Executive Summary / Key Takeaways

• ManpowerGroup (NYSE:MAN) has achieved a significant turnaround, reporting organic constant currency revenue growth in Q3 2025 after 11 consecutive quarters of declines, signaling market stabilization.
• The company's DDI (Diversification, Digitization, Innovation) strategy, particularly its PowerSuite platform and Sophie AI, is a key differentiator, driving measurable gains in client acquisition and recruiter productivity.
• Financial performance in Q3 2025 showed revenue growth, but profitability was impacted by business mix shifts towards enterprise clients and lower permanent recruitment activity, leading to a 70 basis point decrease in gross profit margin.
• Despite ongoing macroeconomic and geopolitical uncertainties, particularly in Europe and North America, management anticipates continued stability and slight organic constant currency revenue growth for Q4 2025.
• Strategic cost control, organizational streamlining, and continuous investment in technology are positioning ManpowerGroup for enhanced operating leverage and long-term profitable growth as global economies are expected to improve in 2026.

A Legacy Forged in Talent, Reimagined for the Digital Age

ManpowerGroup Inc., founded in 1948, boasts a 75-year history of adapting to the evolving world of work, consistently positioning itself for productivity management and accelerated recovery through various economic cycles. A pivotal strategic shift occurred in late 2019 with the introduction of its DDI (Diversification, Digitization, and Innovation) strategy. This initiative was designed to address the accelerating pace of technology, persistent structural talent scarcity, and the increasing demand for specialized skills across industries.

The company operates globally through its three distinct brands: Manpower, Experis, and Talent Solutions, each catering to different facets of workforce needs. Manpower focuses on staffing and consulting services, Experis specializes in professional and IT hiring, and Talent Solutions encompasses Recruitment Process Outsourcing (RPO), Managed Service Provider (MSP) offerings, and Right Management services. This diversified portfolio allows ManpowerGroup to serve a wide array of clients, from consumer goods and financial services to healthcare, life sciences, industrials, and technology.

The global labor market currently presents a complex picture. While Latin America and Asia Pacific continue to experience robust demand, Europe and North America have seen softer, yet stabilizing, trends. A notable phenomenon in the post-pandemic era has been "labor hoarding," where employers, mindful of past talent acquisition difficulties, are maintaining current staffing levels and adopting a cautious approach to new hiring, even amidst macroeconomic and geopolitical uncertainties. This has led to what management describes as a "frozen" labor market, characterized by limited permanent hiring and workforce reductions, despite unemployment rates remaining historically low in many regions.

Technological Edge: PowerSuite and Sophie AI

ManpowerGroup's strategic response to these market dynamics is deeply rooted in its technological differentiation. The company has made substantial investments in its industry-leading technology platform, PowerSuite, which serves as a foundational tech stack. This platform is critical for driving productivity and innovation, providing the data and insights necessary to enhance client and candidate experiences. By the end of 2025, 90% of ManpowerGroup's revenues are expected to flow through a common global front office platform, and 60% of its back-office transactions will be handled by a global platform, with plans to reach 80% to 90% by year-end. This extensive digital core enables the company to standardize processes, centralize operations across countries and regions, and leverage its scale advantage.

A key innovation built upon PowerSuite is Sophie AI, an enterprise-wide AI platform designed to enhance operational workflows. Sophie AI is already driving measurable gains, with approximately 30% of new client revenue derived from AI-rated probability. Furthermore, prospects identified as high probability by AI demonstrate notably higher potential value compared to those identified solely by human insight. The platform's virtual recruiting assistant automates candidate screening and chatbot interviews, providing a superior user experience and allowing recruiters to focus on higher-value tasks, leading to 2 to 3 times more effective time utilization. Currently deployed across 14 key markets, Sophie AI is scaling further, with its AI-powered insights cited as a differentiator in recent RPO and MSP client wins. These technological advancements contribute significantly to ManpowerGroup's competitive moat, enhancing its market positioning and supporting future growth.

Competitive Positioning in a Dynamic Market

ManpowerGroup operates in a highly competitive global staffing and workforce solutions market, contending with major players such as Adecco Group (AHEXY), Randstad Holding (RANJY), Robert Half International (RHI), and Kelly Services (KELYA). The company's competitive strengths lie in its strong global brand, extensive network of offices, and deep expertise in workforce consulting and outsourcing. Its diversified service offerings, including comprehensive HR solutions and talent development programs like Manpower MyPath and Experis Academy, provide a qualitative edge in fostering long-term client relationships and addressing the structural talent shortages, with 74% of employers globally struggling to fill roles.

Compared to its rivals, ManpowerGroup's PowerSuite platform and Sophie AI position it favorably in leveraging technology for talent acquisition and management. While competitors like Randstad and Adecco have also invested in digital tools, ManpowerGroup's integrated global platform provides a unique capability for standardized, centralized operations and data-driven insights at scale. This allows for efficient cross-border talent deployment and tailored solutions for complex projects, potentially enhancing pricing power and market share in international segments. However, the company acknowledges that pricing remains competitive across the industry, though it has remained rational due to the persistent demand for specialized talent.

ManpowerGroup's vulnerabilities include its cyclical business nature and dependence on economic conditions, which can impact financial performance during downturns. While the company has demonstrated resilience, a slower pace of innovation in certain digital tools compared to some competitors could affect efficiency in talent matching. Nevertheless, ManpowerGroup's strategic investments in AI and its focus on augmenting human capabilities are designed to mitigate these challenges and ensure it remains a leader in the evolving workforce landscape.

Financial Performance and Liquidity: A Turnaround in Progress

ManpowerGroup's financial performance in the third quarter of 2025 marked a significant turning point, with reported revenues from services reaching $4.63 billion, representing a 2.3% increase year-over-year, or 0.7% in organic constant currency. This positive shift followed 11 consecutive quarters of organic constant currency revenue declines, indicating a stabilization of demand in key markets. For the nine months ended September 30, 2025, revenues from services were $13.24 billion, a 1.6% decrease from the prior year.

Profitability, however, faced headwinds. The gross profit margin for Q3 2025 decreased by 70 basis points year-over-year to 16.6%. This was primarily attributed to a 40 basis point unfavorable impact from business mix shifts towards enterprise clients, a 20 basis point impact from lower permanent recruitment activity, and a 10 basis point impact from reduced outplacement activity. Operating profit for Q3 2025 was $66.6 million, a 6.1% decrease year-over-year, with the operating profit margin declining 20 basis points to 1.4%. For the nine months ended September 30, 2025, the company reported a net loss of $43.5 million, significantly impacted by $88.7 million in goodwill and indefinite-lived intangible asset impairment charges related to its United Kingdom and Switzerland reporting units. These impairment charges, along with restructuring costs and losses from subsidiary dispositions, unfavorably impacted diluted net earnings per share by $1.79 for the nine-month period.

Selling and administrative expenses for Q3 2025 decreased by 1.3% (4% in organic constant currency), driven by a 19.6% reduction in personnel costs due to restructuring actions and a 14.2% decrease in non-personnel costs. This disciplined cost management led to a 50 basis point decrease in SG&A as a percentage of revenues.

From a liquidity perspective, ManpowerGroup's cash and cash equivalents stood at $274.6 million as of September 30, 2025. Cash used in operating activities for the nine months ended September 30, 2025, was $283 million, compared to $61.6 million provided in the prior year, primarily due to the timing of collections and payments. Days Sales Outstanding (DSO) increased by six days to 58 days, reflecting an increased mix of enterprise clients. Despite these outflows, free cash flow turned positive in Q3 2025 at $45 million, and the fourth quarter is historically a strong period for cash generation. The company maintains a healthy capital structure, with a Net Debt-to-EBITDA ratio of 3.18 to 1 and a fixed charge coverage ratio of 2.76 to 1, well within its credit agreement covenants. Management believes it has sufficient liquidity and capital resources to meet future obligations.

Segmental Insights and Forward Outlook

The Americas segment saw a 4.6% revenue increase (5.5% in constant currency) in Q3 2025, largely driven by strong Manpower staffing services, though partially offset by a decline in Experis interim services in the U.S. Southern Europe's revenue increased 5.2% (but decreased 1.3% in constant currency), with Italy showing robust growth (10.3% reported, 3.7% in constant currency) in Manpower staffing and consulting, while France experienced a constant currency decline. Northern Europe remained challenging, with revenue decreasing 1.4% (6.7% in constant currency), particularly in the U.K. and Germany. However, cost reduction actions led to an improvement in Northern Europe's OUP margin from -3.1% to -1.8% in Q3 2025. APME's revenue decreased 7.5% (8% in constant currency) due to the disposition of the Korea business, but organic constant currency revenue increased 8.2%, bolstered by strong growth in Japan and India.

Looking ahead to Q4 2025, ManpowerGroup forecasts earnings per share in the range of $0.78 to $0.88, with constant currency revenue expected to be flat at the midpoint. This guidance assumes ongoing stability in most markets and a continuation of existing trends. Management is cautiously optimistic, noting that demand in Europe and North America is holding steady, and economists anticipate an improved economic environment in 2026 for both regions. The company's enterprise pipeline continues to expand, with demand concentrated among global enterprise clients, although decision timelines remain extended.

Key risks include volatile economic conditions, particularly in Europe and the U.S., geopolitical uncertainties, and the impact of global trade policies, which CFOs now rank as a top-five concern. The effective tax rate for Q3 2025 was significantly impacted by the 2025 enacted French exceptional corporate income tax surcharge and non-deductible impairment charges. While there are discussions about potentially extending the French surcharge into 2026 at a lower level, management expects the effective tax rate to decrease next year as the surcharge comes down.

Conclusion

ManpowerGroup stands at a pivotal juncture, having successfully navigated a prolonged period of market headwinds to return to organic constant currency revenue growth in Q3 2025. This achievement underscores the resilience of its diversified business model and the strategic efficacy of its DDI initiatives. The company's deep investments in technological differentiation, particularly its PowerSuite platform and Sophie AI, are not merely operational enhancements but fundamental drivers of its competitive advantage, enabling superior client engagement, recruiter productivity, and data-driven market insights. As global economies eye a potential rebound in 2026, ManpowerGroup's disciplined cost management, ongoing organizational streamlining, and technological leadership position it to capitalize on future growth opportunities. While macroeconomic and geopolitical uncertainties persist, the company's ability to adapt, innovate, and strategically allocate resources across its diverse geographic and brand portfolio suggests a compelling investment thesis for discerning investors seeking exposure to a transforming workforce solutions leader.