Welcome to ManpowerGroup's Second Quarter Earnings Results Conference Call. This call is being recorded. I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Welcome, and thank you for joining us for our second quarter 2025 conference call. Our Chief Financial Officer, Jack McGinnis, is with me today. For your convenience, we have included our prepared remarks within the Investor Relations section of our website at manpowergroup.com. I will start by going through some of the highlights of the quarter, then Jack will go through the second quarter results and guidance for the third quarter of 2025. I will then share some concluding thoughts before we start our Q&A session. Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements. Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

When we last reported our Q1 results in April, we spoke at a time of heightened uncertainty, particularly surrounding trade negotiations and their potential impact on the global economy. At that point, many organizations were choosing to pause or slow hiring plans as they waited for greater clarity. Since then, we've seen some of this uncertainty begin to ease. Employers facing not only macroeconomic complexity, but also continued geopolitical tensions are proving resilient. What might once have been seen as black swan moments are now being absorbed with greater pragmatism and pace. Our most recent ManpowerGroup employment outlook survey of more than 40,000 employers across 42 countries also supports this view. The global hiring outlook is holding steady, up very slightly year-over-year and just 1 point lower than last quarter. The picture continues to be mixed globally, though, with Latin America and Asia Pacific labor markets performing well, while we see cooling yet resilient hiring intent in North America. In Europe, employers continue to be more cautious, particularly Northern Europe, reflecting its greater exposure to economic and geopolitical headwinds. Turning to our results, we are pleased to see encouraging signs of stabilization in the U.S. and parts of Europe and a return to revenue growth in our Manpower and Talent Solutions brands this quarter. System-wide revenue, which includes our expanding franchise revenue base, was $4.9 billion. Reported revenue was $4.5 billion, down 3% year-over-year in constant currency. Our reported EBITDA for the quarter was $72 million. Adjusting for restructuring costs, EBITDA was $89 million, representing a decrease of 25% in constant currency year-over-year. Reported EBITDA margin was 1.6% and adjusted EBITDA margin was 2.0%. Earnings per basic share was a negative $1.44 on a reported basis, while earnings per diluted share was $0.78 on an adjusted basis. Adjusted earnings per share decreased 43% year-over-year in constant currency. The diversity of our vertical mix from consumer goods to technology and industrials is proving to be a strength in the current environment. Leveraging our proprietary data, we continuously assess real-time market dynamics to identify and act on growth opportunities. We're seeing solid momentum in consumer goods across both the U.S. and Europe alongside encouraging signals in aerospace and defense. At the same time, we're taking swift targeted actions to protect and optimize performance in sectors experiencing headwinds, such as automotive, ensuring we remain focused on profitable growth and long-term resilience. We know client demand is reactive to many factors, and we are staying closely connected to our clients, anticipating their evolving needs and ensuring we remain the strategic workforce partner of choice as technology transformation accelerates. We continue to build a strong enterprise sales pipeline, simplify our organization and manage costs with discipline by prioritizing growth initiatives that will deliver the greatest value. I will now turn it over to Jack to take you through the results in more detail.

Thanks, Jonas. U.S. dollar reported revenues in the second quarter were impacted by foreign currency translation and after adjusting for currency impacts, came in at the high end of our constant currency guidance range. Although conditions remain challenging in certain markets, our revenue trends demonstrate we continue to perform well in the market. Our revenues from franchise offices are significant and are included within system-wide revenues, which equaled $4.9 billion for the quarter. Gross profit margin came in just below the low end of our guidance range, driven by shifts within staffing, reflecting an increased mix of enterprise accounts. As adjusted, EBITDA was $89 million, representing a 25% decrease in constant currency compared to the prior year period. As adjusted, EBITDA margin was 2% and came in at the high end of our guidance range, representing 50 basis points of decline year-over-year. Foreign currency translation drove a favorable impact to the flat U.S. dollar reported revenue trend from the constant currency decrease of 3.5%. Organic days adjusted constant currency revenue decreased 1% in the quarter, which was favorable to our midpoint guidance of a decrease of 2%. Turning to the EPS bridge, reported losses per share was $1.44. Adjusted EPS was $0.78 and came in $0.08 above our guidance midpoint. Walking from our guidance midpoint of $0.70, our results included a stronger operational performance of $0.04, slightly lower weighted average shares due to share repurchases in the quarter, which had a positive impact of $0.01, a foreign currency impact that was $0.01 favorable to our guidance and interest and other expenses, which was $0.02 favorable. Restructuring costs and disposition losses represented $0.43 and noncash goodwill and intangible impairment charges represented $1.79, bringing reported losses per share to $1.44. Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had growth of 1% in the quarter. The Experis brand declined by 9% and the Talent Solutions brand had growth of 1%. Within Talent Solutions, our RPO business experienced a slight year-over-year revenue decrease. Our MSP business recorded a strong revenue increase compared to the prior year, while Right Management experienced a year-over-year mid-single-digit percentage revenue decline in the quarter as outplacement activity continued to slow. Looking at our gross profit margin in detail, our gross margin came in at 16.9% for the quarter. Staffing margin contributed a 30 basis point reduction due to mix shifts towards enterprise accounts. Permanent recruitment was relatively stable at lower levels and contributed a 10 basis point reduction. Other items resulted in a 10 basis point margin decrease. Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 62% of gross profit. Our Experis Professional business comprised 22% and Talent Solutions comprised 16%. During the quarter, our consolidated gross profit decreased by 5% on an organic constant currency basis year-over-year, representing a slight improvement from the 6% decline in the first quarter. Our Manpower brand reported flat organic constant currency gross profit year-over-year, an improvement from the 2% decrease in the first quarter. Gross profit in our Experis brand decreased 14% in organic constant currency year-over-year, a step down from the 11% decrease in the first quarter, driven by the nonrecurrence of health care technology projects. Gross profit in Talent Solutions was flat in organic constant currency year-over-year, representing an improvement from the first quarter decrease of 5%. MSP and RPO experienced similar activity levels from the first quarter, while Right Management gross profit increased slightly. Reported SG&A expense in the quarter was $789 million. SG&A as adjusted was down 3% year-over-year on a constant currency basis and down 2% on an organic constant currency basis. The year-over-year SG&A decreases largely consisted of reductions in operational costs of $10 million. Corporate costs continue to include our back-office transformation spend, and these programs are progressing well with expected medium- and long-term efficiencies. Dispositions represented a decrease of $8 million, while currency changes contributed to a $19 million increase. Adjusted SG&A expenses as a percentage of revenue represented 15.2% in constant currency in the second quarter. Adjustments represented restructuring and disposition losses of $17 million. The goodwill and intangible impairment relates to Switzerland and the U.K., which experienced further market declines in recent quarters. Balancing gross profit trends with strong cost actions to enhance EBITDA margin is one of our highest priorities, and we continue to analyze all aspects of our cost base for additional ongoing efficiency improvements. The Americas segment comprised 23% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 2% year-over-year on a constant currency basis. OUP was $36 million and OUP margin was 3.4%. The U.S. is the largest country in the Americas segment, comprising 64% of segment revenues. Revenue in the U.S. was $674 million during the quarter, representing a 3% days adjusted decrease compared to the prior year. This represents a decline from the 2% increase in the first quarter, as I will explain in the brand commentary. OUP for our U.S. business was $20 million in the quarter. OUP margin was 2.9%. Within the U.S., the Manpower brand comprised 26% of gross profit during the quarter. Revenue for the Manpower brand in the U.S. increased 9% on a days adjusted basis during the quarter, which represented strong market performance and an improvement from the 7% increase in the first quarter. The Experis brand in the U.S. comprised 41% of gross profit in the quarter. Within Experis in the U.S., IT skills comprised approximately 90% of revenues. Experis U.S. revenues decreased 14% as expected on a days adjusted basis during the quarter, down from the 2% decline in the first quarter based on the nonrecurrence of health care technology projects. As the health care technology projects significantly impacted the U.S. Q1 and Q2 trend, the 6-month trend of a decrease of 8% is more indicative of the underlying business activity. Talent Solutions in the U.S. contributed 33% of gross profit and saw a revenue increase of 13% in the quarter, an improvement from the 3% increase in the first quarter, driven by RPO and Right Management. RPO experienced solid revenue growth in the U.S. during the quarter. Both the U.S. MSP and Right Management businesses executed well during the quarter, posting strong double-digit revenue increases year-over-year. In the third quarter of 2025, we expect the overall U.S. business to have a slightly improved low single-digit percentage revenue decline compared to the second quarter. Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.1 billion, representing a 2% decrease in organic constant currency. As adjusted, OUP for the Southern Europe business was $75 million in the quarter and OUP margin was 3.5%. Restructuring charges of $2 million represented actions in France. France revenue comprised 53% of the Southern Europe segment in the quarter and decreased 6% on a days adjusted constant currency basis. As adjusted, OUP for our France business was $34 million in the quarter. Adjusted OUP margin was 3%. France revenue trends came in slightly better than expected during the second quarter, and we expect stable activity trends into the third quarter, representing a slightly improved rate of revenue decline. Revenue in Italy equaled $476 million in the second quarter, reflecting an increase of 4% on a days adjusted constant currency basis. OUP equaled $32 million and OUP margin was 6.7%. Our Italy business is performing well, and we estimate a similar to slightly improved constant currency revenue growth trend in the third quarter compared to the second quarter. Our Northern Europe segment comprised 18% of consolidated revenue in the quarter. Revenue of $794 million represented a 10% decline in constant currency. As adjusted, OUP equaled a $6 million loss. The restructuring charges of $12 million represented actions in the Nordics, the Netherlands and Germany. Our largest market in Northern Europe segment is the U.K., which represented 33% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 13% on a days adjusted constant currency basis. The U.K. market continues to be challenging, and we expect the rate of revenue decline to improve into the third quarter compared to the second quarter. In Germany, revenues decreased 22% on a days adjusted constant currency basis in the quarter. Germany automotive manufacturing trends continue to be weak. In the third quarter, we are expecting a slightly improved year-over-year revenue decline compared to the second quarter trend. The Nordics continued to experience difficult market conditions with revenues decreasing 9% in days adjusted constant currency in the quarter. The Asia Pacific Middle East segment comprises 12% of total company revenue. In the quarter, revenues equaled $525 million, representing an increase of 8% in organic constant currency. Adjusted OUP was $27 million and adjusted OUP margin was 5.1%. Our largest market in the APME segment is Japan, which represented 61% of segment revenues in the quarter. Revenue in Japan grew 7% on a days adjusted constant currency basis. We remain very pleased with the consistent performance of our Japan business, and we expect continued strong revenue growth in the third quarter. I'll now turn to cash flow and balance sheet. In the second quarter, free cash flow represented an outflow of $207 million compared to an outflow of $150 million in the prior year. As in the prior year, timing of payables impacted the level of outflow in the second quarter. Outflows of free cash flow in the first half of the year are typically followed by strong free cash flow in the second half. Free cash flow in the first half of 2025 included outflows for a large tax transition payment, technology prepayments and the impacts of timing of MSP program payments, which typically are not large factors in the second half of the year. At quarter end, days sales outstanding increased by about a day to 56 days. During the second quarter, capital expenditures represented $18 million. During the second quarter, we repurchased 230,000 shares of stock for $12 million. As of June 30, we have 2 million shares remaining for repurchase under the share program approved in August of 2023. Our balance sheet ended the quarter with cash of $290 million and total debt of $1.29 billion. Net debt equaled $996 million at quarter end. Our net debt levels peak at June 30 and historically improve in the second half of the year. Our debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of 3.2 and total debt to total capitalization at 39%. Our debt and credit facility arrangements and related updates are included in the appendix of the presentation. Next, I'll review our outlook for the third quarter of 2025. Based on trends in the second quarter and July activity to date, our forecast anticipates ongoing stability in the majority of our markets and a continuation of existing trends. With that said, we are forecasting earnings per share for the third quarter to be in the range of $0.77 to $0.87. The guidance range also includes a favorable foreign currency impact of $0.03 per share, and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our constant currency revenue guidance range is between a flat and 4% decrease and at the midpoint is a 2% decrease. Considering the impact of a slight increase in business days and dispositions, our organic days adjusted constant currency revenue increase represents a flat revenue trend at the midpoint. EBITDA margin for the third quarter is projected to be down 50 basis points at the midpoint compared to the prior year. We estimate that the effective tax rate for the full year on an adjusted basis to continue to be 46.5%, and the third quarter will be slightly higher at 48%. This incorporates the previously disclosed French tax change for the 1-year period of 2025. In addition, as usual, our guidance does not incorporate restructuring charges or additional share repurchases, and we estimate our weighted average shares to be 47 million. I will now turn it back to Jonas.

Thank you, Jack. We know from our clients that companies are navigating the here and now while also investing in the mid- to long term. GenAI continues to emerge as a powerful catalyst with an eye on productivity gains as well as the opportunity to unleash human potential, allowing people to focus on more value-added tasks. At this stage, most organizations are focused on driving adoption and exploring possibilities. And outside of some specific areas, we are not seeing any structural impact on labor markets at this time, yet the lag from exploration to impact has the potential to be shorter than any tech advancement in history. Our research underscores this stage of development, too. 58% of employers are now investing in AI, but only 26% believe their workforce is ready to use it. This proprietary data is sourced from our Work Intelligence Lab launched in May, an innovative new platform that brings together our real-time labor market insights and predictive research to deliver deep workforce intelligence, enabling our advisory and consulting services for our clients across sectors. We showcased this data in our humans-first, digital-always perspective at VivaTech, the world's leading tech conference held in Paris in June, where we joined tech leaders and policymakers alongside more than 200 clients and prospects. It is clear that the AI readiness gap represents a significant opportunity for us, supporting companies to find new talent and augmenting their skills to be AI-ready. We continue to execute our diversification, digitization, and innovation strategy at pace. At the core of this is accelerating the adoption of new technologies to better support the evolving needs of both our clients and candidates, all positioning us to drive greater productivity and unlock more profitable, sustainable growth in the quarters ahead. For over 5 years, we have been investing in and building our digital core, PowerSuite. PowerSuite is our foundational tech stack that we believe is unrivaled on a global scale in the industry and has enabled the pace of our digital transformation and the rapid development and deployment of our AI capability. As an example, the strength of PowerSuite is enabling the build-out of Sophie AI, our enterprise-wide AI platform, where our AI solutions are being developed, refined, and incorporated into our operational workflows to further enhance our capabilities. Sophie is already being deployed by our Talent Solutions brand, and we are moving quickly to scale so we can continue to take AI-infused products, solutions, and insights into the market across our strong and distinct brands, supporting our clients wherever they are in their transformation journey. Our commitment to transformation extends beyond the technology. It is embedded in how we operate as a responsible, sustainable business, and it's being recognized. In the second quarter, we were proud to receive multiple global accolades. We received Forbes America's #1 rating as the best temp staffing firm. Talent Solutions was again recognized by Everest Group as a global leader in RPO and we were also named to Times World's most Sustainable Companies for the 15th consecutive year. Congratulations, and thank you to all our teams for these honors, which are evidence of the trust placed in us by our clients, candidates, and stakeholders around the world. Operator, please open the line for our Q&A.

Our first question comes from Jeff Silber with BMO Capital Markets.

This is Ryan on for Jeff. You called out in the press release you remain focused on market share gains. I was just wondering who you're gaining share from? And what is your share gain strategy there?

Thanks, Ryan. Yes. No, we've been very pleased to see the progress in how we are competing. We've built a very strong pipeline. And with the available data, we are now able to target our faster-growing industry verticals in a much more precise way. So we are very quickly able to determine which industry verticals are moving forward and growing, which are lagging a bit, and we talked about that in our prepared remarks. And we're very pleased with the outcomes of what we're seeing there. We're also able to deploy AI in what we call our sales targeting engine, which is now able to much better identify leads that are highly likely to generate orders and higher revenue to the tune of 50% higher revenue than when we do this through human intervention only. So it's really augmenting human capabilities with AI. And all of this said, in many of our major markets, we are competing very well from a revenue perspective. And you could also see that in our performance in the second quarter as it relates to where we ended up compared to our initial guide as we looked ahead into the second quarter.

Great. I appreciate that. And then just for my follow-up, you sold a couple of businesses and are moving them to franchise models during the quarter. I imagine those were relatively small in the broader P&L. I was just wondering if you see yourself moving anything else selectively to a franchise model down the road? Or do you think there are any other geographies where it might make sense?

This is something that we've been working on for a number of years, and we've talked about this in the past. There are some markets big and small in some cases, where we really feel a more local approach might be beneficial to grow faster with our brands, but it doesn't have to be a wholly owned subsidiary that executes on that strategy. So yes, you saw us move out of some smaller markets this quarter. We've had some bigger markets in prior quarters. And we're constantly looking at both existing markets, but also new markets in new parts of the world where we think this model could be really beneficial to help us deploy our brands and serve our clients as we look at where the demographic labor market growth is the strongest.

Our next question comes from Manav Patnaik with Barclays.

This is Princy Thomas on for Manav. Just wanted to see if you could talk about U.S. trends and moving pieces, what the true underlying organic growth would be and what you're seeing for outlook?

Sure, Princy. Thanks for the question. This is Jack. I'd be happy to discuss the U.S. trends. Overall, the U.S. business reported a decline of 3% for the quarter, which is slightly better than our expectations from the guidance we provided. We were aware that many of the Experis Healthcare technology project activities would not be recurring in the second quarter, and that was factored in. Despite that, we performed a bit better, largely driven by the Manpower brand, which achieved a growth of 9% this quarter—a very strong performance. As Jonas mentioned earlier, Manpower U.S. is one of the areas where we believe we are leading in the market. On the other hand, the Experis business, as anticipated, experienced a decline of 14% this quarter, reflecting the significant go-live work we had in the same period last year. When looking at the first half of the year overall, we are down about 8% year-over-year, which aligns with trends in the professional staffing industry in the U.S. that continue to show sluggishness. However, we expect some improvement as we move into the third quarter. Those are the main trends. Regarding Talent Solutions, we observed good growth in that area as well this quarter in the U.S. Both Talent Solutions and Manpower experienced positive growth, with Talent Solutions showing significant double-digit growth overall in the U.S.

And as a follow-up, can you remind us of seasonality expectations for 3Q and for the second half of the year typically and how that stacks up compared to the first 2 weeks of July?

Yes. So I'd say in terms of seasonality from Q2 to Q3, we typically do see a bit of an improvement in margin and EBITDA margin sequentially. And you can see in my guide, we have margin improving 10 basis points from the 2.0 we just posted to the 2.1. And I'd say that has generally happened in recent years, not every year, if we're in a period where we're seeing significant declines, and of course, then maybe that's not the case. But this year, as we continue to see some momentum, and you saw my organic days adjusted guide for flat for the third quarter. So with that moving from negative to flat, we are seeing a little momentum, which is helping keep that plus 10 basis points from 2Q to 3Q. So I'd say that's one thing to consider. Of course, we always have holidays that impact the August period in some of our European markets, but nothing is really different this year in that regard. And I think the only other thing in terms of seasonality, and I covered this in my prepared remarks, is when you think about free cash flow. So we do see negative free cash flow typically in the first half of the year over the last 4 years, and that's followed by typically very strong free cash flow in the second half of the year. So that would be the other consideration as you think about seasonality.

Our next question comes from Mark Marcon with Robert W. Baird.

First question has to do just with Northern Europe. You mentioned, Jonas, in the early part of your comments that in Europe, employers continue to be more cautious, reflecting the greater exposure to economic and geopolitical headwinds. I'm wondering what do you think it will take to see some improvement in terms of the revenue trends in Northern Europe, number one? And number two, how should we think about the profitability? And what are your long-term aspirations for your profitability in Northern Europe?

Thanks, Mark. Yes. And I think as you correctly point out, and we also talked about in the prepared remarks, it's really Northern Europe that is having a very tough time. And if you look at the economic performance of some of the main engines, notably Germany, which is in a recessionary environment and you look at many of the other countries that are also struggling with headwinds, although that is really what's driving the performance of our industry and the operations that we have in those markets. Now we believe that this continues to be areas where demand eventually will come back. And to have that happen, it will help when the economic environment improves. And when some of the geopolitical uncertainties that are largely impacting some of those markets heavier than what we've seen in Southern Europe, such as energy costs and others, they start to subside if there is a resolution to the war in Ukraine. So those are some of the elements that from an external factor, we think could help Northern Europe improve. But as you've seen, over time, and we have taken significant actions to rightsize our business in Northern Europe and taken some very significant restructuring actions to make sure that we are rightsizing the business to the demand as we see it today and in the near term. Longer term, we still feel good about Northern Europe and the ability for those markets to come back. One of the areas that make Northern Europe stick out from a profitability perspective is that most of these markets are using a bench model as part of the legislative environment that we are operating in from a staffing perspective. And that's different from what we have from a legislative framework in Southern Europe. So we continue to improve our positioning in the short term and preparing for better times in the long term. And in the meantime, of course, we are taking the actions that we need both to drive greater pipeline growth as well as to make sure that we have the appropriate cost structures for the environment that we're anticipating.

Go ahead, Jack.

No, sorry Mark. I wanted to provide a bit more detail regarding the restructuring we implemented this quarter. We have made significant moves in Northern Europe, with additional actions taken recently. Most of the restructuring efforts were concentrated in Northern Europe, and we anticipate that this will start improving our profitability trend as we benefit from the savings generated by these actions. Regarding your point on long-term margins, as Jonas mentioned, the regulatory environment in many countries and the large enterprise market in the U.K. suggest that Northern Europe may remain below the company average during periods of stability or slight downturn. However, when Northern Europe does grow, it has the potential to align with the overall profitability average of the company. Our goal is to position Northern Europe for future growth, and that is what we are actively working towards.

Great. In France, can you discuss the competitive dynamics? I've been looking at the constant currency revenue trends in comparison to the Prism data and was curious if you have any commentary on that. It seems you're expecting a slight improvement. Given that people are starting to adapt to the tariffs, should we anticipate further improvement in France?

Yes. Mark, I think it's a very good point. My guide does incorporate some sequential improvement in that rate of decline. And to your point, we've seen that from Q1 to Q2, pretty big improvement from a constant currency perspective coming in at minus 6%. And as we said in our prepared remarks, slightly better than we expected. So the way I would characterize it is it's largely stabilized now as we exit the quarter. I think the run rate we see in our guide for Q3 is stable trends through the third quarter. And with that, we will walk into a slightly improved rate of decline. But I would agree with your comments regarding the business environment overall. And as long as it continues to stay relatively stable, I think that's the trend we would expect to continue to see going forward.

Our next question comes from Andrew Steinerman with JPMorgan.

I want to hop back to the Manpower brand in the U.S. that saw 9% days adjusted growth and acceleration from 7% in the first quarter. I have a few questions on that. One, the Manpower brand is both light industrial and clerical. Could you just tell us if there was a divergence between how Light Industrial and clerical did in the second quarter? The second question is with the acceleration of the Manpower brand, do you think that marketplace is picking up? Or do you think that this is just share gains from Manpower? And if it is share gains, how did that get accomplished?

Thanks, Andrew. Yes, I'd say that we're seeing the ability to fulfill and create demand to be a little bit stronger on the manufacturing side. I think you could look at PMI in the U.S., and you can see the gradual improvement we've seen there as well. But in terms of the share gains, I think a lot of this is down to our ability to target the industry verticals and the opportunities in a much more granular and accurate way in real time, a lot of that driven by access to data that we now have in the U.S. as well as globally, thanks to the PowerSuite ability to really predict where demand should be stronger. And that is part of it. I do sense though that the market appears to be improving and market demand is stable to slightly more positive, which we, of course, see as a very positive indicator of a market that is slowly healing from what has been a long period of tough market headwinds. So the team is doing a great job. We are taking share, but we also sense that the market is starting to improve.

Our next question comes from Andy Grobler with BNP.

A couple from me, if I may. Firstly, just going back to Northern Europe, where conditions are clearly very tough. There is some fiscal spending coming in, in Germany at some stage. Are you seeing any change in sentiment or kind of longer-term planning from your larger clients in Germany? And then secondly, on a slightly different topic. There's been lots of changes in kind of the back office and front office systems. Are you still on track for those to complete and to begin to see improvements both in cost and efficiency through 2026?

Yes. Thanks, Andy. I'd say in conversations with clients in Germany, they largely still have a defensive posture in terms of the economic conditions that they are seeing. They would say that they are optimistic on the outlook yet waiting to see these increased funds and the investments into various sectors come through with the expectation that they're not really going to see any material change during 2025, but they're hoping to see a better operating environment in 2026 and beyond. And that is sort of the sentiment from a German employer perspective. So they, amongst all employers in Europe are one of the most conservative and cautious employer base that we speak with because they are fully aware of the difficulties that are cyclical in nature, structural in terms of all of the former growth engines of Germany that are now stuttering, be it automotive, be it their export engine to China and are expecting to see an improved environment, but are not really seeing it in the near term. And of course, that's reflected in how we are seeing the market evolve as well in our own performance. And Jack, maybe you could give some comments around the progress on our transformation efforts.

Yes. No, I'd be happy to. Andy, thanks for the question. I think the short answer is yes. We are tracking very well. I think particularly on the back-office transformation project. Now on PowerSuite back office, we have almost 65% of our revenues going through that platform. And as we've talked about before, that's really enabling us to make some real progress in our shared service centers and our global business centers. So we have 10 countries now moved in, more in flight. So we're definitely tracking to crossing over in the second half of '26, as we've talked about. So we feel really good about the progress we've been making on the transformation.

And on the front, Andy, we have now 90% of our revenues running through the PowerSuite front office with the same global platform. We have over 40 websites. So 70%, 80% of our website traffic is now also being managed through one global platform. So we are making excellent progress overall with our core technology stack. And we're very excited about what that opportunity could give us today as well as into the future.

Our next question comes from Kartik Mehta with Northcoast Research.

Jack, maybe just to get your thoughts on how the quarter trended, if you saw any differences as the quarter progressed.

Thanks, Kartik. The second quarter is always influenced by holidays in May, which can create some differences when you look at the holiday impact from a days adjusted basis. However, when we review some of our major markets, the U.S. shows steady trends, especially after adjusting for the go-live volatility year-over-year; we had significant go-live activity. The Manpower business demonstrated steady improvement over the course of the quarter, which is encouraging. France also showed a similar steady performance, with some progress as the quarter progressed. Looking at July, I previously mentioned that we expect stability entering the third quarter. Italy, our third largest market, continued to show strong progress this quarter. We experienced an improvement in growth rates as we ended the quarter, and we anticipate that Italy will remain strong in the third quarter. Based on the growth trends we observed in the first half of this year, we believe we are currently leading the market in Italy. So, in summary, those are the trends we've witnessed during the quarter.

Jonas, I know you've talked a lot about Northern Europe and U.K. And I'm wondering, is there any structural issue that you're witnessing in the country for temporary staffing as to why maybe the results haven't been as good as they have been in the past? Or is this just a reflection of where the economy is and once the economy improves, the business should improve?

Yes. Thanks, Kartik. We still believe that this is largely due to the economic cycle. And so it's a cyclical evolution. Now any cycle that has been going on for a long time, of course, ultimately will also have elements of structural change in demand because companies are hiring different and new skills. So we still, at this point, think this is a minor issue from that regional perspective. This is all to do with a very tough operating environment due to economic and geopolitical headwinds that is also then impacting the countries that have the bench model. And with the bench model, just as Jack talked about earlier, comes the drawback that when headwinds are hitting those markets in our operations, we deleverage much faster and harder in those markets than we do in other parts of the world. So we would expect those markets to come back once the economy turns around. And in the meantime, of course, we are, from our business perspective, taking all the actions that we need to shore up both top line in areas where we can see growth as well as manage the costs so that we are bringing them back to profitability. And just as Jack says, with our latest actions here, we are anticipating an improvement in our performance into the third quarter also in this region.

Our next question comes from Trevor Romeo with William Blair.

Sorry, Jonas. I wanted to talk more broadly about Europe with the defense and infrastructure spending. I think your direct exposure to defense is pretty low, but I guess just wanted to ask for your thoughts on what the flow-through could be to industrial, manufacturing, and other verticals. Any way to think about what that benefit could be like and how long that could take to materialize?

Yes. Thanks, Trevor. So overall, broadly speaking, the investment in defense and infrastructure into Europe, we feel will have a good effect into the broader economy as well. So not only in those industry verticals, but also into manufacturing, where we, of course, have a very strong presence. And actually, in defense, we have a very strong presence in Europe, in particular, in France and in Italy and Israel and other parts, we are very strongly represented. It is in the lower single-digit revenue numbers as far as our global exposure is concerned. But for Europe, we see our ability to really benefit from these investments and have a material impact to us in Europe when the funds come through to be promising and that's what the teams are working on. So we think these are great industry verticals for us. We are positioning our teams to ensure that we are taking share and continue to be very well represented in those sectors going forward. But there is a delay in terms of when the funds will actually start to flow through in manufacturing activity that will be noticeable. But when we look at how our business, for instance, in Sweden is seeing an increase in demand, how we're seeing an increase in demand in France, we can start to see the beginnings of something which we think will be a great opportunity for our teams.

Great. And then for a follow-up, I just want to ask back to the U.S. manufacturing. How are you thinking about the opportunity for reshoring, I guess, 3 months out from the tariff rollout? Just curious if you're hearing any clients kind of saying that they're increasing confidence or maybe starting to want to increase manufacturing activity more in the U.S.

I believe that clients are beginning to differentiate between the important signals and the noise surrounding tariff negotiations. They're adopting a more practical outlook, thinking that tariffs will eventually be resolved without significantly affecting the economy. With this mindset, many are considering the U.S. as a favorable environment to conduct business and are contemplating expanding their manufacturing operations here. While it's unclear exactly what types or how many jobs will be created—since many will likely require skilled labor and involve automated manufacturing—we see companies expressing intentions to invest in the U.S. and increase their manufacturing capabilities. This trend is promising for our Manpower business, as well as for Experis and our Talent Solutions divisions in the U.S.

Our next question comes from George Tong with Goldman Sachs.

You talked about taking significant actions to rightsize the business in the U.K. from a cost perspective. Are these cost takeouts focused on frontline revenue generators? Or are they more back-office overhead functions?

George, I'd be happy to talk to that. And actually, this quarter was really more focused on France, Netherlands, Germany and the Nordics. So really Netherlands, Nordics and Germany within Northern Europe. U.K. was a focus last quarter as well. But to your question, regardless, it's been a mix candidly. I think there has been parts of the business where we've needed to rightsize producers to the current demand environment. We've been doing that very carefully, particularly when it comes to any sales professionals, we've been extremely cautious. But the reality is where demand has been down, we have adjusted some recruiter levels in some of those key markets. We are doing a lot in terms of overall back office in those markets as well. You can see that in our national head office. So outside of the business, all the real support functions, we've done some pretty significant cost actions to make those businesses more efficient. And you'll see that come through as we talked about in terms of some of the Northern Europe trends overall as we go into the next quarter. But I'd say it continues to be a balance, and we've been very careful on the producer side.

Got it. That's helpful. And then with respect to AI, you mentioned not seeing any structural impact to the labor markets at this time, but that the lag from expiration to impact could be shorter than other tech advancements. In the business, where would you expect to see impact if there were to be one and what percentage of revenue could be affected?

Well, right now, George, what we're doing as many other companies are doing is exploring really the possibilities of how we can augment human capability. And the results so far have been very, very encouraging. I mentioned earlier our sales targeting engine, which we're deploying across Europe right now. It improves our accuracy in determining which prospects are likely to give better revenue opportunities and higher likelihood of generating an order. That's been very helpful. We've deployed through our Sophie AI technology, the ability to have a virtual recruiting assistant that automates the candidate screening, shortlists and ranks the candidates through a chatbot interview, providing great user experiences for the candidates. More than half of the candidates are fulfilling their candidate interview requirements off working hours and their own time, and we see great productivity improvements there as well to the tune of 2 to 3x more effective time used by our producers. And then we have our own assistant in terms of generating and enhancing job description, candidate submittals and things like that, that is really deployed across the world today. And what we're seeing are point-to-point improvements in recruiter tasks. But just as you're seeing with many other companies, whilst we see excellent opportunities in specific tasks that recruiters do, the impact really to have full effect on productivity needs to come through process transformation and leveraging Agentic AI and automating various steps. And I would say we're in early process of that now that we're really seeing some very good progress on the individual tasks and what the impact can be. The last thing I would say, though, George, is that we're really starting to see tangible impact in terms of leveraging our data. And we have a database of tens of billions of data points that we're starting to generate insights for our clients and our candidates and our own internal sales and recruitment team members so that we can generate much better outcomes for our clients. And we're early on in that journey, but we are very encouraged by the progress that we're seeing and the reaction that we're getting from clients, especially in an environment that's moving very, very quickly.

George, I would just add to your point about the impact on revenues from AI, which is still in the early stages. As Jonas has mentioned, we recognize that basic coding skills are more exposed. The crucial aspect for us is that we do not have a surplus of these skill sets. Therefore, the key for us is to redirect our recruiters to focus on the IT skills that are in demand from our clients. Currently, this area does not contribute significantly to our revenues, but moving forward, I believe this will shape our approach to recruiting technology skills.

That's helpful. And just a quick follow-up there. Would you see the clerical part of your business as potentially exposed, so administrative support or clerical from a white-collar perspective? And how big of the business is that?

Our perspective is that AI will enhance human capabilities. Clerical roles have progressed over the years and improved in productivity thanks to technological advancements like the PC and Microsoft tools that boost efficiency in applications like Excel. We view AI in a similar way. It's crucial for us to assess our current position, identify future skill requirements, understand our clients' needs, and adapt to ensure we can develop and provide those skills. This will allow us to assist companies in navigating a fast-evolving environment while also helping individuals secure meaningful and sustainable employment in rapidly growing sectors. This focus defines our business. We are now leveraging data and insights more than ever before. As mentioned in our prepared remarks, this marks a very promising evolution for our business, and we see excellent opportunities ahead in this field.

Our next question comes from Stephanie Moore with Jefferies.

I was hoping you could talk a bit about how perm activity trended as the quarter progressed, if there were any meaningful changes, particularly in the U.S., just given ongoing tariff conversations. And then in the same vein, what your expectations are for perm as you look to the third quarter?

Thanks, Stephanie. And I'd be happy to take that. So the way I would say is perm was relatively stable overall on a consolidated basis. I think if you look at our revenues and GP for perm, slightly higher in Q2 than it was in Q1. I think as we exited Q1, I was asked what do we think the mix of perm will be in terms of total GP for Q2, and I said about 15.5%. And we came in right in that range. We actually came in at 15.3% of our GP. And we see that 15.5% mark as relatively stable now, these trends that we've seen. As we talked about last quarter, we saw a bit of an adjustment in Q1. But now that, that's done, it actually has been quite stable. In terms of key markets, to your question on the U.S. U.S. actually saw kind of flattish perm on an overall basis, very, very slight growth. So that's a sign of stabilization as well. And I'd say in Europe, kind of in line with what we expected. We've seen stable levels, and that's still walking into a slight year-over-year decline in many of those markets. But I think the key point is from activity levels, relatively stable. So a bit of the reset was in Q1, slightly lower. And from that level, we've actually seen it be quite stable. And as we look at Q3, we're kind of projecting more of the same. We're not anticipating that it's going to change dramatically, but we are anticipating stability at these lower levels into the third quarter, and that's what you see in our guidance.

Our next question comes from Josh Chan with UBS.

My first question is about your tone. It seems like you are feeling more positive about the direction of the business. However, it appears that the broader market clarity hasn’t improved significantly. I'm trying to understand how you reconcile these two aspects and where you see the trajectory heading after this stabilization period you mentioned.

Thank you, Josh. As you can see, we are adopting a more positive stance with our outlook for flat organic revenue. This marks a shift from our previous guidance. We are feeling more optimistic largely due to feedback from our clients. We've previously discussed the significance of employer confidence regarding hiring intentions. Our internal data suggests that clients are discerning amid the noise and focusing on more meaningful trends. They seem to be acclimatizing to a consistently noisy environment, which does not always reflect the actual market conditions. Consequently, their future confidence appears to be stabilizing. Typically, stabilization is followed by an improvement in demand, provided that no significant changes occur. In markets like the U.S., we are beginning to witness this shift, especially within Manpower, which is contributing positively. We're observing strong performance in areas of Southern Europe, including Italy and Spain, as well as ongoing strength in the Asia Pacific and Latin America regions. This fosters a greater sense of optimism regarding possible positive developments ahead. While we are not predicting a turning point, which we believe would be unwise, we are noting an improvement in client confidence, which is the fundamental reason for our belief that the market is stabilizing. Although it is stabilizing at lower levels, this provides a base for potential growth opportunities in the future.

That's great color. And then my follow-up quickly on free cash flow. I know, Jack, that free cash flow is usually negative in the first half. But I guess, could you talk to the magnitude of negativity in this first half? And relatedly, do you expect to recoup some of that in the second half? Or do we expect the second half to be relatively normal, so to speak?

Yes. No, thanks for the question, Josh. Yes, when you look at the second quarter, particularly, second quarter has had very large outflows over the last 4 years. And every year, I think over the last 3 years, it's been somewhere in the range of $150 million to what you see here in the current quarter, just above $200 million. So that has been post pandemic, a little bit of the trend that we have been seeing with larger outflows in the second quarter. I think this year, as we talked about last quarter, the first quarter was influenced a bit by the timing of the MSP program. We have one of the largest MSP programs in the world, and that does cause some volatility specifically, and we saw that from Q4 into Q1. With all that being said, we had very strong free cash flow in the second half of last year, we would expect similar dynamics again this year. I think the MSP program usually works itself out over the course of the year. So we'd expect to see that in the second half work itself out as well. So that's the way I would think about free cash flow in the second half.

We have time for one last question, and that question comes from Tobey Sommer with Truist.

This is Tyler Barish on for Tobey. Could you discuss the implications of the cease fire or the end of the Russia-Ukraine war and any other events in Europe that could be sources of upside for you?

Well, thanks, Tyler. I think it's hard to tell exactly what the consequences would be. But of course, having a war going on in Europe is causing great consternation and uncertainty for employers. It is also having negative economic impacts in terms of the price of energy and the ability thus of manufacturing to absorb those costs. So we think a cease fire on the European continent and in particular, on Ukraine would be very beneficial in terms of providing greater confidence for employers in terms of how the European economy can start to show a bit more momentum.

Got it. And then just one final one. On the recent cut to the dividend, what would be conditions that could raise lead to the dividend being raised again?

Yes. On that, I think we talked a little bit about this in the past as well. So the dividend was reset as we announced back in May to the current environment. But we're very proud of our track record of increases in the dividend in a stable to improving environment. So really, that's it. I think as we see the environment improve, then you should expect we would lean in and start to increase the dividend again like we have in the past. And it's really just a matter of time as we continue to see that play out. But as Jonas said, one step at a time, we're guiding to flat currently. And if we continue to see positive momentum going forward, you should expect that would be the case in terms of dividend plans as well.

I'd like to turn the call back over to Jonas Prising for any closing remarks.

Thanks, everyone, for participating in this earnings call. We hope you continue to enjoy a nice summer wherever you are and look forward to speaking with you again on our next earnings call. Thanks, everyone.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.