Randstad (RAND: NV), the world’s largest staffing firm, today reported revenue for the first quarter ending 31 March 2021 of €6.62 billion, an increase of 15% on an organic basis compared with €5.53 billion a year ago. Reported revenue was up 19.8% over the year.

The 15% organic revenue growth was down slightly from the annual organic growth of 16.3% seen in Q4 2021. Organic revenue growth was seen across all geographies as well as Randstad’s Global Business. Growth was also broad-based across its segments.

Sander van ‘t Noordende, CEO of Randstad, said, “We have had a strong start to the year, with revenues up 15% and gross profit up 22% (organically), underpinned by our diverse portfolio, scale and market leading insights. This market-leading growth was broad-based across geographies and segments, while our gross margin benefitted from both value based pricing and mix. We saw record high perm and RPO activity levels, while staffing revenue continued its strong momentum increasing by 14% (organic) against the same period last year.”

Gross margin was 20.5% in the quarter while underlying EBITA increased organically by 37% annually to €286 million. Gross margin improved largely because of a higher proportion of permanent placement fees. While the company mentioned a more favourable pricing environment, the temporary margin only lifted by 10 basis points.

The more favourable business mix meant that underlying EBITA growth comfortably beat analysts’ expectations of €265 million, according to Reuters.

Permanent fees increased by 63% over the year with Europe up 49% over the year (Q4 2021: up 52%) and North America up 87% over the year (Q4 2021: up 87%). In the 'Rest of the world' region, permanent fees increased by 62% (Q4 2021: up 88%). Permanent fees made up 13.1% of gross profit.

Despite investment in automation and the trend in remote working, Randstad grew its global office network by 2% compared to Q1 2021 to 8,889 offices, with increases in all major markets apart from France. There was also a considerable increase in staff headcount over the same period, by 23% to 44,180.

Revenue by Geography

All Q1 2022 changes noted below are organic unless otherwise noted.

In North America, revenue was up 13%. Perm fees were up 87%. In Q1 2022, revenue of the combined US businesses was up 11%. US Staffing/Inhouse Services grew by 9%. US Professionals revenue was up 16%. In Canada, revenue was up 28%. EBITA margin for the region came in at 6.3% for the quarter, compared to 3.8% in Q1 last year.

In France, revenue was up 12%. Permanent fees were up 18% compared to last year. Staffing/Inhouse Services revenue was up 11% while the Professionals business was up 14%. EBITA margin was 5.3% compared to 4.8% last year.

In the Netherlands, revenue was up 13%. Overall perm fees were up 55%. The combined Staffing and Inhouse Services business was up 14% while the Professionals business was up 8%. EBITA margin in the Netherlands was 6.5%, compared to 6.4% last year.

In Germany, revenue per working day was up 12%. Permanent fees were up 83% compared to last year. The combined Staffing/Inhouse Services business was up 15%, while Professionals was down 1%. EBITA margin in Germany was 1.3%, compared to 1.0% last year.

Revenue per working day in Italy was up 26%. Overall perm fees were up 73%. EBITA margin was 7.5%, compared to 5.2% last year.

In Belgium & Luxembourg, revenue was up 12%. The Staffing/Inhouse Services business was up 13%. The EBITA margin was 4.8%, compared to 4.4% last year.

In Iberia, revenue per working day was up 17%. Permanent fees were up 81% compared to last year. Staffing/Inhouse Services combined was up 16%. Spain was up 23%, while in Portugal revenue was stable. Overall EBITA margin was 4.8%, compared to 4.4% last year.

Across 'Other European countries', revenue per working day was up 14%. In the UK, revenue was up 19%, while in the Nordics, revenue was up 19% on an organic basis. Revenue in the Swiss business was up 16%. Overall EBITA margin for the 'Other European countries' region was 2.7% compared to 1.9% last year.

Total revenue in the 'Rest of the world' region increased by 15% organically. In Japan, revenue grew 13%. Revenue in Australia/New Zealand was up 23%, while revenue in China increased by 15%. The business in India was up 14%, while Latin American revenue grew 5%, primarily driven by Brazil and Argentina. Overall EBITA margin in this region was 5.3%, compared to 5.4% last year.

In the Global Business total organic revenue growth per working day was up 30%. Randstad Sourceright revenue increased by 40% while Monster revenue was up 9%. Overall EBITA margin came in at -0.3% compared to -0.8% last year.

Revenue by Business Line

Total revenue of permanent placements in the revenue categories 'Staffing', 'Inhouse', and 'Professionals', amounted to €183 million in Q1 2022 (Q1 2021: € 110 million). Revenue of recruitment process outsourcing within Global businesses amounted to €98 million in Q1 2022 (Q1 2021: € 41 million).

During the first quarter of 2022 organic revenue per working day increased by 15% over the year.

“The performance in the quarter gives us a strong platform for the remainder of the year, with volumes in early April indicating a positive continuation of the trends we have seen in the first quarter,” van ‘t Noordende said. “We are confident that our broad range of services, global footprint and continued investment in our digital capabilities, positions us to benefit from the structural drivers underpinning the labor market. While there remains a high degree of macroeconomic uncertainty, our operational flexibility gives us the ability to respond quickly and effectively to changes in market conditions.”

On the war in Ukraine, Randstad stated, “In Q1 2022, the impact on our business was fairly limited”.

In the company’s Q1 results webcast, van ‘t Noordende said “Whilst we are in an unprecedented macro-environment, we have an over-60 year track record of adapting to volatility. Our diverse portfolio, strong and experienced management teams and operational flexibility position us very well to respond quickly and effectively to changing market conditions.”

Second quarter 2022 gross margin and operating expenses are both expected to be broadly in line sequentially. “For Q2 2022, we are steering towards an incremental conversion ratio of 25%-30%,” the group stated.” Randstad added that there will be an adverse 0.1 working day impact in Q2 2022

On 28 March 2022, Randstad announced the acquisition of Avanzo, a Spain-based expert in training and development solutions which reinforces the company's leadership position by boosting its learning and training business. Earlier this month, Randstad France also announced it plans to acquire Side, a temporary staffing platform in France.

Shares in Randstad last traded at €52.40, down 0.23% on the day and 7.31% above its 52-week low of €48.83, set on 13 April 2022. The company has a market cap of €9.66 billion.