Randstad NV

AEX:RAND

Q3-2025 Earnings Call

[Operator]

Hello. Welcome to the Randstad Q3 2025 Results Conference Call and Audio Webcast. [Operator Instructions] I will now hand over the word to Sander van't Noordende, the CEO. Mr. Van't Noordende, please go ahead.

[Alexander van't Noordende, executive]

Thank you very much, Alba, for that kind introduction, and good morning, everybody. I'm here with Jorge and our Investor Relations team to share our Q3 results. Let me first say it's been a special quarter as we celebrated our 65-year anniversary. And of course, this milestone is a celebration of our enduring commitment to shaping the world of work and to be a true partner for talent, providing clients with the talent they need to succeed and finding talented jobs and careers they are looking for.

So this quarter, we've been very focused on executing our partner for talent strategy, and I'm pleased to report that our delivery excellence and our digital-first progress, combined with commercial and operational discipline, has led to a good set of results. The market environment in Q3 was in many ways similar to what we saw in Q2. We remain in a stagnant job market. We see more resilience in temp, while as expected, the professional and perm markets remain challenging. From a geographical perspective, we see diverging trends with ongoing recovery in North America and Southern Europe and sustained momentum in APAC.

Condition in Northern Europe remain challenging, and we expect this environment to persist for the remainder of the year. Against this backdrop, we delivered solid results. We achieved revenues of EUR 5.8 billion, an EBITA of EUR 191 million and a margin of 3.3%. Looking forward, we continue to see stabilization, most notably in North America and Southern Europe with temp more resilient than perm. On the other hand, the major Northwestern European countries face ongoing uncertainty in the wake of various domestic challenges. However, I'm proud of the discipline that we have shown in our execution in Q3 with good progress on our operational and enterprise specializations.

And from a commercial point of view, we've grown activity in Randstad operational. We have had some good client wins in enterprise and digital and professional job flow is back at pre-summer levels. And as said, we've been very focused on executing our strategy, and I want to share some meaningful progress that shows things are coming together at scale because that's what we need at Randstad. The main milestone this quarter is clearly Randstad Digital in the U.S. We went live with our talk digital marketplace with a talent community of now over 1 million IT specialists.

We have transformed our business from the classic linear and recruiter-dependent model into one that's community-centric, high velocity and AI-powered. And this does not only result in a better experience for clients and talent, but also in enhanced productivity. And with this move, we immediately add another EUR 1.3 billion in annualized revenues to our digital marketplaces. A second area where we are making great progress through our digital marketplaces is our healthcare growth segment. In the Netherlands, Zorgwerk successfully navigated the transition from freelance to temp, driving strong double-digit growth.

We've expanded our Appel Medical app in France with self-scheduling empowering talent even more. And as mentioned last quarter, we've gone live for healthcare in Belgium. And in the first month, talent take-up was enormous with 50% of shifts filled within 1 hour, of which 30% filled within 10 minutes. And finally, we're making strides in Australia with now over 40,000 self-scheduled shifts. And this growth segment has now generated over EUR 800 million annual revenues through digital marketplaces.

Lastly, I'm pleased with the transformation of our Randstad operational business in the U.S. And as I said before, it's not just the launch of the digital marketplace, it's the business model. Leveraging the power of digital first in combination with talent and delivery centers gives a better experience for talent in terms of flexibility and speed and for clients in terms of fulfillment and quality of talent. Also, it allows us to spend more time with clients because of a higher productivity in delivery. Finally, we run our business at a higher clock speed.

As an example, we now have our supply-demand balance by ZIP code and by role at our fingertips, allowing us to take immediate action where needed. And the good thing is that all of this is already contributing to growth and profitability. So these transformations are taking the way we run our business to a next level with a higher velocity, more data and more precision. We're setting up a new base camp, if you will. And the great thing is it's all powered by next-generation AI embedded in our digital marketplaces.

Combined, our digital marketplaces are now generating approximately EUR 4 billion in annualized revenue, which is 15% of our total business and that's massive. To conclude, we're executing well in fragile markets. We're operating our business with rigor and discipline and at the same time, delivering on our partner for talent strategy with, of course, the best team in the industry. Jorge, over to you.

[Jorge Vazquez, executive]

Thank you, Sander, and good morning, everyone. Let me start by bringing where we left it last time. So overall, the stabilization we highlighted the whole year and in Q2, in particular, continued into Q3. We increased our workforce just to put into perspective by over 10,000 employees in Q3 sequentially compared to last year's similar increase of 4,000 employees, 2.5x. Despite an adverse foreign exchange impact, we'll talk more about it later, we generated more revenue sequentially as well. At the same time, while clients and caution are favoring flexibility, the actual hiring confidence remain extremely low, and our permanent placements felt that impact.

Overall, as the decline in rates ease, like Sander mentioned, combined with our focus on operational efficiency, combined again with a leaner cost structure allowed us to protect profitability and further deleverage. But let's break this down by regions first and starting on Page 8 with North America. In North America, we continue to see good strategic and financial progress this quarter with growth and profitability improving across all specializations. In the U.S., our operational business grew 1% and continues to perform ahead of the market, as we have now implemented our new way of working. Sander alluded to it, but let me remind you, this is not only the marketplace, it's a central delivery for our clients and talent.

It's optimizing roles and responsibilities around specialization, and it's the immediate talent availability and our accommodation footprint. Through digital first and more harmonized ways of working, we continue to generate quarter-after-quarter productivity gains and are able to remove structural costs, operating now already a significantly leaner cost structure. The professional solutions and permanent hiring showed signs of stabilization at a low level, declining still 11% and 18%, as I mentioned before, in permanent.

Digital grew 2%, and we celebrated rollout, as we heard from Sander, of the marketplace. Enterprise was for the whole region, 2% broadly stable sequentially. In Canada, we also saw good underlying improvement and returned to growth in the quarter. The EBITA margin for North America came in at 4.6%, up 100 basis points year-over-year, a solid step towards a structurally higher operating leverage already under the new model. And now let's move on to Northern Europe on Slide 9.

Especially here, we continue to navigate challenging markets. Temp clearly more resilient than perm, but it's too early still to call it the bottom, still fragile and slow paced. We see underlying demand stable, facing tougher comparables nevertheless, with early cyclical pockets continuing to improve, while professionals and perm are still trailing. In the Netherlands, zooming in, growth was more or less stable at a low level of minus 6%. We are responding well to market circumstances. Auto supply chain, hiring freeze across professionals in government, in particular, as well as incoming legislation impact are pressuring in the short term the sentiment.

But on the other hand, we are activating new clients, and we are winning in the healthcare market, where Zorgwerk as mentioned by Sander, is a major winning player. We remain laser-focused. The team is adapting well to these circumstances, and we were able to protect profitability, as you can see in the chart. Germany saw stable quarter-on-quarter movement, as decline rates remained at minus 7%. We see the labor market environment still challenging and unchanged, but our efforts here are paying off. We are back to profitability, as mentioned before already in the last call of Q2, and we are structurally improving our business. Our teams have done very well.

Belgium, virtually unchanged, a slight decline combined with good adaptability. Operational is growing 2%, reflecting improvement in Industrial segment. Like in other countries, professional remains challenging. And as mentioned in May during our Capital Markets Day, a good strategic progress. The healthcare marketplace is received well. And by putting decision-making in the hands of talent, talent immediately self-select and self-service 50% of the shifts in the first hour. If we then look at the Northern European subregions to the right, then we see a mixed picture. Poland is strong growth at 12% again and Switzerland, again at plus 7%, leading the pack, while Nordics remain challenging, subdued at minus 17%.

On the other hand, profitability is almost in line with group average, becoming good contributors and contributing to our diversification. And let's move on to the segment Southern Europe, U.K. and LatAm on Slide 10. In France, we see a story of 2 tails. On one hand, we see decline rates easing, and we continue to see resilience in our industrial pockets. Operational was down 3% year-on-year, but sequentially stable. On the other hand, as many of you, of course, are aware of, ongoing political uncertainty puts pressure on hiring confidence, something we see again weighing on our, in particular, perm business.

Professional, albeit still negative, stepped up to minus 8% from minus 18% in the previous quarter, as we start annualizing the healthcare legislation impact of 2024. Digital trades in line with France group. Despite the decline, good operational discipline and a leaner cost structure enabled us to achieve an EBITA margin of 4%. Italy continues to grow for 6 quarters in a row now. Operational was solid, plus 4%, while we are continuing to diversify our portfolio in growth segments such as digital and healthcare. Profitability came at 5.1%, reflecting key strategic investments, as we're getting ready for the Randstad Talent platform launch.

Iberia remains a key performing market, growing 7%. Spain grew strongly again at 8%. We see the payoff of our investments in growth segments, and we'll keep doing so in many -- with many opportunities still to grow further. Portugal, by the way, is also returning to growth. Furthermore, revenue and profit performance were mixed across other Southern European countries, U.K. and Latin America. U.K., in particular, showed some signs of stabilization, albeit at a low level, minus 8%, with perm still very weak at minus 21%. In Latin America, we still see growth, but the growing uncertainty in Argentina is starting to weigh in.

Now let's move on to now Asia Pacific on Slide 11. Japan. Japan demonstrated again solid growth, plus 6%, combined with strong profitability. Japan is one of the countries that operates talent centers at scale, supporting solid growth in our operational business. Digital continues to do well, and we are ideally positioned to support clients and talent in a structurally candidate scarce market. Australia and New Zealand, good adaptability, while the market conditions remain subdued. India continues to grow double digits, and we continue to invest in growth segments there. Overall, the EBITA margin for APAC was 4.3% in the third quarter, showing good execution, while continuing to invest in growth and a stronger Randstad. That concludes the performance of our key geographies.

So now let me now walk you through our combined financial performance on Slide 13. From a specialization point of view, building on the progress on the last few quarters and as Sander highlighted, operational is now flat. Professional and digital remained stable, while enterprise also saw growth in Q3. We continue to implement new wins from early in the year. And in this quarter, we won considerably 14 notable deals already in addition to the previous ones won earlier in the year. Once again, our gross profit and OpEx, as you can see, were well aligned, but more about that later.

The quarter's EBITA margin was 3.3%, similar profitability margin as last year. Underlying EBITA was EUR 191 million, very close in absolute terms. In reality, actually, the difference being only the adverse FX impact. Now let me unpack the items until net income. Integration costs and one-offs in Q3 amounted to EUR 38 million. This quarter, this was mostly related to harnessing the weak environment we still see in Northern Europe and France, as we continue to drive structural cost reduction. In the amortization and impairment of intangible assets, really nothing relevant, just a regular accounting treatment, as you can see of the PPA of Zorgwerk. Net finance costs, again, just the regular interest payments. And the effective tax rate also for the first 9 months was 30%, within our guidance of 29% to 31% for the full year.

Adjusted net income was EUR 120 million. And with that, let's continue and look at our gross margin bridge on Slide 14. Remember, like-for-like, we need to remove 40 basis points from the divestment of Monster in our line HRS, as we partly already deconsolidated last year in September. So overall, the year-over-year comparable is 70 basis points down. Temp margin is 50 basis points down year-over-year, broadly similar to the decline in Q2 and Q1. The key driver remains mix. Four main points: incremental demand coming primarily from enterprise clients. Operational, as you just saw, is still way more resilient than professional and digital specializations. And we continue to see even into 2025, geographical divergence with Northern Europe still stubbornly challenging and Southern Europe continuing to do better.

Furthermore, this quarter, in particular, we see a significant adverse FX impact in our gross margin and gross profit. Firm contribution was also down 20 basis points, decelerating even further despite annualizing steep declines as key perm markets, as we just mentioned before, remain challenging. In HRS and other, pretty much flat, excluding Monster, if you correct for the 40 basis points mentioned, RPO remains robust, growing 3% as we are finding new ways to revenue in mid-market, new clients and new activities. This is the market at the moment. And overall, we were able to offset a large part of these moving parts, if not all, in our results, which brings me now to the OpEx slide on Slide 15.

And remember, this one is sequentially. Our underlying operating expenses came in at EUR 878 million, down sequentially EUR 34 million organically. Operating discipline and focus on talent service models resulted once more in field productivity gains. Furthermore, we continue to drive structural indirect costs down quarter after quarter. Linking it back to our Capital Markets event, with these additional efforts in the first half of the year, we are now on track to deliver north of EUR 100 million net structural savings already in 2025.

We have incurred restructuring charges once again this quarter, as we continue to address permanently efficiency gains in Northern Europe and France primarily. Remember, the payback of this is lower than one year, as we can already see in action in this quarter. Despite the overall headline number for OpEx, this does include selective growth segment investments in Japan, Italy, Spain, United States, Canada, among others, as well as keeping and raising slightly our strategic investments. Similar to Q1 and Q2, we have successfully maintained our EBITA margin year-over-year, resulting again in a recovery ratio of over 70%. Overall, we continue to position Randstad for the future.

Moving on to our cash and solid balance sheet slides. Our free cash flow for the quarter was positive EUR 244 million, reflecting seasonality and solid cash conversion. Year-to-date, we currently have EUR 385 million free cash flow, up EUR 126 million versus last year. DSO was 56.2 days, up 5 days sequentially. Here again, the very same client mix puts upward pressure with most of the impact accounted by the larger clients. Our leverage ratio decreased to 1.6, and we were pleased to see net debt declined EUR 232 million sequentially from what is a seasonal peak in Q2. And that brings me to the outlook slide on Slide 17.

Let me start with the current momentum. Looking ahead, the overall mood remains cautious, in a way, fragile with mixed signals depending on the country. Volume in early October are in line with the broader quarter. Underlying trends remain largely unchanged, however, with a more pronounced year-over-year FX effect. Looking at gross margin, we expect gross margin to be stable to a notch higher quarter-on-quarter, balancing the seasonal holiday and idle time impact of Q3 versus the strength of manufacturing and logistics associated typically with the end of the year.

Sequentially, we also anticipate a slight increase in operating expenses due to the reversal of Q3 seasonality, partially again balanced out by the ongoing structural cost optimization in the linear Randstad. We expect similar to the previous quarters, at least a similar level of profitability in Q4 compared to Q3, broadly in line with the regular intra-year pattern. And to summarize, let me wrap up. The market stabilization we saw in Q2 continued into Q3. We once again protecting profitability, while funding growth and critical investments in our transformation. As Sander detailed, our focus on delivery excellence and digital first is actively transforming our business model, and we see it.

We are delivering and building the future of Randstad, a more specialized, differentiated Randstad with higher operating leverage from a smarter, more efficient delivery and a continuously leaner cost structure supporting it. And with this, we conclude our prepared remarks, and we open for questions.

[Alexander van't Noordende, executive]

Thank you very much, Jorge. And before we open for questions, maybe one small comment from my side. Last call, I was a little too quick to wrap up the call. So I owe you all an apology for that. So we'll make sure that we have ample time for all your questions this time. Again, apologies. So Alba, let's open it up for some questions.

[Operator]

[Operator Instructions] Our first question comes from Remi Grenu from Morgan Stanley.

[Remi Grenu, analyst]

I hope you can hear me okay. So my question would be a clarification on the outlook. So how should we think about your comments on stable activity in October? Does it mean that we should use the minus 1.2% organic growth in Q3 as a starting base for the upcoming quarter, given the current trading? And if so, I mean, except for the comp base, what has changed versus the trend of gradual but consistent sequential improvement we've seen in the organic growth over the last few quarters?

It feels to me like the comments are becoming a little bit more cautious on the outlook, especially on Europe. So I just want to understand your view on your feeling today versus when you ended Q2 and what you're seeing in terms of outlook for volume of activity, whether it's discussions from clients or signals that you're getting from the market?

[Alexander van't Noordende, executive]

Yes. So thank you, Remi, for that question. We were, of course, expecting that. I'll give the headlines and then I'll leave the fine print to Jorge, so to speak. I mean, by and large, what we're seeing. So we're seeing still a high level of uncertainty in the marketplace, the politics, the geopolitics. We're also seeing AI and AI boom, if you will, that's definitely helping economic activity, particularly in the United States. At the same time, all of that still, and I mentioned it in my comments, results in a stagnant labor market. So there's not a lot of mobility, not a lot of hiring, not a lot of quitting.

We have seen stabilizing demand, so that's good. So by and large, I would say the expectations are more of the same. There is no major catalyst up or down on the horizon now. As always, there will be puts and takes by geography, by industry, by specialization, the usual fluctuations in the business. I mean, over this quarter, we've seen good progress on temp, on operational, on digital in North America, in RPO in Spain, Japan, North America. So we have good nuggets in there. We also have the big challenges, and I would qualify -- I would summarize them as Northwest Europe and professional. That is the 2 big ones that are still out there. So Jorge, I don't know if...

[Jorge Vazquez, executive]

Just a fine print as you call it. So I'll say, if you look -- your question was, does it change? No. So if you look at the starting point of October, I think it's fair to take, let's say, the quarter as a basis. Q3, probably that's why you might feel that Q3 is always a volatile -- has included volatile summer months. September was between minus 1%, minus 2%. But also remember, we're facing more, let's say, difficult comparables as we go into Q4. So that's probably why there is a caution. But overall, pretty much the same unchanging trends.

One overarching comment also for the questions to come. We now really are about fine, fine, fine print. I mean the tone of the last quarters, and again, this quarter, as we now look at Q4, is we are putting so much change in how we operate with discipline and a smarter Randstad, removing structurally leaner -- becoming a leaner company as well on how we support it, that we're looking at Q4 pretty much of an uptick not in profitability, but again, protecting profitability as we've been doing in Q3 and Q2.

[Remi Grenu, analyst]

Yes. And if I just may follow up on one of the things you said on Randstad operational versus professional, it seems like we see continued divergence between the 2. I mean earlier during this earnings season, we heard page flagging that they will stop working under their Page Personnel, which to me feels like it's the most [indiscernible] Randstad Professional, but correct me if I'm wrong. And that closure of Page Personnel is on AI risk and disintermediation risk.

So can you elaborate a little bit more on the weakness you are experiencing in that specialization on your organic growth and how the gross margin in that business has evolved since the mid- to high 20s you were flagging at the 2023 Capital Market Day, I think, that was...

[Alexander van't Noordende, executive]

No. So from a demand point of view, as you note, Remi, it's professional that's challenging. I think to make a clear link between AI and that trend is too early to call. My hunch and view is, given the uncertainty, clients are just very reluctant to hire. So I think it's more that than anything to do with AI. Even the biggest AI proponents and accelerators, the big tech companies, yes, they have fewer people, but it's a percentage or 2, maybe 3 here or there.

It's too early to say that that's all AI. I think it's a bit of an excuse, a bit of a flag, so to speak, but I think it's the market, the market environment, the uncertainty, the hesitance to invest in infrastructure, the hesitant to invest in teams and people. You have a few points more detailed on gross margin and stuff. I think Jorge will comment.

[Jorge Vazquez, executive]

Remi, again, I'm the fine print now. So I think, look, professionals -- but to be clear as well, I mean, we can't celebrate, we're still in decline. But we do celebrate that things have improved again and continue to progress from Q1 to Q2, Q2 to Q3. So let me be also clear there. Our gross margin is stable. And what we do see, and I want to be clear, when we talk about growth segments and investments, in many of these are within our professional specialization.

In United States, in healthcare, in many areas, we continue to invest. So I wouldn't say it's too early. If anything, you see more resilience and more in line with the part where we are in the cycle on the operational specialization, and you see a behavior that is recognizable in professional, but more to do with confidence than necessarily anything else.

[Operator]

The next question comes from Simon LeChipre from Jefferies.

[Simon LeChipre, analyst]

On gross profit margin, I mean, looking at the performance of your Temp business, so minus 50 bps year-on-year. So it is weaker than Q2 despite volumes have been improving. I mean, do you see more competition in the market? Or is there some impact from the growth of your digital platform that would explain this? And if you can comment on what you expect for this -- for the temp gross profit margin in Q4, please?

[Jorge Vazquez, executive]

Yes. So let's be clear. So gross margin this quarter, in particular, there's 2, 3 items. I think it's important to highlight, Simon. One is FX. I mean you can see it from the tables that we disclosed, that's approximately EUR 10 million to EUR 13 million impact that just to put it into perspective, added EUR 5 million, and now we also have to kind of really go into fine, fine, fine print. Every EUR 5 million is 10 basis points. So you see the volatility that these things can have. So FX played an impact. Perm indeed turned out to be even decelerating from already a very low level.

On the temp side, I think actually, we see trends that are pretty similar. It's the market we are operating in, both from a geographical perspective and a specialization/large enterprises trading more or up trading more than smaller companies. The one thing perhaps that we also need to look at and you can see it in the numbers, is in some ways, slightly more idle time than initially expected, but you also see us addressing that. So if you look at some of the one-offs, some of this have been taken on the gross profit cost of service line, meaning that at least we are taking action in making sure that idle time remains within an acceptable level going forward. So looking into Q4, hardly any triggers changing in the market, so pretty much a stabilization and somewhat of a reverse of this seasonality impact.

[Simon LeChipre, analyst]

Okay. And can you comment on the competitive environment? I mean, do you see more competition in some markets?

[Jorge Vazquez, executive]

No. We see competition in markets as we've always seen, Simon. So no, not any different than Q2, Q1 2024 or 2023 for the matter. We remain firm in terms of pricing.

[Operator]

Let's go to our next question. This one comes from Suhasini Varanasi from Goldman Sachs.

[Suhasini Varanasi, analyst]

Just one on SG&A, please. You did have some slightly higher one-off costs below the line and also SG&A came in better than expected in the quarter. Did you get the full benefit of the cost saving measures in Q3? Or is there more to come in Q4?

[Jorge Vazquez, executive]

Yes. So thanks, Suhasini. I mean our OpEx -- again, let's also not forget and I want to be transparent, our gross profit is impacted clearly by FX, but of course, our OpEx as well, still organically significantly down. And as you rightly said, a large part of that, of course, is what we've been doing already in Q1 and Q2, removing, let's say, structurally eliminating costs and becoming a leaner Randstad, and that has a supportive impact of at least, I would say, EUR 15 million to EUR 20 million already this quarter 3. And that will obviously -- that is permanent so that will stay on as we progress through the year.

But as we now address still, let's say, primarily this quarter, Northern Europe and a little bit more in France, that will also support costs into Q4. The flip side of this is in Q3. We always have the seasonal impact of holidays. So it's going to be balancing one with the other as we go into Q4.

[Operator]

Our next question comes from Rory McKenzie from UBS.

[Rory Mckenzie, analyst]

It's Rory here. I want to ask about the cost base as well, please. Obviously, for several quarters now, we've seen the cost base reduce more than expected and restructuring charges higher than expected. What should we expect for the restructuring charge in Q4? And then just zooming out, I think this is the smallest quarterly cost base you've had since 2016. So how do you think about what that means for kind of the shape of Randstad in future years? And what are your thoughts about position in terms of spare capacity, as we think about how you're ready for the next cycle?

[Jorge Vazquez, executive]

Yes. So I'll start and Alexander, if you want to complement anything. Look, Rory, we talked about our Capital Markets event at a very high level, Randstad is becoming a digital-first reorganizing around delivery excellence and our talent service models, which has 2 big consequences on our cost base. One is we become smarter, more efficient in doing our work, and that is basically the power of largely either having digital or having things done at scale instead of a very fragmented way. So we're becoming smarter and more efficient in how we do our work.

The second part is exactly because we digitize and harmonize much more, we can structurally reduce our supporting costs. And these 2 efforts continue to contribute quarter after quarter into what we see today in Q3. It is fair to say on your question, should we expect one-offs in Q4? I mean, by definition, one-offs, we don't forecast them. At the same time, let me also be transparent. Yes, as we continue to roll out our talent platforms, as we continue to optimize how we work, this will mean that we'll find ways to basically make Randstad a leaner company. The advantage of this is that we enter 2026 much stronger. And in the future, not only we are more resilient, but we increased significantly our earnings potential.

[Rory Mckenzie, analyst]

It feels like maybe another link between the ongoing, I guess, gross margin drop and reduction in SG&A is that the changing mix of your demand, not just your model. It feels that structurally, you've got more growth in large enterprise clients, much outsourcing. So does that reveal that clients are looking for just lower and lower cost channels for employment?

[Jorge Vazquez, executive]

Well, I guess anyone is always looking for something more efficient. But what this reveals is the market at the moment and the demand there is at the moment, all the incremental demand, comes primarily from large enterprises, pretty much in line with previous cycles. And as I always say, I use the expression, I mean, in many ways, a large part of our OpEx walks hand-in-hand with our gross margin, our gross profit because indeed, as you know, both the geographical component of it, which is Southern European countries typically have a lower margin, but also a higher conversion than some of our Northern European countries and even North America.

But also on the client side, our large clients have a much more efficient cost to deliver than our traditional SME client base. So yes, there's a component of that. But what I highlight is the structural change underlying going throughout in 2025. That's what is really exciting me for 2026.

[Operator]

Our next question comes from Simon Van Oppen from Kepler Cheuvreux.

[Simon Van Oppen, analyst]

I have a question on France. You delivered quite an improvement in France sequentially in Q3 versus Q2 against the same comparators as last year. Can you talk a little bit more about the third quarter in France in terms of what end markets were performing well and about the quarter itself? Was it back-end loaded? And what was the exit rate in France going into Q4? Was it stable or sequentially improving?

[Jorge Vazquez, executive]

Yes. So Simon, we normally don't necessarily talk too much about exit rates in particular, but was stable. So let's put it like this. And again, France is a bit of a story, I think, of 2 tails. Even geographically -- I mean, Sander were just there, but even geographically, you see a very sharp difference between the western part of the country and the eastern part of the country. But overall, we see actually the market relatively stable, operational continuing to improve.

I think if we continue to double click in that respect, professional for us has been a big step up. Obviously, we had this healthcare changing [ resolution ] last year. As you probably know, we have a strong, very strong healthcare specialization in France. Now we start analyzing that. But also what I think it's quite, let's say, remarkable in our French performance and more what it means for the future is some of the -- as we discussed in Q1 and Q2, some of our one-offs and restructuring charges had already been in France, and we now start seeing the benefit of that hitting our P&L in Q3. So that makes it basically more resilient and the company better prepared for 2026.

[Operator]

Our next question comes from Konrad Zomer from ABN AMRO - ODDO BHF.

[Konrad Zomer, analyst]

I have 2, please. The first one, there's a general election coming up in the Netherlands next week. For the outlook of the Dutch staffing market, do you think a left wing or a right wing government would be beneficial? And my second question, what's, in your view, the single most important argument why Randstad would be a net beneficiary of the AI trends in the labor market as opposed to the risk of some disruption?

[Alexander van't Noordende, executive]

Yes, Konrad, thank you very much for that question. Well, I've learned not to preempt any election around the globe. So I'm not going to do that this time around. We'll see what the outcome is, and we'll deal with that accordingly. I don't think there are major differences in terms of the labor market between the various parties here. Yes, there are some nuances, but I think the direction is not going to change in a major way over the next couple of years, independent of the elections.

So why am I excited about AI? Sorry about that. If we -- if you take a step back -- and you know I'm a bit of a technology officer and that's why I'm so proud about our digital marketplaces and the fact that we now have 15% of our business running through those digital marketplaces. And on top of that, I graduated on AI in 1987. So I couldn't be more excited about AI finally seeing the light of day. And so we see it as a tremendous opportunity. Because if we have our digital marketplaces, we will embed AI, and we are embedding AI, and it's already embedded in those digital marketplaces to do what, to engage with talents, to find talents, to reach out to talents, to do skills assessments, to do interviews, to do onboarding. All of that is going to be part of our digital marketplaces. That's one thing.

The other thing, of course, similarly with clients, when to reach out to clients, how to reach out to clients, et cetera. And then what I like to call the Randstad Digital brain, and this is something focusing on supply/demand. I talked about the map in the U.S. We now know by ZIP code in the U.S., what our supply-demand situation is. So we can use AI to assess and to take action. So AI, let's say, we -- there couldn't be anyone more better positioned in this industry than Randstad to leverage AI, specifically because of our digital-first strategy.

And the good thing there is there's -- not everybody can win that game. A, we're leading. We're probably one of the biggest, if not the biggest company in the digital marketplace space, in the platform space, and we will continue to scale. So we talked a lot about the U.S. We talked a lot about Belgium. We talked about the various businesses in healthcare. For next year, we have on the role Canada, the U.K., Italy, France and the Netherlands to launch digital marketplaces, primarily in our operational business. So this is just the beginning of a major wave.

Why will we be successful? A, we have the investment capacity. You know we have been investing in our business over the last couple of years. We will continue to do that at the same levels. We have the scale to scale those marketplaces. We have the team to make it all happen. And last but not least, we have the wherewithal to make it all happen, and that is not the case for many players. So I think we couldn't be better positioned to benefit from AI, and we will move at pace to get to those benefits.

[Operator]

[Operator Instructions] The next question comes from Marc Zwartsenburg from ING.

[Marc Zwartsenburg, analyst]

A couple of questions left. First, I want to come back to the OpEx line. We had a significant beat in Q3, partly driven then by FX, but your guidance there for Q4 is slightly higher due to seasonality, but yes, a bit difficult to call what the seasonality of looking a few years back. But given that you're making -- continuing to make progress on the rollout of the digital strategy, is it fair to say that maybe also Q4 will be again a better quarter than Q3?

And maybe looking even more important out to '26, should we take the second half of this year in terms of OpEx line as a bit of a starting base like multiplied by 2 to get to the '26 number? Or should we even assume further cost savings continuing to more than offset the price inflation that's currently going on and even have a lower OpEx line than the 2x second half this year? That's my first question. Should we take them one by one.

[Alexander van't Noordende, executive]

Great questions, Marc.

[Jorge Vazquez, executive]

Yes. So on the -- first on Q3 to Q4 and then more on the esoteric question on 2026. On '26 -- on Q3 to Q4, so Marc, first of all, when we say seasonality, 2 important comments. One is -- one important comment. In Q3, we always have an impact from, let's say, holidays accounting and how we actually account for holidays throughout the year. So somewhat artificially, our Q3 OpEx get a little bit of a tailwind from that respect. And we account EUR 10 million to EUR 15 million for that.

That typically, of course, reverses in Q4. At the same time, yes, we continue to do structural cost savings as we just, again, did another -- well, another restructure on top of just normal attrition and management of our cost base, operational discipline. So yes, those 2 things will basically balance. For now, we also highlight that, I mean, we will enter into Q4 still investing in growth segments. We are, in many ways, continuing to roll out our transformation. So I think the best guidance we can give is stable to a notch higher.

As we enter 2026, the mantra is pretty much the same. So as we continue to roll out delivery excellence on our talent platform and capture, let's say, benefits from doing things smarter, both on gaining productivity but also eliminating continuously structurally our cost base. We said it before, the path to achieve that is clear. This will not only build resilience, but we will build a significantly more profitable Randstad on a growth environment. As for the modeling or the more like specific question for 2026, I think your rationale is logic. We'll continue to update anything as we progress into Q4, yes.

And the second question was, Marc?

[Marc Zwartsenburg, analyst]

Yes, just going back on your last remark. So my reasoning is rational to take the second half as a starting point and then add a little bit of savings into 2026. Is that how we should look at it?

[Jorge Vazquez, executive]

Yes. Yes. That's what we mean by we are eliminating and making Randstad a leaner company.

[Alexander van't Noordende, executive]

And then maybe -- sorry, Marc, some comments. So we're going to be focused, of course, in '26 on growth despite; let's say, more of the same in the market. So our growth will be, I call it, our own growth, better fulfillment through delivery excellence, investing in growth segments, speedier fulfillment through our digital marketplaces. All of that will have a positive impact on our top line, if you will.

[Marc Zwartsenburg, analyst]

Yes, now clear. And then focusing on the U.S., your margin did see, let's say, a percentage point improvement year-on-year and also quarter-on-quarter, you see the progress and that totally fits into the digital marketplace strategy. And if you then look at the top line performance, it's slightly better than in Q2 in terms of growth, but only slightly. Is that because the market is simply a little bit weaker to be -- maybe a little bit more market share gains?

[Jorge Vazquez, executive]

Yes. We find ourselves, I mean, ahead of the market so I don't call them -- I think the market hasn't changed. If you do look at things -- and Sander does not like when we highlight this. But if you look, we have significantly higher tough comparables in Q3 and Q4. Logistics picked up significantly last year already in Q3 and Q4. So I think if anything, from a percentage perspective, that's the only thing that you see that perhaps might have be comparable, but the rest doesn't change. We continue to be ahead of market, and we continue to roll out our digital marketplace there.

[Marc Zwartsenburg, analyst]

Can I squeeze in a last one as a follow-up on Konrad's question on the AI because I think...

[Alexander van't Noordende, executive]

Yes, because you're a friend...

[Jorge Vazquez, executive]

Yes, they are friends. All right, Marc, go on then.

[Alexander van't Noordende, executive]

Go ahead.

[Marc Zwartsenburg, analyst]

Yes, so you addressed the AI side for Randstad, the benefits. They're obviously clear. But what about the supply side? How do you see that the repetitive jobs, particularly maybe in the accounting, consulting area that are, yes, maybe disappearing because of AI. And of course, there will be new jobs created, but it always takes a few years to get there. How do you see that part of AI impact?

[Alexander van't Noordende, executive]

Marc, I was talking to a client the other day in the U.S., and he told me 15 years ago, there were one million people in the U.S. in toll booth. They're not there anymore because we all have these digital vignettes today. Yet, the unemployment is at historically low levels. It has ticked up a little bit everywhere, but it's still low. So I guess what I'm saying is we are AI optimists. The world needs a productivity boost, which is good. Also, if you look at some of the research primarily by the World Economic Forum, I mean they say AI will drive the creation of 170 million new jobs, anticipating a net growth of 78 million new jobs.

So I think the history tells us and the issue there, Marc, is always it's easier to say, okay, that task or that job might disappear. It's a little bit more difficult to say what the new jobs are that will arise. But rest assured, we will be there where the new jobs will arise to help our clients find the talent they need. That's our job.

And then one more point maybe on the shorter term, I think the lack of hiring or the low hiring levels these days is more driven by the overall uncertainty in the market than by AI itself. We have the big tech companies, they have fewer jobs left and right, but it's a percentage or 2 or 3. It's not meaningful. And for the rest, everything you read is, yes, AI is great and it's here to stay and it's relevant. But scaling AI, that's yet another thing that will take a bit more time. So in summary, we're optimists, and we will skate as we always say, where the puck is going to be.

Any other questions?

[Operator]

It appears we have no more questions. So I will hand back over the word to Mr. Van't Noordende for any closing remarks.

[Alexander van't Noordende, executive]

Yes. Thank you very much, Alba, for your facilitations. And thanks to all on the call for your questions. Thanks to the team here for doing a good job again this quarter. And a final thank you, of course, to our more than 600,000 talent and Randstad team members for their hard work as truly the best team in the industry.

[Jorge Vazquez, executive]

Thank you.

[Operator]

This concludes the call. Thank you, and have a good day.