Adecco : 2023 Third Quarter Results Presentation

Q3 2023 report

Denis Machuel, CEO & Coram Williams, CFO

2 November 2023

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Disclaimer & note on terminology

Forward-looking statements

Information in this release may involve guidance, expectations, beliefs, plans, intentions or strategies regarding the future. These forward- looking statements involve risks and uncertainties. All forward-looking statements included in this release are based on information available to the Adecco Group AG as of the date of this release, and we assume no duty to update any such forward-looking statements. The forward- looking statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations. Numerous factors could cause or contribute to such differences. Factors that could affect the Company's forward-looking statements include, among other things: global GDP trends and the demand for temporary work; the impact of the global outbreak of novel coronavirus disease (COVID); changes in regulation affecting temporary work; intense competition in the markets in which the Company operates; integration of acquired companies; changes in the Company's ability to attract and retain qualified internal and external personnel or clients; the potential impact of disruptions related to IT; any adverse developments in existing commercial relationships, disputes or legal and tax proceedings.

Non-US GAAP measures used

'Organic growth' excludes the impact of currency, acquisitions and divestitures. This presentation refers to revenue growth yoy on an organic, trading days adjusted basis, unless otherwise stated.

This presentation refers to gross margin development yoy on an organic basis, unless otherwise stated.

'EBITA' refers to operating income before amortisation and impairment of goodwill and intangible assets. This presentation refers to EBITA, EBITA margin and yoy margin development excluding one-offs, unless otherwise stated.

'Net debt' comprises short-term and long-term debt less cash and cash equivalents and short-term investments.

'Free cash flow' comprises cash flows from operating activities less capital expenditures.

'Cash conversion' is calculated as last 4 quarters of free cash flow before interest and tax paid (FCFBIT) divided by last 4 quarters of EBITA excluding one-offs.

'Conversion ratio' is calculated as EBITA excluding one-offs divided by gross profit.

'Net debt to EBITDA' is calculated as net debt at period end divided by last 4 quarters of EBITA excluding one-offs plus depreciation.

Q3 2023 results

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Q3 highlights

Further strong market

share gains

Productivity +6% yoy1

€24 mn G&A savings yoy

Year-endrun-rate G&A

savings ~€90 mn

New CHRO appointed

+930 bps relative growth

Productivity +5% yoy2,

reaches 2021 levels

Consulting +8%

EBITA margin +50 bps yoy

Continued strength in Career Transition, +84%

EBITA margin +430 bps yoy

Q3 2023 results 1 GP / FTE; 2 GP / Selling FTE

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Q3 Client wins

added value for client

Contract renewal, extending existing staffing and training services to outsourcing and perm solutions. 4-year contract, major French government institution.

Selected as primary supplier for staffing including tech staffing, under MSP model.

3-year contract, payment services leader, USA.

Upselling from Tech Staffing to Managed Services, global autos leader. Product & Systems development, Validation & Verification services.

•	Omni-channel approach, leveraging	•	Strong processes, providing
•	branches and digital capabilities	•	visibility and accountability
Superior onsite workforce analytics	Depth and breadth of expertise

• Technical expertise in vehicle engineering
• Strength of transformation solution, processes

Q3 2023 results

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Q3 23 financial overview

Revenues
€5,958 mn	+3% yoy

Adj. EPS

€0.85

-6% yoy

Gross profit

€1,242 mn	+1% yoy
20.8% margin	(10) bps yoy

Balance Sheet

Net debt / EBITDA

2.9x

EBITA excl. one-offs

€235 mn	+14% yoy
4.0% margin	+40 bps yoy

Cash Flow

Op FCF	€282 mn
+€172 mn yoy
Cash conversion	85%

Q3 2023 results

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Adecco: strong execution

Revenues €4.6 bn, +4% yoy

Share of Group 78%

8%	0%	4%	3%	6%	6%	3%	5%	4%
4,207	4,467	4,249	4,504	4,607	4,739	4,443	4,609	4,618
Q3 21	Q4 21	Q1 22	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23

Revenues (EUR mn)		% yoy, organic, TDA

EBITA €189 mn, 4.1% margin

5.4%	5.2%
		3.7%	3.6%	4.2%	3.5%	3.5%	3.5%	4.1%
226	231	159	163	193	166	156	160	189
Q3 21	Q4 21	Q1 22	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23
EBITA, excl. one-offs (EUR mn)	EBITA margin, excl. one-offs

• Relative revenue growth +930 bps in Q3

• Flex +2%, Outsourcing +12%, Perm -2%

organically

• Autos, public sector, logistics strong.

Manufacturing robust, IT Tech weak

• Healthy gross margin: pricing firm, sector

and solutions mix less favourable

Strong growth in APAC, Southern Europe	EBITA margin -10 bps yoy
& EEMENA	Current mix
DACH solid, Americas robust	Improved productivity
Northern Europe, France soft	G&A savings

•	EBITA margin supported by reduced
	SG&A, incl. G&A savings
•	Improved productivity: GP/Selling FTE
	+5% yoy; Selling FTEs -3% yoy

Q3 2023 results

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Adecco: strong relative growth, market share gains in all regions

		Revenues			Market share
By Segment	Share	Q3 23	Change,
	of		Q3 23
	€ mn	TDA yoy
	Group
France	21%	1,249		-2%
Northern Europe	10%	595		-1%
DACH	7%	434		+6%
Southern Europe	18%	1,079		+9%
& EEMENA (SEE)
Americas	12%	678		+1%
APAC	10%	583		+21%
Adecco	78%	4,618		+4%

EBITA and EBITA margin

excl. one-offs

Q3 23	Q3 23	Change,
€ mn	margin	yoy bps
62	5.0%	+10
12	2.0%	(130)
18	4.2%	(210)
61	5.7%	+10
9	1.4%	+110
27	4.6%	0
189	4.1%	(10)

• France: market subdued. Construction, healthcare, autos strong; IT tech, retail weak
• Northern Europe: UK&I +1%, Benelux 0%, Nordics -10%, due to regulatory change. Autos, public sector strong
• DACH: Germany +10%. Autos, logistics, prof. services strong. Sector mix, FTE investment weigh on margin
• SEE: Italy +7%, Iberia +11%, EEMENA +12%. Growth led by logistics, autos
• Americas: LatAm +23%, led by Argentina, Mexico. NAM -8%. US progressing in tough market; achieved profitability
• APAC: Japan +13%, India +19%, Asia +9%. Australia & New Zealand +73%, driven by significant new government contract

Q3 2023 results	Quarterly revenue and EBITA excl. one-offs for 2022 are restated to reflect the transfer of part of AKKA US to Adecco US effective Jan 1, 2023	7
	Please refer to the Appendix for further information

Akkodis: margin uplift driven by agile cost management, synergy capture

Revenues €897 mn, -3% yoy

Share of Group 15%

14%	14%	14%	14%	8%			12%
						8%
				6%	4%
						-1%
							-3%
563	581	736	956	974	999	983	925	897
Q3 21	Q4 21	Q1 22	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23
Revenues (EUR mn)	% yoy, organic, TDA	Consulting

North EMEA 0% yoy

South EMEA +8% yoy

North America (NAM) -16% yoy

APAC +4% yoy

EBITA €56 mn, 6.2% margin

									•
	7.0%	6.7%	6.5%		7.3%
6.3%	5.7%				6.2%	•
					4.9%	5.2%
									•
36	40	50	62	56	73	48	48	56
Q3 21	Q4 21	Q1 22	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23	•
EBITA, excl. one-offs (EUR mn)	EBITA margin, excl. one-offs

EBITA margin +50 bps yoy	•
Good cost mitigation, synergies
Lower volumes	•

Revenues impacted by tech downturn; staffing -19%, consulting +8%

EMEA solid: France strong +9%. Ongoing talent scarcity impacts Germany, +1%; strong comp weighs Data Respons, +2%

NAM weighed by sharp tech downturn. Consulting +24%. Strong cost mitigation, 55% recovery ratio1

Japan strong, +9%. Australia -7%, weighed by tech downturn

EBITA margin reflects agile cost management, strong synergy delivery

Secured ~€59 mn FY23 synergies (in EBITA terms) vs. €50-55 mn target

Q3 2023 results	1 Calculation = yoy change in EBITA contribution / yoy change in Gross Profit contribution. Quarterly revenue and EBITA figures for 2021 are for Modis only. In 2022, AKKA was consolidated 24 Feb; quarterly
revenue and EBITA figures include AKKA's contribution, while the organic growth rates yoy are for Modis only. In addition, quarterly revenue and EBITA excl. one-offs for 2022 have now been restated to reflect 8
	the transfer of part of AKKA US to Adecco US effective Jan 1, 2023. Please refer to the Appendix for further information

LHH: robust performance, continued strength in Career Transition

Revenues €443 mn, +2% yoy

Share of Group 7%

9%
	4%	1%	3%	0%	1%	0%	0%	2%
449	447	461	477	462	472	466	465	443
Q3 21	Q4 21	Q1 22	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23
	Revenues (EUR mn)		% yoy, organic, TDA

EBITA €35 mn, 8.0% margin

8.7%	7.5%	6.5%		5.6%	6.9%	7.6%	8.0%
6.3%		3.7%

		39				26			34			31			18			26				32					36					35
	Q3 21	Q4 21	Q1 22	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23
				EBITA, excl. one-offs (EUR mn)			EBITA margin, excl. one-offs

• RS: markets subdued, particularly US, UK.

Gross profit -22%, excl. US -14%

• CT&M: excellent results, led by US. Strong

new client wins world-wide, solid pipeline

• L&D: Ezra +34%, pipeline strong. General

Assembly, Talent Development challenged

• Pontoon & Other: Tech downturn impacts,

Hired challenged, Pontoon +4%

Recruitment Solutions (RS) -18% yoy

Career Transition & Mobility (CT&M) +84% yoy Learning & Development (L&D) -21% yoy Pontoon & Other -1% yoy

EBITA margin +430 bps yoy

Favourable mix

Cost discipline

•	Margin driven by segment mix, mainly
	CT&M, and cost management
•	Strengthening operational discipline in RS,
	protecting capacity to capture rebound

Q3 2023 results

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Healthy gross margin; solid EBITA margin

Gross profit bridge

(As % of revenues yoy, in bps)

(10)	0	(30)	(70)	+100	+10	(20)
21.0%						20.7%	20.8%

Q3 22	FX	M&A	Flex.	Perm.	Career	Outs,	Training,	Q3 23
			Placement	Placement	Transition	Cons	Up/Re-
						& Other	skilling

Gross Profit (% yoy, organic)	-1%	-23%	+89%	+8%	-19%
As % of Group (approx.)	55%	10%	10%	20%	5%

EBITA bridge, excl. one-offs

(As % of revenues yoy, in bps)

(10)

(10)

+30

+40

(10)

4.0%

3.6%

Q3 22	FX /	Gross Sales	G&A Other1 Q3 23
	M&A	Margin

Profitability drivers

• GP / Selling FTE +6% yoy, Selling FTEs -5% yoy
• €24 mn G&A savings yoy
• SG&A 17.0% of revenues, -50 bps yoy
• SG&A -1% yoy vs. +2% in Q2, +7% in Q1

Q3 2023 results

1 Other can include movements in depreciation, digital and IT expenses, one-time and/or special items and contribution from the FESCO JV

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