ManpowerGroup (MAN) Q4 2025: Cost Actions Drive 4% SG&A Cut as Europe and U.S. Stabilize
ManpowerGroup’s Q4 revealed early inflection signals, with stabilization in core markets and cost discipline yielding a 4% constant currency SG&A reduction. Demand trends improved notably in Italy, France, and the U.S., while ongoing technology and AI investments are reshaping the business model for margin expansion. Management’s focus on operational leverage and digital transformation positions the company for incremental margin gains, but broad-based recovery remains elusive as permanent recruitment and professional staffing lag prior peaks.
Summary
- Cost Discipline Delivers: SG&A fell 4% in constant currency, boosting profitability as revenue stabilized.
- Market Recovery Diverges: Italy and the U.S. outperformed, while France and Northern Europe showed sequential improvement.
- Margin Expansion Path: Technology and AI deployment underpin management’s commitment to long-term EBITDA margin targets.
Performance Analysis
ManpowerGroup’s Q4 revenue of $4.7 billion reflected 2% organic constant currency growth, with system-wide revenue including franchises at $5.1 billion. Adjusted EBITDA margin held steady at 2.1%, while gross profit margin landed at 16.3%, pressured by lower permanent recruitment in Europe and a continued shift toward enterprise clients, which tend to carry lower margins but higher volume stability. SG&A expense was a standout, declining 4% in constant currency, a direct result of ongoing cost optimization and restructuring, especially in Northern Europe and North America.
Segment performance was mixed: Southern Europe returned to growth after 13 quarters of declines, led by Italy’s 7% constant currency revenue increase and margin strength. The U.S. Manpower brand posted its sixth consecutive quarter of growth, while Experis, the technology and professional staffing line, showed narrowing declines but remains below prior year levels. Talent Solutions, which includes managed services and RPO, saw stabilization in MSP but continued pressure in RPO and permanent recruitment. Free cash flow rebounded in Q4, but full-year cash flow was negative, reflecting working capital swings and enterprise client mix.
- Enterprise Mix Shift: Higher enterprise client share pressured gross margin but improved revenue durability.
- Regional Resilience: Italy, Japan, and the U.S. delivered above-market growth, offsetting weaker Germany and France.
- Transformation Investments: Technology and back-office programs drove cost leverage, with PowerSuite now covering nearly 90% of business operations.
Overall, cost actions and selective growth in key markets offset continued softness in higher-margin offerings, positioning the company for incremental margin gains as demand stabilizes.
Executive Commentary
"We are pleased with our fourth quarter results, which marked a clear shift to stabilization, led by enterprise demand and supported by disciplined execution and a continued commitment to cost optimization."
Jonas Prising, Chairman & Chief Executive Officer
"SG&A as adjusted was down 4% on a constant currency basis and 3% on an organic constant currency basis. These initiatives include our back office transformation programs and are progressing well, and now also include our front office transformation program, which is being planned for our North America business."
Jack McGinnis, Chief Financial Officer
Strategic Positioning
1. Digital and AI-Led Transformation
PowerSuite, the company’s end-to-end operating platform, now covers nearly 90% of operations. This digital backbone enables rapid deployment of AI tools, such as recruiter automation and agentic AI coding assistance, which have driven a 7% increase in placement rates and improved recruiter productivity. Management is shifting from pilot use cases to scaled, commercial impact, positioning the business for operational leverage as demand returns.
2. Multi-Brand Portfolio and Geographic Diversification
ManpowerGroup’s diversified brand strategy—Manpower, Experis, and Talent Solutions—has enabled resilience across cycles and markets. While Manpower (general staffing) grew 5% organically, Experis (IT/professional) and Talent Solutions (MSP, RPO) continued to decline but at a slower rate, with stabilization in key regions. Italy and Japan stand out for consistent growth and margin strength, offsetting softness in Germany and France.
3. Structural Cost Actions and Capacity Alignment
Three years of cost actions have structurally reduced overhead and aligned capacity with demand. This includes permanent changes to back-office and technology infrastructure, as well as targeted restructuring in challenged markets. Northern Europe, a chronic underperformer, returned to profitability, highlighting the impact of these moves. Further cost optimization is underway, particularly in North America, to drive additional margin expansion.
4. Evolving Workforce Models and Client Flexibility
Market research and client engagement signal a growing demand for flexible work models—including gig, freelance, and blended human-AI roles. ManpowerGroup is evolving its advisory and service offerings to address these shifts, aiming to capture share as clients seek agility amid macro uncertainty.
Key Considerations
ManpowerGroup’s Q4 reflected a turning point in operational discipline and market stabilization, but the recovery is uneven by region and service line. Investors should weigh the following:
Key Considerations:
- Margin Expansion Potential: Technology-driven productivity and structural cost reductions support management’s commitment to return to 4.5-5% EBITDA margin over time, even in a moderate recovery scenario.
- Enterprise Client Dynamics: Increased enterprise mix stabilizes revenue but dilutes gross margin and lengthens cash conversion cycles, requiring ongoing working capital management.
- Permanent Recruitment and Professional Staffing Lag: Higher-margin offerings remain subdued; recovery in these segments is critical for full margin normalization.
- Geographic Divergence: Outperformance in Italy, Japan, and the U.S. contrasts with continued weakness in Germany and Northern Europe, underscoring the importance of local execution and capacity alignment.
- AI and Digital Upskilling: Ongoing investment in AI tools and employee upskilling aims to drive productivity and differentiation, with early signs of commercial impact.
Risks
Persistent softness in permanent recruitment and professional staffing could delay margin recovery, especially if macro stabilization stalls or client hiring remains cautious. Enterprise mix shift, while stabilizing revenue, puts pressure on gross margins and cash flow timing, requiring vigilant cost and working capital management. Political and budget uncertainty in key markets (notably France and Germany) and the pace of AI adoption present ongoing execution and competitive risks.
Forward Outlook
For Q1 2026, ManpowerGroup guided to:
- EPS of $0.45 to $0.55, including a $0.06 favorable currency impact
- Constant currency revenue growth between -1% and +3%, with 1% at the midpoint
- EBITDA margin up 10 basis points YoY at midpoint
For full-year 2026, management maintained a cautious but constructive outlook:
- Continued focus on cost discipline and margin expansion
- Tax rate guidance incorporates French corporate tax surcharge and excludes potential U.S. WOTC benefit
Management highlighted factors including ongoing stabilization in France and the U.S., further cost actions in North America, and the expectation that higher-margin segments will recover gradually as enterprise demand leads the cycle.
- Enterprise demand expected to remain steady, with potential for permanent and professional staffing to improve as recovery broadens
- Transformation investments and AI deployment to drive incremental margin gains
Takeaways
ManpowerGroup’s Q4 marked an inflection toward stabilization, but full recovery in higher-margin areas remains outstanding. Cost discipline and technology leverage are driving incremental margin gains, while regional divergence and enterprise mix shifts require ongoing management focus.
- Operational Leverage Emerging: Cost actions and digital transformation are translating into improved profitability, especially in previously challenged regions like Northern Europe.
- Mixed Recovery by Segment: General staffing outperformed, but professional and permanent recruitment remain below prior peaks, limiting full margin normalization.
- Watch for Margin and Mix Shifts: Investors should monitor the pace of recovery in permanent and professional staffing, as well as the impact of enterprise mix on gross margin and cash flow conversion in coming quarters.
Conclusion
ManpowerGroup’s Q4 2025 results confirm early stabilization and operational discipline, with clear progress on cost actions and digital transformation. The path to full recovery depends on renewed strength in higher-margin segments and continued execution on technology-driven productivity gains.
Industry Read-Through
Staffing industry peers should note the divergence in recovery pace across geographies and service lines, with enterprise client demand leading stabilization but pressuring gross margins sector-wide. Technology adoption and AI-enabled productivity are becoming table stakes for margin expansion and client differentiation, while flexible work models are gaining traction among both employers and candidates. Operators with diversified portfolios and strong digital infrastructure are best positioned to capture incremental share as recovery broadens, but the lag in permanent and professional staffing recovery remains a sector-wide constraint for margin normalization.