SThree’s H1 results have provided more colour on the net fee performance already announced to the market at the Q2 update earlier in June. With the rest of the peer group now reporting their quarter to June trading; the extent of SThree’s net fee outperformance is now clear to see. SThree’s May quarter saw a 12% YoY decline, compared to a mid-30s average for the peers in their quarter to June. Even factoring for the one month disparity still suggests a materially better SThree net fee outcome. As we have discussed in previous research, this net fee outperformance does not come as a surprise. Unlike its peers, SThree is a specialist business whose underlying growth drivers (STEM specialism and flexible working focus), if anything, have been amplified by the current crisis. SThree also enjoys leading positions in a number of key markets outside the UK and has undoubtedly benefited in market share terms. The flip side is the operating leverage impact from investments made over the last year. Heading into this crisis, SThree had been growing headcount in line with its strategic objectives. Tough cost actions have been taken in response to Covid-19 but it is also clear these strategic growth objectives have not been sacrificed. The hit to short term profitability should be set against strong cash-flow performance and a significantly de-risked balance sheet; laying the foundations for recovery in FY21 and beyond.
24 Jul 2020
Standing out from the crowd
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Standing out from the crowd
SThree plc (STEM:LON) | 426 12.8 0.7% | Mkt Cap: 574.9m
- Published:
24 Jul 2020 -
Author:
Iain Daly -
Pages:
10
SThree’s H1 results have provided more colour on the net fee performance already announced to the market at the Q2 update earlier in June. With the rest of the peer group now reporting their quarter to June trading; the extent of SThree’s net fee outperformance is now clear to see. SThree’s May quarter saw a 12% YoY decline, compared to a mid-30s average for the peers in their quarter to June. Even factoring for the one month disparity still suggests a materially better SThree net fee outcome. As we have discussed in previous research, this net fee outperformance does not come as a surprise. Unlike its peers, SThree is a specialist business whose underlying growth drivers (STEM specialism and flexible working focus), if anything, have been amplified by the current crisis. SThree also enjoys leading positions in a number of key markets outside the UK and has undoubtedly benefited in market share terms. The flip side is the operating leverage impact from investments made over the last year. Heading into this crisis, SThree had been growing headcount in line with its strategic objectives. Tough cost actions have been taken in response to Covid-19 but it is also clear these strategic growth objectives have not been sacrificed. The hit to short term profitability should be set against strong cash-flow performance and a significantly de-risked balance sheet; laying the foundations for recovery in FY21 and beyond.