Workforce solutions provider ManpowerGroup (NYSE:MAN) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 2.3% year on year to $4.63 billion. Its GAAP profit of $0.38 per share was 53.3% below analysts’ consensus estimates.
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ManpowerGroup (MAN) Q3 CY2025 Highlights:
- Revenue: $4.63 billion vs analyst estimates of $4.60 billion (2.3% year-on-year growth, 0.7% beat)
- EPS (GAAP): $0.38 vs analyst expectations of $0.82 (53.3% miss)
- Adjusted EBITDA: $104.7 million vs analyst estimates of $109.7 million (2.3% margin, 4.5% miss)
- EPS (GAAP) guidance for Q4 CY2025 is $0.83 at the midpoint, beating analyst estimates by 5.9%
- Operating Margin: 1.4%, in line with the same quarter last year
- Organic Revenue was flat year on year vs analyst estimates of 1.9% declines (177.4 basis point beat)
- Market Capitalization: $1.65 billion
StockStory’s Take
ManpowerGroup's third quarter was met with a negative market reaction, as investors responded to a significant shortfall in profit versus Wall Street expectations despite revenue growth. Management attributed top-line performance to stabilization in demand across North America and Europe and continued momentum in Latin America and Asia Pacific. CEO Jonas Prising noted, "We crossed back over to growth during the third quarter," emphasizing the improved revenue trend, especially within Manpower's core brand and select geographies. However, margin pressure persisted due to a greater mix of enterprise clients and weaker permanent recruitment activity.
Looking ahead, ManpowerGroup’s guidance is shaped by expectations for steadier demand in its largest markets and continued cost discipline. Management is prioritizing AI-enabled insights, streamlined operations, and further standardization to support margin stabilization and future growth. Prising highlighted the scaling of Sophie AI, the company’s enterprise-wide platform, across multiple markets, stating, “We expect to see significant value realization across our global footprint.” The company remains cautious given the uncertain macro environment, but believes operational improvements and technology investments will enhance its competitive positioning.
Key Insights from Management’s Remarks
Management cited demand stabilization in key markets and a shift toward enterprise clients as major influences on the quarter, while continuing to invest in digital transformation and cost containment.
- Enterprise client mix shift: The growing share of large enterprise clients weighed on overall staffing margins, as these accounts typically command lower margins compared to smaller, convenience-focused business. CFO Jack McGinnis explained this trend is expected to reverse as confidence returns to smaller businesses, but for now, enterprise demand is the strongest.
- Permanent recruitment and outplacement softness: Lower activity in permanent recruitment and Right Management’s outplacement services added to gross margin pressure, reflecting a “frozen” labor market with limited hiring and workforce reductions in North America and Europe.
- Manpower brand outperformed: The Manpower brand saw broad-based growth in markets such as North America, Italy, Latin America, and Asia Pacific & Middle East (APME), offsetting declines in Experis (professional/IT staffing) and Talent Solutions (outsourcing and consulting).
- Digital transformation and AI progress: The company’s investment in a global digital core and rollout of the Sophie AI platform now covers 90% of revenues through standardized front office tools and is driving measurable improvements in lead generation and win rates, especially in key markets.
- Cost containment and restructuring: Restructuring actions were focused in Northern Europe and select U.S. and Southern European operations, helping improve profitability trends. Continued SG&A leverage and process standardization in back- and front-office functions are expected to drive further efficiencies.
Drivers of Future Performance
ManpowerGroup expects ongoing demand stabilization, operational cost discipline, and expanded use of AI-driven tools to shape results in coming quarters.
- AI and automation scale-up: Management is accelerating the deployment of Sophie AI and global digital platforms across front- and back-office operations, which they believe will enhance productivity, improve client targeting, and support operating leverage as hiring activity recovers.
- Cost control and SG&A leverage: Ongoing restructuring in Northern Europe and process standardization initiatives are expected to contain costs and support margins. CFO John McGinnis emphasized that SG&A discipline is “starting to bend the curve,” providing stability even as gross profit experiences modest pressure.
- Exposure to labor market cycles: While management is optimistic about stabilization, they acknowledge that further improvements in permanent hiring and RPO (recruitment process outsourcing) volumes are dependent on employer confidence and macroeconomic visibility, particularly in major European and North American markets.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be closely watching (1) the pace and impact of Sophie AI and digital platform rollouts on sales efficiency and client wins, (2) the stabilization of permanent hiring and outplacement trends, and (3) the effectiveness of restructuring and SG&A control, particularly in Northern Europe. Progress in rebalancing the client mix between enterprise and smaller clients will also be a key marker of operational recovery.
ManpowerGroup currently trades at $36.37, down from $38.04 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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