SThree (LON:STEM) used its full-year results briefing to emphasize resilience in a difficult staffing environment, progress on a multi-year technology transformation, and continued focus on contract-led STEM recruitment. Chief Executive Officer Timo Lehne and Chief Financial Officer Andy Beach said the group met the expectations it set at the start of the year, while acknowledging that a broader market recovery—particularly in Europe—has yet to fully materialize.
Management highlights: contract focus and TIP milestone
Lehne said the business “is more than a transactional staffing business,” positioning SThree as a global STEM workforce consultancy supporting around 9,000 contractors across 11 countries. Contract remained central to the model, representing 84% of the group, which management described as providing greater resilience, profitability, and visibility than a permanent-heavy mix.
Lehne also said the company has been rebalancing toward a more focused geographic footprint since early 2023, using its Market Investment Model to deploy resources in markets with the best alignment of opportunity and capability. He highlighted increased emphasis on the U.S. and Japan, and noted early positive results from greater focus on large enterprise accounts and refined account management.
Full-year financial performance
Beach reported that net fees fell 12% year-on-year on a constant currency basis, with the rate of decline improving sequentially quarter-on-quarter through the year. Contract net fees declined 12%, with weakness in new business activity earlier in the year outweighing more recent improvement and “consistently resilient contract extensions.” Permanent net fees declined 9%, which Beach said was an improvement versus the prior year’s decline, supported by growth in the U.S. and Japan.
Operating profit was GBP 26.1 million, down 60% on a constant currency basis. Beach attributed the decline primarily to operational gearing on lower net fees, partially offset by cost discipline and operational efficiencies. The conversion ratio (operating profit to net fees) was 8.1%.
Profit before tax was GBP 25.5 million, down 62%, reflecting lower operating profit and higher net finance costs due to reduced interest income on deposits. Earnings per share decreased 63% to GBP 13.70, with profit after tax down 64% on a constant currency basis. Beach said the share buyback reduced the number of shares, partially offsetting the profit decline in the EPS calculation.
Regional and skill mix: U.S. growth offsets European softness
Beach said the company remains diversified by region and skill vertical. DACH remained the largest region at 33% of net fees, while net fees were lower in three of the company’s five regions, partly offset by growth in the U.S. and in the Middle East and Asia.
Technology remained the largest skill vertical at 45% of net fees. Engineering, the second-largest vertical, declined 6% year-on-year against a strong prior-year performance. Within engineering, the energy business grew 5% year-on-year and accounted for 19% of group net fees. The “other” segment grew 7% year-on-year, reflecting increased demand for banking and finance roles, particularly in the U.S. and Belgium. Beach said these gains were offset by softer demand in technology and life sciences during the challenging trading environment.
Contract visibility, margins, and operating metrics
The company highlighted the resilience of its contract-led model. The contract order book was down 2% year-on-year, which Beach said reflected improved new placement activity alongside strong extensions. Despite the decline, management said the order book continues to provide “sector-leading forward visibility,” equating to around five months of future net fees already booked.
Beach said average contract lengths increased 10% year-on-year to 60 weeks, supported by extension rates. Contract margins were maintained at 21.7% through tight pricing control, particularly on extensions. The average salary of contract roles placed increased 2% year-on-year to GBP 107,000.
He also pointed to a multi-year shift toward the Employed Contractor Model (ECM). ECM increased to 41% of net fees in FY2025 from 23% in FY2019. Beach said ECM margins are typically 30% to 40% higher than those from independent contractors because clients pay for the risk and complexity SThree assumes. Management also said the new digital infrastructure should reduce manual touchpoints, supporting more efficient scaling and higher margins over time.
TIP benefits, costs, and capital returns
Chief Operating Officer Nick Folkes said TIP replaced fragmented legacy systems with a unified global platform, creating a “single source of truth” across clients, candidates, assignments, fees, automation, and insight, with standardized end-to-end workflows and compliance “built in by design.” He said early outcomes include improvements in consultant productivity, pipeline quality, operational velocity, and recurring efficiencies.
- Folkes said TIP has delivered GBP 6.5 million of annualized cost efficiencies to date, with more expected in FY26.
- He reported a 38% increase in A and B grade jobs per consultant since FY2023, which he linked to cleaner CRM data and improved pipeline discipline.
- Time to placement improved 9% since FY2023, including a 22% improvement in the U.S. contract business where TIP has been embedded longer.
- In the U.S. contract business, placements per head for contract consultants rose 18% when comparing FY23 (pre-TIP) to FY25 (post-TIP), after FY24 served as a stabilization period.
- Folkes also described a comparison in Germany where he said the timing of TIP deployment helped explain a divergence in performance between two contract divisions, citing IC new placement weekly net fees outperforming ECM by 10 percentage points in a like-for-like period before ECM went live.
Beach said the TIP rollout was completed below the middle of the expected spend range, with total spending of GBP 32 million by the end of FY25. He broke this down as GBP 13 million in total OPEX and GBP 19 million in total CAPEX, with FY25 TIP OPEX of around GBP 3 million and TIP CAPEX of around GBP 6 million.
On capital returns, Beach said the company will pay a final dividend of GBP 9.20 per share, keeping the full-year dividend flat year-on-year at GBP 14.30 per share. He also announced a further share buyback program of up to GBP 20 million, following the purchase of nearly GBP 8 million shares under the prior program. Management said the decision reflected the group’s trading performance, outlook, and cash generation, as well as a commitment to returning surplus capital where appropriate.
Looking ahead, Beach said profitability phasing in the current year will differ from historical patterns due to first-half-weighted costs associated with the FY26 efficiency program, but he added that management remains confident in delivering full-year expectations. Lehne said new business momentum improved toward year-end in key markets such as the U.S., while the broader recovery—especially in Europe—remains in progress.
About SThree (LON:STEM)
SThree plc brings skilled people together to build the future. We are the global STEM workforce consultancy, placing highly skilled, STEM specialist workers in the industries where they are needed most. We advise businesses, build expert teams, and deliver project solutions for our clients. With more than 38 years of experience in pure-play STEM and a global team with local expertise across 11 countries, we cover high-demand skills across Engineering, Life Sciences and Technology roles.
We provide permanent and flexible contract talent to a diverse base of around 6,000 clients.
