Adecco's AI-Fueled Inflection: Perm Stabilizes, Akkodis Returns, and Agentic AI Hits 50%
Q2'26 revenue growth of 5.6%, market share gains, and a clearer path to deleverage—but one-offs and margin mix remain in focus.
ADEN.SW · Earnings Call · 2026-08-06
The turning point: Perm stabilization and operational leverage
Adecco Group delivered a strong Q2, with revenue up 5.6% year-on-year on an organic trading-day adjusted basis—“the group delivered an organic drop-down ratio of 64% and adjusted EPS increased by 31% year-on-year.” — Denis Machuel, Chief Executive Officer (CEO) · 2026-08-06 The margin story is equally important: “We have started to see the first signs of stabilization in permanent placement with the gross profit gradually improving since the start of 2023 and more recently, stabilizing from minus 7% in Q1 '26 to minus 1% in Q2 '26.” — Denis Machuel, Chief Executive Officer (CEO) · 2026-08-06 This inflection matters because perm has been the biggest drag on gross margin for over a year. The group's gross margin came in at 18.6%, down just 20 bps year-on-year (an improvement from -40 bps in Q1), helped by firm pricing, a better mix, and a 20 bps favorable contribution from Outsourcing and Consulting. The EBITDA margin expanded 30 bps to 2.8% on strong operating leverage and disciplined SG&A. The drop-down ratio is a key metric to watch as volumes recover—and 64% for the quarter is a hopeful sign.Agentic AI: From cost savings to competitive advantage
Management has aggressively scaled its agentic AI platform. “In agentic AI, we're making strong progress. Our initial target was to reach 50% of Adecco revenue enabled by agents by year-end. We achieved that target already at the end of Q2 with end-to-end agents live in 10 countries and have now raised our target to 70% of our revenue by the end of 2026.” — Denis Machuel, Chief Executive Officer (CEO) · 2026-08-06 This is a rapid acceleration that aligns with the broader market's shift toward AI-enabled workflows. The company benefits from a fixed-price contract with its AI provider, which CFO Valentina Ficaio confirmed: “we have a very good contract with our AI provider, with a fixed cost for unlimited volumes.” — Denis Machuel, CEO · 2026-05-13 That arrangement removes a cost barrier and lets the company scale adoption without punishing margins. Early results show a 10% fill-rate improvement, a 40% reduction in time-to-submit, and 25–35% productivity gains—all of which are becoming a source of Agentic AI-powered share gain in a fragmented market. Management's confidence in market share is not new; as early as February, Denis Machuel noted, “we have gained market share 14 quarters out of 16 past quarters.” — Denis Machuel, CEO · 2026-02-25Akkodis and the pivot to high-growth end markets
After several quarters of drag, Akkodis returned to growth in Q2, with revenues up 1% organically, driven by strength in aerospace & defense (+20%) and improving execution. The transformation program is showing tangible results: global delivery now exceeds 3,000 FTEs, and the company is selectively divesting non-core assets to fund bolt-on acquisitions in aerospace engineering and India. Management is focusing on attractive end markets, including data centers and defense, where it has won significant contracts. The signs of stabilization in permanent placement are also visible in the gross margin bridge, where the perm drag improved from -20 bps to -15 bps. With Akkodis Germany close to breakeven on a run-rate basis, the second half should benefit from a lower cost base and higher utilization (91% in Q2).Balance sheet and outlook: Deleveraging on track
Net debt to EBITDA improved by 0.5x year-on-year to 2.7x, with management committed to reaching 1.5x or below by end-2027. Cash conversion remained strong at 83% on a trailing twelve-month basis despite working capital absorption from growth. The Q3 outlook calls for a modest sequential gross margin improvement and lower SG&A. However, one-offs rose again in Q2, primarily due to restructuring in Akkodis Germany and Adecco France. As Denis Machuel concluded,That confidence is underpinned by consistent execution and a clearer path to margin recovery—but the market will be watching whether the company can convert AI-driven productivity into sustainable gross margin expansion while managing the one-off noise.We are uniquely placed to serve the current environment, accelerate with AI, and continue to be extremely relevant for the 100,000 clients that we serve every day.