Adecco : Q3 2022 RESULTS

AD HOC ANNOUNCEMENT pursuant to Art. 53 Listing Rules of SIX Swiss Exchange

Group press release, Zurich, Switzerland, November 3, 2022

Q3 22 RESULTS

Accelerated growth and market share momentum, robust profitability

HIGHLIGHTS

• Revenues +16% reported, +6% yoy organic TDA1
• Growth leadership in Adecco; relative revenue growth +500 bps qoq in Q3, and +1,300 bps year-to-date
• Gross profit +5% organic yoy; Permanent Placement fees +23% yoy
• Strong gross margin of 21.0%, supported by mix and pricing
• Robust EBITA margin excl. one-offs of 3.6%, with conversion ratio and productivity better sequentially. Year-on- year movement reflects Adecco and LHH's investment plans and lower benefit from special items
• Operating income €164 million; Basic EPS €0.65; Adjusted EPS €0.90, -17% yoy
• AKKA on track; >€40 million 2023 revenue synergies won; year-end 2022 total EBITA synergy run-rate >€40 million

ADECCO GROUP WILL HOST A BUSINESS UPDATE TODAY, STARTING 09:30 CET

• The Group's CEO and CFO will provide detailed plans on how they will improve financial performance, deploying three group-wide levers to simplify the organisation, improve execution and prioritise ways to grow market share
• Group G&A cost savings plan announced, targeting €150 million run-rate by mid-2024

Denis Machuel, Adecco Group CEO, commented:

"The Group made strong progress this quarter, as we delivered on our commitment to return to a growth leadership position in the Adecco business. Our Akkodis GBU continued to perform well and the AKKA integration, including synergy capture, remains firmly on track. In LHH, our digital investments showed positive momentum with both Ezra and Hired reporting healthy growth.

Looking ahead, we are determined to accelerate growth across all GBUs, and bring our EBITA margin back to a leading level. With these priorities in mind, today I am unveiling a detailed operational plan to sharpen execution at the Adecco Group. Termed "Future@Work Reloaded", the plan will accelerate implementation of our existing strategy, strengthen resilience in the face of external headwinds, and improve both operational and financial performance. I firmly believe in the quality of our assets, and with this plan, commit to unlocking our potential and driving the Group to achieve a ~6% EBITA margin."

KEY FIGURES
EUR millions, unless otherwise stated	Q3 22	Q3 21	CHANGE
			Reported	Organic
Revenues	6,044	5,220	+16%	+6%1
Gross profit	1,267	1,086	+17%	+5%
EBITA excl. one-offs2	215	250	-14%	-15%3
Operating income	164	196	-16%	-15%3
Net income4	108	133	-19%
Basic EPS	0.65	0.83	-22%
Adj. EPS5	0.90	1.08	-17%
Gross profit margin	21.0%	20.8%	+20 bps	(10) bps
EBITA margin excl. one-offs	3.6%	4.8%	(120) bps
Cash flow from operating activities	110	224	-114
Cash conversion ratio2	46%	69%
Net debt/EBITDA excl. one-offs2	2.6x6	0.2x

Unless otherwise noted, all growth rates in this release refer to same period in prior year. 1 On an organic and trading days adjusted basis. 2 For further details on the use of non-GAAP measures in this release, please refer to the 2021 Annual Report. 3 In constant currency terms. 4 Attributable to Adecco Group shareholders. 5 Please see page 13 for the description of this non-GAAP measure. 6 Adjusted for the acquisition of AKKA (Proforma).

Q3 2022 Results

2

Financial performance

Revenues

Third quarter revenues of EUR 6,044 million were up 6 percent organic and TDA (5 percent organic, 16 percent reported). Currency translation effects had a net positive impact of 300 basis points and M&A activities a net positive impact of 750 basis points. There was a 50 basis points negative impact from the number of working days.

At the Global Business Unit level, organically and TDA, Adecco revenues were up 6 percent (8 percent reported), LHH revenues were flat (up 3 percent reported), and Akkodis revenues rose 8 percent (84 percent reported, including AKKA).

Compared to the prior year, Permanent Placement was up 21 percent organically (28 percent reported), while Outsourcing, Consulting & Other Services was up 18 percent (70 percent reported, with the large differential driven by AKKA's integration), Training, Upskilling & Reskilling services were 10 percent higher (19 percent reported) and Flexible Placement services grew 3 percent (8 percent reported). Strong performance in these services lines was partly mitigated by the counter-cyclical Career Transition services, for whom revenues were 14 percent lower (up 2 percent reported).

Q3 REVENUES (CHANGE YEAR-ON-YEAR)
Group, by growth	Group, by Global Business	Group, by Service Line
driver		Unit
			Reported	Organic,		Reported	Organic
				TDA
Organic, TDA	+6%	Adecco	+8%	+6%	Flexible Placement	+8%	+3%
TDA	-0.5%	LHH	+3%	+0%	Permanent Placement	+28%	+21%
Currency	+3.0%	Akkodis	+84%	+8%	Career Transition	+2%	-14%
M&A	+7.5%				Outsourcing, Consulting	+70%	+18%
			& Other Services
					Training, Upskilling &	+19%	+10%
					Reskilling
Group	+16%	Group	+16%	+6%	Group	+16%	+5%

Gross profit

Gross profit was EUR 1,267 million, up 5 percent organically (17 percent reported) in the third quarter period. Gross margin was 21.0 percent, down 10 basis points organically (up 20 basis points reported). Performance was driven by mix and pricing.

On an organic basis, gross margins benefited from 60 basis points positive contribution in Permanent Placement, and 10 basis points from Outsourcing, Consulting & Other Services. These benefits were fully mitigated by 20 basis points less contribution in Career Transition and 60 basis points lower contribution in Flexible Placement, reflecting lower benefit from special items. Currency effects were 30 basis points positive, and M&A was neutral.

Q3 2022 Results

3

Selling, General & Administrative expenses (SG&A)

SG&A excluding one-offs was EUR 1,059 million, 12 percent higher organically (26 percent reported, including AKKA as well as unfavourable currency impact of ~650 basis points). Full-time Employees ("FTEs") were up 12 percent year-on- year, reflecting investments made in H1 2022 in particular, as well as AKKA.

EBITA

EBITA excluding one-offs was EUR 215 million, compared to EUR 250 million in the prior period.

The EBITA margin excluding one-offs was 3.6 percent, with conversion ratio and productivity better sequentially. The year-on-year movement of -120 basis points mainly reflects Adecco and LHH's investment plans, and lower benefit from special items. Income from the Group's FESCO Adecco JV in China was EUR 7 million.

One-off costs were EUR 23 million, mainly due to AKKA integration and related costs that were recorded at the corporate level.

Amortisation of Intangibles

Amortisation of intangible assets was EUR 28 million in the quarter, from EUR 14 million in the prior year period, with the difference primarily driven by the acquisition of AKKA.

Operating income

The Group generated an operating income of EUR 164 million, 16 percent lower, due to the aforementioned performance drivers.

Net income and EPS

Net income attributable to Adecco Group shareholders was EUR 108 million, from EUR 133 million in the third quarter 2021. The result reflects lower operating income, interest expense of EUR 12 million, and other income/(expenses), net of EUR 7 million. Income taxes amounted to EUR 35 million, with an effective tax rate of 24.1 percent.

Basic EPS was EUR 0.65, 22 percent lower compared to the prior year period's EUR 0.83. Basic weighted-average shares outstanding were 167,094,941. Adjusted EPS, which is the Group's net income excluding a total EUR 42 million for amortisation of intangibles, one-off costs and exceptional tax items, divided by basic weighted-average shares outstanding, was EUR 0.90, 17 percent lower compared to the prior year period's EUR 1.08.

Cash flow and net debt

Cash flow from operating activities was EUR 110 million in the quarter, compared to EUR 224 million in the prior year period. Cash flow was impacted by working capital increase to support the Group's growth and lower net income, due to the aforementioned performance drivers. DSO was 55 days, from 51 days in the prior year period, reflecting mix and residual effects from AKKA's cyber-incident. The rolling last four quarters cash conversion ratio was 46 percent, compared to 69 percent in Q3 2021, mainly reflecting normal working capital increase to support the Group's growth.

Net debt was EUR 2,779 million at end September 2022, from EUR 2,828 million at end June 2022. The Net Debt to EBITDA ratio, excluding one-offs and adjusted for AKKA was 2.6x, in line with management expectations. The Group is firmly committed to decreasing its leverage over the coming quarters.

As a reminder, the Adecco Group issued EUR 1,500 million of senior and subordinated debt in H2 2021 at attractive terms to finance AKKA's acquisition. In addition, the Group has a robust financial structure, with fixed interest rates on 70 percent of its outstanding debts, no financial covenants on any of its outstanding debts, a well-balanced bond maturity profile and strong liquidity including an undrawn EUR 900 million revolving credit facility.

Q3 2022 Results

4

Global Business Unit results

Unless otherwise noted, all growth rates in this section refer to the same period in the prior year, with revenues stated on an organic and trading days adjusted (TDA) basis, and EBITA or EBITA margins stated excluding one-offs.

1. DECCO

EUR millions, unless otherwise					Revenues			EBITA margin excl. one-offs
stated
	Q3 22		Q3 21	CHANGE (yoy)		Q3 22		CHANGE
					Reported	Organic, TDA				(bps, yoy)
Adecco	4,543		4,208	+8%	+6%	4.2%		(120)
France		1,193	+8%	+7%			(210)
	1,293			4.9%
Northern Europe				602	+3%	+4%				(100)
623		3.3%
DACH		413		359	+15%	+13%		6.3%		+70
Southern Europe & EEMENA				975	+3%	+5%				(40)
1,008	5.6%
Americas			592	+14%	+1%			(160)
	673			-0.2%
APAC				487	+10%	+9%				(160)
533	4.6%

Adecco's revenues grew 6 percent in the third quarter, supported by good momentum in France, in addition to strong results from DACH and APAC. Northern Europe and Southern Europe & EEMENA both delivered solid growth, while the Americas were more mixed.

Adecco is delivering on its ambition to drive market share gain by leveraging its H1 investment programme and attained growth leadership versus its major competitors in the third quarter. It delivered relative revenue growth improvement of +500 basis points sequentially in the third quarter and has improved +1,300 basis points year-to-date.

Flexible Placement revenues were 3 percent higher. Growth was strong in the autos, manufacturing, IT tech and healthcare sectors, tempered by continued rebalancing in logistics. Revenue development in Permanent Placement was excellent, up 45 percent, and Outsourcing was very strong, up 28 percent.

Gross margin was supported by mix and pricing. The 4.2 percent EBITA margin was lower year-on-year, mainly reflecting recent investments in headcount as well as lower benefit from special items. Evidencing the shift between Q2 and Q3, from investment phase to driving returns, the unit delivered a healthy conversion ratio of 26 percent, and sequential productivity gains of 3 percent.

Segment results

Adecco France

• France delivered strong revenue growth of 7 percent in the quarter, with volumes consistently outperforming the market, supported by excellent performance in QAPA and from onsite. In sector terms, manufacturing, autos, and healthcare were strong, while logistics were soft.
• The EBITA margin reflects significantly lower contribution from special items than in the prior year period, pricing, and volume benefits as well as recent investment in headcount to drive growth.

Adecco Northern Europe

• Revenues from UK & Ireland were 10 percent higher, benefiting from strong growth in education and finance as well as better dynamics in logistics. In the Nordics, revenues were up 4 percent, led by Sweden, while in Benelux, revenues were 3 percent lower.
• The EBITA margin reflects positive gross margin development and recent investment in headcount.

Q3 2022 Results

5

Adecco DACH

• Revenues in Germany were 11 percent higher, showing good return on investment, supported by a strong upturn in autos, and strength in manufacturing and logistics. Switzerland & Austria grew a very strong 17 percent.
• The strong EBITA margin development reflects favourable volumes, pricing, and mix.

Adecco Southern Europe & EEMENA

• Solid revenue growth was achieved in both Italy, up 6 percent, and Iberia, up 6 percent. The EEMENA region was robust, up 1 percent. Manufacturing and consulting were strong, while logistics moved lower.
• The EBITA margin reflects favourable mix and pricing, as well as recent investment in headcount to support growth.

Adecco Americas

• In Latin America, revenues were up 14 percent, led by Argentina and Brazil and reflecting diminished headwinds in Mexico, which saw significant regulatory impact in September 2021.
• In North America, revenues were 4 percent lower.

1. Revenues in Adecco US improved 2 percent sequentially, evidencing continued traction in the US

turnaround, with revenues from priority growth sectors up 5 percent.

• 1. There was also further improvement in operational metrics such as visits/FTE, order fill rate and employee retention in the quarter.
• The EBITA margin reflects the ongoing turnaround in the US.

Adecco APAC

• The region reported strong revenue growth of 9 percent. Revenues were up 12 percent in Japan, and 18 percent in Asia. In Australia & New Zealand, revenues were 9 percent lower on a tough comparison period. End-market growth was broad-based, with IT Tech, retail, manufacturing, and finance sectors developing notably well.
• The EBITA margin reflects higher volumes, favourable solutions mix and investments in headcount.

LHH

EUR millions,			Revenues		EBITA margin excl. one-offs
unless otherwise stated
Q3 22	Q3 21	CHANGE (yoy)	Q3 22	CHANGE
			Reported	Organic, TDA		(bps, yoy)
LHH	462	449	+3%	+0%	3.7%	(500)
Recruitment Solutions				+0%
Career Transition & Mobility				-11%
Learning & Development				+2%
Pontoon & Other				+7%

The LHH business unit delivered flat revenues in the third quarter. By segment:

• Recruitment Solutions revenues were flat, reflecting easing, albeit still positive development in Permanent Placement, and subdued activity in Flexible Placement. Gross profit for the segment was 7 percent higher, led by Permanent Placement fees, which advanced 14 percent.