In the first quarter of 2025, Randstad NV reported a 4.2% year-over-year decline in organic revenue. Despite this, the company maintained a positive free cash flow of €59 million and an EBITDA of €167 million, representing a 3% margin. The stock currently trades at $19.60, showing remarkable strength with an 81.6% return over the past year. According to InvestingPro analysis, the company maintains a "GREAT" overall financial health score of 3.46 out of 5, particularly excelling in growth and profit metrics.
Key Takeaways
- Organic revenue fell by 4.2% year-over-year.
- EBITDA stood at €167 million with a 3% margin.
- Free cash flow was positive at €59 million.
- Stock price decreased by 0.91% following the earnings report.
- Continued focus on cost efficiency and strategic investments.
Company Performance
Randstad’s overall performance in Q1 2025 reflected the challenges of a volatile macroeconomic environment. While organic revenue declined, the company’s underlying business shows strength with a 16.64% revenue growth over the last twelve months. Trading at a P/E ratio of 6.58, InvestingPro analysis suggests the stock may be undervalued relative to peers. The company’s strategic focus on growth segments such as logistics, skilled trade, and healthcare helped mitigate some of the adverse impacts.
Financial Highlights
- Organic revenue: Declined 4.2% year-over-year.
- EBITDA: €167 million with a 3% margin.
- Free cash flow: Positive €59 million.
- Gross margin: Declined by 90 basis points year-over-year.
Outlook & Guidance
Looking ahead, Randstad expects a modest sequential decline in gross margin for Q2 2025, with stable operating expenses. The company has raised its tax rate guidance to 28-30% and remains cautious due to ongoing macroeconomic uncertainties. With a beta of 0.33 and an attractive dividend yield of 5.92%, Randstad offers defensive characteristics in volatile markets. For deeper insights into Randstad’s valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis and over 30 additional financial metrics.
Executive Commentary
CEO Sander Van Nortender emphasized the importance of staying close to clients, stating, "We stay close to our clients and execute our field steering principles to adapt to the evolving client and talent demand." CFO George highlighted the company’s preparedness for different scenarios, saying, "We are prepared for different scenarios to ensure agility in reaction."
Risks and Challenges
- Macroeconomic uncertainty could impact revenue growth.
- Geopolitical factors and tariffs may create market volatility.
- Potential impacts of tariffs on various industries.
- Need for continued cost management and margin protection.
- Maintaining market adaptability across diverse regions.
Q&A
During the earnings call, analysts inquired about the potential impacts of tariffs across industries and the strategies for growth in Randstad’s RPO and enterprise businesses. Management addressed these concerns by outlining their cost management and margin protection approaches, emphasizing the company’s focus on growth areas and client relationships.
Full transcript - Randstad NV (RAND) Q1 2025:
Sandeep, Call Coordinator: Hello, and welcome to the Randstad First Quarter Results twenty twenty five Call. My name is Sandeep, and I will be your coordinator for today’s event. Please note this call is being recorded and for the durations of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. I will now hand you over to your host, Sander Van Nortender, CEO, to begin today’s conference.
Please go ahead,
Sander Van Nortender, CEO, Randstad: Thank you very much, Adip, for that kind introduction, and good morning, everybody. I’m here with George and our Investor Relations team to share our Q1 twenty twenty five results. We’ve made a solid start to the year. Our strategic moves, increased commercial activities, continued focus on costs and operational agility are paying off. As we were able to protect our bottom line with an EBITDA of EUR 167,000,000 and an EBITDA margin of 3% for the quarter.
Quarter. While we did see some encouraging signs across some key markets, trading conditions remain challenged in many markets, resulting in a 4.2% revenue decline. We were pleased to see continued growth in Spain, Italy and Japan, where our investments in growth segments such as digital and skilled trade are showing results. We see further stabilization in North America, while in Northern European countries and France, business conditions remain challenging, especially in BERM and the broader automotive sector. From an industry point of view, we saw growth in logistics and financial services, and automotive is obviously the most challenged one these days.
If we look ahead to Q2, I would say, first of all, activity trends in April were in line with Q1. However, it’s clear that macroeconomic uncertainty has gone up, which is limiting visibility. Geopolitical factors, including the evolving landscape of international tariffs, are contributing to an uncertain environment for both clients and talent. And therefore, it’s too early to say with any certainty what impact this will have on our markets and on our future performance. Nevertheless, we do what we always do.
We stay close to our clients and execute our field steering principles to adapt to the evolving client and talent demand, so that we are protecting profitability, whilst maintaining our disciplined approach to investing in our growth segments. Finally, tomorrow, we’re hosting a Capital Markets event to update you on the progress against our partner for talent strategy, and we will share how we deliver specialization and experience at scale through the Randstad Talent platform as we become a digital first company. So in summary, solid start in a challenging environment. We’re navigating the uncertainty with operational rigor and agility. See you all in London or online tomorrow for our partner for TalentUpdate.
George, over to you.
George, CFO, Randstad: Thank you, Sandra, and good morning, everyone. Just in February, literally two months ago, during our Q4 publication, we noted stabilization, and we discussed the actions taken to position us stronger for the start of the year. Reflecting on Q1, the year continued no differently than we flagged in February, with signs of stabilization in some of our markets, as the decline rate continued to moderate through the quarter. Our actions though did prove important for the start of the year, but of course, we are mindful of the current uncertain environment, requiring us to always ensure preparedness, and like Sandra just highlighted, managing our naturals. We continue to steer daily and weekly, and adapt our actions where necessary.
Looking at our performance, overall, organic revenue declined by 4.2% year over year, an improvement versus the decline seen in Q4 twenty twenty four. Importantly, at consolidated level, our gross profit and OpEx were aligned, allowing us to protect relative profitability despite the lower top line. Now let’s dive into the regional performance starting on page seven, and starting with North America. In North America, we saw continued sequential improvement this quarter. In The U.
S. In particular, our operational business was down minus two for the quarter, but did return to growth in March, continuing to outperform the market in its parts. We continue to see the benefits of our transformation, and we look forward to sharing more, like Suneja just alluded, with you tomorrow. Encouraging though, digital also turned the corner, returning to growth within the quarter one of this year. We do see businesses though still taking a much more cautious approach when it comes to the professional solutions, and permanent hiring still remains subdued, declining 19% and minus 15% respectively.
In this low hiring environment though, our RiseSmart business did well, growing double digit again this quarter. If we look north in Canada, we saw decline rates easing compared to previous quarters, and we continue to focus on efficiency and market alignments. The EBITDA margin for North America came in at 3.2% this quarter, up 90 basis points year over year, showcasing adaptability and transformation progress. Moving on to Europe, and especially Northern Europe, starting on slide eight. Northern Europe remains challenging, the only region where growth or rate of decline did not improve.
Here, the uncertainty surrounding the automotive sector continues to weigh in, in particular. In The Netherlands, growth sequentially improved from minus 7%, or from minus 10% to minus 7% in Q1, but the environment remains volatile. Operational was minus 6% for the quarter, improving versus last quarter, as we converted new clients into revenue. Professionally or professionally, excuse me, organically, excluding Zorbwerk, slowed to minus 14%. And here, we see a combination of a broader slowing market, and the impact of the freelance legislation coming into effect and to be still fully embedded in Q2 onwards.
On the other hand, we are actively reshaping our portfolio, focused on specialization and growth segments, and in particular in healthcare with Zorbwerk acquisition, building the leaders already in The Netherlands. Our profitability improved year over year, reflecting mostly the acquisition of Zorbwerk. If we look at Germany, the economic environment has continued to be difficult and remain unchanged, and our growth rate notched down a bit sequentially to minus 10%. Here in the automotive sector continues to be under pressure, and we continue to see elevated idle time costs. In Belgium, we leveraged the strength of a well diversified portfolio.
We saw a sequentially slowdown of our operational business, minus 1%, facing primarily tougher comparables. Professionals on the other hand has improved sequentially, and one of our many examples where investments in specialization start to pay off. EBITDA margin was a sound 4.6%. If we then look at the other Northern European countries, let me just break it down, Switzerland is at plus 6%, and Poland at plus 4%. But the Nordics still remains very challenging.
EBITA margin came in at 1.4%, and we’ll continue to work to improve it quarter after quarter. Moving on now to the segment Southern Europe, UK and LATAM on slide nine. And here, let’s start with France, where we saw a slow start of the year, with decline rates moderating throughout the quarter. OTS, or our operational business growth, was down 6%, ahead of the market, but automotive is weighing its impact. Our transport, logistics, and manufacturing continued to improve sequentially though.
Professional was down minus 16%, sequentially stable, and digital is also in decline given its exposure, in particular to the broader automotive sector. Idle time and bench here, on the digital business, weigh on the gross margin. The EBITDA margin was 3.7%, and as you can see, and we’ll talk about more later in our one offs, we are taking action to improve it already this quarter. Italy saw solid growth, and we see momentum continuing. Operation was up 6% this quarter, and we continue to ramp up investments in growth segments such as IT, healthcare, and skilled trade units.
Despite investments, Italy still shows a very good profitability level at 5.8%. If we look South, Iberia. Iberia stabilized at a high level, growing 4% this quarter, and Spain showing robust growth with a 6% increase year over year, mainly driven by strong performance in its operational and enterprise business, supporting clients’ increased demand. Again here, we remain investing in growth segments with many opportunities to continue to capture growth. If we then look at all the other countries in the region, revenue and profit performance were mixed.
The UK labor market continued to soften, and we were down 14%, but in Latin America, Brazil is profitably growing at 6%, offset partially the weakness of Argentina. Which leads us to the last region, moving on to Asia Pacific on slide 10. The Asia Pacific region continues to recover. Japan demonstrated solid growth, combined with strong profitability, a good example of the impact of leaning in on specialization. We continue to see our investments from the last quarters paying off, and our digital specialization is now growing at 16%, and consistently breaking records quarter after quarter.
Here, we are ideally positioned to support clients and talent in a clear candidate scarce markets. Australia and New Zealand improved sequentially, declining now 7% in quarter, slightly better than Q4 twenty twenty four. India grew 8% starting the year well, and setting us up for the rest of the year. Overall, the EBITA margin for APAC, or for the region, was at 4.3% in the first quarter, showing strong operational discipline, while most important, continuing to invest for further growth. And that concludes the performance of our key geographies, so let us now walk you through the group financial performance on slide 12.
But first, let’s look at it from a specialization point of view, on the right hand side of this slide. So operationally, typically being early cyclical, continues to progress despite automotive weakness at minus 3% revenue growth. Last quarter was minus 4%, with diverging trends depending on where each market is. Professionals declined 9%, and we saw sequential improvement in digital and enterprise to minus 5% and minus 4%, respectively. Just to remind you, OTS, or our operational business, makes up approximately 50% of our gross profit, while the other three specializations make up the other 50% already.
Now, we’ll cover gross margin and OpEx later, but the important thing here is that they have aligned as we enter 2025. Therefore, the quarter underlying EBITDA was €167,000,000 with a margin of 3%, similar profitability level margin as last year, while still seeing top line declines, showcasing strategic choices made and disciplined execution, as Sundar mentioned. But now let me unpack some of the other items until net income. Integration and one offs were $18,000,000 this quarter, and although not as elevated as in 2024, we continue to right size and future fit our organization and take action, primarily in Northern Europe and France. In the amortization and impairment of intangible assets, nothing was irrelevant this quarter, regular treatment of the acquisition of Zorberg, and the net finance costs in Q1 were €19,000,000 in line with higher net debt position.
The effective tax rate was 29%, impacted by the low taxable income, following change in profit mix and lower earnings. For 2025, please note we do raise our guidance slightly to 28% to 30%, including the expected impact of changes in tax, corporate income tax in France. Adjusted net income was 103,000,000, and with that, let’s turn the page and look at our gross margin bridge on slide 13. So going into more detail into gross margin. Our gross margin came in 90 basis points below last year, driven, like in past quarters, by business and service mix.
It was slightly ahead of our expectations, impacted by better than anticipated RPO and PERM. Year on year, temp margin is still impacting 50 basis points, reflecting underlying mix and idle time, as just discussed before. PERM, while still subdued, benefited from an additional Monday this quarter, or this month, in the large PERM month of March. Compared to last year, PERM had a negative impact of 20 basis points on the overall gross margin, as you can see in the chart above. HRS was also impacted by the divestment of Munster, partially offset by the growth in RPO that Sundar mentioned earlier.
Overall, HRS still has a negative impact of 20 basis points. Which now brings me to the OpEx details on slide 14, and remember, this one is sequential, not year over year. Our underlying operating expenses came in at $925,000,000 a decrease of $18,000,000 sequentially. And as mentioned in the previous calls, we have made significant efforts last year to structurally address our cost base, both by becoming more efficient in delivery, and in particular, from my perspective, by addressing the indirect costs that represent approximately 35% of our cost base. This results today in an organic decrease of 6% year over year, 59,000,000 lower than last year, directly aligning with the 6% organic decline we saw in gross profit.
Please note, these results of OpEx are net of protecting our strategic investments and our strategic agenda, and we’ll discuss more tomorrow the investments in our strategic agenda, which will allow us to position the business for more profitable growth and to improve its cost structure. This resulted overall in a recovery ratio of 68% for the quarter, clearly in line with our steering principles. And with that in mind, let’s move on to slide 15, which contains our cash flow and balance sheet remarks. Our free cash flow for the quarter was a positive 59,000,000 reflecting working capital management, and partially a refund of prepaid tax. DSO was fifty five days, up 0.4, excuse me, days sequentially, and the client mix continues to put some upward pressure, in line with the normal cyclical pattern, which we do expect to normalize as recovery continues.
Overdues, please note, and write offs remain at historical lows. Our leverage ratio remains unchanged, therefore at 1.6, and we have paid our dividend at the April. And now, to the slide on the outlook on slide 16. As a start, Q2 twenty twenty five is an extraordinary light seasonal quarter, especially in Europe, in terms of working days and holidays, such as Easter, and for example, the Dutch Liberation Day holiday. We will have approximately zero point four five working days less, and in particular in Northern Europe, 2 Days in the quarter, both year on year and sequentially.
What do we see in terms of venous momentum? Let me start with The early signs, and Sandra alluded to this, the early signs we see into Q2 show a similar exit rate in line with March. We are cautious, but despite all the macro volatility with associated limited visibility, we have had to see the impact on volumes and activity. As Sandra said, we stay close to our clients, but at the same time, we are prepared for different scenarios to ensure agility in reaction. As always, we draw on our foot steering principles and disciplined execution.
Moving on, Q2 twenty twenty five gross margin is expected to be modestly down sequentially, mostly reflecting the seasonal impact and mix. Operating expenses are expected to be broadly stable. So to summarize, let me wrap up Q1 and how we enter into Q2. We prepared in 2024 to enter stronger for 2025. We saw the start of the year gradually progressing through the quarter with signs of stabilization in some markets.
We start seeing the impact of our strategy, positioning the business for profitable growth, and to improve its cost structure. And in light of recent uncertainty, we remain even more alert, focused on field steering, and doubling down on scenario planning. And with that, we conclude our prepared remarks, and we welcome any questions from the line. Thank
Sandeep, Call Coordinator: will take our first questions from Remi Graineau from Morgan Stanley. Your line is open. Please go ahead.
Remi Graineau, Analyst, Morgan Stanley: Good morning, gentlemen. If I may, can we start on tough questions or discussion around the tariff situation? So just interested in hearing what you have to say on your discussions with your clients currently. If you expect that this could have a negative impact on volumes in any part of your business, I think one of your competitors calling it a wait and see mode and baking into their Q2 guidance some weakness in permanent recruitment and RPO because of that situation. So just wondering if you are seeing the same situation and if you’ve made the same assumption regarding Q2, especially on the gross margin side.
And within that same discussion, if you can compare that to the discussion you had with clients back in 2018 when we had the impact of the tariff from the first Trump administration and whether this back then resulted in any impact on your business in any specific end markets?
Sander Van Nortender, CEO, Randstad: Thank you, Remi, for that question. I mean, let me first say Chart is a little bit broader. Yes, there is the tariffs, and we’ll talk about that. But I would just also emphasize that the broader economic and geopolitical environment is very dynamic and creates there’s a lot of moving parts and that creates uncertainty. So it’s not tariffs that we’re talking about.
If we look at tariffs, it’s a I mean, you have to look at it at three levels. First, of course, there is the clients that are directly impacted by tariffs. And there you think about automotive and the broader manufacturing industry. If we have seen one place where we have seen some impact, it’s automotive, and you have seen the news reports of some of the automotive companies, specifically here in Europe, of stopping experts or reducing production volumes. So we have seen some impact there.
Broader than that, we have seen very limited impact, I would say. And you do have to keep in mind that in this manufacturing industry, everything ultimately will depend on what the level of the tariff is, in what country, what company, what are the supply chains of that company. So this is a very granular situation. And at this point in time, it’s very hard to say what the exact impact on all those individual clients will be. Then there’s, of course, the ninety day period.
Will there be there are negotiations, will there be outcomes of negotiation, what will the outcome be? So too early to say what the exact impact will be on those particular clients. The second level that you need to see this at is obviously the broader business confidence. And there is the tariffs and the broader environment, as I already alluded to. And obviously, that environment is not very helpful for creating certainty in our clients’ minds in terms of policy direction and economic environment.
So clients are indeed, I would say, on the fence in terms of making their bigger decisions, whether it’s investment decisions in physical assets, in technology assets or in people assets, and that comes to us and that’s hiring. So the overall uncertainty doesn’t help that. Clients are on the fence. You have to also keep in mind, by the way, that the hiring levels that we are speaking of these days are already at the relatively low level. So some of the hiring levels in some parts of the industry are back at the level of 2015, ’20 ’16.
So we’re already operating on a relatively low level of hiring. So that’s something to keep in the back of your mind. The third level, obviously, that you that might be impacted is consumer confidence and what does that mean to the overall economy. And I would say that is, let’s say, business as usual for us at Randstad because where we are and that’s how we do business here. So the bigger question maybe is also what do we do as Randstad?
And of course, we focus there where we see growth opportunities. We have identified our growth segments in logistics, in skilled trade, in Randstad operational, in healthcare, in finance, in engineering, in Randstad professional, in Ransom Digital, all the hot scales for AI, for user experience, consumer experience, etcetera. Our RPO business is tracking nicely these days because we have attracted quite a few new clients. And as George said, our outplacement business is also doing well. So the name of the game is focus on the growth areas, stay close to the clients to make sure we are there with them, to see what’s happening in the market, and to find and to define strategies for them to respond when it comes to their labor force.
Because obviously, there is a downward risk to all of this, but sometimes these situations also create opportunities where clients say, well, I may not be ready to hire, let’s say, on a more permanent basis, but I am ready to hire on a temporary basis. So that’s sort of the name of the game around tariffs and, again, I would say, the broader macroeconomic and geopolitical environment.
George, CFO, Randstad: You had a question on margin, Remi. So I think Sander alluded to it than the 2018. I mean, I think in 2018, the starting point is very different. I mean, at the beginning or in 2018, we came from a ten year growth spur, that then indeed came to a pause. If you look, as Sandra just alluded to it, the hiring levels today are very different from the hiring levels of 2018.
The penetration rate today is actually much lower than their penetration rate of 2018, so it’s a very different starting point. But then on the margin, I think you asked, okay, how do you see, and is that factored into your expectations? I think what we now are guiding for in terms of margin on one hand is reflecting exactly what we see, so a little bit of the reversal. So we were, let’s say, surprised somehow with better than expected, the permanent RPO in Q1. It’s a light quarter when it comes to the traditional temporary business, so that gives a bit of uplift in Q1.
As we now enter in Q2, we factor in a little bit of reverse of that. Also, two days or the, let’s say, the less working days in Q2, but increasingly as well, the weakness we see in automotive. So, this combination brings us to a lower gross margin Q2 than in Q1, exactly what we see today.
Remi Graineau, Analyst, Morgan Stanley: Understood. Thanks very much.
George, CFO, Randstad: Thanks, Ramit.
Sandeep, Call Coordinator: Thank you. Our next questions, we are taking from Suhasini Varanasi from Goldman Sachs. Your line is open. Please go ahead.
Suhasini Varanasi, Analyst, Goldman Sachs: Hi, good morning. Thank you for taking my question. It looks like if I had to take a look at the growth by month in the quarter in 1Q, March was probably a little bit better compared to what you talked about in terms of exit rates in January. Can you maybe clarify that and also give some color on what actually changed through the course of 1Q in terms of verticals or by regions, what improved? Yeah.
Thank you.
George, CFO, Randstad: Yeah. Asini, so let me, I mean, we normally don’t disclose the exact growth rate, but let me just give you a little bit of color to help you there. So, indeed, when we last spoke in February, at the February, we had given basically the entry level into Q1, around 5.5%, so similar to Q4, as we finished the quarter at a higher, at a better decline rate, let’s say 4.2, clearly we’ve been progressing throughout the quarter. If we then double click into that, we see The United States, making, the biggest steps. We saw our broader operational business already in growth in March, and we also saw, for instance, our digital, the Granta digital specialization in growth already through the quarter.
So we see progressing there, and then depends a little bit region by region, but in general, some key markets progressing, enabling us to enter April already with a better rate than the quarter rate in 02/2020 in 02/2025 in q one.
Suhasini Varanasi, Analyst, Goldman Sachs: Thank you. It’s very surprising actually that The US is the region that saw the most improvement in light of the tariff. I suppose that points to what Sando mentioned earlier, the fact is the clients are ready to hire temporarily, but not on a permanent basis. Is that the main reason?
Sander Van Nortender, CEO, Randstad: No. I wouldn’t say that, Swazini. I would say it’s it’s early innings in all of this. Let’s say, it’s every day, things have gone up and down. The tariffs were there.
They were not there. There’s a pause. So it’s sort of it’s a it’s it’s early days. But, of course, we have now in across our full business, and we’ll talk a lot more about that tomorrow, our digital marketplace, which is obviously helping in terms of fulfillment at etcetera. But we’ll talk more about that tomorrow.
Suhasini Varanasi, Analyst, Goldman Sachs: Sounds good. Thank you.
Sandeep, Call Coordinator: Thank you. We will take our next questions from Andy Grobler from BNP Paribas. Your line is open. Please go ahead.
Andy Grobler, Analyst, BNP Paribas: Hi. Good morning. Can I just start with depreciation, which came down quite sharply in the quarter, both in absolute terms and as a proportion of revenues? Could you just talk through what drove that decline and what your expectations are for the full year, please?
George, CFO, Randstad: Hi, Andy. Good morning. It’s, George. It’s actually quite stable. I think it’s just basically the the effect of the divestment of Monster.
So Right. That is basically the difference. So it will be stable through the year.
Andy Grobler, Analyst, BNP Paribas: Okay. Brilliant. And if I could just follow-up on on RPO, which Sandra mentioned earlier, which was was strong. What to what extent is that you winning clients relative to to the broader market? And and where are you doing well from a geographic perspective?
Sander Van Nortender, CEO, Randstad: No. So let’s say, I would say in general, our enterprise team is doing a good job on a number of fronts. First of all, in terms of winning new clients, and we have had some great wins in life sciences, which has been a focus industry for us. We’ve had a good win with Microsoft on the candidate services. So we have had a good and we talked last couple of quarters about a good pipeline.
Some of those wins have definitely come through. Then the other thing is we’re embarking clients on our enterprise operating system, so we are improving productivity and fulfillment for those clients as well. And then last but not least, we’re ramping up our presence around delivery in India, which is also helping, of course, in our cost to serve. So all in all, I would say very encouraging progress by our team and enterprise.
Andy Grobler, Analyst, BNP Paribas: Correct. Thank you very much.
Sandeep, Call Coordinator: Thank you. We will take our next questions from Rory McKenzie from UBS. Your line is open. Please go ahead.
Rory McKenzie, Analyst, UBS: Good morning. Rory here. On the gross margin outlook, thanks for the explanation on how the strong RPO affected the mix. But can you just talk through how the temp pricing idle time and mix evolved from Q4 into Q1? And then what you expect for Q2?
And then just as a follow-up, while trying to look at the kind of temp volume versus price mix impacts, I saw that you restated a number of temp workers from last year. I think it increased by about 10,000 to 568,000. So what was that change, please?
George, CFO, Randstad: Rory, hi. Good morning. I mean, I would say in terms of pricing, it’s broadly stable. And if you look in general to our temp margin through the year, you’ll see just a more regular seasonal pattern from Q1 into Q2. I would say there’s no significant, let’s say, changes between one and the other.
And, in terms of mix, I don’t expect basically a significant change. It’s more we’re gonna have a seasonal up tick from Q1 into Q2. I wanna be clear so that it’s not only the RPO bit. We had both an RPO and the perm, so it’s more the fee business is typically higher in Q1, and it was slightly ahead of our expectations, And therefore, that basically contributed to a higher better gross margin in Q1.
Rory McKenzie, Analyst, UBS: Thank you. And the restatement to your temp volume number?
George, CFO, Randstad: It’s what? Which I don’t know I don’t
Simon Le Shapiro, Analyst, Jefferies: know what we’re talking to. Reflex?
Rory McKenzie, Analyst, UBS: In on slide slide 20, you say you restated the number of employees working, on the pre I’ll have you take it offline. Yeah.
George, CFO, Randstad: But that is but, Rory, that has been something already for more than a year. I mean, we’ve been talking about it for a few quarters now. That was basically re harmonizing or realigning to our specialization at the beginning of last year. So there’s no restatement in this quarter. Okay, thank you.
Sandeep, Call Coordinator: Thank you. We will take our next questions from Simon Le Shapiro from Jefferies. Your line is open. Please go ahead.
Simon Le Shapiro, Analyst, Jefferies: Yes, good morning. Just on your cost strategy, I mean, you mentioned top line trends improving during the quarter, notably driven by some key countries showing progress, but you still cut headcount by 2% quarter to quarter. And I think the cut in 4Q was just 1%. So could you perhaps give us some context on basically why taking headcount a bit more in Q1 than Q4 despite showing encouraging signs on top line? Thank you.
Sander Van Nortender, CEO, Randstad: It was very difficult to hear you, Simon. Did I get it right that the question is how do the headline trends relate to the revenue trends?
Simon Le Shapiro, Analyst, Jefferies: So my question is, basically, why did you cut headcount by 2% in the quarter despite
George, CFO, Randstad: improving performance Yeah, I understand, Simon. Sorry, it was difficult. The line is breaking up a little bit. Normally, Q1 in our industry is a seasonally low quarter. So as we come from a quite high seasonal quarter in Q4, we try to make sure that we enter the year as a line that’s possible from a cost base and gross profit perspective, and therefore in Q1, we reduced, let’s say, field capacity as we get ready for that lower quarter of the year.
Going forward, part of it we always capture in terms of productivity, so we try to make sure we gain productivity as we go throughout the year. The other part, we can always choose to ramp up or ramp down as we see both seasonality and or growth going through the year.
Marc Zosenberg, Analyst, ING: Thank you.
Sandeep, Call Coordinator: Thank you. We’re now taking our next questions from Marc Zosenberg from ING. Your line is open. Please go ahead.
Marc Zosenberg, Analyst, ING: Yes. Thank you, and good morning, everybody. Two left for me. First, on the SG and A guidance, George. Can you give me a bit of an indication what kind of FX you have put in there?
So is the U. S. Dollar already fully reflected in there at $1.15 Or is there a bit of even a bit of upside, let’s say, in a positive side that the OpEx even comes down a bit further? That’s my first question. A bit linked to the second one, so I continue with that one.
Thinking about OpEx maybe a bit later also to Q3, Q4 and operational leverage and margin protection, how are you because I heard you talking about these scenarios you’re currently working on. In case the tariffs puts U. S. In a recession and volumes come down, accelerate, etcetera, would we then see still that you can protect your margin by becoming a bit more aggressive on SG and A side? Or how should we look at the margin maybe a bit more throughout the full year?
Those were my
George, CFO, Randstad: two questions. Yes. So let me start with the second question. Marc, and let me give you a little bit of color. You know we don’t give guidance per se, but I think, I mean, we’ve made a big effort in making sure we were, let’s say, entering the quarter in a stronger position, so we could kind of at least protect profitability.
We, as you saw, we basically start Q1 with approximately €60,000,000 savings year over year. Of course, last year, we started adjusting our cost base down throughout the year, but still, it does give us some headroom into the next quarters in terms of what we can expect in terms of savings over the year. If we do find ourselves in a situation that we need to gear that up, then we always have a degree of flexibility built into our cost base, and furthermore, I mean, we’ve been always striving to stay within our range of adaptability. That’s exactly what we will do throughout the rest of the year. So, that is basically how we look at 2025.
The scenarios, yeah, it’s everyone’s question, obviously. What we can do is basically making sure that we speak weekly, not daily, but weekly with all our top countries, and we have prepared scenarios in terms of actions to be taken. Terms of the FX, I mean yeah. Go ahead, Marc. Yeah.
Marc Zosenberg, Analyst, ING: Yeah. That combined with the indirect cost savings will mean that you can even protect your margin in the second half in case things get worse. Is that how we should look at it?
George, CFO, Randstad: Say that again, Marc? Sorry.
Marc Zosenberg, Analyst, ING: Line of thinking. Now that combined with the overhead savings and the indirect cost savings you already put in place means that we should see some margin protection possible even if things get worse.
George, CFO, Randstad: Is that what you’re trying to say? Will. That’s how we enter in Q1. It’s obviously what the tone we want to set for the year. It’s impossible to guarantee, but that’s how we’re looking at the year.
Simon Le Shapiro, Analyst, Jefferies: Yeah. Okay. Okay, clear.
George, CFO, Randstad: And the FX, I mean, I would say at the moment year to date is broadly stable, so there’s nothing there. We are basically factoring in a little bit into Q2, but let’s be realistic, it’s super volatile. Do remember one thing. Our costs and our revenues go hand in hand in the same currency, so let’s also kind of keep a cap in for Hans Stadt’s business model the impact of FX. Yeah.
Marc Zosenberg, Analyst, ING: Yeah. Okay. Thank you
Simon Le Shapiro, Analyst, Jefferies: very much.
George, CFO, Randstad: Thank you, Mark. Thank you.
Sandeep, Call Coordinator: You. We will move to our next questions from Simon van Oepen from Kepler Cheuvreux. Your line is open. Please go ahead.
Simon van Oepen, Analyst, Kepler Cheuvreux: Yes. Thank you for taking my questions. Two, if I may. First of all, can you please give some insights into the cash taxes for the year? And secondly, could you please give some insights into the development of your MSP business?
Remi Graineau, Analyst, Morgan Stanley: Thank you.
George, CFO, Randstad: Right. So, in terms of cash, so you see an impact of our estimated tax rates to go up this year. I think most of the factors are known, Simon. So on one hand, you have the full implementation of Pillar two. We do have, let’s say, non supportive mix, let’s say more profit in high level jurisdictions than in lower level, But more important, think that’s basically what we’ve been talking a lot about in the previous call and with other competitors, the temporary increase in the French corporate income tax.
If we look at all of this, our guidance is now 28% to 30%, factoring all the things we can see in our business today.
Sander Van Nortender, CEO, Randstad: Yes. With respect to our MSP business, we’re pleased with how the business is developing. Also there, we’ve had a few good wins this quarter. What is also good to see that most MSP deals have an element of direct sourcing, which is, of course, a good thing for us at Randstad. And the other thing is, it’s not directly MSP, but we are working, of course, with our Workday Alliance to approach Workday clients to have direct access to direct positions of those clients, which is also a very interesting element in the game.
Simon van Oepen, Analyst, Kepler Cheuvreux: And what was your growth rate for MSP in the first quarter?
George, CFO, Randstad: We don’t break that down, Simon. So, don’t break that down. And also, like Sandra alluded to it, MSP is as important in terms of growth rate, but even more important, direct sourcing of it. Thank you.
Sandeep, Call Coordinator: Thank you. It appears there are no further questions. So I will hand you back to Sander for any additional remarks. Please go ahead, sir.
Sander Van Nortender, CEO, Randstad: Thank you, Adip, and thank you all for joining the call today. Before we wrap up, let me thank all 600,000 talents and lots of people for doing again a great job this quarter, and we look forward to seeing you all tomorrow in London or online for our update on our Partner for Talent strategy. See you there.
Sandeep, Call Coordinator: This concludes today’s call. Thank you for your participation. You may now disconnect.
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