ManpowerGroup Aktie

Welcome to ManpowerGroup's Second Quarter Earnings Results Conference Call. [Operator Instructions] This call is being recorded. If you care to drop off now, please do so.

I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Good morning, and thank you for joining us for our second quarter 2026 conference call. Our Chief Financial Officer, Jack McGinnis; and our President and Chief Strategy Officer, Becky Frankiewicz, are both with me today. For your convenience, our prepared remarks are available in the Investor Relations section of our website at manpowergroup.com.

I'll begin with a brief overview of the quarter, including how we're seeing conditions evolve across our markets, and then I'll share a few updates on our transformation as well as our longer-term objectives. Becky will then provide an update on client momentum and the opportunities we're capturing with AI, followed by Jack, who will walk through the detailed financial results and our guidance for the third quarter of 2026.

I'll close with a few comments before we open the line for Q&A. Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements.

Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

Thanks, Jack. During the second quarter, we delivered strong results with revenues ahead of expectations, underscored by growing client demand and accelerated delivery of our strategy. Our reported revenues were $4.9 billion, representing constant currency growth of 6%. System-wide revenue, which includes our expanding franchise revenue base was $5.3 billion. Adjusted EBITA margin of 2.1% reflects improving demand trends and operating leverage. These results reflect good execution across our brands and markets, continued cost discipline and improving demand. We continue to leverage our scale and global footprint and focus commercial efforts on verticals where demand is strongest and where we have a clear opportunity to win and capture market share.

We are encouraged by our performance across our brands. Specifically within Manpower, demand indicators have strengthened, and the brand delivered its fifth consecutive quarter of growth with revenue up 8% in constant currency. We are seeing positive momentum across key verticals, including manufacturing, automotive, aerospace, logistics and retail.

In the U.S., Manpower performance in Q2 was particularly strong, driven by accelerated sales activity and a robust pipeline that continues to build. We're also seeing a meaningful improvement in Northern Europe, which was profitable this quarter and represents a significant and broad-based year-over-year improvement. While there is still more progress to make, the actions that we have taken are driving improved performance.

Experis, our technology resourcing and services business delivered encouraging improvement driven by sustained demand for specialized capabilities in cloud migration, application development, data and AI. Our partnership approach and human plus agent offerings are addressing new market needs, all contributing to a pipeline of higher-value opportunities with clients seeking both agility and deep technical expertise. We expect continued improvement in Q3.

Lastly, in Talent Solutions, we delivered sequential improvement and are encouraged by the strength of the pipeline. We've sharpened our strategic focus and strengthened how our teams, capabilities and expertise come together globally. This alignment enables us to reduce complexity, accelerate innovation and deliver stronger client outcomes. Across the portfolio, we continue to actively shape our business towards higher-value opportunities where capabilities are most differentiated. Our experienced leadership team remains focused on executing against today's demand while positioning the company for the opportunities we anticipate tomorrow and we remain disciplined in our approach to pricing and client selection, supporting stronger returns over time.

Before I hand it over to Becky, I'd like to share a few high-level updates on our transformation. First, at the beginning of the year, we told you this was going to be a pivotal moment in our transformation, and we are delivering on that commitment. Specifically, we said we would optimize our current cost base and align capacity with client demand. Last quarter, we launched our expanded global strategic transformation program, expected to deliver $200 million in permanent cost savings in 2028. This program will create a more efficient cost structure while positioning our brands to capture market share. We have a clear path to deliver these savings, and we are making strong progress.

Second, we committed to using the same discipline to review our portfolio to ensure we have the right asset base. As a result, the sale of Jefferson Wells U.S. business was completed during the second quarter, a concrete example of prioritizing investment and management attention behind the core higher return opportunities where we see the greatest potential to create value.

Taken together, our transformational cost out and portfolio optimization actions have put us in a better position to generate operating leverage as demand continues to improve.

Looking ahead, we're committed to delivering at pace. Our first priority is to execute and continue to drive momentum across the business, including the strong performance from Manpower and tangible improvement across Experis and Talent Solutions. This requires focusing our commercial initiatives on the regions and verticals that will drive the greatest demand.

We will equally stay focused on our longer-term ambition to position ManpowerGroup for durable, profitable growth through the cycle. This includes sequencing the global rollout of the cost transformation program and deliver our $200 million cost target on schedule, continuing to redesign our front office sales and recruitment processes to enhance productivity and leveraging AI to create sustainable commercial opportunities to accelerate growth.

I will now turn it over to Becky to go deeper on how we're enhancing productivity and commercializing our AI capabilities.

Thanks, Jonas. As Jonas just shared, we are focused on accelerating how we leverage AI in 2 key areas: to enhance effectiveness within our own organization and to create commercial opportunities that become growth multipliers.

First, as I discussed last quarter, AI-centric enhancements are critical to our ability to accelerate our go-to-market strategy, identify the highest value opportunities and capture incremental revenue. We continue to scale our AI-powered sales targeting engine, and we are encouraged by how it is influencing organic growth by pinpointing the highest probability opportunities so our teams can focus their efforts where sales conversion and revenue impact are the highest. We are leveraging this tool in many of our largest markets and are on track to scale to almost 70% of revenues by year-end.

The other half of the effectiveness equation is creating a differentiated talent experience, critical to attracting and retaining the skilled associates and consultants our clients value most. We are continuing to advance our AI-powered screening and interview experiences to meet talent where and when works for them. We are on track to scale to 70% of revenues by year-end, improving fill rates and accelerating time to hire.

As it relates to new commercial opportunities, we are leveraging AI as a growth multiplier and are focused on anticipating fast-moving client buying behavior and responding at speed. Over the last few weeks, I've been meeting with many of our clients across Europe and around the world. We continue to hear that organizations across industries are focused on how AI can be deployed responsibly to add capability and improve business outcomes. This is creating a new set of opportunities for ManpowerGroup, and we are capturing these opportunities with a partnership approach that we believe is a new value creation lever.

By building new go-to-market alliances with industry leaders that bring complementary expertise, we are creating net new revenue streams that expand our addressable market and accelerate speed to solution in an efficient and cost-effective way. We believe the next decade of AI adoption will be defined by partnerships that combine technology, talent and workforce expertise, and we are intentional on building these relationships now.

Last quarter, you heard me discuss our partnership with SoundHound AI, the global leader in voice and conversational AI. Since then, we have continued to build momentum and have begun converting opportunities into customer engagements. We are seeing increased traction within our health care clients as organizations look to deploy conversational AI to improve both customer and employee experiences, and we are making good progress expanding these opportunities beyond the U.S.

Last week, we expanded our partnership capabilities with the launch of ExcelerateWorkflow built with IBM watsonx Orchestrate. IBM provides the trusted underlying AI technology, while Experis helps clients to unlock value, designing the workflow, implementing the solution, providing the talent and helping to govern and manage the deployment over time.

Unlike traditional AI consulting approaches, Experis brings together technology implementation, workforce transformation and specialized AI talent paired with our depth of human capabilities to help organizations move beyond AI pilots and into scalable execution. These projects are particularly attractive because they combine high-value consulting, AI implementation and ongoing managed services.

Our competitive advantage is no longer defined by technology alone. It comes from orchestrating an ecosystem of strategic partners and combining technology, talent and services into integrated solutions that accelerate customer outcomes. We are seeing encouraging pipeline momentum as this partnership strategy continues to scale.

As we continue to strengthen relationships with organizations such as SoundHound AI, IBM, Accenture, SAP and Microsoft, among others, we are broadening our capability, creating new routes to market and positioning the business for future growth. I look forward to updating you on our progress in future quarters.

I will now turn it over to Jack.

Thanks, Becky. In the second quarter, we delivered reported revenues of $4.9 billion. System-wide revenue, including franchises, was $5.3 billion. Our second quarter revenue results represented constant currency growth of 6%. U.S. dollar reported revenues after adjusting for currency impacts came in above our constant currency guidance range. Gross profit margin came in within our guidance range and considering the impact of the U.S. Jefferson Wells disposition was organically very close to the midpoint of our guidance.

As adjusted, EBITA was $103 million, representing a 15% increase in constant currency compared to the prior year period. As adjusted, EBITA margin was 2.1%, up 10 basis points year-over-year and came in at the midpoint of our guidance range. Organic days adjusted constant currency revenue increased 6% in the quarter, which was well above our midpoint guidance range of 3% growth, driven by our Manpower business.

Turning to the EPS bridge. Reported earnings per share for the quarter was $1.13. Adjusted EPS was $0.99 and came in above our guidance midpoint. Walking from our guidance midpoint of $0.96, our results included a better operational performance of $0.04 and a foreign currency impact that was $0.01 worse. Restructuring costs and strategic transformation program costs represented $0.23 and the gain on sale of Jefferson Wells U.S. business and liquidation of a discontinued business represented a $0.37 positive impact.

Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had a very strong growth of 8% in the quarter, up sequentially from the 6% growth in the first quarter. The Experis brand declined by 2%, an improvement from the 9% decline in the first quarter. The Talent Solutions brand was flat year-over-year, an improvement from the first quarter decline of 1%. Within Talent Solutions, our RPO business continued the sequential revenue trend improvement from Q1 with stable revenue levels from the previous quarter. Our MSP business saw continued solid revenue growth, while Right Management declined slightly during the quarter.

Looking at our gross profit margin in detail, our gross margin came in at 16.1% for the quarter. Staffing margin improved sequentially from the first quarter and on a year-over-year basis represented a 60 basis point reduction, primarily due to mix shifts in the second quarter. This is an improvement from the 70 basis point decline in the first quarter. The staffing margin decrease was also impacted by the sale of the higher-margin U.S. Jefferson Wells business early in the quarter and considering this was very close to the midpoint of our guidance. Permanent recruitment activity resulted in a 10 basis point decline. Other services resulted in a 10 basis point margin decrease.

Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 65% of gross profit. Our Experis professional business comprised 19% and Talent Solutions comprised 16%. During the quarter, our consolidated gross profit grew by 1% on an organic constant currency basis year-over-year, an improvement from the 3% decline in the first quarter. Our Manpower brand grew 5% in organic constant currency gross profit year-over-year, an improvement from the flat first quarter year-over-year trend.

Gross profit in our Experis brand decreased 6% in organic constant currency year-over-year, an improvement from the 11% decrease in the first quarter. Gross profit in Talent Solutions declined 4% in organic constant currency year-over-year, which was an improvement from the 5% decrease in the first quarter. The improvement in trend was driven by RPO, while MSP trends also improved from the first quarter. Right Management had gross profit declines in the quarter on decreased outplacement activity.

Reported SG&A expense in the quarter was $668 million. SG&A as adjusted was down 1% on a constant currency basis. The year-over-year constant currency decreases largely consisted of reductions in operational costs of $5 million. Dispositions represented a decrease of $4 million, while currency changes contributed to a $10 million increase. Adjusted SG&A expenses as a percentage of revenue represented 14.1% in constant currency in the second quarter. Adjustments represented restructuring and strategic transformation program charges of $14 million, which were more than offset by a gain on sale of Jefferson Wells U.S. business of $30 million.

Balancing gross profit growth with strong cost controls while funding ongoing transformation to enhance EBITA margin in both the short and long term remains one of our highest priorities. We continue to estimate restructuring and strategic transformation program charges to range from $10 million to $15 million on average per quarter through the end of the year.

The Americas segment comprised 25% of consolidated revenue. Revenue in the quarter was $1.2 billion, representing an increase of 14% year-over-year on an organic constant currency basis. As adjusted, OUP was $45 million and OUP margin was 3.7%. Restructuring charges of $3 million represented actions in the U.S. and Mexico. The U.S. is the largest country in the Americas segment, comprising 59% of segment revenues. Revenue in the U.S. was $714 million during the quarter, representing an 8% organic days adjusted increase compared to the prior year. OUP as adjusted for our U.S. business was $24 million in the quarter. OUP margin as adjusted was 3.3%.

Within the U.S., the Manpower brand comprised 29% of gross profit during the quarter. Revenue for the Manpower brand in the U.S. increased 16% on a days adjusted basis during the quarter, which represented strong market performance with 8 consecutive quarters of growth and a significant step-up from the 5% increase in the first quarter. The Experis brand in the U.S. comprised 38% of gross profit in the quarter. Within Experis in the U.S., substantially all the revenues represent IT resourcing and services. Experis U.S. revenue was flat on an organic days adjusted basis during the quarter, an improvement from the 15% decline in the first quarter as the business anniversaried strong health care IT projects in the prior year.

Excluding the impact of health care IT project volumes in the second quarter, Experis U.S. revenue decreased 3% on a days adjusted basis during the quarter, an improvement from the first quarter trend. The Experis U.S. business expects a continued improvement in revenue trend into the third quarter. Talent Solutions in the U.S. contributed 33% of gross profit and saw a 6% increase in revenue year-over-year in the quarter, reflecting an increased rate of growth from the first quarter, driven by strong growth in both RPO and MSP during the second quarter. This was partially offset by declines in Right Management on lower outplacement activity in the quarter.

Overall, the U.S. had strong organic revenue growth in the second quarter, and we expect a similar rate of growth in the third quarter.

Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.3 billion, representing 4% growth in constant currency during the second quarter. As adjusted, OUP for our Southern Europe business was $79 million in the quarter and OUP margin was 3.4%. Restructuring charges of $4 million represented actions taken largely in France and Italy.

France revenue equaled $1.2 billion and comprised 51% of the Southern Europe segment in the quarter and was flat on a constant currency basis. As adjusted, OUP for our France business was $31 million in the quarter. Adjusted OUP margin was 2.6%. France revenue trends were stable during the second quarter, and we expect a similar rate of revenue trend of flat to slight growth in the third quarter.

Revenue in Italy equaled $522 million in the second quarter, reflecting an increase of 6% on a days adjusted constant currency basis. OUP as adjusted equaled $35 million and OUP margin was 6.7%. Our Italy business is executing well and leads in the market. We estimate low to mid-single-digit percentage revenue growth in the third quarter.

Our Northern Europe segment comprised 17% of consolidated revenue in the quarter. Revenue of $825 million represented a 2% increase in organic constant currency. OUP was $2 million in the quarter. This represents year-over-year OUP improvement during the last 3 quarters, reflecting the outcome of the significant actions taken in previous quarters.

Our largest market in the Northern Europe segment is the U.K., which represented 33% of segment revenues in the quarter. During the quarter, the U.K. crossed back over to growth with revenues increasing 2% on a days adjusted constant currency basis. The remaining countries in the region progressed as expected with largely stable to improving revenue trends.

The Asia Pacific Middle East segment comprises 11% of total company revenue. In the quarter, revenues equaled $519 million, representing an increase of 5% in constant currency. OUP was $24 million and OUP margin was 4.6%. Our largest market in the APME segment is Japan, which represented 57% of segment revenues in the quarter. Revenue in Japan grew 4% on a days adjusted constant currency basis, and we expect a similar level of revenue growth in the third quarter.

I'll now turn to cash flow and balance sheet. In the second quarter, free cash flow represented an outflow of $9 million compared to an outflow of $207 million in the prior year. On a year-to-date basis, this represents significant year-over-year improvement in the trend, and we expect strong free cash flow during the second half. At quarter end, days sales outstanding was 56 days, flat from the prior year. During the second quarter, capital expenditures represented $6 million, and we did not repurchase any shares.

Our balance sheet ended the quarter with cash of $181 million and total debt of $1.04 billion. Net debt equaled $863 million at quarter end and improved sequentially as we allocated capital from business sales to pay down our revolver, which typically peaks in usage at June 30. Our debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of 2.5 and total debt to total capitalization at 33%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation.

Next, I'll review our outlook for the third quarter of 2026. We are forecasting earnings per share for the third quarter to be in the range of $0.96 to $1.06. The guidance range also includes an unfavorable foreign currency impact of $0.02 per share, and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our organic days adjusted constant currency revenue guidance shows a continuation of the 6% growth achieved in the second quarter again into the third quarter at the midpoint.

On a constant currency basis, which is impacted by the second quarter business disposition, the ranges between a 3% increase and a 7% increase at the midpoint is a 5% increase. Business days and the impact of dispositions adjust our organic days adjusted constant currency revenue growth estimate to 6% at the midpoint.

We anticipate stable underlying staffing margin into the third quarter and estimated GP margin of 16% at the midpoint, which includes a full quarter impact of the higher-margin U.S. business disposition and the current business mix. EBITA margin for the third quarter is projected to be up 10 basis points at the midpoint compared to the prior year. We estimate that the effective tax rate for the third quarter will be 44%.

I will continue to carve out any restructuring and global strategic transformation program costs as they are not included in the underlying guidance. In addition, we estimate our weighted average shares to be 47.9 million.

I will now turn it back to Jonas.

Thanks, Jack. In closing, I'm highly encouraged by our performance in the second quarter. Our commercial execution, coupled with strengthening market demand yielded a meaningful step change in organic growth. Taken together with a prudent approach to cost management, we are driving improved operating leverage and profitability.

Looking ahead, I'm confident that we have set the foundation to be able to sustain this momentum in the back half of the year. As always, thank you to our talented team for their relentless focus and to our candidates and clients for your continued partnership.

Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Mark Marcon with Baird.

Really encouraging to see the improvement both in terms of the cost discipline as well as the revenue trends. I was wondering, broadly speaking, in some of your most important markets, specifically if we take a look at the U.S. and France, can you give us a sense for how the quarter ended up progressing? Did you see improvement building as the quarter unfolded? Or did things kind of -- or were they generally stable throughout the quarter? I'm just wondering what the exit rates were.

Okay. Mark, thanks. This is Jack. I'd be happy to talk about the trends during the quarters in our largest markets. So maybe starting with the U.S., to your point, we saw strong strength and revenue trend building over the course of the quarter. And as I mentioned, in our prepared remarks, Manpower grew at 16% in the second quarter. So very strong growth. And that marks 5 quarters of Manpower brand overall growth. But in the U.S., that's 8 quarters. So strong growth in commercial staffing continuing in the U.S. And it was great to see Experis cross back to flat in the quarter as well. And we said that last call that we expected that to happen, and it did happen. So we're seeing some improved momentum on the Experis side as well.

And I'd say, France was very stable over the course of the quarter overall. So you saw France come in at flat. You may have seen some of the -- I think you comment on the industry data when it comes out, Mark. And you would have seen that, that was very stable. And our revenue trends moved pretty much in line with that stability as well. So that was really good to see.

And I'd say for Italy, pretty much a -- a pretty even revenue trend over the course of the quarter, started maybe a tad bit stronger, but still strong, solid growth as we exited the quarter. And maybe the last one, the fourth biggest business for us would be Japan, and Japan was very steady, pretty even during the entire quarter.

Great. Part of the reason for the question is, was this no ill effects from Iran so far that you can discern? That's -- that was part of that question. And then I was wondering for Jonas or Becky, you talked a lot about the advanced AI-powered screening and the interview experiences. Are you actually seeing improvement with regards to fill rates and a decrease in terms of time to hire? Are you tracking those metrics? And is it really discernible?

Yes, Mark, it's Becky. Yes, so to answer your question, we are now in our ninth month of using some early in the funnel interview tools, and we're seeing a 67% decrease in our time to fill. And so that has been material for us, one, for our speed, but also for our ability to delight our candidates, which is important in a talent-constrained market. And so we're feeling -- it's still early for us. We're going to hit 70% of our revenues in terms of scale by the end of the year, but we're feeling good about the progress on that front.

Our next question comes from Jeff Silber with BMO Capital Markets.

I have to apologize, I'm in transit, so it's a little noisy here. But I just was wondering if you could comment on the general tone of business from your clients, how that's been changing over the course of the year? And what are the expectations for the back half?

This is Becky. As you heard me in my prepared remarks, I was able to spend a tremendous amount of time in this quarter with our clients. And I'd say we're hearing a couple of things. One, they continue to be very resilient in the face of a changing landscape, whether it's geopolitically or economically or demographically. But in these times of uncertainty, customers are increasingly seeking flexible workforce solutions. And as you know, that's where we shine. That's where our business excels, and you're seeing that as we posted our results, particularly in Manpower and the improvement in Experis.

Aside of that, when you talk to them about AI, they're really not struggling anymore to access AI technology. I mean that's becoming available. They're really struggling to get benefit. And again, that's where we're coming in. You heard me talk about our strategic partnerships, mostly on the Experis side, but that's our proof point that AI can be a growth and a profit multiplier for us because we're leveraging it with our customers and to improve the candidate experience.

Our next question comes from Andy Grobler with BNP Paribas.

Can I just ask about gross margin? The decline in the temp margin through the quarter, can you just talk through the extent to which that is mix and whether there's any price impact? And also on that, this kind of early cycle decline is pretty normal. When would you think that's going to trough out and we can start to see gross margin stabilize and improve?

Thanks for the question, Andy. This is Jack. I'll take that one. So, yes, to your point on gross profit margin trends and as we've laid out in the slide, I guess maybe I'll start with staffing. So I'd say very close to our expectations. You heard me carve out the disposition of the Jefferson Wells sale that we absorbed that, and that was about 5 basis points during the course of the quarter. We were very close to the midpoint considering that.

And what I would say is if you look at Q1, we were down 70 basis points year-over-year. That improved into Q2 to down 60 basis points. And actually, our GP margin improved sequentially. It was 16.0% in Q1, and it rose to 16.1% in Q2. And that's absorbing the JW disposition and also absorbing the significant additional growth above expectations, which was largely driven by Manpower Enterprise.

So I think that's a very good signal that pricing is rational, continues to be very stable. As you heard Jonas in the prepared remarks talk about how disciplined we've been on pricing, and that continues. So underlying staffing margin quite stable, considering all of that and also considering the additional growth that we had during the course of the quarter.

We saw perm improve as well quarter-over-quarter, but that was a 20 basis point drag in the first quarter year-over-year, improved to 10. We actually saw perm cross over to flat in the second quarter overall. So that was a big positive.

And to your point, as we go forward and we look at mix, we have seen in this early part of this recovery that enterprise -- commercial staffing enterprise has been leading it. A lot of that mix has worked its way through. If you look at the first 9 months of the year here with my guide for Q3, you see a pretty stable gross profit margin, about 16.0% to 16.1% during the first 9 months of the year, and that's showing underlying stability in our staffing margin and the mix shift as well.

As we go forward, as convenience starts to resume, and we're seeing some early signs of that starting to happen in the U.S., that will be a benefit for Manpower margin. But also, as we know, Experis and perm have been lagging. And as those come back, we'll see some additional strength in GP margin going forward as well. So that's what we would expect. I think that's what we're starting to see early on here, and that would be the outlook, Andy.

Great. Just one housekeeping follow-up. Just on the JW impact in Q2, what would you expect that to be?

Yes, it's about 10 basis points.

Our next question comes from George Tong with Goldman Sachs.

You've now delivered 5 consecutive quarters of growth in Manpower and are seeing improving trends in Experis and Talent Solutions. To what extent does that performance reflect a recovery in underlying staffing demand versus company-specific actions? And how do you expect the relative contribution of market growth and share gains to evolve over the next year?

Thanks, George. We feel -- we think we're executing very well in our Manpower business and as ManpowerGroup. Overall, we think we're leading the market in many markets. When I look at the strong growth that we're having in the U.S. at 16% for Manpower, double-digit growth in countries like Spain, Canada, Poland, a lot of countries in Latin America and then high single-digit growth in the U.K. and Italy, along with improving trends in Northern Europe, we believe we're executing and competing very well in those markets.

As Jack has just mentioned to Andy, we're also very pleased to see the continued progress of Experis and Talent Solutions as well as perm. So I think we have really been executing well. And part of the explanation of that, you heard Becky talk about in her prepared remarks, our ability to target the industry verticals that are growing and shifting in an agile way to where the opportunity sits, both in terms of verticals, in terms of geographies, that's really a capability we have been honing over the last couple of years, and I think that's starting to come through in a very nice way.

Got it. That's helpful. And then can you provide some additional detail on the timing of the $200 million in permanent cost savings from the transformation program? Specifically, how much of the benefit you expect to be realized in the second half of this year versus 2027 and 2028 and which functions or geographies you expect to contribute most to the savings?

George, this is Jack. I'd be happy to talk to that. So as Jonas talked about in his prepared remarks, we're tracking very well on the transformation on the strategic transformation for the front office that we launched at the beginning of the year. As you think about the benefits from that and going back, I'd say, generally, everything is pretty much still in line with what we announced last quarter as we laid out the multiyear progression. What that means is we'll see the back office moving to profits this year. That was $20 million. I would say that is pretty even over the course of the year, probably a tad better in the second half of the year. And then the overall transformation program moves to $80 million with the front office kicking in next year.

I'd say think of that as -- at this stage, I'd say, think of that as more weighted towards the second to the fourth quarters of '27. We'll give a further update on that, of course, as we get to the end of the year. And then in 2028, that's when we expect the $200 million to come through for the full calendar year. And we'll talk more about that in the future.

But I'd say on an overall basis, when we look at the cost for the program, pretty much in line exactly as I guided to last quarter. We said we expect that, that would be $10 million to $15 million a quarter. We came in at about $13 million this quarter, and that guidance still is the same trend for the rest of the year from a cost perspective for Q3 and Q4.

Our next question comes from Manav Patnik with Barclays.

This is Ronan Kennedy on for Manav. I think for several quarters, you had described improving trends as gradual stabilization. Understandably, the commentary this morning is confident and constructive. And if I'm not mistaken, Jack did just say early part of the recovery. Can we just ask for your holistic assessment as to where we are? Is it stabilization moving on to recovery? Your assessment of that, please?

Well, I would say, based on our track record now with Manpower in the U.S. and Manpower globally in fifth quarter, we could say that Manpower has moved from stabilization into a recovery, no question about that. And as Jack also mentioned earlier, we're very encouraged by the progress that we're seeing with Talent Solutions with Experis, with their improving trends as well as perm and its improving trend as well. And as you can tell from our guide, we're expecting that to continue into the third quarter as well. In those areas, though, we would probably still characterize this as stabilizing, but we are very encouraged and confident in their trends heading forward into the Q3 and beyond.

And if I may, I think George -- you touched on manpower, I think, more broadly as a brand. But for the U.S. manpower strength specifically, can you just unpack the elements of market recovery or share gain there and whether it's underlying market demand, better sales targeting, enterprise wins, bill rate inflation or anything to call out from a vertical mix or particular segments of strength standpoint?

Yes, I'm happy to take that. Yes, demand in the U.S. has improved around manpower. And yes, our ability to adapt and target specific areas of growth has also improved, as Jonas alluded to. We're seeing growth in manufacturing, particularly around consumer goods, retail, aerospace, logistics. So we positioned ourselves in a sales perspective towards those high-growth verticals and literally adapted in real time to go after that growth. And so we feel really good, yes, about the market and yes, about our ability to take share in that market given our own actions.

Our next question comes from Trevor Romeo with William Blair.

I had one on your internal headcount. So I guess the last few years, we had been talking about headcount coming down. And now that you're kind of solidly back into revenue growth mode here, how are you thinking about headcount from here? Do you need to kind of ramp up for this demand you're seeing now? Or do you think you have enough capacity to hold about where you are?

Well, thanks. I think we -- as we've talked about, we're very disciplined, both in our sales activities, as Becky just mentioned, and from a cost perspective, as Jack has talked about as well. So I would say, at this point, we're really feeling good about how we're positioned. We think we have additional capacity to leverage the headcount that we have, and we'll be very careful in terms of looking at where and how we add headcount to continue to drive.

So the important part is for us to continue to be very strong in our sales activities and also very agile and quick at adjusting our recruiting capability to the market demand. And with the tools that we're now deploying across the organization, it also gives us further flexibility to leverage our existing headcount for further productivity, and we're laser-focused on that.

Appreciate that, Jonas. And then maybe a quick follow-up for either for you or for Becky. We are kind of in this era where AI is rapidly changing, I think, what companies are looking for in their labor and talent. And it seems like having that flexibility that you have is a huge advantage right now, specifically kind of focusing on Experis here. So kind of what are you seeing in real time in terms of what IT skills clients are demanding now and how that's changing? And for the new skills that are in high demand, how difficult is it to find that talent right now?

Yes. I'll take that question. So for Experis, first, to address the first comment you made, yes, of course, we're seeing clients want flexibility as they navigate both their own plans, but also the execution of their plans to realize value. That's really the discussion with clients is how do we realize value. And we know that technology can get you to the pilot, but it's humans that have to get you to the realization of the benefit, and that's where we come in.

To your question on skills that are growing, a lot around the infrastructure side, so database architects, data scientists for data centers, we're seeing computer network engineers taking off a little bit of cyber, but really, it's more focused on the infrastructure side in terms of skills. And in difficulty to find the skills, right now, we're able to shift people, upskill them. We run an academy called Experis Academy, where we're actually teaching and training the skills to make sure we can meet the demand. So we feel pretty good about our position now. And again, you heard that from Jack saying the improvement, we're shifting ourselves in this example into those skills that are in demand in the marketplace.

Our next question comes from Josh Chan with UBS.

Congrats on a good quarter. I guess I was -- you guys are seeing, based on your numbers, some very classical signs of an early cycle recovery. So I was wondering how you're interpreting the macro environment in light of not having an overall economic recession, but then seeing this early cycle recovery signs.

Yes, we are very encouraged by the momentum and also equally excited about the long-term market opportunity. And I think as you've been hearing from us over some time now is our intent for us is to be the architects of our own future and to take the actions needed to position the business to win in any environment.

And with that in mind, our focus is less on predicting the exact timing of or form of a traditional cycle rebound, but more on executing against the levers within our control, including structural cost actions, portfolio prioritization and the continued investment in higher-value capabilities. And you heard Jack just now give a great example of that in his discussion around our $200 million transformation program that aims at providing or is going to provide permanent savings of $200 million in 2028.

As an industry and as a business, we have almost 80 years of experience in adapting to a changing environment. So just as Becky talked about, the demand may not be that different, but their shift happens within the demand between the skills, especially on the technology side at this point, but also within other parts of our Manpower business as well as our Talent Solutions business. And our strength is to adjust to those changes, anticipate them and then drive towards where the higher value opportunities lie.

So all of this to say, we're very encouraged by what we've seen in our second quarter performance, and we're delivering market-leading growth. And as you can tell from our guide, we expect this trend to continue also into the third quarter.

That's great. And then I guess, Jack mentioned that you're seeing early signs of convenience resuming in the U.S. I think that's the first time we've heard that in a while. So could you elaborate on what you're seeing there in terms of this convenience market possibly getting better?

Yes. So I'll take the market part of that. Yes, we are starting to see the first signs actually of convenience improving in the U.S. with our smaller and up to middle-sized customers starting to recreate their demand, reengage in the market. It's early. But once we start seeing that, we expect that we'll continue to grow, and we're seeing evidence of that in our pipeline.

[Operator Instructions] Our next question comes from Tobey Sommer with Truist.

This is Tyler Barishaw on for Tobey. You mentioned AI as a growth multiplier. Can you discuss some areas where AI has brought new business to the company?

Yes, I'll take that. So on last quarter's call, I talked about the sales targeting engine. We have deployed that first in France. We're now scaling that across all of our major markets expecting to reach 70% of our revenue by the end of the year. That helps us better target the opportunities that are growing in the market and where we have existing capability and talent. And so that is a specific area where we're leveraging AI, and I would also say automation to help be a profit and growth multiplier in our business.

We're also doing work on the front office, where we're partnering around interviews where we can do those when we're not actually in business operating hours. In fact, 30% of our interviews are taking place outside of normal business hours, and those are AI-powered automation enabled. And so those are a couple of examples where we're seeing AI both drive growth and profit.

The last place I would say is on the commercial side because we see AI as two-pronged. We're using it inside our organization, as mentioned, we're also using it to create new products in the market. And last quarter, I talked about the partnership with SoundHound AI. This quarter, I talked about the relationship we have with IBM watsonx. I mean this intersection of ensuring we're partnering for capabilities to better deliver and again, drive measurable outcomes. That's what clients want. They want measurable outcomes, not just implementation. And it is our learning now that it is taking humans to realize that outcome. And again, that's where we shine.

And can you discuss the decision not to repurchase any shares? And should we expect the return to rebound in the second half?

So, Tyler, you were a little faint there, but I think you were asking about share repurchases. And so what I would say is from a capital allocation standpoint, I wouldn't expect any changes in the very short term. I think we've talked about the fact that we've strengthened the balance sheet. It was great to have that cash influx in the second quarter from the disposition. You can see our net debt improved quarter-over-quarter.

So I think for right now, I wouldn't anticipate any changes in the very short term, but we're very proud of our track record, and you should expect that will continue to be part of the mix as we move forward as the business progresses into the future.

Our next question comes from Mark Marcon with Baird.

So just with regards to the gross margins, I was wondering what percentage of gross profit is now from perm? And where -- if we do have a full recovery, where do you expect it could go to?

Thanks for the question, Mark. So in the quarter, our perm GP was 15.3% of total GP. And that's pretty much in line with where we were a year ago at this time as well. And as I mentioned, perm did cross to flat in the quarter on an overall basis. As we go forward, I think perm has been in the 15.5% to 16.5% of GP in more stable conditions. I think, of course, we saw it during the recovery -- the early recovery of the pandemic. It reached 20% when we saw the significant perm activity that peaked in 2022.

But I think in a more stable environment, it should be somewhere in the 16% range, 15.5% to 16.5%. And that's what I would consider. I think as we go forward, we would expect it to be -- continue to be in that range as we move through the second half of the year. And we're encouraged by the trends we're seeing in perm.

In the U.S., we saw RPO growth, very strong RPO growth overall. That's certainly -- that's our biggest RPO business. So that's clearly a good sign. And as I said, perm was stable last quarter as well. So we're seeing encouraging signs, but I think that percentage range is what I would expect going forward.

Great. And then with regards to Experis, you're doing a lot of things, a lot of different partnerships. As you think about the year during the second half and going into next year, how would you anticipate growth for that evolving? And if it starts improving materially, what sort of impact could that have on gross margins?

So I guess what I'd start with, Mark, is Experis overall. So you saw in the quarter, Experis overall improving the rate of revenue trend from the first quarter into the second quarter. So we got to the minus 2% globally, which is a big improvement from where we were in the first quarter. So we're encouraged by that. The U.S. business specifically, as I just mentioned, was at flat. We're encouraged that based on the current trends, we expect that to flip to slight growth in the third quarter. So good ongoing momentum from Experis overall. And in terms of the partnerships, I'll turn it over to Becky to say a little bit about that.

Mark, I'd just say, first, I think the realization that what the market is demanding now is a bit different. They're demanding technology, talent and services into an integrated solution that delivers outcomes. And we obviously play in the integration, the talent and the integrated services that drive the outcomes, and we have partnerships that help us with the technology.

So in terms of how big that can be, it's relatively new for us. I talked about it as a new revenue stream, but we're in progress of delivering between $50 million to $100 million this year from partnership-driven revenue. And I think most importantly or maybe equally importantly, we have almost 100 qualified leads in our pipeline. And so we expect this number to continue to grow.

That concludes our Q&A session, and I will turn it back to Jonas.

Thank you, Michelle, and thank you, everyone, for participating in this morning's earnings call. We look forward to speaking with you again when we meet next for our Q3 earnings call. Thanks very much. And until then, have a great rest of the week.

This concludes the program. You may now disconnect.

Welcome to ManpowerGroup's First Quarter Earnings Results Conference Call. [Operator Instructions]. As a reminder, this call is being recorded. If you care to drop off now, please do so.

I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Good morning, and thank you for joining us for our first quarter 2026 conference call. our Chief Financial Officer, Jack McGinnis; and our President and Chief Strategy Officer, Becky Frankiewicz, are both with me today.

For your convenience, our prepared remarks are available in the Investor Relations section of our website at manpowergroup.com. I'll begin with a brief overview of the quarter, including how we're seeing conditions evolve across our markets, and then I'll share a few updates on how we're positioning Manpower Group to win in any environment. Becky will then provide an update on how we are driving commercial excellence and the opportunities for capturing with the eye, followed by Jack who will walk through the detailed financial results and our guidance for the second quarter of 2026. I'll close with a few comments before we open the line for Q&A.

And Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements.

Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

Thanks, Jack. Our Q1 results reflect disciplined execution and continued stabilization of revenue trends across key markets. In the first quarter, we delivered reported revenues of $4.5 billion representing an organic constant currency growth of 3%. System-wide revenue, which includes our expanding franchise revenue base, was $5 billion. Adjusted EBITDA margin of 1.4% reflects improving demand trends as well as P&L leverage.

We're also encouraged that top line growth exceeded our expectations, reflecting strong execution of our commercial initiatives. We are expanding our new business pipeline, increasing client engagement and continue to win in the areas where growth is strongest and most resilient.

At the same time, the manufacturing environment is strengthening, particularly across Europe. Taken together, this is enabling us to drive continued momentum across the portfolio with strong manpower performance among key markets, including France, U.S. and Italy. We're also seeing stable underlying trends in Experis and solid performance in talent solutions, Papin MSP and Right Management, even as RPO remains more challenged.

Our diversified portfolio, global scale and specialized brand expertise continue to position us well to win in the marketplace. As we move down the P&L, we have continued our relentless focus on driving operating leverage. During Q1, we reduced SG&A as adjusted by 4% in constant currency, while delivering continued top line growth reflecting the impact of our ongoing efficiency efforts, something I'll share more detail on shortly.

Finally, we're closely monitoring developments related to the conflict in the Middle East. While it is still too early to assess if there will be a broader impact, like many global companies, we have become accustomed to navigating a fast-changing environment that includes geopolitical developments, alongside economic and labor market shifts. In the meantime, we have been focused on staying close to our clients and their evolving needs while managing the business with discipline.

Against this backdrop, we're encouraged by the developing short-term momentum and equally excited by the long-term market opportunity. This is supported by improving business confidence in the U.S. as evidenced by the increase in CEO confidence reported by the conference board, rising manufacturing PMLA in the U.S. and Europe and strong business resilience.

As conditions improve, we expect sustainable organic revenue growth to build progressively. Our intent is to be the architects of our own future and to proactively take actions that will position Manpower Group to lead the industry, win in any environment and drive long-term value creation. We are transforming our business model to drive growth and expand margins over time.

As part of this commitment, we are announcing a transformation initiative that will reimagine how we operate and deliver value to our clients and candidates and provide significant cost optimization. Over the past year, we have been doing significant planning to launch this work, and we are pleased to share more details with you today.

We have made targeted investments in automation and AI and build a modern global technology infrastructure, including our PowerSuite platform, which now serves as the backbone of our digitization strategy. With nearly 90% of our global business operating on this platform, we have created a unified technology stack with access to global data across all of our global businesses, enabling us to operate at the unique data scale, strengthen our insights and be better partners to our clients.

As a result of these investments, we are launching a strategic global transformation program that we expect will deliver in permanent cost savings in 2028. There are 2 major components to our plan. The first, which I've talked about before, is the complete redesign of our back office operation, which is progressing well. The second is taking best practices and key learnings from our back-office transformation and executing a similar program for the front office. These redesign processes will be industry-leading and enable us to execute more effectively and move faster to fill roles.

In addition to reducing our cost structure, this transformation will improve both client and candidate experience, positioning our brands to win in market share and better serve clients in a highly fragmented marketplace. We have begun this work in North America, redesigning end-to-end processes, embedding automation and AI where it simplifies work, creating best-in-class local world blueprints before extending globally.

The goal is clear: Connect more people to work by selling more orders to drive growth while structurally lowering our cost to serve. I am also pleased to announce that we have recently hired a dedicated Chief Enterprise Transformation Officer who has joined our executive leadership team to drive the execution of this plan across the enterprise.

At the same time, we continue to thoughtfully review our global portfolio to ensure that we have the right mix of businesses and brands across key markets. Prioritizing investments in core, higher return opportunities while evaluating opportunities to divest noncore assets to strengthen our financial position and support our long-term growth and margin ambitions.

Ultimately, these actions will accelerate our path back to our historical margin profile and create a structural cost basis to expand margins further over time.

Now before I hand it over to Becky, let me just say one more time how excited we are about the transformation underway to improve efficiency, reduce costs and create capacity to invest in growth. Core elements of this transformation is building new capabilities that align with where the market is heading. And this includes evolving how we bring innovative service to market, particularly with AI.

We're also encouraged by the immense opportunities AI is creating as it enables us to shape the future of our industry, including how it is influencing client behavior and how they buy more for solutions. This shift creates a meaningful opportunity for us to evolve our business model so that AI becomes a sustainable tailwind by operating in new ways and developing new products for our clients.

And with that context, let me turn it over to Becky to go deeper into our commercial initiatives and how we are leveraging AI.

Thank you, Jonas. Last quarter, I shared that my remit is focused on driving commercial excellence strengthening and expanding our core capabilities and accelerating AI across the business. Today, I am pleased to share more on how we are embedding AI as a growth multiplier and we'll highlight where AI is already driving measurable value in 3 areas: unlocking effective commercial scale, creating new ways to deliver a best-in-class talent experience and finally, monetizing new human plus agentic solutions for our clients through strategic AI partnerships.

Let me start with how we are embedding AI into our processes to unlock effective commercial scale. The teams can focus on coverage where sales conversion and revenue impact are the highest. We expect this incremental revenue to increase significantly as we scale. Second, let me share how we are creating a differentiated talent experience. One that is critical to attracting and retaining the skilled associates and consultants our clients value most.

To strengthen our talent experience, we recently announced an expansion of our PowerSuite technology platform to include our partnership with hubert.ai to deliver AI-powered screening and interview experiences. In the past 6 months, we've completed over 25,000 AI-led interviews and reduced screening time by 67%. The Automating early-stage interviews helps improve fill rates and time to hire and freeze our recruiters and talent agents to focus on higher-value relationship-driven work.

At the same time, we are achieving 87% candidate satisfaction as more than half of this activity takes place outside of traditional working hours, meeting talent when and where works for them. These responsible, transparent AI capabilities now support markets, representing 40% of our global revenue with plans to scale to 70% by year-end.

And third, monetization. I am delighted to share how we are bringing AI capabilities to market and creating a future where people can build more impactful careers and where companies can achieve greater profitable growth. Human plus agentic workforces are not a future concept. They are already here. In March, we announced a breakthrough partnership with Sound hold AI, a global leader in voice and conversational AI. Our Experis U.S. business is already helping companies across industries to review and redesign workflows and accelerate the adoption of AI and intelligent automation.

This is the lead offering in our Accelerate AI services suite built on a simple and powerful premise that humans and agents can deliver more when working side by side. This partnership expands our presence in the human plus AI space, which is central to our strategy. We are starting in the U.S. to drive scale and market leadership and plans expand globally.

Finally, we know we capture the impact of AI by ensuring that our teams are equipped to use it. We are pleased that tens of thousands of our employees around the world. have completed AI fundamentals training and over 80% of our workforce is already using AI in their workflows.

Our approach is simple. Automate which should be automated, augment what should stay human and create entirely new ways to deliver workforce solutions to our clients. We are in progress to capture the full value of these initiatives and we expect AI to become an increasingly meaningful driver of growth, productivity and differentiation over time. We look forward to continuing to update you on our strategic progress and how we will move at pace.

I will now turn it back over to Jack.

Thanks, Becky. I'll quickly first touch on the headline quarterly results, and I'm excited to give more details on our expanded transformation savings, Jonas announced at the beginning of the call. In the first quarter, we delivered reported revenues of $4.5 billion. System-wide revenue, including franchises was $5 billion.

Our first quarter revenue results represented constant currency growth of 3%. The U.S. dollar reported revenues after adjusting for currency impacts, came in at the top of our constant currency guidance range. I will talk more about the revenue trend drivers in the business and geographic segment summaries.

Gross profit margin came in below the low end of our guidance range, driven by lower bench utilization in Europe and mix shifts impacting staffing margin, while permanent recruitment came in as expected with sequential improvement. As adjusted, EBITDA was $61 million, representing a 5% increase in constant currency compared to the prior year period.

As adjusted, EBITDA margin was 1.4%, up 10 basis points year-over-year and came in at the midpoint of our guidance range. Organic days adjusted constant currency revenue increased 3% in the quarter, which was favorable to our midpoint guidance range of 1% growth.

Coming back to our transformation programs that Jonas referenced, we are excited to announce our path to expected savings of $200 million in 2028. We have previously discussed the implementation of our leading cloud-enabled power suite front and back-office technology platforms. These platforms are now being complemented with best-in-class end-to-end processes.

We started with back office processes and are flipping to run rate savings in IT and finance costs during 2026, which build through 2028, representing 25% of the total cost savings. The strategic transformation will expand to the rest of the world in 2027 to drive expected net savings in 2028. The front office transformation, like the back office will include standardized processes, infused with leading automation and Agentic AI across all major businesses driving significant structural savings.

We will continue to break out restructuring and strategic transformation program charges as we progress the program. We expect the ongoing 2026 run rate of these charges to be lower than the first quarter amount and estimate a range of $10 million to $15 million on average per quarter through the end of the year.

Moving to the EPS bridge. Reported earnings per share for the quarter was $0.05. Adjusted EPS was $0.51 and came in just above our guidance midpoint. Walking from our guidance midpoint of $0.50. Our results included a slightly lower operational performance of $0.02 and a slightly lower tax rate, which had a positive $0.01 impact. A foreign currency impact, it was $0.01 worse and improved interest and other expenses, which was $0.03 better than our guidance. Restructuring costs and strategic transformation program costs represented $0.46.

Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had strong growth of 6% in the quarter, up sequentially from the 5% growth in the fourth quarter. The Experis brand declined by 9%, an expected decrease from the 6% decline in the fourth quarter, largely driven by the timing of health care IT projects in the U.S.

The Talent Solutions brand declined by 1%, an improvement from the fourth quarter decline of 4%. Within Talent Solutions, our RPO business continues to experience a sluggish permanent hiring environment, but did see sequential revenue trend improvement. Our MSP business saw continued revenue growth and Right Management also grew during the quarter.

Looking at our gross profit margin in detail, our gross margin came in at 16% for the quarter. Staffing margin contributed a 70 basis point reduction due to mix shifts in bench utilization in the first quarter. Permanent recruitment activity resulted in a 20 basis point decline. Other services resulted in a 20 basis point margin decrease.

Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 62% of gross profit. Our Experis Professional business comprised 21%, and Talent Solutions comprised 17%. During the quarter, our consolidated gross profit decreased by 3% on an organic constant currency basis year-over-year, stable from the 3% decline in the fourth quarter.

Our Manpower brand was flat in organic constant currency gross profit year-over-year relatively stable considering rounding from the 1% growth in the fourth quarter year-over-year trend. Gross profit in our Experis brand decreased 11% in organic constant currency year-over-year a decline from the 5% decrease in the fourth quarter, largely driven by the timing of health care IT projects in the U.S.

Gross profit in Talent Solutions declined 5% in organic constant currency year-over-year, which was an improvement from the 12% decrease in the fourth quarter. The improvement in trend was driven by RPO as the rate of decline narrowed significantly. MSP rends also improved from the fourth quarter and Right Management had solid gross profit growth in the quarter on increased outplacement activity.

Reported SG&A expense in the quarter was $695 million. as adjusted, was down 4% on a constant currency basis. The year-over-year constant currency SG&A decreases largely consisted of reductions in operational costs of $23 million. Dispositions were very minor and represented a decrease of $1 million, while currency changes contributed to a $38 million increase.

Adjusted SG&A expenses as a percentage of revenue represented 15% in constant currency in the first quarter. Adjustments representing restructuring and strategic transformation program charges were $26 million. Balancing gross profit trends with strong cost actions while funding ongoing transformation to enhance EBITDA margin in both the short and long term remains one of our highest priorities.

The Americas segment comprised 25% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 4% year-over-year on a constant currency basis. As adjusted, OUP was $26 million and OUP margin was 2.3%. Restructuring charges of $7 million largely represented actions in the U.S.

The U.S. is the largest country in the Americas segment, comprising 59% of segment revenues. Revenue in the U.S. was $655 million during the quarter, representing a 5% days adjusted decrease compared to the prior year. as adjusted for our U.S. business was $9 million in the quarter. OUP margin as adjusted was 1.3%. Within the U.S., the Manpower brand comprised 26% of gross profit during the quarter.

Revenue for the Manpower brand in the U.S. increased 5% on a days adjusted basis during the quarter, which represented strong market performance with 7 consecutive quarters of growth and a slight change from the 7% increase in the fourth quarter as we anniversary strong growth in the prior year.

The Experis brand in the U.S. comprised 39% of gross profit in the quarter. Within Experis in the U.S., IT skills comprise approximately 90% of revenues. Experis U.S. revenue decreased 15% on a days adjusted basis during the quarter, down from the 10% decline in the fourth quarter as the business anniversaried strong health care IT projects in the prior year. Excluding the impact of health care IT project volumes in the prior year, Experis U.S. revenue decreased 9% on a days adjusted basis during the quarter, largely in line with the fourth quarter trend.

Talent Solutions in the U.S. contributed 35% of gross profit and saw a 2% decrease in revenue year-over-year in the quarter compared to a 2% increase in the fourth quarter, driven by lower sequential MSP activity. This was partially offset by strong growth in Right Management outplacement activity and improving RPO year-over-year trends. We expect the U.S. business to flip to low single-digit percentage revenue growth in the second quarter on an improved Experis revenue trend.

Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.1 billion, representing 3% growth in constant currency during the first quarter. As adjusted OUP for our Southern Europe business was $58 million in the quarter, and OUP margin was 2.8%. Restructuring charges of $4 million represented actions in France.

France revenue equaled $1.1 billion and comprised 51% of the Southern Europe segment in the quarter and was flat on a constant currency basis. As adjusted, OUP for our France business was $21 million in the quarter. Adjusted OUP margin was 2%. France revenue trends improved during the first quarter, and we expect a similar rate of revenue trend of flat to slight growth in the second quarter.

Revenue in Italy equaled $475 million in the first quarter, reflecting an increase of 8% on a days adjusted constant currency basis. OUP as adjusted equaled $29 million and OUP margin was 6%. Our Italy business is executing well, and we estimate mid-single-digit percentage revenue growth in the second quarter. Our Northern Europe segment comprised 17% of consolidated revenue in the quarter. Revenue up $790 million represented a 1% decline in organic constant currency.

As adjusted, OUP was negative $3 million in the quarter. This represents year-over-year OUP improvement during the last 2 quarters reflecting cost actions taken to date. The restructuring charges of $5 million primarily represent actions in the Nordics and the U.K.

Our largest market in the Northern Europe segment is the U.K. which represents 34% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 2% on a days adjusted constant currency basis, representing ongoing stabilization. The remaining countries in the region progressed as expected with largely stable to improving revenue trends.

The Asia Pacific Middle East segment comprises 11% of total company revenue. In the quarter, revenues equaled $510 million, representing an increase of 8% in constant currency. As adjusted, OUP was $22 million and OUP margin was 4.3%. Our largest market in the APME segment is Japan, which represented 57% of segment revenues in the quarter. Revenue in Japan grew 4% on a days adjusted constant currency basis.

We remain pleased with the consistent performance of our Japan business, and we expect continued solid revenue growth in the second quarter.

I'll now turn to cash flow and balance sheet. In the first quarter, free cash flow represented an outflow of $135 million compared to an outflow of $167 million in the prior year. The cash outflow was negatively impacted by the end of the first quarter payment timing involving our MSP business and to a lesser extent, some isolated working capital utilization, and we expect these items to reverse in the second quarter.

We expect free cash flow to be negative in the first half of 2026, which will be offset by strong free cash flow during the second half. At quarter end, days sales outstanding was 59 days, up 4 days from the prior year reflecting enterprise mix shifts and isolated quarter end timing on certain receivables. During the first quarter, capital expenditures represented $9 million, and we did not repurchase any shares.

Our balance sheet ended the quarter with cash of $225 million and total debt of $1.1 billion. Net debt equaled $922 million at quarter end, an increase from year-end, reflecting first quarter seasonality. Our adjusted debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of $2.86 and total debt to total capitalization at 36%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation.

Next, I'll review our outlook for the second quarter of 2026. Our forecast anticipates a continuation of existing trends, with that said, we are forecasting earnings per share for the second quarter to be in the range of $0.91 to $1.01. Guidance range also includes favorable foreign currency impact of $0.05 per share and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide.

Our constant currency revenue guidance range is between a 1% increase and a 5% increase, and at the midpoint is a 3% increase. Considering business days are equal year-over-year and the impact of dispositions is very small. Our organic days adjusted constant currency revenue increase also represents 3% growth at the midpoint.

EBITDA margin for the second quarter is projected to be up 10 basis points at the midpoint compared to the prior year. We estimate that the effective tax rate for the second quarter will be 43%. I will continue to carve out any restructuring and global strategic transformation program costs incurred, and they are not included in the underlying guidance. In addition, we estimate our weighted average shares to be 47.7 million.

I will now turn it back to Jonas.

Thanks, Jack. In closing, as the market continues to stabilize, we're operating well, staying focused and executing with discipline. Our team remains hyper-focused on delivering for the now while a dedicated group advances our transformation initiatives to position us for future opportunities.

I look forward to keeping you updated on our continued execution as we build on the progress we've made and capture the momentum ahead. As always, thank you to our talented team for their relentless focus and to our candidates and clients for your continued trust.

Operator, please open the line for questions.

[Operator Instructions]. Our first question comes from Andrew Steinerman with JPMorgan.

So it's good to be back to growth here and thinking about the guide of organic constant currency, same-day basis of 3%, it's pretty similar to the first quarter. So would you call Manpower business in a recovery mode, like leaning towards acceleration here? Would you more call it at a point of a stable growth?

Good morning, Andrew. Yes. No, I think we're very pleased with the improving momentum in the Manpower business. You saw an acceleration between Q4 into Q1. We're now anniversary-ing strong growth again. And as Jack said, we've had 7 quarters of growth in manpower in the U.S., 4 quarters globally. So it's really nice to see the manpower business performing better and with momentum. And it's great to notice that despite all of the uncertainty and the volatility in the markets, the underlying economic activity is resilient, yet uncertain, and that is, as we know, a good opportunity for us to provide our services and workforce solutions to our clients under the Manpower brand.

Can I just ask a follow-up to that unit. So obviously, moving forward in the still uncertain environment leans towards flexible labor solutions. One of the things I heard about when I presented at the Staffing Industry Analyst Conference is that companies are unsure of their medium-term plans for their workforce because of AI. And that might lean currently towards more flexible solutions as that's figured out. Do you think that's just a theory -- or do you think that's happening in the marketplace and kind of part of the growth leaning forward for manpower?

From Manpower, that would not really be a factor because it's very resilient to any AI impact, and I'm sure we'll talk later on around the impact in other areas and the opportunities above all that we see with AI. I think it's basically an uncertainty related to the economic environment and outlook. Employers are getting buffeted by geopolitical events, tariffs, wars that are ongoing or started, and that clearly drives employer hesitation. So in our mind, the client hesitation is more related to those events than any particular concerns or possible impact of AI into their workforce.

Our next question comes from Jeff Silber with BMO.

Wanted to shift gears and focus on some of the transformation savings that you talked about. Is it possible to give us a bit more color either by geographic regions where we might see more of those transformation services and also the timing by geographic regions? Are there certain regions we're going to see it ahead of others.

Thanks, Jeff. Yes, let me just before I hand it over to Jack to provide some more of the details, maybe take a step back and provide a bit of context around this global strategic transformation program. As we've talked about over a number of quarters, we've been investing very heavily in a digitization strategy that impacts all of our operations. So we're deploying global applications across our operations.

We have also engaged in a significant back office transformation program and based on those investments and the experience and capabilities that we're accumulating, and as Becky mentioned in the prepared remarks, the increased confidence that we see in the role that AI can play in improving our operations and delivering better services and solutions to our clients and candidates we have been planning for a year now to really broaden this transformation program to also include our front office and really redesign our processes in a way that leads the industry and enables us to do things and drive our business in a very different way in the future. But so maybe, Jack, you could now give a little bit more detail around the announcement we made this morning.

Yes. And specific to your question, Jeff, on geography impact. So I think the way I talk about it, as you see, this is both the back office program, which we progressed nicely and as Jonas said, building on that, moving that to the front office processes. So you see in the chart that we provided on Slide 7 that the initial savings are coming through the back office.

So that majority of the savings is coming from the European region, where we started a lot of our back office processes first. And that's both finance and IT coming through in terms of the standardization and centralization we've seen there on the technology, of course, that we've been talking about for quite some time. And as we move forward now with the front office, we're actually starting in North America. And so as you see the geography impact and you see the green in that bar chart, moving to front office savings, you'll see North America come through first in 2027.

We're doing all that work now in 2026, and it's launched very well, and we're very excited about the progress so far. And then as we go to the rest of the world in 2027 following that blueprint from North America, you'll see more broader savings in the rest of the regions coming through in 2028. So and that's on the front office side.

On the back office side, as I mentioned, starting in Europe, we're actually in the process of doing North America and wrapping up North America on the back office process now. And so that will contribute to some of those additional savings on the blue component of that bar chart into 2027.

Our next question comes from Kartik Mehta with Northcoast Research.

Jack, if you just look at the gross margin trends, you talked about maybe the impact staffing it's having on it. And I'm wondering how much of that is just mix? Is it just enterprise demand versus SMB demand that you've seen in the past? Or is pricing having an impact now?

Yes. Thanks, Kartik. So let me talk to that. I guess what I'd take you back to is the second half of 2025. And at that time, we were seeing enterprise mix shift continue to have an average and have an impact on the overall staffing margin. And when we show the staffing margin walk, year-over-year, you can see that having an impact.

And as we went from the third quarter to the fourth quarter, we actually saw that stabilize the level of staffing margin decrease from the enterprise mix kind of held steady and the issue at that time was more perm. Perm was coming in softer and was driving a bit of that GP margin decrease -- further decrease year-over-year. And so as we walk into the first quarter here, I think the story is perm actually has stabilized. Perm actually came in a little bit better sequentially than the fourth quarter. So that really wasn't the driver getting back to the staffing, really what happened in the first quarter.

And the first quarter is traditionally when you will start to see maybe some of the bench impacts from the bench countries, and that's where absenteeism and sickness has a bit of a role. And we saw an outsized impact on that in the first quarter. So that went against us on the staffing line that drove roughly somewhere 10 to 20 bps of additional headwind. And as Jonas said, our growth was very strong. So that growth is predominantly enterprise. And so that growth came in a bit stronger and drove a little bit more pressure on just the averaging of the mix shift. But I'd say that's really what's happening, and that's what we're seeing right now.

Enterprise continues to be the strongest part of the demand. And that's how I'd characterize what we're seeing. I do -- as you do see in my guide going from Q1 to Q2, we do see it strengthening. And that is after we removed the drag associated with the bench issues in the first quarter, which are traditionally more of a winter phenomenon as we move into the second quarter.

So Jack, just to make sure. So you don't think it's a structural issue right now. It's just more of a timing issue and maybe seasonality issue because of the bench countries..

That's correct. That's correct, Kartik. At this point, pricing is always very competitive. But at this point, we continue to think pricing is rational. It's predominantly a mix shift with enterprise being the strongest demand at the current time.

Our next question comes from Mark Marcon with Baird.

Early in your remarks, you talked about the strengthening that you're seeing in Europe. I'm wondering if you could just provide a little bit more color and also what you're hearing from your European colleagues with regards to any concerns around the impact of the war and whether you think that continued that strengthening can continue? And then I've got a follow-up on the restructuring.

Good morning Mark, yes. No, we've been very encouraged with the improvement that we've seen in a number of or countries in Europe. And largely, you could say that Southern Europe continues to be very strong in a number of markets. You've seen our results in Italy, again, the market-leading very strong growth. It's our third biggest market globally. So we're very pleased with that, but also other countries and very pleased also to see France come back to flat. And Northern Europe continued to improve. Still a lot of work to do for us in Northern Europe, but we're encouraged with the progress that we're making.

And I think as you see our guide into the second quarter, you see we expect that improvement to continue. And a lot of that is underpinned by what we briefly mentioned earlier, which is this economic resilience, the labor market resilience, the improvement in PMIs in all of our major markets today, PMI is above the expansionary levels, so above 50%, which has been a long time coming, and we can see that.

So despite the uncertainty that despite the volatility that companies are experiencing, they have become adapt to be agile in this environment. They are interested and believe that this volatility and these uncertainties will subside and they need to continue to move their business forward. And we're very pleased to see that they're doing that with us to a greater degree in the first quarter as well and looking good also into the second quarter.

As it relates to the events in the Middle East this time, it's really too early to assess if there will be a broader impact. Today, we don't see an effect on customers, and we've been really encouraged by the resilience and adaptation to the rapidly changing environment more broadly. So companies have gotten used to a volatile environment, and they are looking past the noise to the signals, what they need to achieve as a business and they are moving forward.

So, so far, as you can tell from our guide, we're not seeing and including any other effects, which, of course, we're monitoring. And should anything happen, of course, we will take the actions that you've seen us take in the past. We have an experienced management team. We are used to managing in this environment. And as you can see from our results, we're executing with discipline and adjusting to any changes that we see happen. But you had a follow-up question for Jack.

Yes, over for you. In terms of just the restructuring, you mentioned the charges that you're anticipating through the end of this year. Would those do you foresee further restructuring charges going into '27 and '28. How should investors think about the cash flow impacts of those restructuring charges and the timing of those.

And then as it relates to the savings, from a timing perspective, would -- when we talk about the $200 million, would that basically be kind of a run rate savings toward the end of '28? Or could we expect all of those savings to actually hit in '28? And what percentage of that would you actually expect to drop down to the EBITA line as opposed to being, potentially being redeployed for other uses?

Mark, that is definitely a Jack question. You managed to work in 5 questions into that swap. So Jack...

No, thanks for the question, Mark. And so obviously, this is a big program for us. So I understand the questions on the charges. So the way I would answer it is, if you look at that split that I provided for 2026, yes, there is severance in the restructuring in the mix. A part of it and a big part of it is the program transformation costs, right, as well.

So as we look at the rest of 2026, it's basically 1/3 restructuring and 2/3 program. And as I mentioned, that's lower than the run rate in the first quarter. The first quarter, we had a bit more restructuring that included Europe, of course, and some other things. As you think ahead to 2027 I would say, in terms of the program costs, that will continue, maybe even be a bit slightly higher restructuring at this stage is a little too early to tell.

And I'll give further guidance on that as we get through 2026. There's a couple of different variables there. So if the environment stays very static and stable as it is today, then you should expect restructuring will increase. If we start to see some good recovery trends, then it could be very different as we redeploy people into higher growth processes, so that will -- that could reduce restructuring as we go to the rest of the world after 2026.

So a bit too early, but with all of that kind of getting at the heart of your question, we're managing this very carefully based on cash and resources and we will continue to do that. So we continue to be very focused on improved free cash flow for the full year, and we're going to balance that, as I said in the prepared remarks, the ongoing cost reduction savings are going a long way to fund these activities, and that's going to continue to be our playbook as we go forward. So a very careful balance.

I guess, getting to the heart of the question, like we would -- let's say we're in a constant run rate by the end of 28 with these programs being put in place, how should investors think about like what's a reasonable EBITDA margin target for Obviously, you're not giving guidance. But just if we're just taking a look at this program, how -- theoretically, how should we think about it?

Yes. And good point. I meant to answer that part of the question as well, Mark. So thanks for the reminder. So to answer your question, we anticipate the full $200 million coming in, in 2028. So not run rate in the fourth quarter of 28% for the full year based on the work we're doing this year and next year. That will flip to a $200 million run rate savings in 2028.

And as I mentioned, a little too early to anticipate if there's additional restructuring that runs into 2028. We'll give updates on that in the future. But as we think about the impact of the program, that is what we anticipate to be the benefit to the cost structure. So in terms of the guide on, I guess, the financial target that we continue to be firmly committed to the 4.5% to 5%. As we've said in the past, you can do the math on this, but if you just apply the $200 million to where we've been in the last 4 quarters on a run rate basis, basically, that adds 110 basis points to our EBITDA margin in isolation.

So right away, running -- if I look at last year, we're running at about 2% adjusted EBITDA margin at 110 basis points. So that, just in this environment, in this current environment, if we get operational leverage on a stronger recovery, our track record shows that if we start to get a strong recovery, we get very, very good additional operational leverage and we saw that going from '20 to '21 where our EBITDA margin expanded 90 basis points and then expanded another 40 basis points the year after as the recovery to coal. So that is -- that's the operational leverage additional part of it. But in isolation, this will go a long way into accelerating our path towards that EBITDA margin commitment.

Our next question comes from George Tong with Goldman Sachs.

I wanted to touch on the manufacturing environment specifically. You highlighted how manufacturing is strengthening, particularly across Europe. Can you provide country-specific details on the manufacturing landscape and drivers of the improvement in those countries?

Thanks, George. Yes, as you heard me say earlier, you can see the manufacturing environment improving across both the U.S. and Europe by looking at the PMI, and we've really seen that be a positive evolution over the last 3 months or so.

So I think that gives you an idea that there are different sectors, of course, that are stronger than others, one sector that we feel very good about is the aerospace and defense where we have a very strong position in Europe, and we expect that this is going to grow in terms of the share of our business with the increased spending on defense. So you can see a number of areas that are doing better. There are a number of industries that are struggling a bit, like automotive, logistics has been a bit weak in some of the markets across Europe. But more broadly speaking, the economy is resilient.

The labor markets are resilient, and PMI from a manufacturing perspective is improving both in Europe and in the United States.

George, you asked about it at a little bit so maybe -- I'll give really take some color on the geography. So if I just look at our manpower business, which obviously, is very tied to manufacturing. As we talked about, the U.S. was up 5% and in the quarter, actually a bit impacted by weather, extreme weather in the quarter, probably was about a 1% drag, so it would have been about 6%. So the punch line, there's continued strong progress, momentum on manufacturing sector.

France, as we mentioned, moved this predominantly Manpower business moved to flat Italy, very strong manufacturing concentration, up 8%. And Spain, very, very strong growth. You see the double-digit growth that we had in Spain as well. So I'd say pretty broad-based, as Jonas said, from a geography standpoint as well. And that's what's really contributing to that global Manpower business, 6% growth in the quarter overall.

Our next question comes from Manav Patnaik with Barclays.

This is Ronan Kennedy on for Manav. If not mistaken, you referenced $200 million of incremental revenue in France from AI-powered sales -- how scalable is this globally and which markets represent the next largest opportunity? And then beyond that top line contribution, how is AI changing win rates, pricing discipline customer lifetime values. And when can we expect to see this reflected in margins?

Thanks, Ronan, this is Becky, and I'll take that for you. First, to France specifically, -- so we launched an AI-powered sales targeting engine that basically says what's happening in the market in real time, where do we have strength and our capabilities. We match the 2, and that's what has demonstrated our revenue growth there. We will scale to 50% roughly of our markets by year-end.

So you'll see that sequence come out as we have future earnings calls.

To your next question around how AI overall, as you heard in my prepared remarks, we are very active in that space in 2 parts. One, internally applying it to our processes, as you heard me talk about with very new strategic partnerships in the AI space with Hubert.AI embedded in our power suite and our recruiting processes, sales targeting, but also how we apply AI externally to create net new products. And so the SoundHound partnership I talked about that's focused on Experis in the U.S. is really breakthrough in our industry.

So we're leveraging the fact I mentioned on the last earnings call that we have limited exposure to coders, which is a place that has been impacted. We are shifting that limited exposure to a tailwind for AI in our business by bringing agents and humans together to deliver value for our clients. And so we're active on a 2-part view with AI in our business and for our clients for new products.

That's very helpful, Becky. And then may I confirm the element of question on expectations for margin implications.

Yes. Thank you, Ronan, I mean to answer that for you. Yes, it's early, Ronan, and so early days for us. We're very encouraged, one, by our capabilities to bring these tools in quickly to form strategic partnerships in the AI space. We're encouraged by the margin potential that our early deals have shown, but early days, and we expect us to be able to scale, and I'll keep you updated as it does.

Our next question comes from Tobey Sommer with Truist.

I wanted to ask you a relative question on your AI targeting tool as well as your systems investments and reimagining. Where do you think this puts you in terms of market share and, let's say, the lead on reimagining versus others after 3 or 4 years of declining market there are probably a lot of boards and management teams in front of a whiteboard trying to reimagine and where do you think you are relative to their visions of the future and actions?

Well, thanks, Tobey. So as we talked about, we started this journey of creating a global data infrastructure really clearing our technological debt and replacing it with modern cloud-based SaaS platforms that we have now deployed globally, covering 90% of our revenues and 80% of our back office transformation. That is unique in our industry at our scale because we're doing this on single platforms. We have a global data lake that is covering 100 billion data points, and all of our applications are putting the data into the same data lake. And that has opened up this opportunity for us to really think about our business and how we run our business in a very different way.

We have built experience and capability, of course, going through the back office transformation and reengineering processes there. as Becky will talk more about in a minute, how we're now starting to see AI has a bigger impact, both in terms of how we interact with clients, how we interact with the talent the kind of insights that we can now bring to our clients that provides added value is what's really, really exciting to us.

And that's what's given us the confidence to say that this is something that we think can really reshape our industry can drive faster and higher fill rates and also drive further efficiencies.

So Becky, if you take it from there.

Yes. Thanks, Tobey. So I lasted a little bit on how you asked the question about white boards because I spent a lot of time on whiteboards lately. Reimagining how this business can run in a totally different way. So the question is, how do we do what we do in a totally different way and add more value to our candidates and our talent and our clients. And so we are looking at AI as a growth and productivity multiplier. Like we need that 2-party equation, we're looking to automate what we can and should and keep human what we know our clients and our candidates want to keep human with a very heavy dose of governance on top of it to make sure that we meet the needs and demands of our clients and our candidates. And so we're encouraged.

You asked about where we are in leadership. Obviously, we're not privy to what everyone is doing, but we feel very good that we are moving with speed in months versus years, and we've been doing this for a horizon.

And then if I could ask, if you feel like you're in a good spot relative to speed and sort of the pace in which you're executing against your own vision, who's losing if you, in fact, are winning?

Yes. So I would say, again, I don't quite know how to answer that question directly because what we focus on is our winning versus other people losing and winning to us is actually delivering more value to our clients and keeping our candidates central to our efforts. At the same time, making sure our employees are prepared for this new horizon. So you heard me say in our prepared remarks, we've invested significantly internally in time and of our people to make sure they're trained on using AI tools you've not heard a number from us on 80% of our workforce is now using AI on a regular basis. And so I would say to us, that feels like winning.

Our next question comes from Trevor Romeo with William Blair.

Just one quick one for me. I was wondering if you could talk about whether you're seeing erosion get overall...

Trevor, sorry, we could not hear any of that question. Could you please repeat the question? You were breaking up.

No, we can't hear you.

Sorry -- is that here?

A little better.

Hopefully, this is better. I was trying to ask about the overall environment for Experis in the U.S., it sounds like you're expecting things to get that really professional....

Yes. So Trevor, this is Becky. Unfortunately, you dropped out again after a very strong few words. But I believe you're asking about the environment for Experis in the U.S., and so I'll answer that, and you might try to move to a better place that we can hear you better.

For Experis in the U.S., first, let me take a step back on the question that's top of mind, which is impact of AI on that business. So overall, for AI, we feel continued encouragement by the resilience of our manpower business, as you heard both Jack and Jonas refer to in the face of a lot of AI conversations. -- for our tech clients, they are cautious on AI spend. They're being careful about where -- are on their project spend.

They're being careful about where they're investing their money and thoughtful and cautious and a little slow to say yes. But for Experis specifically to your question, we've been very encouraged. We have seen our pipeline grow specifically in health care, in life sciences over the quarter. So we exit the quarter with a robust pipeline we have seen our clients turn to us for advisory.

And again, as mentioned, when we talked about the partnership with SoundHound, we're turning AI into a tailwind for us. So we are actually in a product now. We are selling a product that is agents plus humans. And so that is the future that we see for experience here in the U.S.

Right. I think that was basically the spirit of my question. Hopefully, you can hear me better now. Maybe just -- maybe just a very quickly follow-up. It sounds like you're expecting the U.S. to go back to positive year-over-year. Are you also expecting experience to go back to positive year-over-year? Or would that still be slightly down in Q2?

Trevor, great question. So you're right. In the guide, I have the U.S. I said, going to positive growth. And so that is definitely part of the Americas revenue growth that we're seeing. Experis, we see getting very close to flattish, so revenue trend in Q2 overall.

And as I mentioned, what's really happening there is you see the health care project work, those go-lives. I've created a lot of bumpiness year-over-year, that pretty much works its way through as we go into the second quarter. And as I mentioned, on an underlying basis, the business actually has been quite stable. So we start to anniversary some of that and move closer to a flattish type result in Q2. So we have seen some good stability in the business.

Looking at the weeklies, we're encouraged by some of the consultant headcount increases and we're taking that into Q2.

Our next question comes from Josh Chan with UBS.

So on the savings, could you just give more color in terms of what is actually being saved to result in the dollar savings? And then relatedly, kind of conceptually, why would the savings be higher in the front office and the back office.

Yes. So happy to talk about that. I think if you think about the savings, it's going to really follow a lot of what we've already done on the back office. So -- what -- the way to think about it, Josh, is if we had separate streams and workflow activities in every major business in terms of some of the historical back-office processes, and then we move into global business service centers, like we've talked about with our Porto center in Europe for our European locations.

What we're able to do is centralize a lot of work into those hubs, and that is reducing a lot of the infrastructure that we need in country. And that's going to continue to be that model on the back office applied to the front office processes. So on the back office, it's been the finance and IT related functions that have improved their efficiency as a result of this centralization and standardization.

And on the front office side, it's going to be recruiting. It's going to be sales. It's going to be service delivery. And when you look at the size of those functions, they're bigger. I mean it's 1 of the biggest parts of the business, right, as we think about the front office opportunity. So that's what's going to drive it. And so you're going to hear us talk a lot more about, you've heard us talk a lot about our back office, global business service centers. You're going to hear us talk more and more.

That's going to be a really critical important part of our centralization of the standardization going forward, and that's going to benefit our efficiency in our major businesses going forward. So -- that's the way to think about it. It's continuing what we've already done on the back office through similar themes and applying that to big populations of the front office.

And then of course, underlying all of that, as you heard from Jonas and Becky will be automation. Automation is a key element to all of this. and the opportunity of genic AI being infused in that is going to be a real efficiency driver on top of that. So all of that is how we get to those significant front office costs that you've seen broken out.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Jonas Prising, for closing remarks.

Thanks, Michelle, and thanks, everyone, for participating in our earnings call this morning. We look forward to speaking with you again at our Q2 earnings call in July. And until then, thanks very much. Look forward to speaking with all of you again soon.

Thank you for your participation. You may now disconnect. Everyone, have a great day.

Welcome to ManpowerGroup's Fourth Quarter Earnings Results Conference Call. [Operator Instructions] This call is being recorded. If you care to drop off now, please do so.

I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Good morning, and thank you for joining us for our fourth quarter 2025 conference call. Our Chief Financial Officer, Jack McGinnis; and our President and Chief Strategy Officer, Becky Frankiewicz, are both with me today. For your convenience, our prepared remarks are available in the Investor Relations section of our website at manpowergroup.com.

I'll begin with a brief overview of the quarter and the full year, including how we're seeing conditions evolve across markets and what that means for our execution. Becky will ground us in the broader environment, what we're hearing directly from the market and how we're evaluating those insights as we position the business. Jack will then walk through the detailed financial results and our guidance for the first quarter of 2026. I'll post with a few comments before we open the line for Q&A.

Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements.

Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

Thanks, Jack. Let me begin by saying we're pleased with our fourth quarter results, which marked a clear shift to stabilization led by enterprise demand and supported by disciplined execution and a continued commitment to cost optimization. In the fourth quarter, we delivered reported revenues of $4.7 billion, which represented organic constant currency growth of 2%.

System-wide revenue, which includes our expanding franchise revenue base, was $5.1 billion. Adjusted EBITDA margin of 2.1% reflects improving demand trends across core markets, as well as P&L leverage. Though we faced strong headwinds during the first half of 2025, reflected in our full year results, we are encouraged by our fourth quarter performance, which demonstrated sequential improvement through year-end. As we move through the fourth quarter, revenue trends strengthened in several key markets. Clients remain deliberate in their hiring given the macro backdrop, yet engagement levels are steady and activity is becoming more consistent.

Importantly, while we're not yet calling a broad-based recovery, we are seeing clear sequential improvement in key demand indicators, including Manpower associates on assignment in key markets such as the U.S. and France, which are performing better than expected, with France, in particular, showing resilience despite ongoing political and budget uncertainty.

Markets such as Italy and Spain stabilized earlier and began to inflect with Italy standing out as a clear outperformer on both growth and margin. These trends reinforce our view that the shape of the recovery can be different by market with some inflecting earlier and others requiring longer periods of stabilization first.

Against this backdrop, our priorities remain clear: execute with rigor, maintain cost discipline and leverage our digitization advantage to position the business to generate operating leverage as demand improves. We are working to ensure that we're structurally stronger, more efficient, agile and better positioned to capture share.

To that end, our diversified multi-brand portfolio continues to perform well in a selective demand environment and plays a critical role in earnings durability. Manpower addresses in-demand, AI resilient skills at scale, supporting clients from entry level to specialized roles in growth sectors and has grown for three consecutive quarters with 6 quarters in the U.S.

Experis, our brand providing specialized technology, talent and services that maximize returns on digital, cloud, AI and data investments has seen the rate of decline narrowing and sequential improvement through the second half of the year. Talent Solutions delivers scaled enterprise offerings. Including TAPFIN MSP, Right management, outplacement and consulting, which saw growth in the quarter. Perm recruitment across brands, including our Talent Solutions RPO offering continues to face a challenging environment.

As demand stabilizes, this breadth of our portfolio and geographic footprint positions us to improve win rates, capture share and generate stronger incremental margins. We are pleased with our progress, but a long way from being satisfied, and we will continue to focus on improving the current trajectory.

On that point, let me provide an update on our cost discipline and operating leverage. Cost discipline remains a core leadership priority across our operations. Over the last 3 years, we have taken decisive actions to structurally reduce costs and align capacity with demand. These actions include permanent changes to our operating model in our back office and technology infrastructure, as well as targeted adjustments to current market conditions.

Our efforts were further on display during the fourth quarter as we delivered a 4% constant currency reduction in SG&A, while driving organic growth. This reflects both structural cost reductions and tighter discretionary spend. Further, we accelerated cost actions across corporate functions in select geographies, sharpened capacity alignment and reduced overheads.

These actions are translating into improved profitability across the portfolio. For instance, for the first time in 5 quarters, we delivered positive operating profit in our Northern European business this quarter. A region where we've been highly focused on rightsizing the cost base.

Importantly, we have more opportunity to enhance our cost structure across our global business. Jack will provide additional details on these efforts including ongoing optimization actions, particularly in North America as part of our broader transformation program.

Before that, let me turn it over to Becky to expand on the work we are doing to capture critical market insights that are evolving our business model in line with changing customer needs and candidate behaviors.

Thanks, Jonas. Glad to be with you all this morning. My remit for ManpowerGroup is focused on three areas: driving commercial excellence, evolving our core capabilities to better serve the business and infusing AI in the organization for today and tomorrow.

In recent months, we have embarked on a comprehensive process to evaluate our strategy and priorities as AI accelerates and client and candidate needs change. As part of this work, we've engaged a wide set of experts inside and outside our industry, including our clients and candidates, to conduct independent research and rigorous analysis across both technology and human behavior, while we are still early in this process. This work is servicing two clear macro themes around how clients and candidates want to engage with us.

First, flexibility, candidates are increasingly looking to curate flexible engagement models for when, where and how they contribute to work. Our clients are also seeking flexibility to attract talent and to remain agile in the changing landscape.

The second theme is how AI will shape workforce composition. Our clients are asking tough questions, how could I get work done in the future? What are the new paths between humans and technology. They are increasingly seeking our advisory capabilities on new ways to get work done beyond the traditional models, advancing the paths of temp and perm, alongside newer models of flexibility like gig and freelance and they are seeking guidance on the newest path to work, leveraging AI in combination with humans for productivity and for growth.

From this research and our continuous connections with clients across every industry, the intersection of AI and workforce readiness is an urgent priority and unlocking productivity gains and growth will depend on combining technology adoption with workforce transformation. This was reinforced once again by our engagement with clients and prospects at the World Economic Forum in Davos last week, where we showcased insight and research around what we are calling the human edge, where empathy, imagination and resilience are elevated by technology and where human potential meet digital intelligence.

Ultimately, these insights give us enhanced visibility on where client demand and growth will be, enabling us to make critical decisions now. on where to play and how to win. Though we're in the early stages of this process, we are encouraged at the opportunity ahead to further differentiate our offerings.

I look forward to continuing to update you on this critically important initiative.

Thank you, Becky. As you heard, the environment for AI and automation continues to unfold. Since 2019, we have been executing against a clear technology road map centered on PowerSuite, our end-to-end operating system and best-in-class technology stack.

Today, PowerSuite operates across nearly 90% of our business, creating integrated global technology rails and a proprietary data assets spanning more than 70 countries. This foundation enables faster innovation and allows us to convert technology adoption into productivity gains more quickly than in the past. Last quarter, we shared how we are increasingly moving from AI use cases to scaled commercial impact.

Our integrated AI recruited toolkit is now scaled to more than 12 markets. Streamlining content creation, talent search, communication and workflow automation. This is improving recruited precision and productivity, while enhancing the candidate experience to faster, smarter matching and real-time insights resulting in a 7% increase in placement rates. This is not just about productivity. It is about commercial excellence. Positioning us to increase revenue, win clients and deliver a superior experience to our clients and candidates.

For instance, we are scaling the use of agentic AI coding assistance across Experis in the U.S. to deliver faster, higher quality and more cost-efficient solutions for clients. This helps our clients accelerate delivery, improve product quality and reduce operating costs, while enabling us to strengthen our value proposition and win higher-margin work.

More broadly, we are moving from experimentation to disciplined, governed deployment of AI turning proprietary data, embedded technology and human expertise into faster delivery, higher win rates and durable differentiation. And as part of this commitment, we're upskilling our 25,000 employees and embedding AI more deeply across the organization to drive productivity, support higher-margin growth and ensure that these gains translate into a leaner, more efficient cost structure.

Pleased that we're able to deliver sequential improvement in revenue growth and profitability improvement through 2025 finishing Q4 with momentum that reflects our stronger execution in our core markets and profitability improvements from our cost actions. Assuming current trends continue, and as we anniversary the tariff-related headwinds, we believe 2026 has the potential to represent an important inflection point for the business, with a path towards sustainable organic growth and margin expansion. At the same time, we remain agile and continue to monitor geopolitical developments. While uncertainty exists, our focus remains on supporting clients and executing in this evolving environment.

And with that, I'll now turn it over to Jack to walk through the fourth quarter and full year financial results in more detail.

Thanks, Jonas. In the fourth quarter, we delivered reported revenues of $4.7 billion. System-wide revenue was $5.1 billion. Our fourth quarter revenue results represented organic constant currency growth of 2%. U.S. dollar reported revenues in the fourth quarter were impacted by foreign currency translation and after adjusting for currency impacts, came in above the midpoint of our constant currency guidance range.

Our revenue trends demonstrate the continuation of largely stable activity levels across North America and Europe overall, with improving trends in France and ongoing strength in Italy. Gross profit margin came in just below our guidance range driven by lower permanent recruitment in Europe, while staffing margin came in as expected and consistent with the previous quarter year-over-year trend.

As adjusted, EBITDA was $100 million. Representing a 2% decrease in constant currency compared to the prior year period. As adjusted, EBITDA margin was 2.1%, equal to the prior year and came in at the midpoint of our guidance range. Foreign currency translation drove a favorable impact to the 7% U.S. dollar reported revenue increase from the constant currency increase of 1%. Organic days adjusted constant currency revenue increased 2% in the quarter, which was favorable to our midpoint guidance of flat.

Turning to the full year results for a few moments. Reported earnings per share for the year was a negative $0.29. As adjusted, earnings per share was $2.97 and represented a constant currency decrease of 38%. Reported revenues for the year decreased 2% in constant currency to $18 billion, and system-wide revenues were $19.5 billion. Reported EBITDA was $270 million.

As adjusted, EBITDA was $337 million, which represented a 20% constant currency decrease year-over-year. Transitioning to the EPS bridge, reported earnings per share for the quarter was $0.64. Adjusted EPS was $0.92 and came in $0.09 above our guidance midpoint. Walking from our guidance midpoint of $0.83, our results included improved operational performance, representing a positive impact of $0.06 and improved interest and other expenses, which was $0.03 favorable. Restructuring costs and other represented $0.28.

Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had growth of 5% in the quarter. A sequential improvement from the 3% growth in the third quarter. The Experis brand declined by 6%, an improvement from the 7% decline in the third quarter, and the Town Solutions brand declined by 4% and an improvement from the third quarter decline of 8%. Within Talent Solutions, our RPO business experienced lower demand, notably in select ongoing client programs in the U.S. year-over-year.

Our MSP business saw continued revenue growth, and Right Management saw slight growth year-over-year. Looking at our gross profit margin in detail, our gross margin came in at 16.3% for the quarter. Staffing margin contributed a 40 basis point reduction due to mix shifts towards enterprise accounts, which was stable from the third quarter trend. Permanent recruitment activity was softer than expected in Europe and the lower contribution resulted in a 30 basis point decline. Other services resulted in a 20 basis point margin decrease.

Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 62% of gross profit. Our Experis Professional business comprised 22% and Town Solutions comprised 16%. During the quarter, our consolidated gross profit decreased by 3% on an organic constant currency basis year-over-year, representing an improvement from the 4% decline in the third quarter.

Our Manpower brand increased 1% in organic constant currency gross profit year-over-year, an improvement from the flat third quarter year-over-year trend. Gross profit in our Experis brand decreased 5% in organic constant currency year-over-year, an improvement from the 10% decrease in the third quarter. Gross profit in Talent Solutions declined 12% in organic constant currency year-over-year, which was an improvement from the 13% decrease in the third quarter.

Right Management gross profit improved from the third quarter on increased outplacement activity. MSP experienced similar activity levels from the third quarter and RPO experienced slightly lower activity from the third quarter. Reported SG&A expense in the quarter was $686 million. SG&A as adjusted was down 4% on a constant currency basis and 3% on an organic constant currency basis.

The year-over-year organic constant currency SG&A decreases largely consisted of reductions in operational costs of $22 million. Corporate costs have increased sequentially from the third quarter and include incremental investments in our transformation initiatives. These initiatives include our back-office transformation programs and are progressing well, and now also include our front office transformation program, which is being planned for our North America business. These programs are enabling industry-leading end-to-end processes and further efficiencies associated with our leading PowerSuite front and back-office technology platform.

Going forward, I will carve out any incremental expenses associated with the new front office transformation program, which we will fund to the greatest degree possible through ongoing strong cost management as we remain focused on expanding EBITDA margin year-over-year in 2026. Dispositions represented a decrease of $3 million, while currency changes contributed to a $29 million increase.

Adjusted SG&A expenses as a percentage of revenue represented 14.4% in constant currency in the fourth quarter. Adjustments represented restructuring of $13 million. Balancing gross profit trends with strong cost actions, while funding ongoing transformation to enhance EBITDA margin in both the short and long term remains one of our highest priorities. The Americas segment comprised 24% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 5% year-over-year on a constant currency basis.

As adjusted, OUP was $39 million and OUP margin was 3.4%. Restructuring charges of $1 million largely represented actions in Peru. The U.S. is the largest country in the Americas segment, comprising 60% of segment revenues. Revenue in the U.S. was $682 million during the quarter, representing a 1% days adjusted decrease compared to the prior year, which was stronger than anticipated, driven by Experis and Talent Solutions MSP business. This represents a flat revenue trend sequentially from the third quarter. OUP as adjusted for our U.S. business was $15 million in the quarter. OUP margin as adjusted was 2.2%.

Within the U.S., the Manpower brand comprised 27% of gross profit during the quarter. Revenue for the Manpower brand in the U.S. increased 7% on a days adjusted basis during the quarter, which represented strong market performance with 6 consecutive quarters of growth and a relatively stable trend from the 8% increase in the third quarter. The Experis brand in the U.S. comprised 39% of gross profit in the quarter. Within Experis in the U.S., IT skills comprised approximately 90% of revenues. Experis U.S. revenue decreased 10% on a days adjusted basis during the quarter, broadly stable from the 9% decline in the third quarter.

Town Solutions in the U.S. contributed 34% of gross profit and saw a 2% increase in revenue year-over-year in the quarter, an increase from the flat result in the third quarter driven by a well-executed MSP business, which again posted strong double-digit revenue increases year-over-year and slight growth in Right Management outplacement activity. This was partially offset by lower RPO activity and the anniversary of select client programs in the second half of 2024.

In the first quarter of 2026, we anniversary a very strong health care IT project volumes in Experis and expect the overall U.S. business to have an increased rate of revenue decline compared to the fourth quarter. If we exclude health care IT project volumes from both periods, the U.S. year-over-year revenue trend in Q1 will be largely in line with the Q4 trend.

Our Experis health care IT project volume timing can be uneven. And although we do not anticipate comparable volumes in Q1 of 2026, we have a very strong pipeline that is expected to benefit the second and third quarters of 2026. Southern Europe revenue comprised 48% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.2 billion and following 13 consecutive quarters of revenue declines, flipped to 1% growth in constant currency during the fourth quarter.

As adjusted, OUP for our Southern Europe business was $77 million in the quarter and OUP margin was 3.4%. Restructuring charges of $6 million represented actions in Spain and France. France revenue equaled $1.2 billion and comprised 62% of the Southern Europe segment in the quarter and decreased 3% on a days adjusted constant currency basis. As adjusted, OUP for our France business was $28 million in the quarter, adjusted OUP margin was 2.4%. France revenue trends improved during the fourth quarter. This represents four consecutive months of revenue trend improvement, and we expect a similar sequential rate of revenue trend improvement into the first quarter.

Revenue in Italy equaled $486 million in the fourth quarter, reflecting an increase of 7% on a days adjusted constant currency basis. OUP, as adjusted, equaled $33 million and OUP margin was 6.7%. Our Italy business is performing very well, and we estimate a similar constant currency revenue growth trend in the first quarter as compared to the fourth quarter. Our Northern Europe segment comprised 17% of consolidated revenue in the quarter. Revenue of $819 million represented a 1% decline in constant currency.

As adjusted, OUP was $5 million in the quarter. This represents sequential OUP improvement during the last 3 quarters reflecting cost actions taken to date. The restructuring charges of $6 million primarily represented actions in the Netherlands and Germany. Our largest market in the Northern Europe segment is the U.K., which represented 32% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 3% on a days adjusted constant currency basis, representing significant sequential improvement. We expect the rate of revenue decline in the U.K. to improve into the first quarter compared to the fourth quarter.

The Nordics revenues flipped to growth during the fourth quarter, representing an increase of 2% in days adjusted constant currency. In Germany, revenues decreased 22% on a days adjusted constant currency basis in the quarter. Germany remains a very difficult market, but we are expecting an improvement in the rate of year-over-year revenue decline in the first quarter compared to the fourth quarter trend. The Asia Pacific Middle East segment comprises 11% of total company revenue.

In the quarter, revenues equaled $520 million, representing an increase of 6% in organic constant currency. OUP was $28 million and OUP margin was 5.3%. Our largest market in the APME segment is Japan, which represented 58% of segment revenues in the quarter. Revenue in Japan grew 7% on a days adjusted constant currency basis. We remain very pleased with the consistent performance of our Japan business, and we expect continued strong revenue growth in the first quarter.

I'll now turn to cash flow and balance sheet. In full year 2025, free cash flow equaled an outflow of $161 million compared to an inflow of $258 million in the prior year. As we discussed in prior quarters, 2025 cash flows were impacted by timing of items that benefited 2024, which have not been repeated in 2025. In the fourth quarter, we drove a strong finish to the year with a free cash flow result of $168 million, which was not significantly impacted by timing items.

At year-end, days sales outstanding increased to 55 days, up from 52 days in the prior year as enterprise client mix has increased. During the fourth quarter, capital expenditures represented $11 million and we did not repurchase any shares. Our balance sheet reflects continued actions to strengthen our liquidity and overall balance sheet composition. Our year-end reporting amounts reflect the successful refinance of our EUR 500 million note in December 2025, resulting in the payoff of the previous EUR 500 million note shortly after year-end in January of 2026.

Adjusting to exclude the temporary increase from the new euro note and offsetting cash, we ended the quarter with cash of $284 million and total debt of $1.1 billion. Net debt equaled $806 million at December 31. Our adjusted debt ratios at year-end reflect total gross debt to trailing 12 months adjusted EBITDA of $2.7 million and a total debt to total capitalization at 35%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation.

Next, I'll review our outlook for the first quarter of 2026. Our forecast anticipates a continuation of existing trends. When considering our guidance for the first quarter, it is also important to note there's always a meaningful sequential seasonal decrease in earnings from the fourth quarter to the first quarter.

With that said, we are forecasting earnings per share for the first quarter to be in the range of $0.45 to $0.55. The guidance range also includes a favorable foreign currency impact of $0.06 per share, and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our constant currency revenue guidance range is between a 1% decrease and a 3% increase, and at the midpoint is a 1% increase.

Considering business day variances are very slight and the impact of dispositions is very small, our organic days adjusted constant currency revenue increase also represents 1% growth at the midpoint. EBITDA margin for the first quarter is projected to be up 10 basis points at the midpoint compared to the prior year. Although the government of France has not yet enacted the 2026 budget, the current proposal includes the corporate tax surcharge being extended into 2026. As a result, our 2026 tax guidance incorporates a similar level of surcharge, and we estimate a full year global tax rate of 45%.

In addition, the U.S. workers' opportunity tax credit, WOTC, in the U.S. has not been renewed for 2026 at this time, and this benefit has not been included in our 2026 estimate. If WOTC is enacted in the U.S. and retroactively applied to the beginning of the year, we estimate it would reduce our full year rate to within a range of 43.5% to 44%. We estimate that the effective tax rate for the first quarter will be 43%.

As I mentioned earlier, I will carve out any restructuring and related front-office incremental transformation expenses incurred in Q1 and as they are not included in the underlying guidance. In addition, we estimate our weighted average shares to be $47.3 million.

I will now turn it back to Jonas.

Thank you, Jack. In closing, we are confident that we have the right strategy, capabilities and team in place to execute in this environment with improving consistency across our major markets and early signs of inflection becoming increasingly evident.

Our cost discipline, diversified portfolio and scale digital and AI platform gives us a clear leverage as demand stabilizes with improving productivity and margin potential over time. Thank you to our talented team. for your relentless commitment and to our candidates and clients for your continued trust in ManpowerGroup.

And that concludes our prepared remarks. And as we go into our Q&A session, I'd like to ask if you could limit your question to one, so we can make sure everyone has the opportunity to ask a question this morning. And with that, I'll ask our operator, Michelle, to start our Q&A session.

[Operator Instructions] And our first question comes from Mark Marcon with Baird.

Jonas and Jack, it's great to see that there are some early signs of an inflection here. Jonas, I'd like to go back to some of your earlier comments just on a broad base with regards to the productivity and not just productivity but also excellence initiatives that you have with some of your technology.

As PowerSuite is fully implemented and as you implement AI, I'm wondering if you could discuss a little bit from a longer-term perspective, what your aspirations are in terms of where the margins could ultimately end up going if we end up having kind of a nontraditional more moderate recovery in the markets as opposed to the types of cyclical rebounds that we've seen more traditionally back in the '90s, early outs post GFC.

Just because it seems like employment on the whole is going to be a little bit more limited in terms of growth. So I'm wondering if we have a moderate recovery, what should investors expect over the next 2 to 4 years with regards to where we could potentially go from a margin perspective?

And as you've heard from my prepared remarks, we're pleased to see that we're seeing the sign -- the early signs of an inflection coming through. But to your specific question about our PowerSuite and investments over the last couple of years, they've really put us in a really, really good position for us to think about ways to evolve our business and optimize our processes and improve our customer, our client and our candidate experience regardless of what the market does and how quickly it comes back.

So as you heard from Becky's prepared remarks, we're really thinking about this around productivity and growth. And we're encouraged by the early signs that we're seeing. And you heard me talk about a number of examples in terms of AI enablement around Experis and how we are improving the candidate experience and process as well. And we are really encouraged by what we're seeing.

But as we said, it's early days yet, but our entire focus is around controlling what we can control and whether that's a faster recovery or a slower recovery, we're going to be driving growth, and we're going to be driving productivity. We will always be a people business. We are a people business today. but we are going to be an AI-enabled global people business, and that's the path that we're on, and we are very encouraged by the results that we're seeing so far. But maybe, Jack, you can talk a bit about what investors should expect from a longer-term perspective on margin.

Yes. Happy to add some additional color there. I think, Mark, to Jonas' point. I think on the technology implementations, as you mentioned in the prepared remarks, on the front office side, we're now 87% complete on front office revenues, global revenues running through, and on the back office, we're at 75%. So we just had Italy go live as we ended the year. So we're in a really good place. A lot of the heavy lifting has been done on the technology implementation. And now we're very focused on centralization and standardization and that is going to drive structural cost efficiency going forward.

And as I mentioned, on the back office, we expect that in the second half of this year. So even in a modest recovery scenario, you should expect EBITDA margin improvement year-over-year over the next 4 years in that scenario when we see continued improvement year-over-year.

And as I mentioned, we're really excited about extending the work we're doing on the back office. Now to starting additional work on the front office, and that's going to drive it even further in terms of margin expansion opportunities going forward.

Any sort of goal or target that you would have just under a moderate recovery? I know it's early days, but just trying to get a realistic sense in terms of -- at one point, we were targeting 4.5%. Is it realistic to assume, hey, we could -- we should be able to get to 3%. I'm just wondering how you're thinking about it.

Yes. No, I would say, first off, we're absolutely still committed to the 4.5% to 5%, Mark. And you're right, we've delevered pretty significantly in the recent period here. So we're starting from a lower point. But from that lower point, we're very optimistic. We have an opportunity to expand margin meaningfully from this point over the next few years here to get back to the 4.5% to 5% over time.

And it is going to be a measure of how much operational leverage comes in through the environment that will help. But even without that, we're going to have really good opportunity to continue to climb progressively forward towards that 4.5% over the next couple of years.

Our next question comes from Andrew Steinerman with JPMorgan.

This one's probably a little tougher. So when you talk about a path towards sustainable organic revenue growth, could you give us a sense of what level of sustainable organic revenue growth is likely once the staffing market starts to improve? And then kind of an add-on to that question, we've been hearing a notable chatter from the staffing industry operators talking about an increased interest in flexible workers once such a recovery takes hold because labor uncertainty will remain? Do you have a view on that thesis?

So thanks, Andrew. Yes. No, to predict when and how the market is going to be improving overall, I think is difficult. But as you can tell, we've been improving our performance in the U.S., for instance, in a tough market with 6 quarters of continuous growth for the Manpower brand.

You've seen a number of our countries despite reasonably stable, but not growing labor markets performed very well, such as Italy and Spain, not to mention Japan that has 45 quarters of consistent growth. So I'd say that just as Jack just mentioned in his conversation with Mark, that we're going to control what we can control, make sure that we drive the efficiencies we need to do in markets where we are facing headwinds. We will be very focused on rightsizing the business and adjusting capacity to the existing demand.

In markets where we see the opportunity, we're investing in demand-generating activities and we'll keep on working very, very hard on driving growth to capture share, as well as driving the productivity initiatives that you have seen us execute on in a number of markets and over a number of quarters. And we're encouraged by the inflection points that we've seen and the improvement in trends in France and in the U.S., particularly and the earlier ones, it's too early for us to call a broad-based recovery is in motion. But certainly, over the last couple of quarters, we've had some positive signs. And as you can tell from our guide, we expect those trends to continue into the first quarter.

On the second part of your question around flexibility, maybe Becky, you could give some insights in what you've heard from clients and some of the work that we've been doing. So, over to you.

Thanks, Andrew. It's a timely question because we're just off of 2 weeks in Europe, spending time with our markets as well as spending time with our clients and partners at the World Economic Forum. And just as you said, the chatter around flexibility is increasing.

And for us, that's good for our business because it's one of the prime core propositions that we offer is flexibility. And so we're seeing that in the short term, as well as over the long term. All the research I've done around the strategy indicates that candidates want more flexibility and clients want more flexibility. And so we anticipate this is good for today. It's also going to be good for us in the future. So the chatter is starting. We're not seeing all that flow through in volume yet, but it starts with conversation.

Our next question comes from Kartik Mehta with Northcoast Research.

Jack, I think you said enterprise demand is helping at least stabilize the revenue. And I'm wondering enterprise revenue grows, what that means for margins, maybe even cash conversion and kind of what you think about revenue durability for the business?

Sure, Kartik. Happy to talk about that. So you're right. And that has been the trend we've seen in the second half of the year. The enterprise client have been the lion's share of the demand, and we've seen the mix impact on the GP margin. Now with that being said, most of that has worked its way through. If you look at the third quarter, that's really when we signaled the shift weighted in a bit more. And from the third quarter to the fourth quarter, it's really been quite stable.

So you see in the GP margin bridge on the staffing side, it's down that same 40 basis points year-over-year from Q3 again in Q4. So that is signaling that a lot of that enterprise shift has worked its way through. And I'd say with that, pricing remains very rational. That indicates that we are -- it's always competitive, but pricing is not changing and that is not having the impact.

It's really just that averaging impact on the enterprise client. With that being said, you mentioned a couple of other things. What impact is that going to have on the balance sheet and cash flow. And I would say, that is part of the equation. We did see DSO tick up a bit. We do know enterprise clients traditionally have a bit longer payment terms on average.

And that's -- again, I'd say that's worked its way through in the numbers. With that being said, we're very focused on that. We have actions in place to continue to mitigate that and we expect ongoing progress in that in 2026. And then lastly, I'd say the other part of the enterprise component is that does create some timing in terms of the cash flows. And we saw that with perhaps some lighter cash flow in the third quarter year-over-year. But a really good fourth quarter cash flow results as a lot of those enterprise client payment terms came in during the fourth quarter, really driving a pretty strong fourth quarter free cash flow result for us on an overall basis.

So, it's all part of the balancing equation between enterprise and nonenterprise on an overall basis. We have actions in place to mitigate that -- the DSO that I mentioned, and we do expect ongoing improvement as we go forward here in 2026.

Our next question comes from Trevor Romeo with William Blair.

I wanted to, I guess, focus on some of the commentary on near-term demand. I think you noted some improvement throughout the quarter in some of your key markets. So I was just wondering if you could maybe provide some more color or Jack, if you could maybe quantify how the revenue trends progressed on a monthly basis in maybe France, Italy, U.S., maybe in the U.K. And any color on what you're seeing so far in January, if you have it.

Thanks, Trevor. I'd be happy to add a little color there. I'd say, generally, we're seeing positive momentum in a lot of our large markets. And maybe to your point, starting with France, improvement over the last 4 months, sequentially month-over-month. So we ended September on a days adjusted basis at minus 4, improved slightly into October, moved to minus 3 in November and ended December minus 2. So very good progress sequentially.

And as we sit here in January, we're seeing ongoing progress here, and that aligns with the guide that I gave for the first quarter. So that is ongoing quarter-over-quarter improvement in France, and that's great to see for us. And so that's our biggest country, and that's a big driver. I would say if we look at the U.S. We've been very -- we've discussed the trends in manpower very frequently this year, very strong we're performing really, really well.

So they've been running plus 7%, plus 8% in the second half of the year. We take that momentum into the first quarter. I think on the U.S. overall, on an underlying basis, very stable from Q4 to Q1. I say underlying because we know the health care go-lives in the Experis business, as I mentioned in the prepared remarks, can be a bit lumpy.

But if you normalize for that, the U.S. is trending on a stable position into Q1. And then Italy, as we mentioned, as Jonas mentioned, performing very, very strong. And I'd say on those trends, Italy, very strong sequential quarter trends as we end the year here.

And I'd say we saw that generally, December is always a little bit of a tricky month just based on the holidays and so forth. But I'd say on an overall basis, Italy is continuing to see very strong momentum, particularly here in January. So moving -- we're at that plus 7% as adjusted in Q4, and we feel really good, as I mentioned, for a similar trend into Q1. So I'd say those are the biggest countries and some of the momentum. But as I mentioned, I'd say generally moving in line with positive trends as we start 2026.

Our next question comes from Jeff Silber with BMO Capital Markets.

Jonas, I think in one of the answers to the previous questions, you talked about being able to control what you can control. I'm just curious, are you expanding your workforce in any regions? Or because of the technology you put in, you're still able to have some excess capacity?

Yes, we are expanding -- more so thinking about this from a regional perspective, we're thinking about it from a country perspective. And there are definitely countries where we're expanding our teams, and it's mostly in demand-driving roles. So when you think about the growth that we're seeing in Japan, if we're thinking about the growth we're seeing in Italy, We're leaning into and we're expanding our team members there, especially in demand-driving roles.

And we continue to bring great tools through the PowerSuite to our recruiters. And we are seeing, as I mentioned in my prepared remarks, some notable productivity improvement, for instance, in our candidate screening capabilities. And one of the huge advantages that we believe we are uniquely positioned to take advantage of is our global scale of PowerSuite.

So we have a global technology infrastructure modern and a global data asset that we are leveraging for faster expansion of recruiter tools that drive better productivity and enhance the client and candidate experience. So the answer to that is yes. We adjust capacity to demand and in some cases, in some countries, that means we're leaning into demand-generating roles and in others, we are pulling back so that we ensure we protect our ability to deliver the bottom line margins that we're targeting.

Our next question comes from Manav Patnaik with Barclays.

This is Ronan Kennedy on for Manav. Could you please reconfirm -- I know you talked about what you're seeing associates on assignments in key markets, the positive trends in the U.S. and France, et cetera.

Could you please reconfirm other leading indicators to be mindful of that give insight to potential depth and breadth of the demand dynamics? And then what we could or should potentially look for to see to enable to call a broad-based recovery, whether that's new assignment starts and priority verticals or even fundamental client conversations, what we could look for, for that broad-based recovery confirmation.

Thanks, Ronan. Well, there are a number of indicators that we look at from a demand perspective, and you can take anything from the conversations that Becky referenced we are hearing more clients express a desire to start to think about through our various brands about projects that they have held back and are now getting closer to activating.

As Becky said, we're not seeing the activation yet, but the number of conversations with clients and employers seems to indicate that they are looking forward with greater confidence and that their plans are getting closer to being executed. So we then look at, of course, the flow of demand in terms of RFPs and RFIs that would come our way.

And clearly, what we've been very successful at is targeting the verticals, the industry verticals that we feel good about for growth at this point versus others that we are noticed that we see -- have headwinds. So we feel, for instance, that the aerospace and defense sector could give us some tremendous opportunity across Europe. We have strong positions in a number of our very strong countries, such as the France, the U.K., Sweden and Italy. So we're very well positioned there. We feel good about that opportunity.

So that's how we're sort of thinking about both looking at the moves within industry sectors, as well as the client conversations within those sectors or verticals and then in other areas as well. And frankly, we'll know the broad-based recovery when you see these inflection points coming through in lots of our countries. But as we mentioned in our prepared remarks, we've been very encouraged by the overall trend in a number of our important markets. We continue to perform very well in Asia Pacific, as well as in Latin America.

In fact, Asia Pacific broke an all-time profitability record in 2025. Latin America continues to perform very well. We have market-leading positions in 13 countries in that important region. So we're encouraged by what we're seeing, but we're not fully there yet from a broad-based recovery. But we are controlling what we can control, driving growth where we see demand and adjusting our cost to and capacity to demand in markets that remain more difficult.

I appreciate it. And as a follow-up to you having spent 2 weeks in Europe around the World Economic Forum, are there any implications of potential political sentiment shift from Europe towards the U.S. or any shifts in trade alliances as a result of U.S. ambitions in the continent and the general approach that was taken at Davos. Could these developments have implications for some of the momentum you are seeing in Europe? Or the shape of recovery inflection or general time required for stabilization where it hasn't come yet.

We clearly are living in a turbulent environment, but I have to say from what we're seeing from our clients and from our business, at this point, this is not impacting our business. And to Becky's earlier point on flexibility, if anything, employers are becoming more confident about the future against the backdrop of greater turbulence, flexibility is key for them to find the right talent and be able to adjust with various kinds of skill sets.

So we actually think this so far has not really impacted our business based on the trends that we're seeing and we're now used as employers and organizations to a more fluctuating geopolitical environment and companies at some point have to decide to manage through it and get on with the business of doing business. And that's what we're seeing, I think, in a lot of our countries.

Appreciate it. May I just sneak in one more. Can I ask your broad high-level characterization of the labor and hiring markets. I think previously, it was frozen. Is it showing now? Or how would you characterize it?

I would say that the labor market is stabilizing and we think the broader labor market, if you're referring to the U.S., is heading to stabilization.

And our next question comes from Josh Chan with UBS.

I just have a 2-part question on margins. So for SG&A leverage, it seems like your momentum is picking up quite nicely there. So could you talk to what's driving that in the last 2 quarters and where SG&A leverage could potentially go?

And then, I guess, number two, is on the gross margin line, a lot of this call has been about stabilization, but that's sort of the one line that has not yet stabilized. So do you have any thoughts on whether gross margin will stabilize as the demand environment does the same?

Okay. Thanks, Josh. I think on the SG&A, it's pretty straightforward, and thank you for your comments there. So we are very proud of the actions we've taken and the results we're seeing in the SG&A coming down 4% in constant currency in the fourth quarter.

And to your point, that's an improvement from the 2% constant currency decline in the third quarter. So we've done a lot of work. We've taken a lot of actions earlier in the year, and we're seeing the benefits of that hard work coming through in the run rate now. And that is going into our continued trajectory into Q1, as well as we continue to see the benefit of those actions.

And we've talked previously about the restructuring we've taken. A lot of that in Northern Europe. And as we mentioned on the call, and you saw in our results, Northern Europe flipped to a profit in the quarter. So based on the work we've done earlier in the year, we are actually helping to improve the -- seeing the benefits of those actions helping to improve the profitability of Northern Europe as we end the year.

So, that -- those are the main items that are driving that. And as Jonas said, we continue to focus on what we can control. And in this environment, particularly in the markets that continue to be more stable and in parts of the business that are still recovering. We're holding the line on cost, and that's coming through in the run rate.

Your question on GP margin, I would say, really, to your point, it has come down over the course of the year, but that's that enterprise element that we've talked about. And as enterprise demand continues to be the biggest part of demand in the current environment, that's averaged in. And to my earlier point, a lot of that has worked its way through, Josh.

So you see that on the on the staffing margin progression from Q3 to Q4 being pretty stable year-over-year. But the bigger part of the story on an overall basis is perm. Perm is lower, and perm will come back in the future, but it's at historically low levels of a percentage of total GP for us right now. And that's depressing the GP margin on an overall basis. So when perm starts to rebound, we'll see an opportunity for GP margin to increase. And we also will see opportunities for that as the higher-margin businesses inflect in the future and start to average in at a higher percentage of the mix as well.

So -- and convenience will come back going forward as well. So we have some really good opportunities as right now, enterprise is the strongest part of demand, and that's been holding very steady. But as the other components start to come back and they usually follow enterprise, enterprise usually leads that will be opportunities for us to increase GP margin in the future.

Our next question comes from Andrew Grobler with BNP Paribas.

Just one for me around technology with Experis still down quite sharply in the U.S., what are you seeing in those end markets? I noted one of your competitors was talking about improvement in late '25 and into this year. Is that something that you are also seeing? And if so, what can we expect through the remainder of this year?

Yes, we are -- as we mentioned in our prepared remarks, we've seen sequential improvements in Experis, although still experiencing headwinds, we're encouraged by that. I would say that in conversations with our clients, they've been very focused on a number of areas and specifically within the technology sector, the very strong hiring that occurred during the pandemic caused a hiring bubble, and they've been working their way through that, and they've been focused on projects primarily related to AI.

But in our conversations with our clients, we are hearing that their pent-up project demand is getting closer to being executed. We haven't seen this come through yet, but we're encouraged by those conversations and we would expect to see that the sequential improvements that we've seen in Experis continue, we would characterize it as stable into Q1.

But overall, our clients are telling us that we want to proceed with the other technology investments and the projects that we need to do. And overall, I would say we've seen a very nice evolution around data and infrastructure projects where we were having to shift a bit into those areas and then with our tools that are starting to give us confidence both consulting with our clients on how they can access AI and use AI in their own work and how we are providing solutions to our clients that resonate.

We are faster efficient, better quality, more cost effective, which is also differentiating us. So Long term, we feel very good about the trajectory that we have in Experis, acknowledging the headwinds, acknowledging that we still have a lot of work to do, but we think that we'll continue to see the progress going forward.

Our next question comes from Tobey Summer with Truist.

I wanted to ask you a follow-up question on your comments about the 4.5% EBITDA margin goal longer term and that commitment. Could you talk to us in broad strokes, whether it's about top line, gross margins or mix that might be required from the higher margin sources of revenue. How much do those have to rebound? Do they have to go back to prior -- prior peaks? Or is it sort of more normalized levels to think about that long-term EBITDA margin goal?

Yes, Toby, I'd be happy to talk to that. So I think the way to think about it, and that is definitely part of the equation, right? So if you look at where we're ending 2025, so at 2.1% margin, our previous peak was 4.1%, and if we look at the mix of the businesses, what we've seen with the 5% Manpower growth in the quarter, Manpower certainly has been averaging in as a bigger part of the GP mix.

And as the environment continues to recover, that will start to change. We'll start to see Experis and Talent Solutions start to average back in at a higher contribution that in itself is going to be a positive, and we were just talking a little bit about this on the GP margin. That in itself will be a very positive impact on the overall consolidated GP margin.

And we do expect that to happen. As Jonas said, we don't know the exact timing of that, those parts permanent and professional have been more sluggish. But we are starting to see some signs that on the stabilization, there's opportunities for improvement here as we walk into 2026. So we will need that to happen. That will be important as we look at the overall GP margin component as getting back to where we were from a mix perspective, and that will be quite significant.

And then just forget aside from just the brands, as we mentioned, just even within all the brands as we see convenience come back, that will be a positive for the GP margin. So that's definitely part of the equation. As I mentioned previously, I think all the work we're doing structurally on costs are a big part of the equation.

So as we see EBITDA -- as we see that GP margin improvement fall down to the EBITDA line, combined with the cost improvement, those two items together will be big drivers for that EBITDA margin progression to the 4.5%. And as I said, hey, if the recovery is stronger, and we start to see professional and RPO and perm come back stronger, it will be faster.

We'll see more help on the GP line. We'll get more operational leverage. But even in a modest recovery as those sectors come back, that will be positive for both GP and EBITDA margin. So it's really just a question of the pace of when those other sectors start to come back. But it is encouraging that we're seeing manpower now growing at 5% as we end 2025. And so that's a very good initial sign.

Our next question comes from [ Harold Antor ] with Jefferies.

This is Harold on for Stephanie Moore. I guess just on AI, just real quick. I guess, could you provide your long-term views on the impact of blue collar versus white collar staffing? And then I guess, are you hearing clients talk about the need to hire people who can use AI? Are they focused on just training their current staff to use the technology? And I guess the last thing is, do you expect to see long-term pricing to be pressured in the future as clients request to share the productivity benefits gain from AI?

All right, Harold. We'll try and cover that's four questions in one. So here comes. So what -- first of all, let's be clear that we think that AI has tremendous opportunity for growth. and productivity improvement generally, but specifically to our business. And that's what we are preparing for, and that's what we have been preparing for as we are creating more growth opportunities in terms of addressing how we're setting ourselves up for growth.

In the research that Becky has done, we've looked at some of the AI resiliency, and I mentioned this in my prepared remarks that there are a lot of skill sets that we have in manpower that appear to be more resilient and that we're seeing in the other skill sets, white collar emergence of some greater use of AI and frankly, mostly enhancing human capabilities as opposed to replacing them. But I think from a usage perspective, Becky, as we look at what we talk to our clients about and how they see it in terms of where they're using AI, I think that could be great color. And then also, maybe, talk a little bit about the work that we have done on Sophie AI and how that is resonating with our clients as well.

Yes. Thanks, Jonas. First, I would say I've spent a lot of time focused on AI over the last few months trying to understand what it can do today, but maybe more importantly, what it will grow up into tomorrow. And it is true that AI will impact most jobs, most skills inside most jobs. The difference, it will be to varying degrees. And I think that was part of your question.

What we found is that for blue collar industrial manufacturing roles, they appear to be more resilient over the horizon, where the disruption is happening more in the white collar software developers and coders as we've already seen in demand. Keep in mind, though, that in the U.S., software developers are still the #3 job in demand in our country. So even though it's impacted, it's still a huge in-demand role.

We've also seen impact in call center professionals and the good news for our business is we have limited exposure there. So we have an opportunity to actually find opportunity in this changing landscape. And a highlight of that is what Jonas mentioned with Experis and us getting into these coding assistance to provide value and that's incremental growth pocket for us as a company, small, early days, but we think that's an opportunity.

In terms of Sophie, Jonas mentioned Sophie. Sophie AI, just to remind everyone, is our proprietary AI ecosystem. So it's built on our PowerSuite foundation. It's why that foundation is so important, and it's designed to integrate human expertise, our proprietary data, as well as leading-edge AI models.

And probably one specific example that I'm encouraged by is a pilot we're doing around workforce insights so that we're providing real-time AI agents available 24/7 to give accurate labor market insights. It's 10x faster than anything we could do with humans alone. So it is augmented, augmenting humans, it's 99% accurate, and it has self-correcting capabilities. if something is off, it will alert us. And so those are the kind of actions we're taking to find profitable growth opportunities in the changing landscape.

And then to your last part of the question, Harold, you asked about we're seeing an impact on this from a pricing perspective and taking a share. And whilst it is early days, most of our enhanced AI capabilities are coming through with higher value offerings and differentiated innovation. So we're actually seeing opportunities for us to deliver higher value work and actually maintaining, if not increasing, our margin opportunities on those offerings.

So, so far, we have not seen this and the indications are positive to the reverse, but this may change as time goes on.

Thank you. This concludes the question-and-answer session. I'd like to turn the call back over to Jonas Prising, for closing remarks.

Thanks, Michelle, and thanks, everyone, for joining us this morning for our Q4 earnings call. We look forward to speaking with all of you again on our Q1 earnings call sometime later in April. Until then, Stay warm, greetings from the frozen Tundra in Milwaukee. We look forward to speaking with you on our next call. Thanks, everyone.

Thank you for your participation. You may now disconnect. Everyone, have a great day.

Welcome to ManpowerGroup's Third Quarter Earnings Results Conference Call. [Operator Instructions].

This call is being recorded. If you can drop off now, please do so. I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Welcome, and thank you for joining us for our third quarter 2025 conference call. Our Chief Financial Officer, Jack McGinnis is with me today. For your convenience, we have included our prepared remarks within the Investor Relations section of our website at manpowergroup.com. I will start by going through some of the highlights of the quarter, then Jack will go through the third quarter results and guidance for the fourth quarter of 2025. I will then share some concluding thoughts before we start our Q&A session. Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements. .

Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures. When we last reported earnings in July, we characterized the environment as one of continued uncertainty yet growing resilience. With employers hiring very cautiously and labor markets holding steady against the backdrop of geopolitical complexity and economic softening. Since then, these dynamics have largely persisted Geopolitical tensions remain elevated, the rate to invest in AI continues at pace and employers are adapting to the fluctuating policy environment and cautious consumer sentiment in Europe and North America.

Globally, conditions remain mixed. Strong momentum across Latin America and APME, offset by softer trends in Europe and North America where activity levels remain well below historical peaks yet stable over recent quarters. While hiring remains cautious, we continue to see gradual broad-based signs of stabilization. Our most recent ManpowerGroup Employment Outlook Survey covering over 40,000 employers across 42 countries reinforces this view. Hiring outlooks remained relatively steady year-over-year with ongoing stabilization and 45% of employers planning to maintain current workforce levels, the highest since early 2022, and as organizations balance capturing growth opportunities with mitigating economic uncertainty. Turning to our results.

After 11 consecutive quarters of organic constant currency revenue declines we crossed back over to growth during the third quarter. The stabilization of demand in recent quarters in North America and Europe, despite ongoing tariff uncertainty has been a key factor in the revenue trend improvements. We're encouraged by this progress as well as a continuation of revenue growth in our largest brand, manpower, with strength in North America, Latin America, Italy, Spain, Belgium, Poland and APME to name a few. Within Experis, we're beginning to see early signs of stabilization in professional and IT hiring. Win rates have improved modestly, and we have secured new enterprise programs in sectors such as financial services and life sciences. Our ongoing modernization of the Experis offering, including enhanced consultant development and tighter integration of our PowerSuite AI tools is supporting margin improvement and future growth as client demand recovers. The trends in talent solutions are also improving for our managed service provider offering, where win rates and demand stabilization is driving strong revenue growth. helping offset some weakness in recruitment process outsourcing and right management as labor markets remain somewhat frozen in terms of hiring and workforce reductions. Overall, for the quarter, reported revenue was $4.6 billion, down 2% year-over-year in constant currency.

System-wide revenue, which includes our expanding franchise revenue base was $4.9 billion. Our reported EBITDA for the quarter was $74 million. Adjusting for restructuring costs, EBITDA was $96 million, representing a decrease of 22% in constant currency year-over-year. Reported EBITDA margin was 1.6%, and adjusted EBITDA margin was 2.1%. Earnings per diluted share was $0.38 on a reported basis, while earnings per diluted share was $0.83 on an adjusted basis. Adjusted earnings per share decreased 39% year-over-year in constant currency. As we look to the fourth quarter, we're closely monitoring several leading indicators of demand, including activity among our largest enterprise clients, new assignment starts and priority verticals such as logistics and manufacturing and year-end seasonal patterns. These metrics are helping us assess the depth and breadth of stabilization across our markets and inform our expectations as we plan for 2026.

Looking closely at these indicators, we believe our demand in Europe and North America is holding steady and are confident that we're well positioned for future growth. Our AI-enabled data insights are increasingly instrumental in tracking, anticipating and predicting client demand. This real-time intelligence enables our teams to pivot quickly to sectors and regions where growth opportunities are emerging. Our enterprise pipeline continues to expand with most of the demand in this environment concentrated among global enterprise clients. Although decision time lines across major markets remain extended. As a leadership team, we remain laser-focused on managing the current environment while positioning our business for future growth. We continue to take decisive actions to contain costs drive efficiencies at scale and simplify our organization while accelerating the strategic initiatives that will strengthen our capabilities, expand our margins and deliver long-term shareholder value.

I'll now hand it over to Jack for more details on the quarter's financial results.

Thanks, Jonas. U.S. dollar reported revenues in the third quarter were impacted by foreign currency translation. And after adjusting for currency impacts, came in at the midpoint of our constant currency guidance range. Our revenue trends demonstrate the continuation of largely stable activity levels across North America and Europe. Our revenue from franchise offices are significant and are included within system-wide revenues, which equaled $4.9 billion for the quarter. Gross profit margin came in below our guidance range, driven by shifts within staffing, reflecting an increased mix of enterprise accounts, lower permanent recruitment and lower outplacement. As adjusted, EBITDA was $96 million, representing a 22% decrease in constant currency compared to the prior year period. As adjusted, EBITDA margin was 2.1% and and came in at the midpoint of our guidance range, representing a 50 basis points decline year-over-year. Foreign currency translation drove a favorable impact to the 2% U.S. dollar reported revenue increase from the constant currency decrease of 2%. Organic days adjusted constant currency revenue increased 0.5% in the quarter, which was slightly favorable to the midpoint guidance of flat.

Turning to the EPS bridge. Reported earnings per share was $0.38. Adjusted EPS was $0.83 and came in [indiscernible] above our guidance midpoint. Walking from our guidance midpoint of $0.82. Our results included improved operational performance, representing a positive impact of $0.02 and a slightly higher tax rate, which had a negative impact of $0.01. The Restructuring costs and other represented $0.45 bringing reported earnings per share to $0.38. Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had growth of 3% in the quarter. The Experis brand declined by 7% and the Talent Solutions brand declined by 8%, within Town Solutions, our RPO business experienced lower demand in select ongoing client programs year-over-year. Our MSP business continued the strong revenue growth performance while Right Management experienced declining year-over-year revenues as outplacement activity continued to slow. Looking at our gross profit margin in detail. Our gross margin came in at 16.6% for the quarter. Staffing margin contributed a 40 basis point reduction due to mix shifts towards enterprise accounts. Permanent recruitment activity was softer than expected, and the lower contribution resulted in a 20 basis point decline. Lower career transition outplacement activity within Right Management resulted in a 10 basis point margin decrease. Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 63% of gross profit, our Experis Professional business comprised 21%, and Town Solutions comprised 16%.

During the quarter, our consolidated gross profit decreased by 4% on an organic constant currency basis year-over-year. representing a slight improvement from the 5% decline in the second quarter. Our Manpower brand reported flat organic constant currency gross profit year-over-year, equal to the second quarter year-over-year trend. Gross profit in our Experis brand decreased 10% in organic constant currency year-over-year, an improvement from the 14% decrease in the second quarter. Gross profit in Talent Solutions declined 13% in organic constant currency year-over-year. a decline from the flat result in the second quarter. MSP and RPO experienced similar activity levels from the second quarter, but RPO declined year-over-year as they anniversaried large growth in the third quarter a year ago in select client programs. Right Management gross profit decreased on lower outplacement activity.

Reported SG&A expense in the quarter was $702 million. as adjusted, was down 2% on a constant currency basis and 1% on an organic constant currency basis. The year-over-year organic constant currency SG&A decreases largely consisted of reductions in operational costs of $5 million, partly driven by previous restructuring actions Corporate costs continue to include our back-office transformation spend, and these programs are progressing well with expected medium-term efficiencies. Dispositions represented a decrease of $8 million while currency changes contributed to a $20 million increase.

Adjusted SG&A expenses as a percentage of revenue represented 14.8% in constant currency in the third quarter. Adjustments represented restructuring of $21 million. balancing gross profit trends with strong cost actions to enhance EBITDA margin is 1 of our highest priorities, and we continue to analyze all aspects of our cost base for additional ongoing efficiency improvements. The Americas segment comprised 24% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 6% year-over-year on a constant currency basis. As adjusted, OUP was $43 million, and OUP margin was 3.9%. Restructuring charges of $5 million primarily represented actions in the U.S. The U.S. is the largest country in the Americas segment, comprising 63% of segment revenues. Revenue in the U.S. was $691 million during the quarter, representing a 1% days adjusted decrease compared to the prior year. This represents an improvement from the 3% decrease in the second quarter. OUP as adjusted for our U.S. business was $24 million in the quarter. OUP margin as adjusted was 3.5%.

Within the U.S., the Manpower brand comprised 28% of gross profit during the quarter. Revenue for Empower brand in the U.S. increased 8% on a days adjusted basis during the quarter, which represented strong market performance and a slight decrease from the 9% increase in the second quarter. The Experis brand in the U.S. comprised 39% of gross profit in the quarter. Within Experis in the U.S., IT skills comprise approximately 90% of revenues. Experis U.S. revenue decreased 9% on a days adjusted basis during the quarter, an improvement from the 14% decline in the second quarter. Town Solutions in the U.S. contributed 33% of gross profit and saw a flat revenue trend year-over-year in the quarter, a decrease from the 13% increase in the second quarter driven by lower RPO activity from select ongoing client programs and lower right management outplacement activity.

The MSP business executed well during the quarter, again, posting strong double-digit revenue increases year-over-year. In the fourth quarter of 2025, we expect the overall U.S. business to have a similar to slightly further revenue decline compared to the third quarter, largely due to higher seasonal Experis health care projects in the prior year period. Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.2 billion, representing a 1% decrease in organic constant currency.

As adjusted, OUP for our Southern Europe business was $70 million in the quarter, and OUP margin was 3.2%. And restructuring charges of $4 million represented actions in Spain and France. France revenue equaled $1.2 billion and comprised 53% of the Southern Europe segment in the quarter and decreased 5% on a days adjusted constant currency basis. As adjusted, OUP for our France business was $31 million in the quarter.

Adjusted OUP margin was 2.7%. France revenue trends improved slightly during the course of the third quarter despite the government uncertainty in September, and we expect a slightly improved rate of revenue decline into the fourth quarter, reflecting the third quarter exit rate. Revenue in Italy equaled $463 million in the third quarter reflecting an increase of 4% on a days adjusted constant currency basis. OUP as adjusted equaled $27 million and OUP margin was 5.8%.

Our Italy business is performing well, and we estimate a slightly improved constant currency revenue growth trend in the fourth quarter compared to the third quarter. Our Northern Europe segment comprised 18% of consolidated revenue in the quarter. Revenue of $817 million represented a 6% decline in constant currency.

As adjusted, OUP equaled a $1 million loss. This represents an improvement from the $6 million loss in the second quarter and reflects the impact of cost reduction actions. The restructuring charges of $14 million primarily represented actions in Germany and the U.K. Our largest market in the Northern Europe segment is the U.K. which represented 32% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 13% on a days adjusted constant currency basis. We expect the rate of revenue decline in the U.K. to improve into the fourth quarter compared to the third quarter. In Germany, revenues decreased 23% on a days adjusted constant currency basis in the quarter. Germany automotive manufacturing trends continue to be weak.

In the fourth quarter, we are expecting a similar year-over-year revenue decline compared to the third quarter trend. The Nordics continue to experience difficult market conditions with revenues decreasing 4% in days adjusted constant currency in the quarter. The Asia Pacific Middle East segment comprises 11% of total company revenue. In the quarter, revenues equaled $521 million, representing an increase of 8% in organic constant currency, [indiscernible] was $27 million and OUP margin was 5.1%. Our largest market in the APME segment is Japan, which represented 60% of segment revenues in the quarter. Revenue in Japan grew 6% on a days adjusted constant currency basis. We remain very pleased with the consistent performance of our Japan business, and we expect continued strong revenue growth in the fourth quarter.

I'll now turn to cash flow and balance sheet. In the third quarter, free cash flow was $45 million compared to $67 million in the prior year. following a trend of declining earnings and large outflows for tax and technology license payments through the first half of the year, free cash flow was positive during the third quarter. Earnings have also been stabilizing in recent quarters which will improve the trend of free cash flow going forward. The fourth quarter is typically a strong quarter for free cash flow as we look ahead. At quarter end, days sales outstanding increased 1.5 days to 59 days as enterprise client mix has increased. During the third quarter, capital expenditures represented $15 million. During the third quarter, we did not repurchase any shares.

And at September 30, we have 2 million shares remaining for repurchase under the share program approved in August of 2023. Our balance sheet ended the quarter with cash of $275 million and total debt of $1.2 billion. Net debt equaled $941 million at September 30, reflecting an improvement from June 30. Our debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of $3.1 million and a total debt to total capitalization at 38%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation.

Next, I'll review our outlook for the fourth quarter of 2025. Based on trends in the third quarter and October activity to date, our forecast anticipates ongoing stability in the majority of our markets and a continuation of existing trends. With that said, we are forecasting earnings per share for the fourth quarter to be in the range of $0.78 to $0.88. The guidance range also includes a favorable foreign currency impact of $0.08 per share and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our constant currency revenue guidance range is between a 2% decrease and a 2% increase and at the midpoint is a flat revenue trend. Business days are stable year-over-year and considering the impact of dispositions, our organic days adjusted constant currency revenue increase represents slight growth, which rounds down to a flat revenue trend at the midpoint. EBITDA margin for the fourth quarter is projected to be flat at the midpoint compared to the prior year. We estimate that the effective tax rate for the fourth quarter will be 46.5%. In addition, as usual, our guidance does not incorporate restructuring charges or additional share repurchases, and we estimate our weighted average shares to be $47.1 million.

I will now turn it back to Jonas.

Thanks, Jack. In parallel with our disciplined cost control, we continue to advance our digitization and standardization agenda across both the back and front office. We are pleased with the strong progress of our global business services initiatives, which are streamlining operations, aligning processes and improving speed and quality while reducing costs. I recently visited our new hub in Porto, Portugal, where our finance and technology team, a standardized and centralized back-office functions across Europe. These advancements are providing a blueprint for how we will continue to evolve our operating model standardizing our processes and leveraging our scale advantage across countries and regions. We're now preparing to apply the same disciplined approach to the front office optimizing recruitment and sales processes on our global Power suite front office platform to identify similar opportunities for client and candidate service excellence, process standardization and productivity gains. .

By simplifying workflows and integrating technology, we're empowering our teams and building a business that will be leaner, more agile and well positioned for long-term growth. We are confident that our combination of operational rigor, strategic investment and disciplined execution will ensure Manpower Group continues to strengthen our value to clients and candidates in a fast-changing external environment. This confidence in our value reinforced by the consistent recognition of 3 strong and distinct brands received for their market leadership and capabilities. Last quarter, Everest Group recognized Manpower, Experis and Talent Solutions as industry leaders across multiple categories, reflecting the strength of our strategy, technology and people. Each recognition highlights Sofie AI, our enterprise-wide AI platform we introduced last quarter, where our AR solutions are being developed refined and incorporated into our operational workflows to further enhance our capabilities and help clients make smarter, faster talent decisions. We are now increasingly moving from AI use cases to scaled commercial impact. In our largest market, Sofie AI is now driving measurable gains with approximately 30% of new client revenue derived from AI rated probability. We also see that when prospects are identified as high probability by AI the potential value is notably higher than prospects identified by human insight alone. With this new technology deployed across 14 key markets and scaling further, we expect to see significant value realization across our global footprint. The RPO and MSP, several recent client wins directly cite our AI-powered insights as differentiators in their selection process. These proof points reinforce how our technology investments are enhancing client outcomes.

And as we look ahead, we do so with cautious optimism. While near-term conditions remain challenging in North America and Europe, our teams continue to execute our current priorities with discipline, serving our clients, supporting millions of associates and meaning for work and building the foundation for future profitable growth.

I want to close by thanking our people around the world for their unwavering dedication and commitment to helping our clients win and our associates succeed. Operator, who leaves open the line for our Q&A.

[Operator Instructions] Our first question comes from Andrew Steinerman with JPMorgan.

My first question is about when business confidence improves. So this is like beyond what you just guided for fourth quarter, $25 million would you expect kind of more of an early cycle pickup in flexible staffing volumes? And then also, Jack, if you could just comment on the gross margins that you talked about in the prepared remarks. Like is it this kind of an odd time where we're seeing softer outplacement and softer perm at the same time?

Andrew, and yes, no, it is a bit of a strange time in many labor markets in Europe and North America. As you heard me characterize it in our call, it's like a frozen labor market. There's very little hiring going on, and there's very little workforce reductions going on. And we see that, of course, reflected in both our perm and RPO numbers as well as in the right management business also. But what's been very encouraging to us, though, is that despite this and despite PMI still being below 50 in many of our major markets, we're starting to see a distinct stabilization and growth in manpower, which is what we would hope to see when the markets bottom out. And to your question, if employer confidence returns, we are hopeful that, that then would mean that we see a return to industry dynamics where we expect to see better manpower growth and the rest of the brands also benefiting from that improved environment. .

Our next question comes from Kartik Mehta with Norcos Research.

Maybe, Jack, if you just talk about the trends you saw in the quarter. And I guess I'm wondering if the quarter was even throughout or if you saw any volatility because of kind of what's happening in the economy.

Sure, Kartik, I'd be happy to talk to that. So I think -- if we look across our major markets, probably starting with the biggest 1 being France, in line with what I referenced in my prepared remarks, we actually saw improvement in the trend during the course of the third quarter in France, where you see on an overall basis, the revenue at that minus 5%. But as we exit it, it was minus 4%. So we did see it start to improve in the month of September.

You actually saw that in some of the industry data that was published as well. and that's a positive sign. And I would say as we look at October data, it continues to hold in that space as well. So a slightly improving trend from where we started the third quarter here into the fourth quarter. And I'd say, similar with Italy as well, I think Italy, we saw an improving trend in the month of September as well as we went through the course of the quarter. And as we look to the fourth quarter, we would expect that rate of revenue growth to improve in Italy as we go forward. And then I'd say in the U.S., I'd say there was probably a little more stable. I think there's a little bit more volatility in the U.S. just due to some of the year-over-year we had -- as I've talked about previously, we had some very large RPO volumes from select projects from select clients in the year ago period that completed.

So that created a little bit of volatility in the year-over-year. But overall basis, I'd say the U.S. the manpower business grew very steadily during the entire quarter. And I'd say the Experis business was more stable-ish in terms of activity levels during the quarter. I'd say those big ones that I referred to, and it kind of reflect what we saw on an overall basis in terms of the overall revenue trends.

And if we could just go back to the gross margin issue. As you look at the fourth quarter and kind of look at gross margin, are you seeing any price pressure? Or is there any mix issue that is impacting gross profit. And beyond the mix of I realized perm is still kind of in a recessionary standpoint. But just beyond that, is there anything as that you'd say is impacting the gross profit margin.

No. I'd say, Kartik, when we look at the staffing margin, it's primarily mix shift towards enterprise clients. And in this environment, enterprise clients continue to be the bigger part of the spend and the demand, and that's averaging in. And that's been a trend we've been seeing over the course of the year. So what that means is the larger enterprise mix is putting pressure on the consolidated margin as they continue to average in. We would expect that to start to reverse when convenience comes back and that market starts to come back. But in the current environment, it's the enterprise clients that are spending the most and have the greatest demand. And that's the main driver of what's happening on the staffing side.

Pricing is always competitive, but we have not seen any dramatic changes in pricing on an overall basis. And to your point, in terms of the rest of the GD margin, yes, we did acknowledge that Perm came in a bit softer than we expected that put a little more pressure on the GP margin this quarter. And our placement volumes, as we talked about previously was a bit lower as well, which was the other piece of the of the GP margin bridge year-over-year. But I would say it's primarily driven by mix shift.

And just one last question, Jonas. As you talk to customers, and I'm not sure how you measure this, but are you sensing any more or less amount of uncertainty? Because it seems like uncertainty has been kind of the word for the whole year. And I'm wondering, as you speak with them if there's any level of difference in your opinion?

I would say that the clients that we speak with are increasingly resilient to the fluctuating policy environment. So they're considering this not to be a bug, but rather a feature. And as they then plan for their businesses to be successful, they are moving their businesses forward and thinking about the investments that they need to make. Now as the year has gone on, even though there are a lot of oscillations, the environment in terms of tariffs appears to be gradually settling down.

And as I say this, I'm sure that, that will change this afternoon. But most -- many of the major countries and regions now have trade agreements that companies can project into 2026. And we would expect that to continue continue towards the end of this year and the beginning of next year. So the operating environment in terms of visibility for many employers should improve coming into 2026. I should also note that from an economic perspective, as economists look at 2026, the expectations at this point at least, is for an improved economic environment, both in Europe as well as in North America, with Asia Pacific and our -- in Latin America continuing on the current good path, so there's reasons to be optimistic, but of course, we're managing the business as we see it today and to give guidance into the quarter, but employers are, I think, getting more and more resilient to the noise and are really trying to understand the signal of where this is heading. And as the year goes on, there's more stability in that outlook, I believe.

Our next question comes from Manav Patnaik Barclays.

This is Ronnie Kennedy on for Manav. This was touched on to a certain extent in responses to both Andrew and Cars questions. But could I reconfirm the leading indicators of demand that you are seeing that is informing the assessment, the stabilization beyond, I think, largest enterprise clients with the new assignment starts -- anything to note in respective regions and/or brands there from those leading indicators.

Well, as we mentioned in our prepared remarks, if you look at APME in Latin America, we continue to see good growth. So the notion of stabilization really mostly applies to some of the markets in Europe as well as the U.S. and Canada. And yes, those are the indicators, amongst others that we look at -- we also look at the trends that we've now seen over a number of quarters with markets firming up. And despite a labor market that in some sense is a bit frozen between permanent hiring and workforce reductions. What is clear if you look at our performance from a Manpower brand perspective that we're starting to see demand coming through and giving us growth opportunities. And over time, as the market and the demand improves, we would expect to see the same trends play out also in our other brands.

Appreciate it. And then a follow-up question, Jon, is on the SoFi II implementation. I think you indicated there are measurable results, 30% new client revenue. deployment across 4 key markets. Can you just help us think about how -- what the current global coverage is the time line for deployment as I think you move from back office enhancement to front office? And then any other metrics to note or improved KPIs, whether it's producing time, higher revenue, time to fill, et cetera, and how we should think about implementation and benefits?

Well, first of all, let me say that we believe that AI could have a really positive impact on our business. And as you know, we've spoken over quite some time now over -- to our significant investment into our digital core. So by the end of this year, 90% of our revenues will be covered by a common global front office platform. 60% of our back-office transactions will be handled by a global platform moving to 80% or 90% towards the end of the year. So all of that says that we now have a global digital core that gives us the opportunity to leverage our scale by standardizing processes, centralizing across countries and regions in completely different ways.

It also gives us the opportunity, of course, to deploy AI in a scalable way as we have been doing in a number of instances. Like many companies, we've been working with use cases and really trying to understand where the opportunities lie. And I'd say we are still in the early innings of exploring what it can be -- but the example that I cited in our prepared remarks really shows the strength of what can happen when you apply AI into your lead generation and prospecting database. Now we have the opportunity to really combine human insight with AI-generated insights, and the results that we're seeing in terms of the improvement in win rates as well as in value generation are very, very promising. So whilst I can't give you a time line for a global rollout on AI I would say that we feel very good about our digital core and being able to deploy AI and more efficient processes enabled by AI across our network and across our global operations.

Very comprehensive certainly appreciate it. Matt just sneaking a quick follow-up. Can you -- you talked about AI enabling realtime AI intelligence enabling quick pivots to sectors and regions for growth opportunities? Can you highlight some examples of that where you have pivoted or even potentially exited based on that data.

I think it's really around the pipeline management that Jonas was referring to, where we've seen significant impact in terms of probability-weighted assessment of our revenue opportunities, Ronan. And so when we look at that, that impacts across all industries. I wouldn't say it's 1 specific vertical that has benefited from AI. I'd say it's multiple verticals, verticals that we deliver into. And it's been a big benefit to the way we focus our sales teams focus their time on opportunities I think in this environment, we've talked a lot about in the past about delayed decisions by clients. So having that type of technology has been a big improvement for us to make sure we're focusing our time on the best opportunities, and that's been working quite well. But I wouldn't say it's a specific industry. It's very broad across all of our industries.

And as I mentioned in my prepared remarks, you can see that our Sofie AI platform has really helped us distinguish ourselves in the markets in terms of the accolades and the recognitions we've received. And we're very pleased with that initial recognition, but of course, we're counting on continuing to deploy this and applying commercial scale everywhere where we operate over time. .

Our next question comes from Mark Marcon with Robert W. Baird.

Wondering with -- I don't want to harp on the gross margin, but I just want to understand it a little bit better. On the enterprise side within Connie's on a like-for-like basis, are the gross margins holding steady? Like if we take a look at your most important markets like France, Italy, U.K. and the U.S.

Mark, I would say that just as Jack explained, most of the changes that we would see within country are really the same as we see on a consolidated basis -- consolidated basis, which is it's -- on a country basis is also related to business mix. So enterprise in the markets where that's growing, we can see -- growing more than the convenience side that's where we -- that's where we're seeing the business mix shift. And this is not unusual for us to think -- to see this effect in markets that are challenged. .

And I would also concur with Jack that pricing is always competitive, but that we're not seeing any major moves in any particular market of scale either. So it's really business mix at this point. And as you look at the labor markets and being frozen, what's important to note, though, is that they're solid labor markets, both in Europe and in North America. So unemployment, whilst the markets have been softening a bit here in the U.S., for instance, unemployment is still at a reasonably and historically low level. And the same is true for Europe. So finding and accessing talent when companies are looking for talent might be slightly easier today, but it is still a challenge in many areas and for distinct and specialized skill sets. So we've really seen the business mix shift being the main driver of the staffing margin, not any price competition.

Yes. And I would just add, Mark, it's not broad brush in every market. We improved staffing margin in Japan in the third quarter year-over-year. as we anniversary a very difficult environment in the Nordics from a year ago, we improved staffing margin there as well. We improved staffing margin in Canada. But as Jon has said, in the markets where we have very large enterprise client bases, we have seen a shift on the mix. So as enterprise becomes a bigger part of the pie, that's averaging in and putting pressure on in those other large markets. And of course, that would include France and the U.S. and Italy.

Are there things that you could do to to stimulate the convenience side of the market? I mean, like within the U.S., when we take a look at small business employment relative to large enterprise employment, on a macro scale, it doesn't seem like there's a huge difference, although I imagine that small businesses are a little bit more concerned about managing costs. But I'm wondering, are there things that you can do in order to tilt things a little bit on the convenience side.

Well, our efforts around building stronger pipelines enabled by technology, and I mentioned earlier, help getting AI to target prospect lists, both for enterprise as well for convenience clients should help us get some traction, but what's not unusual at times like this is that enterprise demand is just higher because they have greater ability to absorb the uncertainty, and their caution is balanced across multiple geographies and multiple businesses as well. So we continue to believe that the convenience market is strong. we believe we have great opportunities to continue to improve our positioning and market share also in that market. But what we're seeing right now at this point in the cycle in Europe and in North America, is that enterprise demand is slightly higher than what we're seeing from the convenience. But those things, once employer confidence shifts can change quite quickly. So we expect to see the margin business mix to rebalance the way it has done in the past.

And I would just add, Mark, we do have significant convenience initiatives in place in markets like Italy and in France, that's one of the reasons we believe Italy is leading the market. Currently, our business. Our growth is -- yes, there's a lot of enterprise growth, but there's very good convenience growth in our Italy business. .

And it's a key initiative in U.S. Manpower and Experis as well. But we see significant growth in convenience in markets like Italy. And those initiatives are happening in all of our largest markets. It's just having a much bigger impact at the moment in Italy.

Great. And then can I just ask about RPO. It sounds like you're starting to see some wins from Sophie. Are those new wins, those new RPO wins enough to offset the frozen market? Or would you expect RPO to continue to primarily be driven by the macro?

I think it can help us drive better win rates, but what's clear is that both the size of the deals in the market today and the extended time of implementation means that we are anticipating RPO to still be feeling the headwinds at least looking towards the near term. The fact that companies are less interested in hiring permanently means that from RPO, which is a recruitment process outsourcing offering, essentially an outsourced perm hiring engine to bring in lots of talent into organizations. The companies are slower to act on those kinds of initiatives. And when they're planning for those initiatives, the time line for implementation tends to be longer and the initial volumes tend to be lower. .

So we think the RPO business model as well as the value that it presents for clients remains extremely strong. And especially if you think about the future where we are going to be demographically constrained, taking our RPO operations into any company looking to find talent at scale across geographies and nations is going to be extremely valuable. But right now, what we're seeing is that companies are less focused on that, so that's why we're expecting it to continue to face some headwinds in the near term. .

Okay. Can I speak one more in, please. Jonas, I just want to -- you've got a great perspective with regards to what's going on internationally, particularly in Europe. We all see what's going on in France from a political perspective. How is that impacting decision-makers on ground? Is it -- are businesses feeling any less certain about stability just given the turmoil that we're seeing from a political perspective over there?

Yes. Thanks, Mark. I just came back from France last week and spent quite some time with our teams and being in various markets as well. And clearly, the political turmoil in France is not helpful to the sentiment of employers. Having said that though, if you look at the various elements of the prolictical factions, no one disagrees that France needs to go through a budget process that helps reduce the deficit. So the degrees of how much that would relate to. So that's where the pensions lie.

As you might have seen this morning, the government has survived 2 no-confidence votes, and we would expect that to continue. But what's coming next is the discussion around the actual budget, which needs to be concluded before the end of the year. And so there's still a lot of uncertainty in terms of what's going to happen.

But from a company perspective, what our clients are doing is looking at their business and navigating through this environment, responding to the demand that they're seeing in various markets. And as Jack alluded to and as you've seen from our numbers, French PMI has improved. The outlook for Europe has improved somewhat into 2026 as well. So companies are preparing and that's what we're also seeing in our business that we're navigating this and companies are resilient, and they need to take care of their business first and what's very important to their business is to find the right talent to execute their plans. And in a labor market that is regulated as France, our offerings are extremely attractive to fuel those talent investments in environments like these. So to conclude, the environment in France right now with the political uncertainty is not helpful for sure. But at the same time, most of our clients are very pragmatic and they're responding to the demand that they are seeing.

And in turn, that gives us the opportunity to provide talent into their operations and make sure that they are successful.

Our next question comes from Trevor Romeo with William Blair.

If I could maybe just follow up very quickly on that last question with France. Just quickly, is there any change to your expectations or your confidence level at this point that the additional business tax from this year won't recur beyond 2025 at this point based on everything that's going on there?

Trevor, this is Jack. I'd say it's too early to tell. Candidly, at this stage. There were some discussions just this week on that. But we're monitoring the situation. I'll give a better update on that at year-end. As Jonas said, once the budget is presented and passed. I think at this stage, there is -- there has been some discussion within the French budget of perhaps continuing the surcharge, but at a lower level than the current year. into 1 additional year into 2026.

But as I said, it's too early to tell. So I think from this perspective, we would expect our effective tax rate to decrease next year. as the surcharge comes down, we'll see where it ends up as the budget continues to be debated and discussed within Parliament. But I'd say at this stage, it's a bit too early to give any firm guidance on that, Trevor.

Okay. That is helpful. And then I guess maybe kind of a broader question. I think for several quarters now of the Manpower brand outperforming Experis. So from kind of a macro perspective, I guess, what do you think are the drivers of blue collar staffing outperforming white collar staffing is AI playing a role there? Is it kind of more labor boarding in those white-collar areas and the frozen labor markets you talked about us. Anything you could say on that topic?

Well, we've been very pleased to see how Manpower has rebounded into growth for a number of quarters now and projected to do so again into the fourth quarter. But that evolution, of course, is tied to a number of different things. You've seen PMI start to improve. I talked about the resilience of employers that are getting used to a more fluctuating environment and have to run their business and make the talent investments going forward. .

So I think those are things that we are looking at. And of course, we've also been able to pivot to areas that are growing faster and targeting industry verticals that we feel are going to give us more opportunity for growth. If you think about Experis, clearly, it's unusual from an industry perspective, our own industry perspective to see that there is that disconnect. But really, there's been a lot of things that have been different in this post-pandemic era. And what we believe is happening from our experience perspective is that companies are really focused in investing into the AI boom, and they are really moving much lower on the traditional IT project. And that's what we think is happening and impacting the demand for many of our big clients. They have shifted their priorities into AI investments, and whilst we are participating in those skill sets as well, the volumes that we have in different areas is really something that is being impacted at this point in time.

Now we believe demand more traditional digital project is going to come back with many of those same clients, but we think it's a moment in time, and that's why you're seeing this difference between white collar staffing. In our case, our Experis business as well as our Manpower business that is moving forward and is doing very well.

Our next question comes from George Tong with Goldman Sachs.

Going back to your comments on labor markets being frozen in terms of hiring in more ports reductions, can you parse out which markets are more frozen than others? And in which markets you're starting to see some filing?

I would say the industry verticals, George, that we see are starting to pick up a bit. are related to financial services in some markets, logistics, some of that is seasonality. That's coming back. There's a lot of activity also in the defense sector, especially in Europe that we feel could be very beneficial to us. On the flip side, we are still seeing sluggishness around auto that we've talked about. Construction is still sluggish in many parts of Europe as well, where we are in that business. So we can see a number of sectors that are more sluggish than others. .

But I would say that the nature of how employers are holding on to their workforce, we believe is really the memory of the post-pandemic surge in demand for talent that had been dislocated in various countries. And employers are very keen not to relive their experience. They believe the workforces they have in place today are largely the workforces they will need going forward, and they're holding on to their workforce to a greater degree today than we have experienced in past economic slowdowns and periods of uncertainty of this kind because we think employers are informed and cautioned by that experience. And as long as they believe in a recovery and they will hold on to their workforces longer.

And I think that's what we're seeing, especially here in the U.S. That's what the mindset is. Now the good news on that part is, of course, that once they are seeing tangible signs of an improvement in economic outlook and maybe also greater certainty from a policy perspective, they're ready to move forward bringing talent back on so that they can meet the growing demand. And of course, that's what we are preparing for and working with them on being ready to capture the future growth opportunities as things improve for them.

Got it. That's helpful. You talked about accelerated initiatives to remove structural costs from the organization. which regions are seeing the most amount of restructuring and head count reductions?

Yes. Thanks for that question, George. I'd say in the third quarter, we continue to be very focused on Northern Europe. Germany was at the top of the list in terms of the restructuring of $11 million. But also we did some work in Spain, the U.K. and the U.S. as well. But I would say if you just -- if I just step back and look at 2025 overall, the most impact and most of the actions have been around Northern Europe. And we see that in the improvement in the trend from Q2 to Q3. So that minus $6 million moving to minus $1 million is actually showing the results of a lot of the hard work we've been doing in Northern Europe. We have more work to do to be clear, but we are making progress. As we go forward, I think as we talked about in the prepared remarks, we are looking at structural costs everywhere in the organization. So as Jon has talked about, we have a lot going on in the back office.

He referred to our global business service center in Europe that is driving reduced cost going forward for us. And we're looking very, very closely at the front office and elements of all of our largest businesses, where there could be other opportunities to do similar things in terms of standardization and centralization.

And that continues to be an opportunity for us that you'll hear us talk about in the future.

Our next question comes from Stephanie Moore with Jefferies.

Just some follow-up question. You talked a lot this morning about just the technology advancements and investments, whether it's AI or others that you've made over really the last several years here. when the underlying environment unfreezes or starts to be a bit more constructive do you believe that your technology advancements will enable you to capture some of that market growth or just that recovery with effectively less people and ultimately kind of seeing greater operating leverage and greater torque to the model than impact upswing.

Thanks, Stephanie. Yes. And the investments we are making, first of all, I believe, positions us very uniquely in our industry with our scale, having 90% of our revenues flow through a common global front office platform mobile apps that are being deployed across many of our countries addressing both our associates, so the people that are working for us and are candidates, people that are playing for jobs. And then combining that with our back-office technologies also at a global level, gives us an opportunity to standardize, centralize and reimagine our processes in a completely different way. And clearly, what we're aiming to do is to leverage our scale not only across countries but across regions as well. And when we look at our operations in Latin America, all 15 countries in which we operate and lead the market in across that region are handled from a back office perspective centrally. .

Our payrolling is handled centrally. And you've seen the progress that we have made across Latin America over time. We're very pleased with that performance. and the improved productivity that we're seeing there. And we aim to drive similar kinds of effects, both from a growth perspective, being able to deliver faster to our clients at a higher quality, but also working on streamlining our processes in the back office and in the middle office so that we can gain productivity and efficiency there as well.

And on top of all of that, of course, the impact of AI and what we can do through further automation, enabled by AI or just automation is, of course, another aspect that we're looking at very, very closely.

Our next question comes from Josh Chan with UBS.

Jack, just 2 quick ones here. So I wanted to ask about SG&A leverage because in Q4, you're guiding to some margin compression on the gross margin line, but not much EBIT margin compression. So that obviously implies improving SG&A leverage. And I was just wondering what's driving that and whether you think you're at a point where SG&A can start potentially levering positively?

Thanks, Josh. No, you're absolutely right. The guy does anticipate that SG&A will be a big part of the equation in terms of falling gross profit dollars down to the EBITDA line. So with that guide, you basically see a relatively stable level of EBITDA from Q3 into Q4. And we talked about crossing over to organic growth. Well, that's a big step to hold our margin flat year-over-year. It's been a while since we were able to do that. And with all the actions we've taken, we're starting to bend the curve on SG&A as well, and that's going to have a meaningful impact in the fourth quarter, and you can see that incorporated into the guide. So you're absolutely right that -- that is going to be a bigger impact in the overall equation in terms of holding that EBITDA.

But I would say in terms of the GP, with that guide, it is just a modest change from Q3. So it's really just that effect that we've talked about with perm being a little bit softer, while we have a bit more enterprise in the mix. So just about 10 basis points sequentially as that continues to average in. But that's really the main impact there. But you're right. On SG&A, that is going to start to have a big impact on the EBITDA line. And that really is a reflection of all the work that we've talked about over the course of the year with the actions we've taken. And I talked about Northern Europe. That's 1 example of it, but we're seeing it in other markets as well in terms of improvement in bottom line profitability.

Great. That's good to see. And then I guess, Jack, I wonder if there's a way for you to ballpark for us how good free cash flow could be in Q4? And maybe relatedly, could you talk about sort of the negative free cash flow in the first half and whether -- how unusual that is as we kind of think about what a normal cash flow should be kind of going forward?

Yes. No, sure, Josh. As I talked about last call, we had a big outflow in the first half of the year. And part of that was due to our very large market-leading MSP program. That does create some timing issues. We saw that at the end of last year into the first quarter of this year, where we had some very significant prepayments from some very large MSP clients at the very end of quarter and those payables went out at the very beginning of the following quarter. Usually, it's neutral, but sometimes if there's large prepayments that could create a little bit of volatility from a quarter-over-quarter.

And we did see that flatter in the fourth quarter. We had a very strong free cash flow in the fourth quarter last year. It was flattered somewhat by that. But even putting that aside, it was still a very, very strong free cash flow for us in the fourth quarter of last year. but that did depress the first quarter outflow. We typically, as I've mentioned, over the last 4 years, we've had negative outflows in the first half of the year and very strong positive free cash flows in the second half of the year. And we started that here in the third quarter. The fourth quarter typically is a very strong free cash flow, and we would expect that to be the case again this year where the fourth quarter will be a strong free cash flow at this stage. So that's what I would to add a little more color. The other item in the first quarter outside of the MSP program was we did have some very large onetime payments. We had the Tax Act from 2017 that had multiyear transition payments go out. We had the last 1 of those in the first quarter, which is 1 of the biggest payments, so that goes away going forward. And as I mentioned, a lot of our technology license costs are all loaded into the first half of the year, and we don't have that in the second half of the year. So that's why typically the second half is much stronger, and that would be the outlook. The last point I'd make is now here we are about 3/4 of stabilized EBITDA, that is going to work into more favorable free cash flow trends as we go forward. Now that trailing 12 months EBITDA is stabilizing here with the guide for 9 months as we finish and that will be a positive impact because 1 of the other factors, of course, is trailing 12 months EBITDA had been decreasing with the downturn that we talked about that 11 quarters. And now that's shifting and we stabilized. So that will be a positive factor in terms of free cash flow as we go forward as well.

Our next question comes from Tobey Summer with Truist.

I wanted to ask a question about gross margin. If we do see employers sort of become a little bit more forward leaning and optimistic, how would the social costs that typically reinflate gross margin after a period of decline perform in this context where unemployment rates didn't really rise a ton.

The changes that we've seen in the gross margin so far, Tobey, are all related to business mix. And to your point, there hasn't been a real decline in employment that's significant. And so whatever social burdens are carried today, and I'm sure that you're referring mostly here to the U.S. we would expect to carry on and be stable into the future because there's no need to re-up those burdens to a level that had been depleted, and that's what we would expect to see. So from that perspective, we don't think that social costs will have a major impact, barring changing legislations, of course, but just from an employment perspective, driving changes in social costs and aside from any pension-related costs in other countries that might go up or not. We don't really expect that to be a main factor in driving our gross profit margin differences. But of course, what we are very keenly focused on is when employers feel more confident in the economy that we will see permanent pruitment go up to more normalized levels, and that will have an overall very positive effect on our gross profit overall.

Understood. And from an IT perspective internally within the firm, you've been pushing process improvement, global standardization, et cetera. Where do you think you sit from a competitive perspective? Because globally for the largest enterprise customers, you compete with a relatively narrow set of firms, are you ahead on par, trailing? Where do you see yourself competitively from that perspective?

Well, of course, it's hard to say, Toby. But I don't know that many of our competitors, national or other or global certainly, have 90% of their revenues flowing through 1 common office platform. We also have an extensive data lake that captures all of the data of our actions through our various digital channels. So I think we're very, very well positioned from a competitive perspective. But we're also clear that this is a race and that it's all about enabling the company to shift the value to where it matters most, which is the human interactions with our clients, our candidates and our associates and render all the transactional activity as efficient as possible through automation, leveraging AI when appropriate and making our processes as efficient as possible. The true value that we create is in the last mile delivery with our clients and our associates, and that's what we're aiming firmly towards making sure that, that moment of truth is where we spend most of our time and that we enable our organization to be as efficient and as productive as we can, leveraging this global platform to the greatest degree possible. .

Thank you. That concludes our earnings call. And I'll hand it over to Jonas to end the call.

Thank you very much, Michel, and thanks, everyone, for participating in today's earnings call. We look forward to speaking with you again on our Q4 call in January. Thanks, everyone. Have a great rest of the week. .

Thank you for your participation. You may now disconnect. Good day.