Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • Group net fees fell 12% YoY, though the US business returned to growth during the quarter.

  • The Group confirmed FY25 PBT guidance of £25 million but expects FY26 PBT of around £10 million amid subdued business activity.

  • SThree announced further investment in AI and cost optimisation, alongside plans for a share buyback in FY26.

     

     

SThree plc (LSE:STEM), the global STEM workforce consultancy, reported a 12% year-on-year (YoY) decline in group net fees for the three months ended 31 August 2025. The update covered the period from 1 June 2025 to 31 August 2025.

The Contract division, which contributes 83% of net fees, was down 13% YoY. Meanwhile, the Permanent business fell by 5% YoY, though it showed a sequential improvement compared to the previous quarter. At the end of Q3, the Group’s contractor order book stood at £156 million, representing approximately five months’ net fees, albeit 6% lower than the prior year.

Despite challenging conditions, the US Contract business returned to growth, partly offsetting performances in Germany and the Netherlands. The Group closed the period with a net cash position of £42 million, down from £48 million at the end of May 2025.

Regional and Sector Trends

Within its skill verticals, Engineering net fees declined only 1% YoY, supported by demand in the US. Life Sciences and Technology were down 12% and 22% YoY, respectively, due to ongoing market uncertainty.

Regionally, SThree reported substnatial growth in the Middle East & Asia, with Japan and Dubai delivering positive contributions. In the Group’s three largest markets, the US showed renewed growth driven by Energy demand. In contrast, Germany and the Netherlands recorded declines due to weaker demand for Technology and Engineering skills.

Group headcount at the end of Q3 was down 16% compared to the prior financial year, reflecting careful management of attrition and selective hiring.

Technology Improvement Programme Nearing Completion

The Group’s Technology Improvement Programme (TIP) is now live in 10 of 11 markets, following the onboarding of two additional geographies. The programme is designed to drive efficiencies, with in-year net savings of £6 million on track for FY25.

With TIP nearing completion, SThree has turned its focus to new technologies. Following evaluation of agentic AI, the Board confirmed plans to invest in next-generation AI solutions to capture opportunities in the recruitment industry.

Outlook and FY26 Guidance

SThree reaffirmed its previously announced FY25 profit before tax (PBT) guidance of £25 million. However, subdued levels of new business activity are expected to persist into FY26, resulting in an anticipated PBT of approximately £10 million. This guidance reflects an expected £20 million reduction versus consensus, alongside the Group’s planned investment initiatives.

These investments, combined with a further cost optimisation programme scheduled for FY26, will be fully funded through cost management initiatives. The Board also confirmed its intention to launch a new share buyback programme in FY26, consistent with the Group’s capital allocation policy.