Adecco : 2023 First Quarter Results Release

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

Group press release, Zurich, Switzerland, May 4, 2023

Q1 2023 RESULTS

Delivering strong market share gains, revenue growth and gross margin

Q1 HIGHLIGHTS

• Revenues +8% reported, +3% yoy organic TDA1, with standout performance in LHH Career Transition, +63%, and double-digit growth in Adecco APAC, Germany, Latam, EEMENA
• Broad-basedmarket share gains; Adecco's relative revenue growth +600 bps in Q1
• Sustained strong 21.3% gross margin driven by favourable business mix, supportive solutions mix and pricing
• Robust EBITA margin excl. one-offs of 3.1%, includes impact from the timing of AKKA's consolidation and FESCO JV income, and a moderated contribution from Adecco North America
• Group productivity +2% yoy; Adecco productivity +5% qoq with FTEs -2% qoq
• Akkodis integration well progressed; strong momentum in Consulting
• Operating income €144 million, +3% constant currency
• Basic EPS €0.55; Adjusted EPS €0.72

Denis Machuel, Adecco Group CEO, commented:

"The Group achieved a very good Q1 performance, effectively delivering against our plan, with growth that continued to outpace the market and a gross margin that remained industry-leading. In Adecco, we achieved further significant share gains with outperformance in many key geographies, while dynamic pricing and productivity improvements kept profitability at a solid level. Akkodis continued to perform well including navigating the US tech staffing slowdown, with the team harnessing the newly combined tech and engineering capabilities to secure continued major consulting contract wins, with a healthy pipeline in place. In LHH, our Career Transition business actively captured further corporate restructuring projects resulting in record high performance levels, while Ezra, our digital coaching business, also posted excellent growth.

Looking ahead, we still have a number of areas that require further focus and we are fully concentrated on these, while remaining agile and responsive to market conditions. Overall we see strong momentum from our Simplify-Execute-Grow plan; our teams are equally focused on achieving significant G&A cost reduction, which we expect will begin to flow through in H2, while driving growth and market share."

KEY FIGURES
EUR millions, unless otherwise stated
Q1 23	Q1 22	CHANGE
			Reported	Organic
Revenues	5,892	5,446	+8%	+3%1
Gross profit	1,254	1,151	+9%	+5%
EBITA excl. one-offs2	184	185	-1%	+2%
Operating income	144	146	-1%	+3%3
Net income / (loss)4	92	92	0%
Basic EPS	0.55	0.56	-1%
Adjusted EPS2	0.72	0.76	-5%
Gross profit margin	21.3%	21.1%	+20 bps	+20 bps
SG&A excl. one-offs2 as % of revenues	18.4%	17.8%	+60 bps
EBITA margin excl. one-offs	3.1%	3.4%	-30 bps
Cash flow from operating activities		55
(116)
Cash conversion ratio2	47%	79%
Net debt/EBITDA excl. one-offs2	2.7x	2.4x

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 2022 Annual Report. 3 In constant currency terms. 4 Attributable to Adecco Group shareholders.

Q1 2023 Results

2

Q1 FINANCIAL PERFORMANCE

1. EVENUES

First quarter revenues of EUR 5,892 million were up 3 percent organic and TDA (4 percent organic, 8 percent reported). Currency translation effects had a net negative impact of 50 basis points, M&A activities a net positive impact of 400 basis points, and number of working days a net positive impact of 150 basis points.

At the Global Business Unit level, organically and TDA, Adecco revenues were up 3 percent (5 percent reported), Akkodis revenues rose 4 percent (34 percent reported, including AKKA), and LHH revenues were flat (up 1 percent reported).

Revenues rose across the vast majority of the Group's service lines, led by Career Transition, for which revenues were up 60 percent organically (63 percent reported). Flexible Placement revenues rose 4 percent (4 percent reported), Permanent Placement revenues rose 1 percent (2 percent reported), and Outsourcing, Consulting & Other Services was up 1 percent (25 percent reported, including AKKA). Training, Up-skilling & Re-skilling services revenues were flat (up 2 percent reported).

Q1 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	+3	Adecco	+5	+3	Flexible Placement	+4	+4
TDA	+1.5	Akkodis	+34	+4	Permanent Placement	+2	+1
Currency	-0.5	LHH	+1	0	Career Transition	+63	+60
M&A	+4.o				Outsourcing, Consulting	+25	+1
			& Other Services
					Training, Up-skilling &	+2	0
					Re-skilling
Group	+8	Group	+8	+3	Group	+8	+4

GROSS PROFIT

Gross profit was EUR 1,254 million, up 5 percent organically (9 percent reported) in the first quarter period. Gross margin was 21.3 percent, 20 basis points higher organically (20 basis points reported).

On an organic basis, gross margin expanded 10 basis points in Flexible Placement and 70 basis points in Career Transition. These benefits were partly mitigated by lower contribution in Permanent Placement, down 20 basis points, and from Outsourcing, Consulting & Other, down 40 basis points. Currency effects were 15 basis points positive and M&A 15 basis points negative.

SELLING, GENERAL & ADMINISTRATIVE EXPENSES (SG&A)

SG&A excluding one-offs was EUR 1,086 million, 7 percent higher organically (12 percent reported, including AKKA for the full quarter period, versus from February 24 in the prior year period), and broadly inline with Q4 22 expenses. Full- time Employees ("FTEs") were up 3 percent organically, and 8 percent reported, including AKKA, to 38,747. On a sequential basis, FTEs reduced 2 percent.

Group productivity, in terms of gross profit per FTE, rose 2 percent year-on-year.

Q1 2023 Results

3

EBITA

EBITA excluding one-offs was EUR 184 million, compared to EUR 185 million in the prior year period.

The EBITA margin excluding one-offs was 3.1 percent. The 30 basis points differential year-on-year includes positive impact from the timing of FESCO JV income, which was EUR 16 million this quarter, unfavourable impact from the timing of AKKA's consolidation, and a moderated contribution from Adecco North America.

One-off costs were EUR 12 million, from EUR 19 million in the prior year period, mainly reflecting AKKA integration and related costs.

AMORTISATION OF INTANGIBLES

Amortisation of intangible assets was EUR 28 million in the quarter, from EUR 20 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 144 million, up 3 percent in constant currency terms, due to the aforementioned items.

NET INCOME AND EPS

Net income attributable to Adecco Group shareholders was EUR 92 million, flat year-on-year. The result reflects interest expense of EUR 17 million, and other income/(expenses), net of EUR 1 million. Income taxes amounted to EUR 34 million, with an effective tax rate of 26.8 percent including discrete events.

Basic EPS was EUR 0.55, compared to the prior year period's EUR 0.56. Adjusted EPS, which is the Group's net income excluding a total EUR 28 million for amortisation of intangibles, one-off costs and associated tax effects, divided by basic weighted-average shares outstanding, was EUR 0.72, compared to the prior year period's EUR 0.76.

CASH FLOW AND NET DEBT

Cash flow from operating activities was negative EUR 116 million in the quarter, compared to positive EUR 55 million in the prior year period. Cash flow was impacted by the timing of working capital and by AKKA's consolidation. DSO was 52 days, from 51 days in the prior year period, mainly reflecting a shift in business mix. The rolling last four quarters cash conversion ratio was 47 percent, a robust result during a period of growth and including AKKA.

Net debt was EUR 2,633 million at end Q1 2023. The Net Debt to EBITDA ratio, excluding one-offs was 2.7, in line with management expectations. The Group is firmly committed to decreasing its leverage going forward.

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 78 percent of its outstanding gross debts, no financial covenants on any of its outstanding debts, a well-balanced bond maturity profile and strong liquidity including an undrawn EUR 1,000 million revolving credit facility. In addition, the company has no bonds maturing until end 2024.

Q1 2023 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.

ADECCO

EUR millions, unless otherwise stated			Revenues		EBITA margin excl. one-offs
		Q1 23	Q1 22	CHANGE (% yoy)	Q1 23	CHANGE
				Reported	Organic, TDA		(bps, yoy)
Adecco	4,443	4,250	+5	+3	3.5%	(20)
France	1,178	1,145	+3	+1	3.4%	+10
Northern Europe	579	597	-3	-1	1.8%	+10
DACH	406	363	+12	+9	2.6%	(120)
Southern Europe & EEMENA	1,034	973	+6	+4	5.5%	0
Americas	681	639	+7	-1	0.0%	(170)
APAC	565	533	+6	+10	6.7%	+60

2022 results restated due to the transfer of part of AKKA's US operations to Adecco Americas (Adecco US), effective Jan 1, 2023

Adecco's revenues were up 3 percent in the first quarter, with growth underpinned by resilience in flexible placement volumes. On a year-on-year basis, results from APAC and DACH were notably strong, with APAC revenues at record levels. France grew moderately, while Southern Europe & EEMENA was solid, led by EEMENA. Northern Europe and the Americas were mixed.

Adecco firmly delivered on its ambition to gain market share. It delivered strong relative revenue growth of +600 basis points in Q1, with the majority of countries outpacing the market.

Flexible Placement revenues were 3 percent higher. On a sector basis, growth was led by autos and consulting. Manufacturing activity was robust, while continued rebalancing in logistics weighed on growth by approximately (150) basis points. Revenues were very strong in higher-value solutions: Permanent Placement was up 19 percent and Outsourcing was up 13 percent.

Gross margin was stable, reflecting favourable solutions mix and pricing. The 3.5 percent EBITA margin includes impact from the timing of FESCO JV income, a lower contribution from Adecco North America and select investment to drive growth. Productivity was up 5 percent sequentially, while FTEs were 2 percent lower sequentially.

SEGMENT RESULTS

ADECCO FRANCE

• France delivered moderate revenue growth of 1 percent in the quarter, in line with the market. Growth was robust in flexible placement and QAPA, training and perm activities were strong. In sector terms, autos, healthcare, IT and manufacturing were supportive, while logistics and construction were soft.
• The EBITA margin improvement mainly reflects favourable solutions mix.

ADECCO NORTHERN EUROPE

• Revenues from UK & Ireland were up 1 percent, with strong growth in finance and construction, largely mitigated by subdued activity in logistics. Revenues were 2 percent lower in the Nordics, weighed by lower manufacturing activity, and 2 percent lower in the Benelux. Overall, the region's growth outpaced the market.
• The EBITA margin improvement mainly reflects favourable solutions mix and pricing.

Q1 2023 Results

5

ADECCO DACH

• Revenues in Germany were up 13 percent, strongly outperforming the market. In Switzerland & Austria revenues were flat. Growth was generated mainly from autos, logistics and professional services.
• The EBITA margin development reflects investment to drive growth.

ADECCO SOUTHERN EUROPE & EEMENA

• The region's growth rate, at 4 percent, was boosted by EEMENA, where revenues were up 16 percent. Both Italy and Iberia grew 2 percent, and all areas gained share. In sector terms, autos, retail and consulting developed favourably, while logistics was soft.
• The strong EBITA margin reflects positive solutions mix and pricing.

ADECCO AMERICAS

• Latin America revenues grew 18 percent, a very strong result, with Argentina, Brazil and Mexico performing notably well.
• In North America, revenues were 8 percent lower, impacted by an uncertain macro-economic environment. o In Adecco US, revenue developments outperformed in a challenging market.
  o In operational terms, Adecco US delivered continuous improvement in voluntary turnover levels, continuous improvement in fill rates, and strong sales intensity levels during the quarter.
• The EBITA margin includes impact from lower volumes in Adecco North America.

1. At quarter end, Adecco US management reduced headcount by approximately 10 percent given the altered trading backdrop. Management remains highly focused on implementing the turnaround plan.

ADECCO APAC

• Revenues were 10 percent higher in Japan, up 13 percent in Asia, and up 13 percent in India. Australia & New Zealand revenues were flat, weighed by the end of a large government contract. End-market growth was broad- based, with consulting, IT Tech, retail and manufacturing all performing well.
• The strong EBITA margin includes impact from the FESCO JV, driven by favourable timing of government payments that in 2022 were received in the second quarter. Excluding this impact, margin benefited from positive client and solutions mix, but was affected by the end of vaccination contracts and by changes in social charges in Japan. Management have taken action to offset the additional costs incurred in future quarters.

AKKODIS

EUR millions,			Revenues		EBITA margin excl. one-offs
unless otherwise stated
Q1 23	Q1 22	CHANGE (yoy)	Q1 23	CHANGE
			Reported	Organic, TDA		(bps, yoy)
Akkodis	983	735	+34%	+4%	4.9%	(180)
North EMEA				+8%
South EMEA				+3%
North America				+1%
Akkodis APAC				+5%

AKKA contribution from February 24, 2022

Akkodis 2022 results restated due to the transfer of part of AKKA's US operations to Adecco effective Jan 1, 2023

Akkodis delivered solid revenue growth of 4 percent in the quarter. By segment:

• North EMEA includes Germany and the Nordics. The regions' revenues rose 8 percent, benefiting from high utilisation and good project management. Growth in Germany was +7 percent, led by autos, while Data Respons revenues were up 10 percent.