SThree Q1 Earnings Call Highlights

FY2026 started in line with expectations: Q1 net fees fell 8% on a constant currency basis (contract down 10%) while permanent net fees were flat, and management described it as the strongest first quarter since FY2022 with improved productivity despite a mid‑teens reduction in sales headcount.
Regional and sector divergence: Momentum was led by the U.S. (U.S. contract net fees +13%, third consecutive quarter of growth) and Japan (fourth consecutive quarter of growth), while Technology net fees were down 14% and the Netherlands saw a steep 29% decline in contract net fees.
Financial position and leadership update: Contractor order book was £152m (around five months' visibility), net cash £51m and a £20m share buyback programme is underway, and CFO Andy Beech will step down after a transition period.
SThree (LON:STEM) said FY 2026 has started in line with expectations, pointing to continued stabilization in trading conditions and improved productivity despite a lower headcount, according to comments made during the company’s Q1 trading update.
Management highlighted “ongoing momentum” in the U.S. and Japan and said the year-on-year rate of decline in group net fees improved significantly, reflecting the conclusion of an important contract renewal period and new business performance that was broadly consistent with the prior year. The company described Q1 as its strongest first quarter since FY 2022, citing higher interview activity and more placements per head as evidence of improved operational effectiveness.
CFO Andy Beech said group net fees declined 8% year-on-year on a constant currency basis, with trading conditions “largely consistent with the prior quarter.” Contract, which represented 83% of group net fees, declined 10%. Beech said new placement activity was broadly stable year-on-year and in line with expectations, adding that results were delivered despite a “mid-teens percentage reduction in sales headcount,” which management said underlined a meaningful productivity improvement supported by the group’s new technology platform.
Permanent net fees were flat, which the company described as its strongest quarterly year-on-year performance in more than three years. Management attributed that outcome to particularly strong trading in Japan, which it said is the second-largest permanent business in the group.
By skill mix, management cited divergent trends across end markets:
Technology (largest discipline): net fees down 14%, reflecting soft demand, particularly in the Netherlands and Germany, which management said contributes around 60% of net fees.
Engineering (second-largest): down 5%, though the energy segment continued to grow, driven by strong demand for roles in the U.S.
Life sciences (third-largest): down 10%; the company said strong growth in Japan only partially offset reduced demand in other major markets.
Regional highlights across top markets
Beech reviewed performance in the company’s top five countries and said the pace of decline moderated in several areas relative to Q4.
Germany: Management said the year-on-year decline moderated compared with Q4, supported by a smaller decline in life sciences and stronger demand for banking and finance roles. Contract net fees were down 11%, which Beech said primarily reflected lower demand for technology skills, with a similar trend in permanent.
United States: U.S. contract net fees rose 13%, marking the third consecutive quarter of growth. Beech said demand was positive across all skill verticals, especially energy and technology roles. This was partially offset by softer trading in permanent as demand moderated across most verticals, though the company cited robust demand for banking and finance roles within its “other” category.
Netherlands: Management described the market as challenging, with trading marginally softer than Q4 due to the “modest impact” of new regulation introduced in January. The company also noted difficult comparatives, saying the Netherlands sustained growth for longer than other major markets. Contract, which accounts for over 90% of net fees, declined 29% amid reduced demand for technology and engineering roles.
United Kingdom: The company reported a 9 percentage point moderation in the rate of decline year-on-year relative to Q4, driven by smaller declines across most skills. Contract net fees were down 21%, primarily due to lower demand for technology roles.
Japan: Japan delivered a fourth consecutive quarter of growth, with management citing strong demand across all skill verticals, particularly for technology roles.
Headcount, cost program, and balance sheet
On costs and staffing, Beech said group headcount at the end of February was down 4% compared with the end of FY 2025, reflecting management of natural churn, selective hiring, and early cost optimization actions. The company reiterated that its FY 2026 cost optimization program is progressing as planned, with costs weighted toward the first half of the year and savings weighted toward the second half.
The contractor order book was GBP 152 million, down 7% year-on-year. Management said this continues to represent “sector-leading visibility,” equivalent to around five months of net fees. Beech added that when the FY 2026 portion of the contractor order book is combined with net fees delivered year-to-date, the company has visibility of around 60% of full-year market consensus net fees. Management said this visibility, along with the cost program, extensions, and new placements tracking in line with expectations, underpinned guidance for FY 2026.
SThree reported net cash of GBP 51 million. The company also highlighted its share buyback program of up to GBP 20 million, launched in February, with GBP 1.6 million purchased as of the prior day’s close.
CFO transition and outlook commentary
The company also announced that CFO Andy Beech will step down after five years. CEO Timo Lehne thanked Beech for his contribution, including building the finance function and delivering the company’s transformation and investment program (TIP) “on time and on budget.” Lehne said Beech will provide support during a transition period while the company runs a process to identify a successor. Beech said he expects an orderly handover and said he will leave “confident that the company is stable, well-positioned, and ready to seize the opportunities that lie ahead.”
Looking ahead, Lehne said it is “too early” to call a broad-based sustained recovery, but that the company remains cautiously optimistic. He also referenced ongoing macroeconomic volatility, geopolitical uncertainty, and rapid technological change, including the growth of AI, and said organizations are increasingly looking for partners to manage workforce complexity. Lehne said the company’s employed contractor model remains resilient as clients move from “purely transactional hiring” toward scalable end-to-end workforce solutions.
Lehne added that recent events in the Middle East—described as contributing around 2% of net fees—have heightened geopolitical uncertainty, though he said it was too soon to determine any potential impact on the global economy and the company’s wider markets. He said the immediate priority is the well-being of teams in affected regions.
SThree said it will next update the market at its half-year results on 21 July.
About SThree (LON:STEM)
SThree plc brings skilled people together to build the future. We are the global STEM workforce consultancy, placing highly skilled, STEM specialist workers in the industries where they are needed most. We advise businesses, build expert teams, and deliver project solutions for our clients. With more than 38 years of experience in pure-play STEM and a global team with local expertise across 11 countries, we cover high-demand skills across Engineering, Life Sciences and Technology roles. We provide permanent and flexible contract talent to a diverse base of around 6,000 clients.