also an action point. So we are adjusting our workforce to a market which is not clearly not very dynamic at the moment.

And on the restructuring, both for Akkodis Germany and Adecco France, you would expect that the benefits will flow through starting from Q4. So that further helps our margin expansion, not only from Q2 to Q3, which we have elaborated on also in our near-term outlook, but also from Q3 to Q4 and well into 2027, where you will have the full year impact.

Thank you so much. I'd now like to hand the call back to Denis Machuel for closing remarks.

Yes. Thank you very much for attending this call. Just a few things to keep in mind. Fifth quarter of growth in a row. 14 last quarter out of the last 16 where we gained market share. Perm is stabilizing. Akkodis is back to growth. Adecco is in a great place to continue to grow. And our profitable growth strategy that has delivered plus 5.6% revenue growth, plus 21% EBITA growth and plus 31% adjusted EPS is working. That strategy is delivering results and will continue to do so. We are uniquely placed to serve the current environment, accelerate with AI and continue to be extremely relevant for the 100,000 clients that we serve every day. Thank you so much for having been with us today.

Thank you for attending today's call. You may now disconnect.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Adecco Group Q1 2026 results. [Operator Instructions] I would now like to turn the call over to Benita Barretto, Head of Investor Relations and External Communications. Please go ahead.

Good morning, and thank you for joining the Adecco Group's conference call today. I'm Benita Barretto, the group's Head of Investor Relations. And with me are the Adecco Group CEO, Denis Machuel; and CFO, Valentina Ficaio.

Before we begin, please take note of the disclaimer on Slide 2. Today's presentation will reference both GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements, which are based on current assumptions and, as always, present opportunities as well as risks and uncertainties.

With that, I will now hand over to Denis.

Thank you, Benita, and a warm welcome to all of you who've joined the call today.

Let me begin with Slide 3. I'm really pleased to present Q1 results that show a very strong start of the year. Organic revenue growth has continued to accelerate. In the first quarter, revenues rose 5.3% year-on-year on an organic trading days adjusted basis, a strong result. The group made further strong market share gains, outperforming key competitors by 365 basis points, and we delivered a market-leading healthy 18.8% gross margin. The group EBITA, excluding one-offs, was 24% higher year-on-year on an organic constant currency basis. In turn, the EBITA margin expanded 20 basis points year-on-year to a robust 2.6%. Leverage was reduced 0.2x year-on-year, consistent with the ratio improvement delivered at the end of 2025, while the group's operating cash flow performance was solid, in line with normal seasonality and reflecting the business use of working capital during periods of rising revenue growth. Moreover, the group has continued to make swift progress with its AI agenda from which we are capturing encouraging productivity and growth.

Let's turn to Slide 4, which highlights how rigorous execution, including deploying AI tools and services is supporting the group's strong growth momentum. The left-hand side shows flexible placement and outsourcing volume data for the Adecco business. Against a mixed market backdrop, the Adecco Group has seen volumes recovering for over 12 months. In Q1, volumes further improved sequentially, achieving solid growth year-on-year and moving consistently higher than levels achieved in the first quarter 2 years ago.

Moving to the right side. Our talent supply chain solution delivered healthy operational results this quarter. Looking at performance for our largest clients, the temp placement fill rates improved by 400 basis points year-on-year with a 25% faster time to submit and a 30% reduction in time to fill. As the chart shows, against the backdrop of 20% higher demand from our largest clients, we are able to increase filled positions 25% year-on-year in Q1. This is a key part of how we gain market share.

So how did we achieve that? Well, actually, let's move to Slide 5, where we highlight how AI is driving productivity and growth across the group. We continue to scale a more efficient, integrated AI-driven platform model across the group. We have consolidated more than 30 Salesforce instances into a single AI-enabled digital platform with 27,000 recruiters now operating on a common tech stack and all recruiters equipped with GenAI capabilities. Automated order processing is up more than 65% year-on-year, year-to-date across 9 countries with plans to drive pace and efficiencies further. The group's Agentic AI rollout has accelerated with agents now added to Germany, Spain and selected global recruitment centers.

We will upgrade existing agents this year and deploy around 5 new agents. For example, we are currently piloting an onboarding agent in Spain, offering benefits such as instant automated candidate verification. We already see tangible operational benefits. More than 30,000 agent conversations are now held monthly, while over 110,000 candidate skills have been updated through agents, enriching our candidate database, which supports better search and matching.

To date, agents have delivered around 20% time savings for our recruiters. By the end of 2026, we expect 50% of Adecco revenues to be covered by Agentic AI. With these agents, we will be more efficient and more effective in delivery for our clients. And this, in turn, will help us grow faster.

Let me now hand over to Valentina to deep dive on our Q1 results.

Thank you, Denis, and good morning to all.

Let's begin with the GBU developments and Adecco on Slide 6, where we are pleased to report growth across all regions. Adecco grew revenues by 6.6%, further improved sequentially. In relative terms, Adecco captured 210 basis points of market share gain and all regions grew, underpinned by momentum in flexible placement, where revenues increased 6% and in outsourcing, which grew 16%. We believe both flex and outsourcing are benefiting from an uncertain geopolitical context as they are highly agile services, while permanent placement remained soft, declining 7% this quarter.

Adecco's gross profit improved with the margin mainly reflecting lower permanent placement volumes and the current client mix in flexible placement. EBITA rose 6% with a margin of 3%, mainly reflecting current business mix, largely offset through higher volumes, firm pricing and G&A savings benefit. Productivity rose 2% and selling FTEs were stable compared to the prior year period. Let's now move to Adecco at the segment level on Slide 7.

In Adecco France, revenues returned to growth, rising 1% and ahead of market. On-site activities grew double digits. And in sector terms, autos and manufacturing were strong, while health care was soft. The EBITA margin of 1.5% mainly reflects current business mix. Management is implementing a cost optimization plan, which delivered EUR 4 million run rate savings at the end of the first quarter. In Adecco EMEA, excluding France, revenue growth was strong, up 7%, and sequentially improved. Most territories delivered good performance and grew ahead of competitors. When we look at the larger markets, revenue rose 6% in Italy, supported by strong activity in logistics and solid demand in financial services, tech and autos.

Revenues in Iberia were up 16%, led by autos, financial services, food and beverage and consumer goods. DACH's revenues were stable, a good result given market headwinds. Growth was strong in aerospace and defense and autos, while logistics and public sector activity was soft. In the U.K. and Ireland, revenues were up 5% despite a tough market, supported by strong demand in financial services and the public sector. The segment's EBITA margin of 3% mainly reflects current business mix mitigated by higher volumes and G&A savings and productivity was up 7%.

Turning now to Slide 8. Adecco Americas delivered 15% revenue growth. North America continued to successfully execute its improvement plan. Revenues remained very strong, growing 15% and above market trends. In sector terms, consumer goods, food and beverage and autos performed well. Latin American revenues remained strong, rising 15%, led by Colombia, Peru and Brazil. By sector, logistics, financial services and retail were strong. The Americas EBITA margin of 1.7% mainly reflects higher volumes and G&A savings benefit, partly mitigated by investment in capacity to fuel growth and productivity was stable.

Turning to APAC. Revenues continued to advance strongly, growing 8% with growth across all territories. Revenues rose 6% in Japan, 12% in Asia, 10% in India and 3% in Australia and New Zealand. By sector, growth was led by consulting, aerospace and defense and public sector services. FESCO delivered EUR 20 million of income in the quarter, stable year-on-year. APAC's EBITA margin of 7.2% mainly reflects higher volumes and investment in capacity to drive future growth and productivity rose 2%.

Let's now move to Slide 9 and Akkodis. Top line developments are stabilizing. Revenues were 1% lower, with consulting up 0.4%, supported by a strong acceleration in aerospace and defense, which was 22% higher. In EMEA, revenues were 3% lower. Looking at the key countries, revenues in France were 2% higher and ahead of market with notable strength in aerospace and defense. However, Germany was 5% lower with headwinds in autos, partly offset by strong growth in aerospace and defense and manufacturing. North American revenues were up 5%, with tech staffing and consulting up 6% and 4%, respectively.

In APAC, revenues were 4% lower, weighed by Australia, where market conditions remain demanding. Japan was strong with revenues up 5%. Reflecting mainly the turnaround in Germany, Akkodis' profitability is improving. EBITA rose 23%, while the margin of 4.2% was 70 basis points higher, also reflecting good project margin developments and a strong utilization rate of 90%.

Let's now move to Slide 10 and LHH's good performance. LHH's revenues were down 1% this quarter. Revenues in career transition were up 5%. U.S. revenues were 4% higher, a strong result given a softer job cuts dynamic in this market. India, Spain and Switzerland performed well, and the business pipeline remains healthy. In Professional Recruitment Solutions, revenues were 6% lower, reflecting continued market headwinds in permanent placement. Recruitment Solutions gross profit was 8% lower, with the U.S. also 8% lower. Productivity rose 11% with billing FTEs down 13% due to further rightsizing efforts. In coaching and skilling, revenues rose 6%, led by Ezra, which grew revenues by 35%. LHH's EBITA was up 50%. We were pleased to see the business deliver a double-digit EBITA margin at 11%, reflecting positive business mix and strong cost mitigation.

Let's now turn to Slide 11 and the group's gross margin bridge. On a year-on-year basis, the group's 18.8% margin was driven by an unusually large FX headwind of 20 basis points, a 30 basis points impact from flexible placement, a 20 basis points impact from permanent placement and a 10 basis points positive impact in outsourcing, consulting and other services, mainly driven by Akkodis Germany. Overall, the result is healthy in the context of the current business mix, moving 40 basis points lower year-on-year on an organic basis.

Let's now look at Slide 12 and the group's EBITA bridge. The EBITA margin, excluding one-offs, was robust at 2.6%, up 20 basis points year-on-year and 40 basis points on a constant currency basis. The result was driven by a 20 basis points negative impact from FX, 10 basis points favorable impact from Akkodis Germany and 30 basis points favorable development from higher gross profits, excluding Akkodis Germany. Among key metrics, productivity is up 4% and G&A costs are at 3.2% of revenues, evidencing tight control over SG&A, which is stable year-on-year and 100 basis points lower as a percentage of revenues.

Moving to Slide 13 and the group's cash flow and financing structure. The last 12-month cash conversion ratio was strong at 94%. In Q1, we had an operating cash outflow of EUR 178 million, down EUR 34 million versus the prior year period. This cash result reflects good working capital management, working capital absorption for growth and normal seasonality. The group's DSO remains best-in-class at 53.3 days. Including capital expenditure of EUR 22 million, the free cash outflow was EUR 200 million. Alongside strong cash performance, the group is strengthening its financial structure.

The net debt-to-EBITDA ratio improved to 0.2x, consistent with year-end 2025 progress on deleveraging, affirming progress to meet our commitment to bring the net debt-to-EBITDA ratio to 1.5x or below by the end of 2027, absent any major macroeconomic or geopolitical disruption. In April, the group successfully issued a EUR 450 million hybrid bond with an attractive coupon of 4.875%. The group has strong liquidity resources, including an undrawn EUR 750 million revolving credit facility and low interest expenses. It has fixed interest rates on 76% of its outstanding gross debt and no financial covenants on any of its outstanding debt.

With regards to the dividend, 53% of shareholders elected for the scrip, resulting in 5.3 million new shares issued at CHF 16.94 per share and CHF 79 million of cash distribution in Q2. We are pleased with the take-up of our scrip dividend and thank our shareholders for their continued partnership.

Moving on to Slide 14, where we provide our near-term outlook. The group has seen a continuation of the positive momentum in volumes to date this quarter. For Q2, the group expects gross margin to be marginally lower sequentially, reflecting normal seasonality. It expects SG&A expenses, excluding one-offs, to be marginally higher sequentially. We are rigorously executing the group strategy and run and change priorities, focusing on market share gains while managing costs and capacity with discipline to continue driving profitable growth.

And with that, I'll hand back to Denis.

Thank you, Valentina. And let's now turn to Slide 15.

Before I conclude, let me share an executive committee leadership change. Ranjit de Sousa has been appointed as President of LHH and member of the Group Executive Committee effective today. He will succeed Gaelle de la Fosse, who has decided to leave the company to pursue opportunities outside the group following a handover period. I'd like to sincerely and warmly thank Gaelle for her significant contribution over the past 4 years. Under her vision, LHH has been successfully repositioned into an end-to-end executive and professional talent solutions leader. And we are pleased to welcome Ranjit back to the Adecco Group to lead LHH. He is a highly effective leader who will build on the strong momentum of LHH, using his experience and track record to further drive innovation, leveraging human-centric AI and ensuring clients and candidates benefit from the full power of the Adecco Group's offering.

Moving to Slide 16. Let me conclude with our key takeaways. We have made a very strong start to 2026. We've delivered strong revenue growth and market share gains in the first quarter with AI deployment demonstrably driving competitive strength. The group's EBITA increased by 24%, a strong improvement that reflects disciplined strategic execution and rigorous cost management. Productivity was also up 4% year-on-year. The balance sheet has improved, and there is more to come. Deleveraging remains the clear priority for the group.

And with that, we'd like to thank you for your attention and open the lines for Q&A. So we are ready for the first questions.

[Operator Instructions] Your first question comes from the line of Suhasini Varanasi with Goldman Sachs.

Just one for me, please. I think on SG&A, maybe there was a little bit of a surprise to the upside on costs in first quarter and you're continuing to invest going into the next quarter. Can you maybe help us understand the dynamics behind this development here? Which are the regions that you're choosing to invest? And why -- what changed, I suppose, through the course of the quarter that made you want to invest a bit more?

I think Vale, who likes to control as much as I do, by the way, like to control the cost, will answer that question.

Thank you, Suhasini, for the question. I think what is clearly the takeaway is the revenue growth that we've seen stepping into Q1 '26 was very strong. And as always, we are very close to the behavior that each country shows, and we take deliberate choices to ensure that whenever we see growth, we capture it. So selectively, we have chosen to invest a bit more in S in some of these countries to ensure that we capture this growth, which, by the way, we've done successfully in Q1, and it was profitable growth, as you've seen how this improved our profit year-on-year.

And we see this momentum continuing. So it is very important that we remind ourselves that to make these deliberate choices is relevant also because we need to ensure that then we have the right capacity stepping into Q2 and more importantly, into H2, where volumes go up, trading days go up and then the opportunities of growth become even more important. So that's how we thought about it, and that's how you should think about us investing a bit more in S in these territories that are growing.

Yes. I just want to say we are also very focused on maintaining our G&A cost flat and at below 3.5% of revenue, we are laser-focused on that.

Your next question comes from the line of Remi Grenu with Morgan Stanley.

A few questions on my side, if I may. So the first one is related to the previous question on SG&A. Maybe taking a little bit of a step back there. Denis, you were talking about AI implementation time, 20% time saved for recruiter, increasing productivity. So I guess one could have thought that this would translate into a higher drop-through or lower necessity to invest in cost when the volume is coming back. So I guess the question would be whether you think it's just a matter of time. It takes time for these initiatives to yield financial results. And if so, when would you expect to see the benefits materializing on the P&L? So that's the first question on AI and cost.

The second one is on the current momentum. So looking at the data published in March and April from the different providers, it feels a little bit and tell me if I'm wrong, that temp has continued to gradually improve. But perm has deteriorated a little bit once again and was weaker. So of course, different by countries, but are you seeing something which is consistent with that trend? And if so, would you say it's consistent with what's happening in the Middle East, higher uncertainty and clients moving toward flex placement?

And the last question is on Akkodis. I think Germany, as you were saying, was probably a little bit weaker. So any additional flavor you can give on that, whether you think it's a multi-quarter weakness we can expect? Is it the beginning of an inflection towards a little bit of a deterioration? And do you feel like at this point, you need to maybe adjust the size of the bench or take any significant actions?

Thank you, Remi. So I'm going to start with AI, and then I think Valentina will complement. But we're very optimistic about how we are scaling AI, but it's still in scaling mode, okay? What we see is productivity is coming in, okay? And that's going to be very promising in the future. It helps us gain market share. In terms of the cost, particularly when we scale Agentic AI, we signed a contract with Salesforce that gives us unlimited access to agents for a fixed price, which means whatever volume we put on top we don't have additional costs. So that's -- I think it's a pretty good thing. But maybe in terms of the dynamic of the drop-through, you want to say something, Valentina. And then I'm going to go on the market improvement and the other questions.

What I think is very important, building on what Denis just said is we're really driving the return on investments of these modest investments that we are doing in AI that, by the way, within the business, the usage we keep within the selling cost to ensure that accountability is driven and within the results that the leaders are delivering. What I think is really important, Remi, is on a year-on-year basis, revenues were up 5.3%. Our SG&A ratio over revenues is down 100 basis points. So that tells you that this revenue growth that we are generating with additional gross profit is dropping through.

And so the fact that on a year-on-year basis, our EBITA improves 24% organically is true profit generated, [indiscernible] flat year-on-year. So this is growth that is not just profitable, but driven by strong productivity, also thanks to AI, dropping 100% through with additional profit. This is important, and you have to look at it also on a year-on-year perspective.

Now on the trends. As we said, we have seen a positive trend on the volumes, on the flex volumes all through Q1, and it continues in Q2, which makes us very positive about the future. It's driven by probably the uncertainty -- the economy, which is not that bad and the uncertainty that favors more flexible placement than permanent placement. So you're right, permanent placement, I don't think it's deteriorating. It's just the same trend that we've seen, mostly linked to uncertainty where clients do not want to bet on recruiting permanently. It's true across many geographies.

However, if you think about 3 particular geographies, where we have a pretty nice momentum. In Adecco, Spain is growing 8% in permanent recruitment, and you know how good the economy is in Spain. In APAC, we are growing 10% in permanent recruitment in Adecco. In LHH, we are growing 19% in LatAm in permanent recruitment. We're growing 3% in Spain. The problem is the rest of the regions are probably more sensitive to macros. And yes, it's true that at the moment, it's really -- it's subdued. But let's be clear, we're still doing close to EUR 1 billion in permanent recruitment. So it's still a nice business, and it will remain quite dynamic. It will continue, albeit at lower levels. However, we're well positioned whenever the recovery comes. And we, of course, managing capacity. So this is -- but of course, macros today support Flex, and we are seeing continuous momentum on Flex volumes and also outsourcing, we mentioned 16% growth in outsourcing.

Now Germany, definitely, we have 2 sides of the coin. We have still pressure on autos, okay? Yes, we were expecting a little bit more dynamic. There's still pressure, and it's mainly coming from the German OEMs, and it is what it is.

However, on the other side, we have fantastic growth in aerospace and defense, 26%, with all the large clients that we have. We've seen growth in energy, growth in manufacturing. So -- I mean there is momentum here. However, of course, given the size of autos in Germany, it puts pressure on the overall results. Our margin is up 70% -- 70 basis points year-on-year. To your point, Remi, we are managing the bench. So we are adjusting. We are continuing to do savings. We see the top line stabilizing. I would not say fully stable yet, but stabilizing. And we are very actively saving costs. We've done 2 divestments, and we're managing the bench very, very actively. So I think on the midterm, I have a positive outlook on Germany. At the moment, it's still a bit under pressure.

Your next question comes from the line of Simon LeChipre with Jefferies.

I've got three, please. First of all, could you give us a bridge for the gross margin in Q2? And what is the degree of conservatism baked into this guidance given it has been a few quarters in a row now where GM came in weaker than expected?

And secondly, can you help us understand why gross margin would come down in Q2, while SG&A would go up?

And lastly, a follow-up on one of the previous questions. You are talking about profitable growth and the productivity gain from AI, but if we look at the gross margin of the temp business, it has been incrementally weaker over the past quarter. So does that mean that you are sharing most of the productivity gains with clients and then driving this deflationary trend?

Thanks, Simon. I'll take your first and second question, and then I'll hand over to Denis for the third one.

So looking at the outlook, first on gross margin, what we see and what you should model thinking about Q2 is marginally lower, in the region of 20 basis points, considering that FX will continue to be a headwind, albeit smaller than what you've seen in Q1, so more in the region of 10 basis points. You were asking why we have to think about this being lower. I think we also have to remember that Q2 in comparison to Q1, seasonally, we always see volumes in larger clients being a bit bigger. And there's also trading days that are actually lower. So these are the main elements that I would model.

Looking at SG&A, G&A tightly under control, well below 3.5%. We continue to capture pockets of efficiencies, but there's continuation. You have to think about our guidance in light of the strong momentum on growth that we continue to see. So we will continue to selectively invest in S to ensure that we capture that growth. H2 will be up in terms of trading days. We have to be prepared to capture that growth. But productivity will continue to be strong and up. So you should also model for our SG&A ratio over sales on a year-on-year perspective to perform well and down on a year-on-year basis.

So with regards to the productivity gains from AI, what we're doing is we are -- AI helps us really reduce our cost to serve with the large clients. And large clients are very competitive. So when you talk about the pressure on gross margin, there's a lot that's coming from the mix because we are growing very, very nicely in our large clients. And there's a bit of a difference with the growth on small and medium companies, which is a big focus now for sure. And of course, and driving better cost to serve to serve large clients is fundamental. So it's not that we are sharing productivity gains with clients. I mean the environment with the large ones is always very competitive.

So we are more and more scaling AI to improve our cost to serve, improve our productivity, and that's going to help us sustain our gross margin. But the thing is more the mix than what happens on the client side. The spread bill rate, pay rate is still positive. So it's a question of mix. And I'm very positive with the way we are scaling on the front line with our clients that delivers efficiency, that delivers value creation. We are able to go faster to deliver candidates to our clients. We have a better qualification. So we -- this is very promising as we move.

We will also deploy AI in the branches, in our network. It takes a bit more time than scaling AI in our global recruitment centers. But we are currently piloting AI in what we call branch of the future and getting all the learnings that we have from the large accounts in the smaller ones. And we'll keep you posted on that, but it's also promising.

Your next question comes from the line of Rory McKenzie with UBS.

It's Rory here. I just want to ask again about the gross margin because I think we're all still seeing it as a puzzle. If I look at the absolute organic growth in revenues and the absolute organic growth in gross profit that you report for the last 4 quarters, I calculate an incremental organic gross margin of 10%. Now that last 12 months is the period in which you have returned to growth. And so I guess, why shouldn't we think that, that 10% gross margin is representative of the average margin that you're able to win in this environment? What's going on within that, that explains why I'm only measuring a 10% margin?

Thanks, Rory. I'll try to unpack it a bit more for you. The reason why you see that difference is clearly coming from the mix. And when I talk about mix, it's on the one hand, client mix, yes, because the further growth that has accelerated even more in Q1 comes from larger clients, but it's also country mix. So you have seen that we have grown, in some cases, even double digits in countries that also mainly based on the fact that it's lower salaries on average terms. That also skews our gross margin overall a little bit down. However, that helps us on the SG&A ratio. And that is why you see such a strong performance also of the SG&A ratio year-over-year going down. So you have to look at those 2 in conjunction. If you look only at the gross profit in absolute terms growing, you see both of those impacts, client mix, but also the country mix.

No, that does actually [indiscernible] my second question. Again, you guess what I've been playing with this morning. But If I look at the organic growth in SG&A again over the last 4 quarters, I think I get to an organic incremental conversion ratio of 101% for the last 12 months, which obviously is great. But again, in some ways, looks perhaps unsustainable at that level to drop everything through to profits. So...

I think what you mean is that there are more levers, right? There are more levers that we are starting to pull and will come through more strongly over the next quarters because when I think about Akkodis Germany, not the vast majority has come in, more will come. There is further improvement in North America. There is a clear further improvement coming from France. So you have to expect improvement coming not just from this, and so the relationship between gross profit growing and how do we deal with us. But the other areas that we're working on to diversify, but also to improve and turn around some of the units.

Your next question comes from the line of Will Kirkness with Bernstein.

I've got two, please. So firstly, you mentioned bill rates and pay rate spreads still positive. I just wonder if you could talk about price versus volume, those components overall in the growth in temp and whether you're seeing wage inflation or conversations about wage inflation creeping back?

And then secondly, just looking at a couple of regions, and I guess sort of linking in with Rory's question to some degree. So in France, you've got growth coming through now, but margins down a bit. I guess you would expect that to sort of correct in the coming quarters. So just interested in the outlook there.

And then in Americas, I appreciate margins are up year-on-year, but you're seeing very good growth there. And there's been a number of years, I think, of self-help turnaround. So just wondering there why margins still sub-2% and where you would expect those to move to over the coming quarters?

I think Valentina will take the first one, and I'll take your second part.

Yes. Thanks, Will. So in terms of spread, you've heard already Denis mentioning that it continues to grow positively in terms of bill to pay rate. You were mentioning the behavior on wage inflation. What we see consistently now is a very modest wage inflation, and this is applicable both to what we see based on our cost base, but also in the market. So that's how you should model it moving forward. Very modest wage inflation, spread continues to be positive.

So as far as the 2 regions you're mentioning, France, we're pleased to be back to growth. We are at 1%. We are ahead of the market, which is good. We definitely -- we have -- and that's -- again, that's the mix that Valentina was talking about. We still have a better dynamic with large accounts than with small and medium enterprises, which, of course, again, weighs on the profitability. We have a strong plan to do several things. First of all, to reactivate strongly how we go to market with small and medium enterprises. That is underway.

We also want to scale up faster the talent supply chain model that helps us reduce our cost to serve so that the profitability with the large accounts is improving. We also have an SG&A program to make sure that we delivered EUR 4 million of cost optimization. And that's what we -- and we believe there's still pockets of permanent placement opportunities in tech, in construction in a few sectors. So this is -- I think this is going to be helping us in the quarters to come.

Just a quick parenthesis, we're talking about Adecco, but Akkodis is growing 2%. Aerospace and defense is growing 13%. Autos is even growing 3% in Akkodis. So on that side, we have a very good momentum in France. U.S. or Americas -- yes, Americas or U.S., we are growing nicely, and it's the same thing. So we're growing 15%. We've improved the margin 60 basis points. But as you said, we're still below 2%. It's a series of things. First of all, we grow faster in large accounts, 21% versus small and medium 7%.

And that branch, we had to recover from a very difficult situation. And the turnaround plan was, first, to drive growth in large accounts and then progressively improve branch after branch, improve the profitability in our go-to-market. We have 12% more branches that are profitable in Q1 at the end of 2025. So that's good. It's progressing. But we started 3 years ago from -- 4 years ago from a very, very difficult situation. So we're improving, but more to come, and that's going to deliver progressively EBITA.

I remind you that 2025 was the first year where we were positive in EBITA, okay, after so many years of being negative. So it's trending nicely. We're doing the right things. We have traction in MSP business. We have a revenue retention, which is over 100% per client. We are accelerating the talent supply chain model. We're seeing 25% fill rate improvement, Q1 versus Q4 in our competence development center. So we have traction. But given the size of the business, it takes time to fully deliver. But it's on track. Quarter after quarter, we're improving. We have a solid pipeline. Yes, we are anniversarying a few large clients, but we still have a solid pipeline. So I am very confident that our plan is delivering, and we continue to see nice results.

Your next question comes from the line of Konrad Zomer with ABN AMRO ODDO.

I just wanted to come back on the margin development in Q1. I think you've done really well on the top line, but clearly, the operating margin is still below 3%. And I think most of us on the call have already expressed a slight disappointment on the gross margin development. To me, it reads a bit like if markets go down, you struggle to fight the negative operating leverage. But if markets go up or at least if your top line goes up, you need to invest more in the business. Is it fair to say that structurally, over time, there will continue to be negative pressure on both the gross and the EBITA margin. Is that how you look at your business? Or do you still think you can get margins back up to historic levels?

Thanks Konrad. So let me first start with one point. You mentioned that it feels that when we grow, we need to invest. In Q1, we've grown 5.3%. Our SG&A were flat. And our SG&A over revenues was down 100 basis points. So I don't think that I agree when we say that to grow, we need to invest. That is exactly what we are demonstrating here that we are growing and the growth is dropping through in profit. Gross profit was up 3% in Q1. EBITA was up 24% organic constant currency. Net income was up 41% organic constant currency. So I really think we have to be careful when we look at our year-on-year drop-through of the growth that has been very profitable. I also want to remind you of one more thing. You mentioned us landing in Q1 below 3%. It's correct. It's 2.6%.

However, you know that typically, our margin expands way more stepping into H2 versus H1, which is normal because Q1 and Q2, our lower volumes, lower trading days, lower working days. So it is a normal behavior. What is important, I believe, is year-on-year, also the margin is up 20 basis points, 40 if you consider the fact that we had an unusually high FX headwind of 20 basis points. So on absolute terms, we're growing, but also in relative terms, we're really growing year-on-year. And this -- and its thanks to growth that is materializing more profit.

Your next question comes from the line of Simon Van Oppen with Kepler Cheuvreux.

One question for me, please. Obviously, in Q1, solid performance in terms of top line for Adecco, whereas Akkodis and LHH remain somewhat under pressure. I just have a question, under what circumstances would you consider selling one of your GBUs or exit certain markets permanently where you don't expect growth to come back?

Well, we are really pleased with the portfolio that we have. And as you understand, we have a growth agenda and every single piece of our business can deliver growth. Now we are constantly, of course, scanning the portfolio to make sure that we believe that every component of it remains relevant. We have, for example, in Germany, we've divested this past year -- in the beginning of this year, we've divested small businesses that we believed were not bringing value and were a drag to our performance. So we've done that. We continue to do that. There is nothing on our portfolio that of massive importance that would justify sell. And in terms of markets, I mean, we are -- as you could see, we are in a good place in many, many markets. There's no market that we don't think we couldn't turn around.

Now if I look at Akkodis -- if you look at Akkodis overall, we have a drag in Germany for sure, and it's autos, right? But Akkodis France is plus 2%. Italy is plus 4%. U.K. is plus 12%. Japan is plus 5%. U.S. is growing as well, like plus 5%. So we are -- I mean, this is growing. We have addressed this topic in Germany. We're also growing strongly in aerospace and defense in Akkodis, right, 22% overall. Even in Germany, we're growing 26%, okay? So we have very good underlying elements to our performance.

In LHH, yes, we are -- at the moment, we have subdued market in permanent recruitment, but career transition is growing 5%. Ezra, coaching platform, growing 35%. So all these elements make us very confident that our growth agenda will continue to deliver. And to Vale's earlier point, this growth that we have in revenue is very, very nicely dropping through into EBITA and EPS.

Your next question comes from the line of James Rowland Clark, Barclays.

Two quick questions, please. One on the outlook. You talked about your positive volume momentum continuing from Q1 to Q2, but the comps get about 2 percentage points tougher. So can you just help us with sort of on a year-on-year organic trend, whether you think you're seeing the same level of growth as Q1 or maybe given the tough comps that you're a touch below that, but obviously, that's still positive year-on-year.

And then in APAC, the margin is a fraction softer year-on-year, but it's already very high. And the region is now a very big sort of profit contributor for the overall group. I know you're investing there, looking to grow quickly, but is there a margin growth story here as well? Or should we think about flat performance in the medium term given you're putting a lot of branch and capacity into the region?

Thank you, James. I'm very confident in the fact that we are able -- yes, comp base is getting tougher, but look at the dynamic that we have. Look at the progressive growth that we demonstrated since the beginning of 2025, okay? Our teams are super motivated. They are compensated also through relative revenue growth. You heard me say that probably many times. I tell the team, I don't care about macros. What matters is that you run faster than the others. And that's how we've designed the incentives, and we are a fragmented market. So we're able to grow through very active sales team through a very strong value proposition across all these services that are very meaningful with our clients. We're able to grow because we are more and more efficient in the way we serve our clients. So I'm confident. Is it going to be -- are we going to have the same differential? I don't know. But I can tell you, we are on it. And volumes are trending very, very nicely so far.

And James, on your APAC question, of course, we're very pleased with the results in APAC. And I have to say that we are pleased both when we look at Adecco, but also Akkodis. We see APAC, of course, as an engine of growth, and it is a profitable growth. If I think about Adecco, there are countries -- I mean, our biggest country is Japan. It's growing profitably. The productivity is up. It is one of the areas where we are investing because we see more opportunities. It's also an area where we grow nicely, not just in Flex, but also in outsourcing, and that's accretive for our margin.

And when I think about Akkodis, also Japan is a growth story and the profit is also very nice. The profit in -- it's one of the countries that has the highest profitability within the Akkodis GBU. So we're pleased. And yes, APAC is not just a growth, but it's a profitable growth story for sure for the group.

Your next question comes from the line of Virginia [indiscernible] with Bank of America.

I just had an additional one on Akkodis. Could you help us understand a little bit more what you're seeing on aerospace and defense as opposed to autos as 2 very different end markets and how you're thinking about the end of the year? I know you've touched on this on the call, but especially in A&D would be interesting to understand a bit more how you're thinking about the space?

Yes. Thank you for your question. We are having great momentum in aerospace and defense. We have very good momentum in Adecco as well, by the way, we're growing high double digit in aerospace over -- even though it's smaller volumes, of course. But we are having a good trend. In Akkodis, as I said, we are growing 22%. It's across most of our geographies. And it's a mix of, of course, the investment that the defense sector is doing in many, many countries linked to the geopolitics, but also aerospace has a really great, great momentum. So Akkodis is growing 22% in aerospace and defense. I mentioned even in Germany, we're growing 26%. So that's really good.

And we're growing with all the major players, the Airbus, Thales, Safran of this world, Rheinmetall and Deutsche Aircraft, all these big clients are asking us to support them. In France, we are growing 13% in aerospace and defense as well. So there's great momentum. We are doubling down on this sector. We are building capacity because there's really a long tail of projects that we have. We have great perspective, and we have extremely good positioning. The trust that our large clients have with us is really encouraging. So we are -- I see that as a very, very positive supporting trend in the future.

Your next question comes from the line of Simon LeChipre with Jefferies.

Yes. A quick follow-up, please, on the debt refinancing. Can you give us a refresh on the maturity profile of your debt and any material refinancing coming up? And what would be the implications for your interest cost for 2027? Should it go up from the EUR 80 million you are expecting for 2026?

So no, we're guiding from EUR 68 million in '25 to EUR 80 million, mainly because of the hybrid bond that we've successfully issued in last April. But we were very pleased because the coupon was very well done by our group treasury team. In terms of profile of debt, we continue to repay. So you would expect that not only, of course, we will repay the EUR 500 million hybrid bond in December 2026, but we also repaid the CHF 100 million bonds that also matures this year. So gross profit continues -- sorry, gross debt continues to go down in line with our trajectory to delever.

Thank you. I would now like to turn the call over to Denis Machuel, CEO, for closing remarks.

Thank you very much to all of you who have attended the call. As you could hear from what we said, we are very confident in the future. Since I joined 4 years ago, my agenda has been to grow the business in fragmented markets, okay? This is what is ahead of us. We've proven for the past 15 quarters, we've outperformed and gained share, 13 of them. And as we have this healthy top line, this is driving absolute profit growth. 5% revenue growth, 24% EBITA growth this quarter, 41% EPS growth this quarter, okay?

This is my agenda and it's delivering. We have big opportunities ahead of us. I was mentioning aerospace and defense, where we're doubling down and investing in further capabilities. I am extremely confident in the future. We have seen the volumes nicely growing in early Q2. We are in a very good place for this year.

Thank you very much for all your questions, and I look forward to maybe more closer interactions in the weeks to come as we do our road show. Have a great day. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Adecco Group Q4 and Full Year 2025 Results.

[Operator Instructions] I would now like to turn the call over to Benita Barretto, Head of Investor Relations. Please go ahead.

Good morning. Thank you for joining our conference call today. I'm Benita Barretto, the group's Head of Investor Relations. And with me are the Adecco Group's CEO, Denis Machuel; and CFO, Valentina Ficaio.

Before we begin, please take note of the disclaimer on Slide 2. Today's presentation will reference both GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements, which are based on current assumptions and, as always, present opportunities as well as risks and uncertainties.

With that, I will now hand over to Denis.

Thank you, Benita, and a warm welcome to all of you who joined the call today. And let me open with the full year highlights on Slide 4.

The group has consistently delivered on its ambitions and targets in 2025. In terms of market share, the group gained 245 basis points relative to key competitors with ongoing positive momentum. On a full year basis, the group's revenues were up 1.3% year-on-year, gross profit was stable, and the group delivered an industry-leading 19.2% gross margin, evidence of the benefits of its diversification strategy.

The group has managed costs and capacity with discipline. G&A overheads were further reduced by EUR 23 million, bringing our total net savings to nearly EUR 200 million when compared to 2022's baseline. And productivity increased 3% year-on-year. In turn, the group generated EUR 693 million of EBITA and stayed within the EBITA margin corridor on a full year basis at 3%.

Cash generation was strong with 102% cash conversion ratio, operating cash flow of EUR 613 million and free cash flow of EUR 483 million. Importantly, the group improved its leverage ratio, ending the year at 2.4x net debt-to-EBITDA, down 0.2x year-on-year and down 0.6x sequentially.

Let's turn now to Slide 5. And on the left side, we highlight our consistent outperformance relative to key competitors across the past 3 years. And the chart on the right side shows volumes steadily improved throughout the year with flexible placement and outsourcing volumes in the Adecco GBU rebounding from decline to growth.

Management's focus on customer satisfaction, digital innovation and recruiter productivity, integral to our strategy, is driving strong top line and volume momentum ahead of market trends.

Let's move to Slide 6, where we set out the progress we are making with the run-and-change agenda, strengthening execution muscle across operations day by day, while investing in digital solutions and new services to drive future growth. There are many points on this slide, so let me highlight only a few.

Beginning with the Strengthen Run priorities. The group has made significant progress in 2025. The Adecco North American turnaround gained traction. Full year revenues were up 12% and the EBITA margin expanded 230 basis points year-on-year.

In line with the group's digital strategy, Adecco further expanded its Talent Supply Chain approach to 144 large clients, adding 42 in Q4 alone. By centralizing, automating and digitizing processes effectively, the Talent Supply Chain delivered a meaningful 550 basis points year-on-year improvement in fill rates.

In Akkodis, restructuring in Germany has locked in EUR 58 million run rate savings. And LHH's Career Transition business continued to successfully expand in the SME segment, increasing the number of companies served by 17%.

The group's Change agenda also progressed. Adecco now has 6 recruiter agents live within the Talent Supply Chain structure in the U.K. and in France. The U.K. agents have achieved approximately 15% time savings in recruiting processes, and this is an encouraging start. And we will roll out agents across key markets in 2026 to scale these benefits.

And while there is further work to be done in Akkodis Consulting, France's value creation plan improved performance with the unit growing ahead of market and achieved a 7% margin run rate, up 160 basis points year-on-year. And in LHH, targeted investments in Ezra digital coaching platform drove 42% revenue growth and a record pipeline at year-end.

Moving to Slide 7. On this slide, we detail the firm progress made in the turnaround of Akkodis Germany. Management took decisive restructuring action in 2025, achieving EUR 58 million in annual cost savings on a run rate basis by year-end. This included reducing the cost of sales by EUR 43 million and SG&A expenses by EUR 15 million, with EUR 8 million saved through real estate consolidation across 26 locations.

Last wave of rightsizing effort is in flight, lowering headcount by approximately 600 in total. In addition, select noncore assets were exited, eliminating approximately EUR 3 million of negative EBITA. The program incurred onetime charges of EUR 46 million in 2025 but has already delivered around EUR 15 million of in-year P&L benefit. As a result, Akkodis Germany achieved a healthy 5.4% EBITA margin run rate at year-end.

The group expects incremental savings to crystallize in the P&L during 2026, in particular during H1. With the organization being rightsized, management's focus in 2026 will shift to rebuilding the top line, supported by encouraging new client wins across sectors such as aerospace, defense and life sciences. In short, the group has made strong progress in stabilizing Akkodis Germany, positioning it for sustainable profitable growth going forward.

Slide 8 sets out the Board of Directors' dividend proposal. We are retaining our attractive shareholder remuneration with a dividend of CHF 1 per share for fiscal year 2025. This represents a 46% payout ratio, in line with our established dividend policy of paying out 40% to 50% of adjusted earnings per share. Shareholders will have the option to receive the dividend either in cash or in newly issued shares.

With this proposal, the group provides attractive returns to shareholders, including the option for qualifying shareholders to participate in the group's future growth in a tax-efficient way. The optional scrip dividend aligns with and supports the group's capital allocation priorities, which remain unchanged. It allows shareholders to increase their investment in the Adecco Group while enabling the company to retain cash for growth and prioritize deleveraging.

Now let me hand over to Valentina for the Q4 results.

Thank you, Denis, and a warm welcome from my side. Let's begin with Slide 10 and an overview of the group's strong Q4 results. The group delivered further significant market share gains, leading key competitors by 395 basis points. Revenues reached EUR 6 billion, rising 3.9%, our best quarterly performance this year. Gross profit grew 4% to EUR 1.1 billion with a healthy 19.1% margin, stable on an organic basis.

Our disciplined execution drove good operating leverage. We were pleased to see a strong productivity improvement of 11% and to deliver a strong drop down ratio of over 80%. In turn, the group's EBITA was EUR 225 million, up 20%, with a 3.8% margin, up 60 basis points.

Let's now discuss the GBU developments, beginning with Adecco on Slide 11. Adecco delivered a strong performance with revenues at EUR 4.8 billion, up 4.9% and improved sequentially. Flexible placement revenues increased by 4%. Outsourcing was very strong, up 14%, and MSP was up 6%. Permanent placement, however, was 6% lower.

Adecco's healthy gross margin was driven by firm pricing, client mix and lower permanent placement volumes, and productivity improved 6%. The EBITA margin improved 40 basis points to 4%, mainly reflecting higher volumes and strong operating leverage, supported by G&A savings and agile capacity management. Adecco's drop down ratio this quarter was robust at over 50%.

Let's now move to Adecco at the segment level on Slide 12. In Adecco France, revenues were 2% lower, stable sequentially and ahead of the market. Logistics continued to weigh, while autos and manufacturing were strong. The EBITA margin of 4.4%, up 10 basis points, mainly reflects client mix and benefit from SG&A savings plans. Revenues in Adecco EMEA, excluding France, were up 4% and sequentially improved. Most territories achieved good growth and outperformed competitors.

Looking at the larger markets. Revenues were up 3% in Italy with solid activity in logistics, financial services and consumer goods. Revenues in Iberia were up 7%. Food and beverage, autos and financial services were strong. In the U.K. and Ireland, revenues declined 1%, a good result in a challenging market. The result was weighed by lower logistics and public sector demand despite strength in IT tech and financial services.

Revenues in Germany and Austria were up 2%, well ahead of competitors, with strength in autos, consumer goods and defense. The segment's EBITA margin of 3.9% was 50 basis points higher, mainly reflecting strong operating leverage and good cost mitigation.

Turning now to Slide 13. Adecco Americas delivered 21% revenue growth. North America revenues increased 23%, well ahead of the market, mainly due to strong activity from large clients. In sector terms, consumer goods, food and beverage and autos were notably strong.

Latin America revenues were up 19%, led by Colombia, Peru and Brazil. By sector, logistics, financial and professional services and retail were strong. The Americas EBITA margin of 3.3% expanded 150 basis points, reflecting client mix and strong operating leverage from higher volumes.

Adecco APAC remained strong with revenues up 7%. Revenues rose 6% in Japan, 14% in Asia and 7% in India. Australia and New Zealand returned to growth with revenues up 2%. APAC's EBITA margin of 4.3% mainly reflects the timing of income from FESCO.

Let's now focus on Slide 14 and Akkodis' strengthened performance. Akkodis' revenue were 1% lower and sequentially improved. Consulting & Solutions revenue were up 2%, marking a return to growth for this service line. In EMEA, revenues were flat. Germany was 7% lower, driven by autos headwinds. However, revenues in France were up 3% and ahead of the market in aerospace and defense and autos. And the U.K. and Italy performed notably well.

North American revenues were up 3%, ahead of market, supported by further modest improvement in tech staffing demand. And Consulting & Solutions grew 46%. Revenues in APAC were 4% lower. Japan's result was heavily influenced by trading day differences. On an adjusted basis, revenues were up 5%. Revenues in Australia were 10% lower in a tough market. Akkodis' EBITA margin of 7% was 90 basis points higher, mainly reflecting benefit from the turnaround in Germany.

Let's move to Slide 15. LHH has executed well and delivered highly profitable growth. LHH's revenues were up 2%. In Professional Recruitment Solutions, revenues were 3% lower, taking share in a subdued market. Recruitment Solutions gross profit was flat with the U.S. 3% lower and Rest of World up 4%.

Permanent Placement was up 4% and productivity was 8% higher. Career Transition was robust with revenues up 1%. U.S. revenues were 2% lower on a high comparison, while the U.K. and Switzerland were strong, and the pipeline remains healthy.

Revenues in Coaching & Skilling rose 27%. Ezra's revenues were very strong, rising 68% while General Assembly's B2B business grew 31%. LHH's EBITA margin was 9.7%, up 510 basis points. The year-on-year development is flatted by the absence of charges recorded in Q4 '24 related to the wind down of General Assembly's B2C activities. On an underlying basis, the margin expanded 230 basis points, reflecting positive mix and volumes and strong operating leverage with productivity up 12%.

Let's now turn to Slide 16. Gross margin was healthy at 19.1%, stable year-on-year on an organic basis. The group's gross margin was driven by negative FX impact of 10 basis points; 20 basis points negative impact coming from flexible placement, mainly reflecting client and country mix; 10 basis points negative impact from permanent placement, reflecting lower activity in Adecco; and a 30 basis points positive impact in Outsourcing, Consulting & Other Services, mainly driven by Akkodis Germany.

Let's now look at Slide 17 and the group's EBITA bridge. At 3.8%, the EBITA margin excluding one-offs was strong, rising 60 basis points year-on-year. The result was driven by a 10 basis points negative impact from FX, a 30 basis points favorable impact from Akkodis Germany and, furthermore, excluding Akkodis Germany, a stable gross profit contribution at healthy levels, an encouraging 50 basis points positive impact from operating leverage, including G&A savings as well as strong productivity improvement, and a 10 basis points negative impact from the timing of FESCO income.

Among key metrics, SG&A expenses excluding one-offs as a percentage of revenues was 15.4%, down 70 basis points, while G&A costs were just 3% of revenues. Productivity, measured as direct contribution per selling FTE, rose 11%.

Moving to Slide 18 and the group's cash flow and financing structure. The last 12-month cash conversion ratio was strong at 102%. Full year operating free cash flow was EUR 613 million. Free cash flow was EUR 483 million. Both outcomes are strong given the group's continuous improvement in revenues.

In Q4, operating cash flow was EUR 476 million, a modest EUR 15 million decrease from the prior year period. This outcome reflects strong collections and favorable timing of payables, partly mitigated by working capital absorption for growth. We have maintained discipline regarding payment terms and are very pleased to report that the group's DSO improved 0.4 days to 51.8 days, remaining best-in-class.

Capital expenditure was EUR 50 million, and free cash flow was EUR 426 million, a modest EUR 20 million decrease from the prior year period.

The group also strengthened its balance sheet. Gross debts were reduced by EUR 280 million in 2025, supported by the repayment of CHF 225 million senior bond in Q4. At the end of Q4, net debt was EUR 2.29 billion, EUR 186 million lower.

Leverage ratio improved to 2.4x, down 0.2x year-on-year and down 0.6x sequentially. The group is firmly committed to bringing the net debt-to-EBITDA ratio to 1.5x or below by the end of 2027, absent any major macroeconomic or geopolitical disruption.

On Slide 19, we provide our near-term outlook. The group has seen continued positive momentum in volumes this quarter to date. For Q1, the group expects gross margin and SG&A expenses, excluding one-offs, to be broadly stable sequentially.

As a reminder, the prior year period benefited from the timing of FESCO income. We are rigorously executing the group's strategy and run-and-change priorities, focusing on market share gains while managing costs and capacity with discipline to drive profitable growth.

And with that, I hand back to Denis.

Thank you, Valentina. And let me conclude with Slide 20 and key takeaways. We launched the agility advantage value creation path and run-and-change agenda at our November Capital Markets Day. We are successfully executing against group strategy and driving momentum.

During 2025, the group delivered on its full year margin commitment, captured market share and return to revenue growth. And we are encouraged to see continued positive momentum in volumes to date this quarter.

Moreover, as we successfully advanced our strategic priorities, the group's financials are improving, underpinning an improvement in the year-end net debt-to-EBITDA ratio, which was down 0.2x year-on-year and 0.6x sequentially. We remain firmly committed to achieving a net debt-to-EBITDA ratio at or below 1.5x by year-end 2027.

With this said, thank you for your attention, and let's open the lines for Q&A.

[Operator Instructions] Our first question comes from the line of Andy Grobler with BNP Paribas.

Just a couple from me, if I may. Firstly, just on free cash. It was very strong in Q4 led by payables. Could you just talk through what you did to drive that and whether any of that is going to reverse into early 2026?

And then secondly, just a slightly broader one around client behavior. Are you seeing any change in client behavior in terms of their desire for flexibility, in terms of the interactions they're having with you? Or do they remain broadly pretty cautious in those end markets?

Thank you, Andy. And Valentina is going to answer the first part, and I'm going to answer your second question.

Andy, on free cash flow, it was a very strong performance. You've seen that we landed on EUR 483 million and the conversion ratio was very strong, above 100%. And it's particularly strong, this performance, if we consider that we've done it on the back of a year and, most importantly, a Q4 where we were growing. And you know that our business absorbs working capital when we grow at this level.

If I try to unpack a bit what are the most important components, fundamentally, it all goes down to very strong working capital management. We've been very diligent on collections. And you've seen how our DSO continues to be very strong. We are down year-on-year. It's not easy to keep going down on year-on-year in this market. So we're very pleased with that.

And in terms of AP, yes, we did have some favorable timing on payments, but we've also done quite a lot of job in terms of carving out overbalancing, negotiating payment terms. And you really start to see how the impact of that comes through also in our AP management. So overall, we are very pleased and we continue to be laser-focused on working capital.

When you think about 2026, I would -- I really think about free cash flow generation this year to -- the behavior to be similar. Just as a reminder, seasonally, our H1 is an outflow versus an H2 that is an inflow. So that's the way that I would model it. But again, laser focused on working capital because that's the key of our strong free cash flow performance this quarter.

And as far as what our clients are telling us, we see pretty good momentum, particularly on flex. I must say, Adecco is firing on almost all cylinders. We have soft results in France and the U.K., but apart from that -- even though in France, we are ahead of the market. But apart from that, we're really, really strong.

And we see momentum, we see demand for flexible workers across the board, across geographies. It's says something also a little bit about, of course, the uncertainty that we live in. But the economy is pretty good. So there's demand. There's work to be done. And we are surfing on that. We're surfing on that through, of course, our sales dynamism we serve because we have very strong delivery engine. And that makes me very confident.

There's one sign, which is interesting, is we see a little bit of a pickup in permanent recruitment in LHH. It's 4%. It's not big yet and we start from your volumes, but it's a little bit positive. But overall, I'm very, very optimistic on the momentum that we have. We have a great momentum as well in outsourcing, you've seen double-digit growth. I think the market is there to support our development.

Can I just ask one quick follow-up? Just on LHH and in RS in particular. You noted that perm was growing, but gross profit was down in that segment. So that suggests that your kind of gross margin in your contract temp businesses is lower. Could you just talk through what's going on in that segment, please?

Well, actually, you've got to look at LHH as in 2 dimensions. There is perm and flex on one side and there is the U.S. and outside of the U.S. In the U.S., we are minus 3%. In the rest of the world, we are plus 4% overall. So that says something about the geographic differences. But overall, I mean, let's be clear. We are -- the whole industry is operating at pretty low historical level. But we are -- what we do is we are outperforming the market, which matters to me.

And I would also add that as you look overall at the performance, you see also how LHH has really worked on productivity to offset also some of these elements. And LHH productivity was up 12% in Q4 and their sales FTE was down 4%. So you see how they are acting also on what Denis just mentioned.

Your next question comes from the line of James Rowland Clark with Barclays.

My first is just on the answer you just gave about good momentum. Just to be clear, I understand you've taken a lot of market share in the last few quarters. Is that momentum comment about you specifically taking share? Or do you think that's more market-based? If you could help sort of parse those two elements, that would be great.

Secondly, on EBIT margins in 2026, I think consensus has got 30 to 40 bps of margin growth. Are you comfortable with that? And could you help us bridge that improvement across organic gross margin, which looks to be under pressure going into this year but also then offset by SG&A? So I'd love just to get your sense on the moving parts to achieve that margin, if you're comfortable with it.

And then finally, on leverage, you're guiding to down to 2.5x by the end of '27. So you've got to lose 0.5x a year between now and then. Do you see that as a linear progression or faster in '26 and '27 or vice versa? And if so, why?

Thank you, James. And I'm sure Valentina will be super happy to take the EBITA and leverage questions, and I'm going to talk about the momentum. Two things here.

As much as I believe that the way we operate, the way we've put in place a very strong sales dynamic, which is -- which we adjust as per market conditions, as per the industry we are facing, et cetera, as per the geographies, and we have also put a very strong delivery engine that helps us gain share from our own merits and that makes me very confident for the future, I also believe that it's overall the market conditions that are also improving.

And we have been through some difficult quarters in, I would say, end of 2024 and beginning of 2025. And we see an overall better traction on the markets. And on that, we are well positioned because we've done all the hard work to strengthen the muscle in sales, strengthen the muscle in delivery. So it's -- I would say it's a bit of both that help us grow as we do.

Vale, now on EBITA?

And I'll build on the comments that Denis just mentioned about momentum just to give you some more flavor on guidance for Q1 EBITA. So I think that what you mentioned, James, is reasonable. And the way that I think about our Q1 EBITA is the continued positive volumes behavior gives us confidence in terms of revenue outlook. And gross margin is broadly stable sequentially.

If you think also about the comparison year-on-year is we have a 20 basis point headwind coming from FX. You may remember that last year in Q1 '25, this represented a tailwind. So that gives you a flavor why also year-on-year Q1 gross margin is actually broadly stable.

And in terms of SG&A, our normal seasonality from Q4 to Q1 usually see SG&A going up by EUR 10 million, EUR 15 million. So the fact that we're guiding for broadly stable tells you about the cost discipline that we continue to enforce. And you saw that we've mentioned the FESCO income because we assume FESCO to continue to contribute positively on a full year basis. But the timing last year, it can vary. And last year, it happened in Q1.

On a full year EBITA, we don't guide overall, but I think this gives you a bit the moving pieces that you need to model in terms of getting there, and the assumption that you mentioned are quite reasonable.

Moving to leverage. I think it's -- the free cash flow generation, the performance that we had -- the trajectory of the performance that we had throughout 2025 delivered good delevering, 0.2 year-on-year and sequentially, 0.6. The path to 1.5 is clear. We don't guide specifically on '26 and '27. But clearly, the levers that we have in our hands, and we are already pulling are modest growth.

You've seen how growth has dropped through in operating leverage over the past quarters. We expect that to continue throughout the next quarters. And then we have additional benefits coming from Akkodis Germany, but also other elements like the turnaround in North America, like the improvement in France that will continue to help us get there, as we've shown you in the last -- in recent quarters.

Your next question comes from Suhasini Varanasi with Goldman Sachs.

Just one question for me, please. I just wanted to clarify the exit rate and momentum that you saw year-to-date because I think your slide on -- Slide 5 seems to suggest at least on the GBU, Adecco GBU front, the momentum is continuing to improve in year-to-date. Just at that GBU level and at the group level, can you please clarify how the exit rate has looked compared to the 3.94% growth that you reported last quarter?

Suhasini, I'll take this one. Just to give you a sense, the exit rate was very much aligned with the quarter leverage, so at group level. So I hope that's helpful to give you a sense.

Your next question comes from the line of Simon LeChipre with Jefferies.

First question. Looking at your Q4 results and if we exclude Akkodis, so gross margin was down 30 bps on an organic basis and SG&A was probably flat organically. And in prior quarters, it seems you were able to offset the gross margin pressure through cost savings.

So does that mean it is no longer the case? And I mean, how should we think about the future quarters in terms of the relation between margin performance and SG&A?

Secondly, in terms of your Q1 gross margin guidance, so stable sequentially. So I would assume the seasonal effect from Q4 to Q1 is negative. It seems you're also talking about like FX negative impact being a bit stronger. So how would you offset these 2 factors to get to a stable gross margin sequentially?

And last thing on AI. We see more and more evidences of how AI can make the business more efficient. So I would assume this suggests some deflationary effect on top line. So how do you think about the net bottom line impact in the future? Like do you think your SG&A would continue to reduce? And would that be enough to offset this potential deflationary trend on the top line?

I'll take the AI piece and Valentina will be very happy to take the gross margin question and the FX.

So starting with your 2 questions on gross margin, Simon. I think when you think about the performance that we had in Q4 at 19.1%, it's a very healthy level. It's industry-leading. And it reflects a number of components. It's not just Akkodis, right? There's firm pricing and client mix, and there's GBUs mix that contribute positively to the gross margin buildup.

Yes, Akkodis Germany is a component of it, but it's not the only one. And then there's clear added value in the gross margin that comes from the service lines that have higher gross margin profile, like outsourcing, like Ezra.

You've heard us mentioning a number of service lines that have grown double digit in Q4, and will continue to do that. So there are a number of levers that we can continue to work on, Akkodis Germany is one of them, to work on our gross margin and keep it at this stable levels.

When you look at -- and by the way, permanent placement continues to be subdued clearly. When permanent placement picks up, it is a further lever that we can capture because we will capture permanent placement growth when it comes, and that's another further lever we can pull.

When you think about Q1, let me just take a moment to walk you through the elements. You've called out FX. It's correct. As I was mentioning before, actually it was a tailwind in Q1 last year. So you do have a 20 basis points gap when you look at it from a Q-on-Q perspective.

And then we again have several pieces because there's modest impact coming from perm and flex, but there's also a modest positive impact coming from the other service lines.

So that is why we continue to say it's really broadly stable even on a year-on-year basis. Because if you take out the FX, we are continuing to see how the benefits of the other service lines of Akkodis that we are implementing is affecting the modest client mix that we have in flex and perm.

Sorry, may I have just a quick follow-up on GM and also on SG&A. So it was minus 1% organically year-on-year in Q4, so I think mainly driven by Akkodis. So does that mean like the Adecco GBU, as you know, is now trending kind of flattish year-on-year?

No. We continue to see the same performance. We call out Akkodis when we mentioned that because we want to call out the nice progress that we've done in the restructuring and the fact that most of it, it is coming through SG&A but it's broad-based. And you've seen it also in our productivity numbers. They're up in all of the GBUs, not just in Akkodis. And in our G&A over sales, that is just 3%, and that is not just Akkodis. It's broad-based.

Let me take now the AI impact. And I think there is a top line impact, positive impact and also an impact in productivity that's going to help our profitability overall. On the top line, I believe that AI is really an opportunity for us.

Remind you, we are in a fragmented market. So the more optimized we are in how we deliver our service through AI, the better we can gain share. And I'll give you two examples.

We've embedded generative AI into our Career Studio in LHH. And when people use Career Studio with AI powered, they find a job 32 days earlier than the ones who don't. This is creating value for our clients. This has helped us penetrate bigger, faster our clients. So this has a positive impact on the top line.

If I look at the way we deliver with our AI agents in the U.K. on our recruitment, we have fill rates that have improved 550 basis points, okay? So this is an impact. We have improved our time to submit by 24% quarter-on-quarter. This helps us be more efficient, deliver more. So -- but a positive impact on the top line. In doing so, we have operating leverage, as Valentina was saying.

And in terms of how we optimize our cost, of course, we will progressively embed AI into our processes. We embed AI in our middle and back office, and this is going to create also efficiencies. So I believe that AI will have a positive impact both on the way we capture market share and in the way we improve our profitability.

Your next question comes from the line of Remi Grenu with Morgan Stanley.

Denis, Valentina, just one question remaining on my side. Focusing a little bit on North America and the very high growth there. I mean, the acceleration came in Q1 and Q2 last year, if I remember correctly. So can you help us unpack a little bit the performance there, if it's been driven by a few contracts and if we then should expect some kind of annualization of these benefits in Q1 and Q2 this year?

Just trying to understand a little bit from the 20% organic growth you're currently growing out in that country, what we should expect in terms of potential normalization over the next few quarters?

Yes. Thank you, Remi. Yes, if I go back to history, Q1, we were minus 1% year-on-year. Q2, we are plus 10%. Q3, we are plus 21%. And Q4, we are plus 23%. So of course, this is -- we're very pleased. This shows that all the efforts that we've put in the turnaround plan in the U.S. is delivering.

We have productivity improve by 10% and we have a very strong dynamic on the large accounts. We also are positive in the SMEs, but that's the point where we need to focus our efforts because the growth in our large accounts is a bit higher than the growth on small and medium companies.

So to your point, yes, I mean, we -- let's be clear, we started from a low base, okay? So we are -- I mean, this double-digit growth rates are encouraging. But as we anniversary some of the wins of the large clients, we will go more towards more market trends to sort of a bit of a normalization.

Still our focus and our efforts will be to gain share, to be ahead of the market. And I'm quite positive that we can achieve that, but probably not to the extent that we've had this year.

We have good traction in customer goods, in retail, in autos, in food and beverages. So I mean, there's traction in the market. The economy in the U.S. is still pretty good. So we will serve on that. We are much stronger than we were 2 years ago. And yes, you can expect growth, probably not with such a differential with the market.

Understood. And just maybe building up a little bit on the question from Simon on the operating cost guidance for Q1. I mean, I'm a little bit surprised by the comment on stability. So can you help us a little bit quantify the building blocks to get there?

I mean, discussing with some of your competitors, it feels like that they are forecasting some wage inflation around 2% or a little bit more than that. The higher volume of activity, the 4% organic growth and positive momentum probably would mean under a normal cycle that you need to invest a little bit more in resources. So yes, so can you help us a little bit on that stability of operating costs?

And I'm just trying to understand as well if to what extent you think that stability comments and these cost efficiencies are already driven by AI initiatives, or if it's just about Adecco removing some of the inefficiencies in the cost base that you had there and had to address?

Let me start by a little bit of how we strategize that growth. And you heard me say in the past that what we try is to be very, very granular in the way we inject the resources that are linked to the dynamic of the market.

And if I talk markets, it's by country. It's even by region in a country. It's by industry in a particular region, a particular country. So really adjust with the -- through this empowerment that we've put in place years ago, that's what we -- we let people adjust very precisely to the market conditions.

Yes, we will need to invest in some places, but we are also cautious in some others. And that's how we operate. And definitely, we will -- we have improved our cost inefficiencies. We've really readjusted our SPs. We have adjusted our G&A. So I think we are continuously optimizing the resources, and I think AI will nicely help us on that. Now on the building blocks for Q1.

And just to give additional color, Remi. On the operating cost sequentially stable. It's all about cost discipline, right? The continuous focus on productivity and G&A gets us there. If you look for a second at Q4, I think it's also very helpful to see how we have performed. Productivity was up broad-based, plus 11 at group level. But if you look at each GBU, Adecco was plus 6, LHH was up 12 and Akkodis, even with Germany soft, capped 90% utilization rate approximately.

So -- but if you look at our employee -- group employees, they are actually slightly down. So that tells you how we are combining very well growth with good cost discipline and good productivity. And that gives you a sense of why we guide for this to continue to be stable as we continue building on these 2 clear levers that has been key to the operating leverage that you've seen in our results.

And just to complement on AI. Yes, we see a 30 bps improvement when we serve the clients by -- through AI initiatives. But it's not at the scale that I want to see. We said that we would cover 60% of our revenues by agentic AI over time by the end of 2026.

I mean, it's progressing. We yet have to fully scale. So more to come. We'll keep you updated on the progress. I remain prudent in the impact of AI because there is no magic in AI. It's hard work. You need to scale it. I think we have all the levers and the foundations, but let's see how it goes. But the trend is positive.

Okay. And the last question is on the SME, which you referred to, Denis, I think, in one of your previous answers, saying that you need to address this segment better. Is the issue market related? Is just the momentum between the 2 markets, if you see separate them between SME and large enterprise, is still very, I mean, diverging a lot in terms of volume of activity? Or is there any initiative at Adecco's level which you need to implement to be better at serving this cohort of client? Because it has implication, obviously, for gross margin and profitability, I guess.

Yes. Well, actually, we've really doubled down in the past couple of years in how we serve the large clients and enhance Talent Supply Chain and enhance all that. We still have a pretty good dynamic in SMEs. But this is a place where we accelerate our efforts because we know, to your point, that it's very accretive to our margin.

So I think we are in a good place in how we roll out all our technology into our Talent Supply Chain, and we are also rolling out progressively the technology through our branches. I believe that the strength of branch network is that proximity, that deep understanding of the local ecosystems. And that's one of the top priorities for 2026 is to inject as much energy and technology into the SME segment as we have done in the large accounts.

Your next question comes from the line of Simon Van Oppen with Kepler Cheuvreux.

I have a question on margins. We see margins in all divisions strengthening in Q4, most significantly in Akkodis and LHH, especially on an underlying basis. Can you unpack a little bit the main drivers for the strengthening of your margins by division? And what do you expect in terms of margin for each division in 2026? And in extension to that, should we expect more one-offs in 2026? And if so, roughly by how much by division?

Valentina?

Thank you, Simon. So let me explain a bit around each GBU and how they evolved in terms of margin, and then we can also quickly touch on formal one-offs guidance. I think what is the common denominator among the 3 GBUs improvement is volumes up, operating leverage drop through. That is clearly -- and if I take for a moment Akkodis out, it's a clear denominator, right?

And then if I take one GBU apart, you have Adecco that grew materially, right? You've seen how in Q4, it's up almost 5% with pockets that are even double digits. And clearly, the Adecco story is a story around strong operating leverage but also diversification with service lines like outsourcing that grew double digits, to give you a sense. And it always comes on the back of good cost discipline, healthy operating leverage and the improvement in margins.

In LHH, you've seen us mention that there's an element of the improvement year-on-year that is because we had headwinds last year. So it is a 500 basis point improvement, but in fact, underlying is half of it, 250, which is still a very significant improvement. And it's mainly coming from CT continuing to performing very well, but also the contribution of other lines like Ezra and like the B2B business in GA that have grown double digits, and they come with very healthy high gross margins.

And then finally in Akkodis, clearly, the main driver of the improvement in performance is Akkodis Germany and the fact that we are progressing well in the turnaround.

In terms of one-off costs, the guidance that we're giving you is down from EUR 60 million this year to EUR 40 million next year. The EUR 60 million clearly this year is mainly coming from the Akkodis Germany turnaround. And so we're basically guiding next year to be lower in one-offs, mainly because Akkodis Germany is basically completed.

Your next question comes from the line of Gian-Marco Werro with ZKB.

Two questions from my side. The first one is on the gross profit margin in flexible placement. I would appreciate if you can dive there a little bit deeper into this development of 20 basis point decline year-over-year.

Can you maybe elaborate, please, on the gross margin dynamics in the temporary staffing, especially in your key markets like France, Germany and also the U.S., please, just to grab a little bit there the dynamics, how is it evolving, still increasing, stable or declining?

And then second question is on AI also. Denis, I appreciate your optimistic tone about the opportunities lying here. But very frankly speaking, don't you also see also, of course, some headwinds here of jobs that become redundant, like many operations of warehouses, IT, white collar back-office work that, in my view, is certainly also affecting your top line negatively. I would appreciate if you can just talk briefly about the dynamics that you observe in the industry.

So I'm going to start by answering your questions on AI, Gian-Marco, and then Valentina will talk about the gross margin. Fundamentally, we don't see any impact of AI at this stage. We know that as all technology evolutions that are happening, some jobs are going to be impacted, some destroyed, but so many are going to be created. That's what history tells us, okay?

And for the moment, if you look at the numbers coming from Career Transition, okay, which is the world leader in outplacement, 1.4% of the people are telling us that they've been laid off due to AI. That's it, okay? And 12% say, yes, there was a bit of AI coming in. So to date, there's no massive impact, no impact of AI.

And let's be clear, and I'm not the only one to say that, a lot of companies are doing layoff plans pretending that is coming from AI because it makes them look good, okay? But fundamentally, this is not the case, okay? So now nobody knows within 3 or 5 years what's the relationship between the jobs destroyed and the jobs created, okay?

If you look back 10 years ago, nobody was talking about cloud architects, nobody was talking about content moderation. And these jobs have been created because of the digital world, et cetera. So this is going to come as well with AI, okay?

So I believe that because of this, I'd say, massive reshuffling of the labor market, this is a massive opportunity for us to upskill, reskill, move people around, accompanying people in their agility. That's what we are here for.

And AI is not new. It has been now around for more than a couple of years. And look at our numbers, okay? So we are trending nicely in this world of AI. We are reshaping the future of work in this AI era, And we are well placed to accompany our clients on their agility that is necessary with AI. So that makes me very confident. Now on the gross margin.

So the year-on-year development you were asking about, Gian-Marco on flex. First of all, it's a modest impact. Overall, the flex gross margin remains quite healthy. We are happy with pricing. It stays firm. We have a positive spread bill-to-pay rate. And so the modest impact that you see is fundamentally client and country mix.

And just to build on the question that you were asking about, what about countries, France, U.S.? It is really all about how do we grow, right? So sometimes in some countries, but also in some industry, we may see one client segment growing faster than the other. It's the case right now, as Denis was mentioning, in France and North America.

But what is really important is that, as that happens, we also operate on cost base, right? Because these are also clients that come with a lower cost to serve. So the most important thing when we think about margin, yes, it's the gross margin, but it's also the mix that we have between SMEs and large and the drop-through on the overall margin.

Okay. But no specific comments you want to make here on the 3 countries I mentioned, about the development of the gross margin? If it's stable or you mentioned that most probably...

The trends in these 3 countries are aligned with the overall trend of the GBUs, yes.

Your next question comes from the line of Karine Elias with Barclays.

I just had a quick one on the hybrid. I believe on your third quarter conference call, you mentioned your intention to refinance at the time the hybrid. Just wondering whether that's still the case.

Thank you, Karine. Yes, so the refinancing, you're correct. We are refinancing the hybrid. We are in progress of doing that. We are constantly in the market to understand when is the right moment to execute. But you should expect that to be happening.

Your next question comes from the line of Andy Grobler with BNP Paribas.

Just one follow-up, if I may. Just on the dividend. You moved to the option of the scrip. What drove that decision? And to what extent is that part of the plan for getting to 1.5x leverage by the end of next year?

Thanks, Andy. So let me put the overall perspective. The group has a very clear framework on capital allocation and a clear dividend policy. Every year, of course, depending upon the results, the annual performance, the Board evaluates all options within that framework and within dividend policy to provide what the Board believes as the best outcome for shareholders.

And this year, the decision has been made to propose the choice between the payment in shares or payment in cash, which we believe is the right balance between our deleveraging priority on one side and also retaining cash for growth. So we also felt that this is an optionality that is financially attractive for our shareholders, for qualifying shareholders on the tax side. So I think it's a pretty good decision for shareholders. Now on the...

On the leverage.

The leverage, yes.

As Denis mentioned, the scrip is an option, completely independent from the path that we've discussed to reach our 1.5. That path is based on performance, growth, operating leverage, the turnarounds that we're doing. The scrip is an option and it's independent from that.

I will now turn the call back over to Denis Machuel, CEO, for closing remarks.

Thank you very much, everyone. We really appreciate your presence today. So just to wrap up, I think our 2025 results make me very confident for the future. I must tell you that our teams are energized and they are focused on delivering performance.

So yes, we still have a lot to do. But the momentum that we've created and which continues at the beginning of 2026, as we said, puts us in a very good place, in a very good place to deliver profitable growth moving forward and to delever.

With that, thanks a lot for having been with us today, and speak to you next time. Have a great day. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Adecco Group Q3 Results 2025. [Operator Instructions] I would now like to turn the call over to Benita Barretto, Head of Investor Relations. Please go ahead.

Good morning. Thank you for joining the Adecco Group's Q3 Results Conference Call. I'm Benita Barretto, the group's Head of Investor Relations. And with me are the Adecco Group CEO, Denis Machuel; and CFO, Coram Williams. Before we begin, please take note of the disclaimer on Slide 2. Today's presentation will reference both GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements, which are based on current assumptions and as always, present opportunities as well as risks and uncertainties. With that, I will now hand over to Denny.

Thank you, Benita, and a warm welcome to all of you who have joined the call today. So today, I want to share an important leadership update which also underscores the strength of our succession planning and our commitment to continuity. At the end of this year, Coram Williams will step down as Chief Financial Officer after 5 years of outstanding service. Coram has played an absolutely pivotal role in guiding the Adecco Group through a period of significant transformation and strengthening our financial foundations. His disciplined approach and strategic insight have been absolutely instrumental in achieving the strong Q3 results we announced today.

We warmly thank Coram for his tremendous contribution and wish him every success as he takes on a CFO role in the automotive sector in Germany, a move that reflects his passion for this sector and also brings him closer to his family.

And I'm pleased to announce that Valentina Ficaio will succeed Coram as CFO effective January 1, 2026. Valentina is a proven leader with deep knowledge of our business and strong financial and strategic acumen. She's been part of our global finance leadership team, most recently leading financial planning, controllership and strategy and has acted as Coram's deputy for the past 3.5 years. Her appointment follows a rigorous selection process and represents an internal promotion to the CFO role, which is a testament to the strength of our talent pipeline. This leadership transition is well planned, and we remain focused on delivering sustainable growth, improving margins and creating long-term shareholder value.

Let's now turn to our results and starting with Slide 4 and an overview for the quarter. We gained significant market share this quarter with the group and Adecco, leading key competitors by 375 and 300 basis points, respectively. The group delivered EUR 5.8 billion in revenues, 3.4% higher year-on-year on an organic trading days adjusted basis. Revenue trends improved sequentially across all GBUs. Additionally, we observed a strong performance from Adecco U.S. with revenues increasing by 20% year-on-year. Gross profit reached EUR 1.1 billion with a gross margin of 19.2%, while this represents a modest year-on-year decrease of 10 basis points on an organic basis, it is a 30 basis point sequential improvement, fully matching our Q3 guidance.

Gross margins benefited from reduced pressure in Akkodis Germany, where the turnaround plan is progressing well. EBITA excluding one-offs, was EUR 195 million with a 3.4% margin. Disciplined execution drove good operating leverage with productivity up 8% year-on-year and higher in all GBUs. Adjusted EPS was EUR 0.67. Cash conversion was very strong at 110%, and the group generated a solid operating cash flow of EUR 200 million, up EUR 79 million from the prior year period. In summary, the group delivered a strong performance this quarter and remains on track to achieve the 3% EBITA margin floor for the full year.

Moving now to Slide 5. The group delivered a further increase in market share this Q3. In Q2, the group gained 205 basis points in market share and Adecco gained in 130 basis points. In Q3, the group gained 375 basis points of share and Adecco gained 300 basis points. We have seen a consistent improvement in flex volumes year-to-date across the Adecco GBU. In Q3, we were encouraged to see volumes move clearly into modest growth territory with a meaningful uptick in demand from the largest Adecco countries.

Now as we move to Slide 6, you will see case studies that demonstrate our strong win momentum in the market. First, in the life sciences sector, Adecco and Akkodis were selected as the preferred suppliers for global solutions due to the group's global footprint and breadth of services. The client was impressed by our technology expertise, reporting quality, market insights, all of which are underpinned by strong data analytics. Second, Akkodis was selected as a Tier 1 supplier to a leading German aerospace company, our comprehensive suite of advanced system engineering solutions covering lending gear and system design and installation, supports the client's strategic need for innovation to improve operational efficiency and sustainability. Akkodis' global presence which maximizes responsiveness and cross-fertilization of ideas was key to be selected.

Third, LHH's EZRA won a multiyear contract with a leading U.S. software provider for AI and human coaching services beating a major competitor. EZRA will coach over 27,000 employees, creating a measurable business impact.

With that, I will now hand over to Coram for further details on the Q3 results.

Good morning, everyone, and thank you, Denis, for your kind words earlier. It's been an honor to be the CFO of the group over the last 5 years and a real pleasure to work with you and the talented teams that we have around the group. The Q3 results that we're announcing today show that the group is on a good path and affirm my decision to step back and pursue a new role in a sector I'm passionate about in my adopted home country. I'm really delighted that you and the Board have chosen Valentina as my successor. She's been a strong member of my team, a brilliant deputy and I have no doubt that she is the right person to drive the group forward.

With that said, I'd like to now focus on the Q3 results. First, let's discuss GBU developments, beginning with Adecco on Slide 7. Adecco delivered EUR 4.7 billion in revenues, up 4.5% year-on-year on an organic trading days adjusted basis and up 2.8% sequentially. Flexible placement revenues increased by 4%. On an organic basis, outsourcing remained strong with revenues up 12%. Permanent placement revenues were 7% lower, while MSP Pontoon revenues rose 5%. By client type, revenue growth from SMEs was strong, up 5%. Gross margin was healthy, reflecting the client and solutions mix, particularly lower perm volumes. Pricing remains firm.

Productivity improved by 5%, while selling FTEs decreased by 1%. The EBITA margin improved 50 basis points year-on-year to 3.9%, reflecting higher volumes and operating leverage, aided by G&A savings and agile capacity management. Adecco's dropdown ratio this quarter was north of 100%, a very strong outcome.

Now let's move to Adecco at the segment level on Slide 8. In Adecco France, revenues were 2% lower year-on-year, improved sequentially and outperforming the market, driven by robust growth across large clients. Growth in autos, financial and professional services, food and beverage and the strategically important construction sector was strong. However, logistics presented some challenges. The EBITA margin of 4% was 80 basis points higher year-on-year with France benefiting from the execution of G&A savings plans. Adecco EMEA, excluding France, returned to growth, with revenues up 3% year-on-year and taking market share.

Looking at the larger markets, revenues in Italy were flat, with strong activity in logistics and food and beverages offsetting weak autos demand. Iberia was strong, with revenues up 13%, reflecting strength in flex and outsourcing as well as double-digit growth from SMEs. Food and beverage, financial and professional services, manufacturing and autos were strong. In the U.K. and Ireland, revenues declined by 4% year-on-year. a resilient result given the challenging market environment. While soft demand in logistics and the public sector impacted performance, the business continues to demonstrate adaptability. Revenues in Germany and Austria were flat year-on-year, reflecting a solid outcome in a demanding market.

The manufacturing and automotive sectors performed robustly, supporting overall stability. The segment's EBITA margin of 4.1% was 20 basis points higher year-on-year. The margin reflects client mix and good operating leverage with productivity up in all territories and support from G&A savings.

Turning now to Slide 9. Adecco Americas delivered very strong revenue growth of 20% year-on-year. North America revenues increased by 20% year-on-year, improving sequentially and ahead of market trends. The result was driven by strength in Flex across all client segments, including double-digit growth from SMEs. In sector terms, consumer goods, autos, manufacturing and food and beverage were notably strong. This growth rate shows the continuing progress we're making with the turnaround of Adecco U.S. At the same time, we do have work to do on the business mix and cost to serve to restore margins further.

In Latin America, revenues grew 21%, with all countries experiencing double-digit growth, driven by demand for flex and outsourcing across SMEs and large clients. By sector, financial and professional services, logistics and manufacturing were strong. The Americas EBITA margin of 2.5% increased 240 basis points year-on-year, reflecting higher volumes and operating leverage. Productivity improved, while the segment continues to optimize costs. Adecco APAC remains strong, with revenues up 9% year-on-year and ahead of the market, led by strong demand from SMEs. Revenues rose 8% in Japan, 18% in Asia and 14% in India. In Australia and New Zealand, revenues were 3% lower. In sector terms, financial and professional services, consumer goods, food and beverage and defense was strong. The EBITA margin of 4.7% reflects higher volumes, G&A savings and modest investment in capacity to capture future growth opportunities.

Let's now focus on Akkodis on Slide 10. Akkodis' revenues were 3% lower year-on-year on an organic constant currency basis and sequentially improved. Consulting and Solutions revenues were 1% lower organically, improving by 4% sequentially. By segment, EMEA revenues were 3% lower. France returned to growth, with revenues up 1% and ahead of the market. Aerospace, defense and autos were strong. Revenues in Germany were 9% lower, driven by market headwinds in autos and despite good momentum in defense. Italy, Iberia and the U.K. performed well. North America revenues returned to growth, with revenues up 1%.

The business has seen a modest improvement in tech staffing demand and delivered very strong growth in the Strategic, Consulting and Solutions segment, with revenues up 45%. APAC revenues were stable, with Japan and China up 2%. Revenues in Australia were 4% lower, reflecting a slow market backdrop. Akkodis' EBITA margin was 4.5%, 60 basis points lower year-on-year. Excluding Germany, the margin was 6.5%, and an improvement year-on-year, reflecting solid utilization rates and good cost discipline. Germany's turnaround is progressing well. Given the market context, the level of targeted savings has risen to approximately EUR 50 million.

To date, an annualized savings run rate of approximately EUR 36 million has been achieved, driven primarily by adjusting consulting headcount, which improves bench utilization and G&A savings. Additional savings were expected in Q4. These actions will enable the unit to return to healthy run rate profitability by year-end.

Let's move on to LHH on Slide 11. LHH executed well with revenues returning to growth, rising 4% in the third quarter on an organic constant currency basis. The EBITA margin reached 9%, up 240 basis points year-on-year, driven by higher volumes and strong operating leverage with a 25% increase in productivity. Turning to LHH's segment. Professional Recruitment Solutions revenues were 7% lower, with the unit taking share in tough recruitment markets. Recruitment Solutions revenues were 5% lower, primarily due to an 8% decline in permanent placement.

Gross profit was 6% lower. Productivity remained flat and billing FTEs decreased by 6%. Our peer activities remain soft. Career transition performed very well, with revenues up 9%. U.S. revenues grew by 7% and revenues outside the U.S. increased by 11%. The pipeline remains healthy across all geographies, supporting future momentum. Revenues in coaching and skilling rose 40%. EZRA delivered outstanding growth with revenues increasing 59% to another record high. General Assembly returned to growth, with revenues up 48%, driven by strong momentum in its B2B business, which focuses on AI-related offerings.

Let's turn now to Slide 12, which shows the group's gross margin drivers on a year-on-year basis. Gross margin was healthy at 19.2%, 10 basis points lower year-on-year on an organic basis. Currency translation had a negative impact of 10 basis points. Permanent placement has a 25 basis point negative impact with headwinds in both Adecco and LHH. Career transition had a positive impact of 10 basis points. Outsourcing, consulting and other services had a 10 basis point negative impact due to mix in outsourcing and ongoing pressure in Akkodis Germany. Additionally, training, upskilling and reskilling had a positive impact of 15 basis points driven by growth at EZRA and General Assembly.

Let's look at Slide 13 and the group's EBITA bridge. At 3.4%, the EBITA margin, excluding one-offs, was 10 basis points higher year-on-year, driven by a 10 basis point negative impact from currency translation, a 10 basis point negative impact from organic gross margin development, a 40 basis point favorable impact from operating leverage and a 10 basis point negative impact from Akkodis Germany. In Q3, SG&A expenses, excluding one-offs, as a percentage of revenues, were 15.9%. And 30 basis points better year-on-year, reflecting cost discipline with G&A expenses up 3% of revenues and agile capacity management. Selling FTEs were 3% lower. Productivity in terms of direct contribution per selling FTE rose 8% with all GBUs improving year-on-year.

Let's turn to Slide 14 and the group's cash flow and financing structure. The last 12 months cash conversion ratio was strong at 110%. DSO remains best in class at 53.6 days. The group delivered cash flow from operating activities of EUR 200 million in the quarter, a EUR 79 million increase versus the prior year period. The cash result reflects strong working capital management, partially offset by increased working capital absorption, resulting from improved revenue performance. CapEx was EUR 30 million, and free cash flow was EUR 170 million, an increase of EUR 88 million compared to the prior year period. The group benefits from a robust financial structure.

We have strong liquidity, including an undrawn EUR 750 million revolving credit facility. 80% of debts have fixed interest rates and there are no financial covenants on any outstanding debt. The group also has low interest expenses with a net charge of EUR 13 million in Q3. At the end of Q3, net debt was EUR 2,705 million, EUR 220 million lower year-on-year. Since 2021, the group's capital structure has included a EUR 500 million hybrid bond, which rating agencies classify as 50% equity and 50% debt. Management is in the process of refinancing this hybrid bond, reaffirming its long-term role in the capital structure. In light of this planned refinancing, and to align with rating agency methodology, the group will now apply 50% equity treatment to the hybrid bond when reporting its leverage ratio.

This adjustment does not impact the group's credit rating or the net debt calculation. It does, however, ensure consistency and transparency in how leverage is assessed across stakeholders. Applying this methodology, the group's end Q3 leverage ratio was 3 terms. On an underlying basis, strong cash generation and EBITDA improvement in Q3 has reduced the group's net debt-to-EBITDA ratio, excluding one-offs, by 0.3x sequentially. The group remains firmly committed to bringing the net debt-to-EBITDA ratio to 1.5x or below by the end of 2027, absent any major macroeconomic or geopolitical disruption. Our capital allocation policy is clear on options for excess capital once we achieve this target.

Let's move to Slide 15 and the group's outlook. Based on Q4 volumes to date, the group expects revenue growth in Q4 to be in line with Q3's revenue growth year-on-year on an organic trading days adjusted basis. For Q4, the group expects gross margin and SG&A expenses, excluding one-offs, to be broadly stable sequentially. The group is focused on managing capacity with agility to balance share gain and productivity in mixed markets, in addition to securing G&A savings. The group is on track to deliver its full year EBITA margin commitment.

And with that, I'll hand back to Denis.

Thank you, Coram. And let me conclude with Slide 16 and few takeaways. In Q3, the group delivered a further increased market share with revenues improving sequentially across all GBUs. At the GBU level, we were encouraged by the strong growth in Adecco U.S., evidencing traction with the turnaround plan. Meanwhile, the Akkodis German turnaround is progressing well with the unit expected to return to healthy run rate profitability by year-end. In reaching a 3.4% EBITA margin this quarter, we demonstrated good operating leverage.

Cash generation was solid. We thank our teams for yet another quarter of rigorous execution. We look forward to sharing the evolution of our strategy and detailed value creation plans at our Capital Markets Day on 26th of November in London. With this said, thank you for your attention, and let's open the lines for Q&A.

[Operator Instructions] Your first question comes from the line of Andy Grobler, BNP Paribas.

I've got a lot, but just a couple to start with, if that's all right. From a cost base perspective, a couple of things here. As you move into Q4, what are the incremental savings that you expect to drive? And does that include turning that about EUR 16 million loss in Akkodis Germany into a positive? And how should we think about that as the right base going into 2026 if you could chat through that, that would be really helpful. And also, just adding to that, does that guide include the currency headwinds that you'll see in the Q4? And then secondly, on cash flow, very strong performance through the quarter. Can you just talk through the drivers of that and whether you're seeing any pressure on payment terms? Has that been incremental through this year?

I think I'll let Coram answer most of these questions. I'm just going to say a word on payment terms. Yes, definitely I think we have pressure from our clients on payment terms. We resist actively to this pressure. We are -- I think we are very focused with our teams managing these kind of negotiations. We see also our DSO remaining relatively solid. So I think we are able to -- thanks to the strong relationship that we have with our clients to resist to the maximum on the payment terms request from our clients. I mean for all the other questions, Coram.

Thank you, Denis. Thank you, Andy. Actually, let me start with cash, therefore and build on Denis' answer. I mean, yes, we do see pressure on payment terms, but our DSO is at 53.6 days. It is quite clearly best in class at the moment where our peers see their DSOs going in the wrong direction. So I think it's very clear that we are managing that and managing it very effectively. On the cash flow itself in Q3, I mean, we tried to unpick the drivers.

Fundamentally, you have good working capital management, which includes the point I'm making about keeping DSO very stable, but also payables, where we've been managing those very tightly and have done for a number of quarters, which is partially offset by the working capital absorption that you see because of the growth that the business is delivering. And we know that's a feature of the way this operates. So when you put all of that together, then we're very pleased with the operating cash flow of EUR 200 million.

It's up year-on-year, and it has obviously helped us deliver that rolling 12-month cash conversion of 110%. On the cost side, yes, the guide includes FX movements. If you step back and look at what we're saying, we're guiding to SG&A being broadly stable. Typically a seasonal movement between Q3 and Q4 actually increases SG&A little bit, usually between EUR 10 million to EUR 20 million. So you can see by saying that we will hold it stable, we are confident we will continue to deliver savings. Part of that comes from Akkodis, as you mentioned, we have real estate optimization, which will flow through, but we also have further savings in other parts of the business that we've been activating through the year.

You saw the benefits, for example, on the margins in France. There are other territories where we continue to manage this. By the end, and I'm now just moving on to Akkodis Germany. The restructuring there is progressing well. We have EUR 36 million of run rate savings locked in. We've got clear plans for how we get to a run rate of EUR 50 million, and that will deliver healthy run rate profitability for that business by the end of the year. And I think it's important to make the point that we are not presupposing an improvement in the top line of that business in the short term. We're managing the restructuring to make sure that we see healthy profitability on the market conditions that we now see.

And just maybe one last word. Andy, top line in Akkodis Germany is being stabilized. So I mean, we can go in details around what we do very actively in Germany on our turnaround plan, but there's also an element of stabilization of top line, of course. But thanks, Andy, for your questions. .

And just to add, Coram, best of luck with the new role.

Thank you, Andy. I appreciate it.

Your next question comes from the line of Remi Grenu with Morgan Stanley.

A few questions on my side, if I may. So just first taking a step back and looking at your outlook for stable growth on the same comp base. It feels like similarly to some of your competitors, you are assuming that the recovery of organic growth we've seen over the last few quarters is stalling a bit or kind of stabilizing. So what makes you slightly more cautious compared to the sequential improvement we've seen over the last few quarters. Just wanted to understand if there was anything there? And if so, what part of the business, which divisions do you think could improve, remain stable or deteriorate in Q4 just to have a bit of breakdown of that stable organic growth comment for Q4.

The second question is on the U.S. organic growth. Obviously, I mean, very impressive. Can you just elaborate a little bit on this? What are the drivers in terms of type of clients if you think the broad-based recovery or has it been driven by any specific contract win and on the market share gains in that country, why do you think is the case that your winning volumes away from your competitors? And then the last one would be just maybe a little bit of a teaser on end of November, then if you wanted to share with us a few of the topics you think could be important to address during the CMD?

Thank you, Remi, I think I'm going to take the 3 questions. So on the outlook, actually, we're pragmatic. We're looking at our flex volumes data. And they are -- let's say, they are nicely up year-on-year. They continue to do so, but we have only a few weeks of data. So we are -- definitely, we see some momentum. We see an improving momentum in the HH and Akkodis, but we are -- we've always been -- I must say, we've always been relatively cautious. When we see it, we talk about it but I don't want to overpromise and create expectations.

So we have volumes, as I said, nicely up, but it's not stored definitely. It's not stalling. It's improving nicely, but this is reasonable. So it's not -- it's -- I continue to be positive about what we have ahead of us. As far as the U.S., yes, actually, it's broad-based. It's also the result of our turnaround. It's -- and there's so much more to do. Let's be clear. And we are -- we're pleased with the growth. We were plus 10% in Q2. We are now plus 20%. We've returned the U.S. to be profitable, which is good. We are growing ahead of the market. So it's been systematic. It's been rigorous execution on how we improve branch profitability, how we see that the incentives that we've put in place in the branches that are boosting both flex and perm are delivering results.

We're focusing on increasing the traction with the MSP business. We are really, really focused on cutting our cost to serve to preserve our competitiveness. We've moved into more centralized delivery, nearshore offshore delivery. We have adjust also our G&A costs. So and all that. It's a series of things that we've applied rigorously and systematically for now, almost 3 years, and it starts to deliver results, which is good. The sales growth is broad-based. We grow large accounts, plus 36% this year. We also grow SME plus 12%. So that means both drivers are executing nicely.

We have a nice development of new accounts in branches. If I look at the number of new accounts that we had in Q2 versus -- in Q3 versus Q2, it's plus 19%. So we've also had a healthy development of new clients and branches, okay? But we're not there yet. Let's be clear. We start from a low base because we -- what we've been through some -- so encouraging, good, people deliver. So it's, as I said, it's encouraging, but I wouldn't call it impressive. It's good numbers. We've got to confirm over time but I'm confident in what we're delivering. Now as far as the CMD, well, we'll -- I think we are going to deep dive on some of the drivers that show that the proof points of the way the strategy is delivering results.

So to give you more insights, more granularity in what the things that you do. And also, of course we're going to focus on some of the transformative actions that we are layering on top of the way we run the business. We also, of course, as you can imagine, have a deep dive on Akkodis because it's going to be on stage to explain his value creation plan and how confident he is to improve both the top line and the margins at Akkodis. So this is what we're going to talk about.

Your next question comes from the line of Suhasini Varanasi of Goldman Sachs.

Just a few for me, please. On perm trends, the declines have been easing for a couple of quarters now. Can you maybe give some color on whether you're seeing things stabilizing at these low levels? The second one, just to clarify again on working capital, the strength that we've seen in Q3, was there any timing effect that helped, especially on the payable side that is potentially going to unwind in Q4? And the last one on Akkodis restructuring, how much more should we expect on restructuring costs in the next quarter, please?

Thanks, Suhasini. I'll take the question on perm and also on working capital in Akkodis Germany.So on perm, yes, I mean we've been -- and it's an industry -- it's a global industry challenge, and we see it both in Adecco and LHH. Adecco is minus 7% on perm, LHH is minus 8%. So it's -- I wouldn't call it yet stabilized definitely. I think it reflects, fundamentally, it reflects the fact that there is little visibility for many of our clients and when you don't have visibility because of the -- let's be clear, the unpredictability of geopolitics and some of the tariffs and things like this, we -- clients do not dare to recruit permanently.

When you recruit permanently, it's because you're confident on the things that you have ahead of you. And because even in markets like the U.S. where it's relatively easy to recruit and lay off, you don't do that if you don't have visibility. So I think an interesting point is we see this momentum on perm coming up, and that says something about the mindset of our clients. Though we have seen a little bit of pickup in September, particularly in the U.S. so that there are pockets here and there in the finance sector, particularly where we have seen a pickup.

But it's still -- it's not massive. So I wouldn't call it a change in the trend. But of course, on the mid, long term, I'm confident that perm will come back because we will -- this is a market that we like. Companies, even with AI, they will need people and we need experts to recruit permanently. So that's -- this is a moment where we're a bit low on that business, but progressively, I believe it will recover but not now. Coram?

And I'll pick up on your other 2 questions. So on the working capital side. We had timing effect in Q3 '24, if you remember, which did work against us and then helped in Q4 '24, but there are no material timing effects in Q3 '25 that will unwind in Q4. This is a pretty clean set of numbers in cash terms in Q3. And I think to the point I made earlier, it's really all about tight working capital management. Payables, obviously, we mentioned, but also really ensuring that we manage that DSO in a best-in-class way.

On the one-off costs, we're forecasting EUR 25 million in Q4. Almost all of that will be related to Akkodis Germany, and it's a sign of how rapidly we are moving on this restructuring plan so that we can make sure that we get that business back to healthy run rate profitability by the end of the year.

Your next question comes from the line of Simon Van Oppen of Kepler Cheuvreux.

I have a question on the gross margin contribution from your adjacent services. We saw that trading upskilling and reskilling was up only 1% organically, but drove a 15 basis point margin improvement and if I'm correct, then this segment has a gross margin of roughly 60% historically. Could you please elaborate how this segment is contributing to this improvement in gross margin? And has the gross margin in this segment moves up? Or where do you see the long-term potential for the gross margin of this segment?

Sure. I will pick that one up. It's really important to understand the underlying growth number that you've highlighted, Simon, because there is actually an exit in that number of something called the U.S. Akkodis Academy. It's relatively small in the context of the group, but it does impact the growth rate in this segment. And on an underlying basis, training, upskilling and reskilling is up 28%, which I think gives you a real sense of how strong the growth is in EZRA, in GA and in the other parts of our business, which contribute training services, et cetera.

They do all -- and certainly, GA and EZRA have strong gross margins. This is very much a characteristic of this type of business. I think it gives you a real sense of how much value is created there. And because of the growth rates, because those businesses are becoming material in the context of the group top line they're having a material impact on the gross margin, and that's what's dropping through in Q3. I would expect those businesses to continue to contribute to positive gross margin.

Yes. And then to your point, Coram, I think I'm very pleased with the momentum we see in GA. GA is having great pipeline and great development in how we can accompany our clients on their own AI evolution, there is a lot of appetite for the type of services that GA provides in terms of how we can -- how we focus on specialties roles that are impacted by AI, and we can embark our clients on the journey. And in EZRA, I mean we are -- there is a significant market potential, and we are scaling this platform. It's really a platform business that we are scaling now with a really high gross margin.

So EZRA has become -- is extremely relevant in most of our client transformation, the cultural transformation, the AI transformation, so that's -- we have great expectations for the growth of that business moving forward with very, very healthy gross margins.

Your next question comes from the line of Rory McKenzie of UBS.

It's Rory here. First, I want to ask about the growth outlook for both career transition and the training businesses after a very strong quarter. Career transition, in particular, had been bumping up against high competitors for a while, and clearly, it's now jumped past of that. So is that new contracts ramping up or anything else one-off in there? And so should we expect similar growth in Q4 and into the start of next year? And then secondly, given the other announcements today, I feel like I have to ask Coram about trends in autos specifically.

So maybe when you look at the Adecco GBU and the strength this quarter, can you just talk about the performance of the global verticals like autos, logistics, manufacturing, and given all the contract wins you're kind of talking about, are there any commonalities in sectors you think you've targeted well or doing well in? And what lessons can you draw from that?

Thanks, Rory. So as far as the growth outlook, I think we have -- so we grew 9% this quarter in CT. We have a bit of a difference. U.S. is growing 7%. Rest of the World is growing 11%. So -- but it's still very high numbers. The pipeline is still quite healthy. And to your question, it's mostly new clients that we win. I mean we have a constant sales team on the field, remind you that we are the world leader by far. And we have an excellent reputation, the way we've also digitized our business the way we have now people on the platform, all the people that we accompany on platform with very efficient AI support, and that's a good thing.

And as I said, in training and scaling, GA is growing 45% -- 48%, EZRA is growing 59%. So are we going to sustain the super high level, I cannot promise, but definitely strong double-digit growth for EZRA and GA. No problem. And I would say for the moment, given the pipeline that we have in CT, I think we can expect modest growth, maybe mid-single digits or low-single digit. But let's be clear, we are on very high levels, and we've sustained these very high levels of revenue for quite some time. And now I pass over to Coram to speak about autos.

Thank you, Denis. and you did make me smile, Rory. So thank you. But to be clear, I would have been happy to answer a question on autos at any point during our discussions. So a couple of points on this. Firstly, when we look at Adecco, the growth is very broad-based. We have a number of sectors, which are all up across multiple countries. And I think it's a sign of the momentum that we have, the share that we're taking and the way, as you know, that we have been managing the business with agility to really identify growth wherever we can.

On autos, in Adecco represents about 8% of the Adecco GBU. It's up 10% year-on-year. And we see growth in France, Spain, U.S. and Germany. Germany is up 3%, which is encouraging for me, but partially offset by the one area, the one country where we do see a bit of pressure right now, which is Italy. I think the key to this is that cars are still being produced. There is obviously impact from all of the changes that are happening. But there are still models that are doing well. And our teams are very effective at identifying which manufacturers to partner with, which sites they should be targeting and in particular, therefore, which models have momentum and will require flexible labor.

And I think that is really strongly demonstrated by that Adecco Germany plus 3% number. And obviously, the other side of the autos coin for us is Akkodis. That is down 7% year-on-year. Interestingly and I'll focus on the 2 big markets, France is up, and we've had some really strong successes with a number of French manufacturers, which I think demonstrates the strength of the offering. In the short term, there continues to be pressure in Germany, as the German OEMs are reconfiguring their product plans and looking to move more of their R&D work of -- outsourced and offshored. And that's what gives us confidence that longer term, the demand for the Akkodis services is there. And France is a really good proof point for that because that expertise is required .

And in Japan, with the -- also Japanese carmakers, Akkodis is also growing nicely. So it's also a complement. And it's -- we said something about the that the problem is more focused on the German OEMs than the rest -- than the whole industry.

Now look, we manage these sectors, as you know, very forensically. But I think we're pleased with the progress that we see. And then the final comment I'll make is on logistics, which you flagged. That's around 9% of the Adecco GBU. It is down year-on-year, around 8%. That's almost a 1 basis point -- a 1 percentage point headwind to the group as a whole. This is the nature of this sector, so logistics partners manage demand very carefully. They go through periods where actually they increased the number of temps that they use.

They go through periods where they reduce and they in-source. Actually, if we look at the decade, there are some of our countries which are growing in logistics, for example, Italy and Japan. And there are several countries where right now, we're declining slightly, such as France, Germany and Spain. But that very much is the nature of that sector, and we're well positioned and it will be healthy in the medium to longer term. And my final point, please remember the broad-based nature of what's happening in Adecco. It's really important.

Your next question comes from the line of Michael Foeth of Vontobel.

I just have a follow-up on the training, reskilling and upskilling business. You said it's up 28% when you exclude the inorganic effect there. But still coaching skilling LHH is up 40% and EZRA up -- or G&A up 48%. So what's actually dragging the whole thing down. So I'm missing some part of that business. That would be the first one. The second question is regarding U.S. You said manufacturing is a driver. I was just wondering which type of manufacturing activities you're talking about and whether that's a trend that we should expect to continue in light of the whole repatriating manufacturing to the U.S. And then finally, if you can make a comment on the Akkodis defense exposure and how that's working?

So I think Coram will take the first question, and I'll take the other 2.

Yes. And very quickly on this one because I think we are very pleased with 28% underlying growth. And I think there is real strength in EZRA and GA and this offering as a whole. There are 2 pieces which are bringing that growth rate down from the 40% to 50% that you see in EZRA and GA. There is some more traditional coaching business which is effectively being substituted by EZRA.

That's an opportunity for us long term because the digital nature of EZRA's coaching platform actually expands the addressable market. And as we've talked about before, there is still a small piece of B2C business in general assembly, which we are sunsetting and in the short term, brings the growth rate down. So those are the 2 other pieces. But I think you'll agree the 28% underlying growth is a strong number.

And as far as the manufacturing is concerned, we're growing -- in the U.S., we're growing 11% on overall manufacturing, I would say, in the U.S., which is good. It's broad-based. I mean there is a lot of -- from the sort of mid-sized manufacturer that can serve a variety of industries to the larger piece. We exclude, if you want, in that category, we exclude the manufacturing that are purely sector-related like automotive or aerospace or others.

So far, we've seen -- it's a series of quarters where we've seen manufacturing relatively solid in the U.S. Is it related to ensuring I am not fully sure, we have seen some announcements, but before you build a new factory, or before you change your production strategy, it takes a bit of time. Probably over time, given the promises that we've heard from so many companies to increase their investments in the U.S., this will be supportive of our manufacturing business. I would say it's probably a bit early to link it to reshoring. It's just like we have, as I said, we have our salespeople really, really on the field, close to our clients and making sure that we fill every job requisition that we receive.

That's the point. It's -- the motto that we've had for several years now is I don't care whether the economy is good or bad, our markets are fragmented, if you are close to your clients, you can win share. And if you deliver faster than your competitor, then you gain share. And that's how we win. Now on the Akkodis defense, yes, we see momentum. It's -- the overall -- the aerospace and defense sector overall is growing 11% year-on-year. It's supported both by the aerospace dynamic and also with the pickup in defense, we say, I see it across the board, it's not yet -- I mean, the full investment that has been announced, for example, in Germany is not fully in place, but we see a pickup. And let's be clear, we are a key Tier 1 supplier for engineering services to all the major players, particularly in Europe and that puts us in a very good place. They also want to consolidate their Tier 1 list and we are in a very, very good place to continue to grow there.

Okay. Perfect. And thanks, Coram, for the very transparent and clear communication over the years and all the best.

Your next question comes from the line of Will Kirkness of Bernstein.

I just had 2 questions, please. Just on Akkodis, in terms of the U.S. and France, is there anything to do on cost there? Or is that just a case of waiting for end markets to get better to continue to improve? And then the second question was just a clarification on the 1.5x leverage target by the end of '27. And how we think about that with the new hybrid definition. So whether that -- when we start to think about return of surplus capital, just which calculation we use related to the hybrid?

I'll take the first one and then Coram will be super happy to talk about the second one. The -- yes, so U.S. and France, I mean, we are -- first of all, we are laser-focused on our cost base to ensure our competitiveness. We are also accelerating and Jo will talk about that at the CMD, accelerating our offshoring capacity to make sure that we provide the best possible service to our clients. There's a big need from our clients to -- for us to grow offshoring.

So that's good. We are -- so we are super focused on the cost base. France is back to growth, right, 1%, which is good. And the U.S., I mean, we have a great, great dynamic with -- in Consulting & Solutions. We grew 45%. And the tech staffing is improving. So it's sequentially, okay? So if you go back to North America in Akkodis was minus 9% in Q1, minus 4% in Q2 and now plus 1% year-on-year. So it is improving. We are still working on our cost base, it's too high. We are accelerating, particularly on the tech staffing, we're accelerating the way we use offshore to recruit faster and at more competitive costs. So this is what we're doing. I think I'm positive on both markets.

Let me pick up on the net debt-to-EBITDA question. Just to reiterate why we're doing this. We introduced the hybrid in 2021 as part of our capital structure. Obviously, the rating agencies from day 1 have given us the equity credit on 50% of it. We are in the process of refinancing, which very much reinforces the long-term nature of this instrument in our capital structure.

And therefore, it is the moment to align our reporting with rating agency methodology, it makes sense to do it. It is common practice, many companies do this. And as you can see in the press release, we've been very transparent in terms of the numbers, both before and after the change on the leverage ratio. The target remains at or below 1.5x net debt to EBITDA. And it's important to remember it is at or below and we are leaving it there for 2 reasons. One, it reflects our commitment to the investment grade credit rating. And obviously, that credit rating is assessed and calculated, including the hybrid, so it makes sense.

And as we know, for a business of this size and this nature, the 1.5x is a good point where you reach efficiency on cost of capital. So we will leave the target where it is. We've been transparent in the move on the reporting change and we are very committed to achieving that target.

Your next question comes from the line of James Rowland Clark of Barclays.

So just on the very strong North American performance, which is obviously well ahead of market growth rates at the moment. Does this sort of normalize back to market growth rates in the second half of next year or even lower on the tough comps? And I guess, could you just express your confidence that you could outperform the market on a sustainable basis there beyond that?

Just on the CFO change, I'd just like to know whether this maybe there's an opportunity for any slight changes to how to think about the financial guidance or use of capital in the future? And then finally, are you confident you can hold on to the broader cost savings, the structural cost savings in the business to deliver ahead of the market organically next year?

Thank you, James. So yes, I think the -- on North America, as I said, I mean, I don't think we'll grow 20% every quarter for the years to come. But yes, the objective is to always be ahead of the market. So are we going to normalize a little bit of growth, probably. Do we want to be ahead of the market? Yes, that's the objective. You know that the incentives of our executives and people are linked to doing better than the competition. So definitely, we will do -- we will push hard to always be ahead of the market.

Sometimes we get there, sometimes we don't, but that's the absolute focus of our teams, and it's not only North America, it's everywhere. As far as the CFO change, I mean we'll go in depth on this -- the financial strategy and the guidance in the Capital Markets Day, but you can expect continuity because this is what we've been told. I think we -- sorry, what we have been saying, you've understood that this was a very smooth transition. It was well prepared. And so that's the idea. It's all about the continuity. And yes, I mean the structural cost savings we will continue to be laser-focused on cost, both to achieve and to secure our gross margins.

So cost to serve is an absolute obsession because this is how we deliver our competitiveness. That's why and Christophe will talk about that in the CMD, that's why we've accelerated our talent supply chain delivery because that works. And of course, we are absolutely laser focused on the G&A and as you could see, we delivered on our promise to deliver the full savings, EUR 174 million net of inflation and we've kept that line really strictly. So moving forward, our G&A will be less than 3.5% of revenue, that's the sort of the line we've set and we'll stick to it.

There are no further questions at this time. And with that, I will turn the call back to Denis Machuel, CEO, for closing remarks. Please go ahead.

Thank you very much. And again, thanks again to all of you for having attended this call where we think we presented strong quarterly results and these results, they evidence further the strength of our execution. So we believe we are leading a recovery in our key markets. That's encouraging. While there is still a lot to do, all our turnaround plans are delivering according to our expectations. So that's encouraging for the future.

We are on track, as you understood, to meet our margin commitment for the full year, and that was very important for us. And so we are looking forward to seeing you at the CMD in London. I mentioned what we're going to talk about. And it's going to be also the opportunity for you to say goodbye to Coram and also to meet Valentina, they will be both on stage, as you can imagine, and also see with your eyes how we are living through a very smooth transition that we ensure full continuity.

So as you could hear, I'm confident in the future we're building a very strong group and we'll talk a lot about that in the CMD. See you there. Thank you so much. Have a great day.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.