SThree warns weak global hiring will persist into 2026, cuts profit outlook

Shares in specialist recruiter SThree plunged about a fifth after the company warned that a prolonged slowdown in global hiring will weigh on profits next year and cut its 2026 profit guidance.

The London-listed group, which focuses on science, technology, engineering and mathematics (STEM) roles, now expects pre-tax profit for the year ending November 2026 to be roughly £10 million, well below analysts' consensus near £30.5 million. SThree said the board was taking a "prudent view" that subdued new-business activity will continue into fiscal 2026 as macroeconomic uncertainty has persisted "for longer than expected."

The group's net fees fell 12% year-on-year in the three months to the end of August. Contract hiring was down 13% over the period and permanent recruitment declined 5%. Regionally, SThree reported particularly sharp falls in the Netherlands, the U.K. and Germany, where net fees dropped 35%, 27% and 21% respectively; the U.S. and Japan also recorded double-digit declines.

SThree said it had seen "positive momentum in certain markets and verticals," and that contract hiring in the U.S. improved in the third quarter, but that these gains had not offset wider weakness driven by recession fears, inflationary pressures and trade tensions across its markets.

The group maintained its target for 2025 pre-tax profits of about £25 million, while attributing the lower 2026 outlook in part to near-term investments aimed at improving long-term competitiveness. Management said it will "further invest in next generation AI to capitalise on the new opportunities emerging in our industry," alongside cost reduction measures intended to deliver future benefits.

Chief Executive Timo Lehne said the business was "well advanced in our journey of embedding agile, future-ready technology deep within the organisation," and that a new digital backbone was producing early signs of scalability. Lehne pointed to improved placement levels among junior cohorts and a reduction in time to first interviews in early adopter markets, while highlighting "actionable, data-driven insights through a unified platform." He added that the tech-enabled model positions SThree to invest in "agentic AI functionality, to deliver quality STEM candidates quicker and more efficiently."

SThree shares dropped about 20% to 147 pence, their lowest level in nearly 17 years, leaving them roughly half their value since the start of 2025. The move reflects investor concern about a prolonged weak hiring cycle in technology and specialist professional markets.

Recruitment groups are typically sensitive to shifts in corporate hiring plans, and SThree's trading update underscores a broader cooling in demand for STEM roles across Europe and North America. While some markets show pockets of recovery, SThree said the overall pace of new-business activity remains subdued and that the board expects that to extend into the next financial year.

The company said planned investments and cost optimisation are intended to "provide an optimised cost base for greater efficiency and scalability, and position the Group at the forefront of the AI opportunity within our industry." The board reiterated confidence in the long-term strategy even as it prepared investors for a weaker short-term profit outcome.