ManpowerGroup (NYSE:MAN) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
ManpowerGroup reported strong Q2 2026 results with revenues of $4.9 billion, a 6% growth in constant currency. The adjusted EBITDA margin was 2.1%, showing improved demand trends.
The Manpower brand delivered its fifth consecutive quarter of growth, with notable strength in the US market and improvements in Northern Europe.
Experis, focused on technology resourcing, showed improvement driven by demand for cloud, migration, and AI capabilities. Talent Solutions also delivered sequential improvement.
A strategic transformation program is underway, targeting $200 million in cost savings by 2028, including the sale of Jefferson Wells US Business.
The company anticipates continued revenue growth in Q3 2026, with EPS guidance between $0.96 to $1.06 and stable gross profit margins.
Management highlighted successful AI integration in sales and recruitment processes, enhancing efficiency and creating new business opportunities.
Notable partnerships with AI companies like SoundHound and IBM WatsonX are expanding market capabilities and creating new revenue streams.
Full Transcript
OPERATOR
Welcome to ManpowerGroup's second quarter earnings results conference call. You'll be put into listen-only mode until the question and answer time begins. This call is being recorded. If you care to drop off now, please do so. I would now like to turn the call over to ManpowerGroup's Chairman and CEO, Mr. Jonas Prising. Sir, you may begin.
Jonas Prising, Chairman & CEO
Good morning and thank you for joining us for our second quarter 2026 conference call. Our Chief Financial Officer Jack McGinnis and our President and Chief Strategy Officer Becky Frankiewicz are both with me today. For your convenience, our prepared remarks are available in the Investor Relations section of our website at manpowergroup.com. I'll begin with a brief overview of the quarter including how we're seeing conditions evolve across our markets and then I'll share a few updates on our transformation as well as our longer-term objectives.
Jackie will then provide an update on client momentum and the opportunities we're capturing with AI, followed by Jack who will walk through the detailed financial results and our guidance for the third quarter of 2026. I'll close with a few comments before we open the line for Q and A. Jack will now cover the safe harbor language.
Jack McGinnis, Executive Vice President and Chief Financial Officer
Good morning everyone. This conference call includes forward-looking statements including statements concerning economic and geopolitical uncertainty which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements.
Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.
Jonas Prising, Chairman & CEO
Thanks Jack. During the second quarter we delivered strong results with revenues ahead of expectations underscored by growing client demand and accelerated delivery of our strategy. Our reported revenues were $4.9 billion representing constant currency growth of 6%. System-wide revenue, which includes our expanding franchise revenue base, was $5.3 billion. Adjusted EBITDA margin of 2.1% reflects improving demand trends and operating leverage. These results reflect good execution across our brands and markets, continued cost discipline and improving demand, continue to leverage our scale and global footprint and focus commercial efforts on verticals where demand is strongest and where we have a clear opportunity to win and capture market share. We are encouraged by our performance across our brands. Specifically within Manpower, demand indicators have strengthened and the brand delivered its fifth consecutive quarter of growth with revenue up 8% in constant currency. We are seeing positive momentum across key verticals including manufacturing, automotive, aerospace, logistics, and retail. In the US, Manpower performance in Q2 was particularly strong driven by accelerated sales activity and a robust pipeline that continues to build.
We're also seeing a meaningful improvement in Northern Europe which was profitable this quarter and represents a significant and broad-based year-over-year improvement. While there's still more progress to make, the actions that we have taken are driving improved performance. Experis, our technology, resourcing and services business, delivered encouraging improvement driven by sustained demand for specialized capabilities in cloud, migration, application development, data, and AI.
Our partnership approach and human plus agent offerings are addressing new market needs, all contributing to a pipeline of higher value opportunities. With clients seeking both agility and deep technical expertise, we expect continued improvement in Q3. Lastly, in Talent Solutions we delivered sequential improvement and are encouraged by the strength of the pipeline. We've sharpened our strategic focus and strengthened how our teams, capabilities, and expertise come together globally.
This alignment enables us to reduce complexity, accelerate innovation, and deliver stronger client outcomes across the portfolio. We continue to actively shape our business towards higher value opportunities where capabilities are most differentiated. Our experienced leadership team remains focused on executing against today's demand and while positioning the company for the opportunities we anticipate tomorrow. And we remain disciplined in our approach to pricing and client selection, supporting stronger returns over time.
Before I hand it over to Becky, I'd like to share a few high-level updates on our transformation. First, at the beginning of the year we told you this was going to be a pivotal moment in our transformation and we are delivering on that commitment. Specifically, we said we would optimize our current cost base and align capacity with client demand. Last quarter we launched our expanded Global Strategic Transformation Program, expected to deliver $200 million in permanent cost savings in 2028.
This program will create a more efficient cost structure while positioning our brands to capture market share. We have a clear path to deliver these savings and we are making strong progress. Second, we committed to using the same discipline to review our portfolio to ensure we have the right asset base. As a result, the sale of Jefferson Wells US Business was completed during the second quarter. A concrete example of prioritizing investment and management attention behind the core higher return opportunities where we see the greatest potential to create value.
Taken together, our transformational cost out and portfolio optimization actions have put us in a better position to generate operating leverage as demand continues to improve. Looking ahead, we're committed to delivering apace. Our first priority is to execute and continue to drive momentum across the business including the strong performance from Manpower and tangible improvement across Experis and Talent Solutions. This requires focusing our commercial initiatives on the regions and verticals that will drive the greatest demand.
We will equally stay focused on our longer-term ambition to position ManpowerGroup for durable, profitable growth and through the cycle. This includes sequencing the global rollout of the Cost Transformation program and deliver our $200 million cost target on schedule. Continuing to redesign our front office sales and recruitment processes to enhance productivity and leveraging AI to create sustainable commercial opportunities to accelerate growth.
I will now turn it over to Becky to go deeper on how we're enhancing productivity and commercializing our AI capabilities.
Becky Frankiewicz, Chief Commercial Officer (CCO), President NA
Thanks Jonas. As Jonas just shared, we are focused on accelerating how we leverage AI in two key areas to enhance effectiveness within our own organization and to create commercial opportunities that become growth multipliers. First, as I discussed last quarter, AI-centric enhancements are critical to our ability to accelerate our go-to-market strategy, identify the highest value opportunities and capture incremental revenue. We continue to scale our AI-powered sales targeting engine and we are encouraged by how it is influencing organic growth by pinpointing the highest probability opportunities so our teams can focus their efforts where sales conversion and revenue impact are the highest. We are leveraging this tool in many of our largest markets and are on track to scale to almost 70% of revenues by year end. The other half of the effectiveness equation is creating a differentiated talent experience critical to attracting and retaining the skilled associates and consultants our clients value most. We are continuing to advance our AI-powered screening and interview experiences to meet talent where and when works for them.
We are on track to scale to 70% of revenues by year end, improving fill rates and accelerating time to hire as it relates to new commercial opportunities. We are leveraging AI as a growth multiplier and are focused on anticipating fast-moving client buying behavior and responding at speed. Over the last few weeks, I've been meeting with many of our clients across Europe and around the world. Continue to hear that organizations across industries are focused on how AI can be deployed responsibly to add capability and improve business outcomes.
This is creating a new set of opportunities for ManpowerGroup and we are capturing these opportunities with a partnership approach that we believe is a new value creation lever. By building new go-to-market alliances with industry leaders that bring complementary expertise, we are creating net new revenue streams that expand our addressable market and accelerate speed to solution in an efficient and cost-effective way. We believe the next decade of AI adoption will be defined by partnerships that combine technology talent and workforce expertise and we are intentional on building these relationships.
Now, last quarter you heard me discuss our partnership with SoundHound AI, the global leader in voice and conversational AI. Since then, we have continued to build momentum and have begun converting opportunities into customer engagements. We are seeing increased traction within our healthcare clients as organizations look to deploy conversational AI to improve both customer and employee experiences, and we are making good progress expanding these opportunities beyond the US.
Last week we expanded our partnership capabilities with the launch of Accelerate Workflow built with IBM WatsonX Orchestrate. IBM provides the trusted underlying AI technology while Experis helps clients to unlock value, designing the workflow, implementing the solution, providing the talent, and helping to govern and manage the deployment over time. Unlike traditional AI consulting approaches, Experis brings together technology implementation, workforce transformation and specialized AI talent paired with our depth of human capabilities to help organizations move beyond AI pilots and into scalable execution.
These projects are particularly attractive because they combine high-value consulting, AI implementation and ongoing managed services. Our competitive advantage is no longer defined by technology alone; it comes from orchestrating an ecosystem of strategic partners and combining technology talent and services into integrated solutions that accelerate customer outcomes. We are seeing encouraging pipeline momentum as this partnership strategy continues to scale.
As we continue to strengthen relationships with organizations such as SoundHound AI, IBM, Accenture, SAP, and Microsoft, among others, we are broadening our capability, creating new routes to market and positioning the business for future growth. I look forward to updating you on our progress in future quarters. I will now turn it over to Jack.
Jack McGinnis, Executive Vice President and Chief Financial Officer
In the second quarter, we delivered reported revenues of 4.9 billion. System-wide revenue, including franchises, was 5.3 billion. Our second quarter revenue results represented constant currency growth of 6% US dollar. Reported revenues after adjusting for currency impacts came in above our constant currency guidance range. Gross profit margin came in within our guidance range and considering the impact of the US Jefferson Wells disposition was organically very close to the midpoint of our guidance.
As adjusted, EBITDA was 103 million, representing a 15% increase in constant currency compared to the prior year period. As adjusted, EBITDA margin was 2.1%, up 10 basis points year over year and came in at the midpoint of our guidance range. Organic days adjusted constant currency revenue increased 6% in the quarter, which was well above our midpoint guidance range of 3% growth driven by our Manpower business. Turning to the EPS bridge, reported earnings per share for the quarter was $1.13.
Adjusted EPS was $0.99 and came in above our guidance midpoint. Walking from our guidance midpoint of $0.96, our results included a better operational performance of $0.04 and a foreign currency impact that was $0.01 worse. Restructuring costs and strategic transformation program costs represented $0.23, and the gain on sale of Jefferson Wells US business and liquidation of a discontinued business represented a $0.37 positive impact. Next, let's review our revenue by business line year over year on an organic constant currency basis.
The Manpower brand had a very strong growth of 8% in the quarter, up sequentially from the 6% growth in the first quarter. The Experis brand declined by 2%, an improvement from the 9% decline in the first quarter. The Talent Solutions brand was flat year over year, an improvement from the first quarter decline of 1%. Within Talent Solutions, our RPO business continued the sequential revenue trend improvement from Q1 with stable revenue levels from the previous quarter.
Our MSP business saw continued solid revenue growth while REIT management declined slightly during the quarter. Looking at our gross profit margin in detail, our gross margin came in at 16.1% for the quarter. Staffing margin improved sequentially from the first quarter and on a year over year basis represented a 60 basis point reduction primarily due to mix shifts in the second quarter. This is an improvement from the 70 basis point decline in the first quarter.
The staffing margin decrease was also impacted by the sale of the higher margin US Jefferson Wells business early in the quarter and considering this was very close to the midpoint of our guidance. Permanent recruitment activity resulted in a 10 basis point decline. Other services resulted in a 10 basis point margin decrease. Moving on to our gross profit by business line during the quarter, the Manpower brand comprised 65% of gross profit. Our experienced professional business comprised 19% and Talent Solutions comprised 16% during the quarter.
Our consolidated gross profit grew by 1% on an organic constant currency basis year over year, an improvement from the 3% decline in the first quarter. Our Manpower brand grew 5% in organic constant currency gross profit year over year, an improvement from the flat first quarter year over year trend. Gross profit in our Experis brand decreased 6% in organic constant currency year over year, an improvement from the 11% decrease in the first quarter.
Gross profit in Talent Solutions declined 4% in organic constant currency year over year, which was an improvement from the 5% decrease in the first quarter. The improvement in trend was driven by RPO while MSP trends also improved from the first quarter. Bright management had gross profit declines in the quarter on decreased outplacement activity. Reported SG&A expense in the quarter was 668 million. SG&A as adjusted was down 1% on a constant currency basis.
The year over year constant currency decreases largely consisted of reductions in operational costs of 5 million, dispositions represented a decrease of 4 million, while currency changes contributed to a $10 million increase. Adjusted SG&A expenses as a percentage of revenue represented 14.1% in constant currency in the second quarter. Adjustments represented restructuring and strategic transformation program charges of 14 million, which were more than offset by gain on sale of Jefferson Wells US business of $30 million.
Balancing gross profit growth with strong cost controls while funding ongoing transformation to enhance EBITDA margin in both the short and long term remains one of our highest priorities. We continue to estimate restructuring and strategic transformation program charges to range from 10 to 15 million on average per quarter through the end of the year. The Americas segment comprised 25% of consolidated revenue. Revenue in the quarter was 1.2 billion, representing an increase of 14% year over year on an organic constant currency basis.
As adjusted, OUP was 45 million and OUP margin was 3.7%. Restructuring charges of 3 million represented actions in the US and Mexico. The US is the largest country in the Americas segment, comprising 59% of segment revenues. Revenue in the US was 714 million during the quarter, representing an 8% organic days adjusted increase compared to the prior year. OUP as adjusted for our US business was 24 million in the quarter. OUP margin as adjusted was 3.3%.
Within the US, the Manpower brand comprised 29% of gross profit during the quarter. Revenue for the Manpower brand in the US increased 16% on a days adjusted basis during the quarter, which represented strong market performance with eight consecutive quarters of growth and a significant step up from the 5% increase in the first quarter. The Experis brand in the US comprised 38% of gross profit in the quarter. Within Experis in the US, substantially all the revenues represent IT resourcing and services.
Experis US revenue was flat on an organic days adjusted basis during the quarter, an improvement from the 15% decline in the first quarter as the business anniversaried strong healthcare IT projects in the prior year. Excluding the impact of healthcare IT project volumes in the second quarter, Experis US revenue decreased 3% on a days adjusted basis during the quarter, an improvement from the first quarter trend. The Experis US business expects a continued improvement in revenue trend into the third quarter.
Talent Solutions in the US contributed 33% of gross profit and saw a 6% increase in revenue year over year in the quarter, reflecting an increased rate of growth from the first quarter driven by strong growth in both RPO and MSP during the second quarter. This was partially offset by declines in REIT management on lower outplacement activity in the quarter. Overall, the US had strong organic revenue growth in the second quarter and we expect a similar rate of growth in the third quarter.
Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was 2.3 billion, representing 4% growth in constant currency during the second quarter. As adjusted, OUP for our Southern Europe business was 79 million in the quarter and OUP margin was 3.4%. Restructuring charges of 4 million represented actions taken largely in France and Italy. France revenue equaled 1.2 billion and comprised 51% of the Southern Europe segment in the quarter and was flat on a constant currency basis.
As adjusted, OUP for our France business was 31 million in the quarter. Adjusted OUP margin was 2.6%. France revenue trends were stable during the second quarter and we expect a similar rate of revenue trend of flat to slight growth in the third quarter. Revenue in Italy equaled $522 million in the second quarter, reflecting an increase of 6% on a day's adjusted constant currency basis. OUP as adjusted equaled 35 million and OUP margin was 6.7%. Our Italy business is executing well and leads in the market.
We estimate low to mid single digit percentage revenue growth in the third quarter. Our Northern Europe segment comprised 17% of consolidated revenue in the quarter. Revenue of 825 million represented a 2% increase in organic constant currency. OUP was 2 million in the quarter. This represents year over year OUP improvement during the last three quarters, reflecting the outcome of the significant actions taken in previous quarters. Our largest market in the Northern Europe segment is the UK, which represented 33% of segment revenues in the quarter.
During the quarter, the UK crossed back over to growth with revenues increasing 2% on a day's adjusted constant currency basis. The remaining countries in the region progressed as expected with largely stable to improving revenue trends. The Asia Pacific Middle East segment comprises 11% of total company revenue in the quarter. Revenues equaled 519 million, representing an increase of 5% in constant currency. OUP was 24 million and OUP margin was 4.6%.
Our largest market in the APME segment is Japan, which represented 57% of segment revenues in the quarter. Revenue in Japan grew 4% on a day's adjusted constant currency basis and we expect a similar level of revenue growth in the third quarter. I'll now turn to cash flow and balance sheet. In the second quarter, free cash flow represented an outflow of 9 million compared to an outflow of 207 million in the prior year on a year to date basis. This represents significant year over year improvement in the trend and we expect strong free cash flow during the second half.
At quarter end, day sales outstanding was 56 days, flat from the prior year. During the second quarter, capital expenditures represented 6 million and we did not repurchase any shares. Our balance sheet ended the quarter with cash of 181 million and total debt of 1.04 billion. Net debt equaled 863 million at quarter end and improved sequentially as we allocated capital from business sales to pay down our revolver, which typically peaks in usage at June 30.
Our debt ratios at quarter end reflect total gross debt to trailing twelve months, adjusted EBITDA of 2.5 and total debt to total capitalization at 33%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation. Next, I'll review our outlook for the third quarter of 2026. We are forecasting earnings per share for the third quarter to be in the range of $0.96 to $1.06. The guidance range also includes an unfavorable foreign currency impact of $0.02 per share and our foreign currency translation rate.
Estimates are disclosed at the bottom of the guidance slide. Our organic days adjusted constant currency revenue guidance shows a continuation of the 6% growth achieved in the second quarter again into the third quarter at the midpoint on a constant currency basis, which is impacted by the second quarter business disposition. The ranges between a 3% increase and a 7% increase at the midpoint is a 5% increase. Business days and the impact of dispositions adjust our organic days adjusted constant currency revenue growth estimate to 6% at the midpoint.
We anticipate stable underlying staffing margin into the third quarter and estimated GP margin of 16% at the midpoint, which includes a full quarter impact of the higher margin U.S. business disposition and the current business mix. EBITDA margin for the third quarter is projected to be up 10 basis points at the midpoint compared to the prior year. We estimate that the effective tax rate for the third quarter will be 44%. I will continue to carve out any restructuring and global strategic transformation program costs as they are not included in the underlying guidance.
In addition, we estimate our weighted average shares to be 47.9 million.
Jonas Prising, Chairman & CEO
I will now turn it back to Jonas.
Jack McGinnis, Executive Vice President and Chief Financial Officer
Thanks, Jack. In closing, I'm highly encouraged by our performance in the second quarter. Our commercial execution coupled with strengthening market demand yielded a meaningful step change in organic growth taken together with a prudent approach to cost management. We are driving improved operating leverage and profitability. Looking ahead, I'm confident that we have set the foundation to be able to sustain this momentum in the back half of the year.
As always, thank you to our talented team for their relentless focus and to our candidates and clients for your continued partnership.
OPERATOR
Please open the line for questions. Thank you. If you'd like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, please press star 11. Again, our first question comes from Mark Marcon with Baird. Your line is open.
Mark Marcon (Equity Analyst)
Hey, good morning and thanks for taking my questions. Really encouraging to see the improvement both in terms of the cost discipline as well as the revenue trends. I was wondering, broadly speaking, in some of your most important markets, specifically, if we take a look at the US and France, can you give us a sense for how the quarter ended up progressing? Did you see improvement building as the quarter unfolded or were they generally stable throughout the quarter?
I'm just wondering what the exit rates were.
Jack McGinnis, Executive Vice President and Chief Financial Officer
Okay, Mark, thanks. This is Jack. I'd be happy to talk about the trends during the quarters in our largest market. So maybe starting with the US to your point, we saw strong strength and revenue trend building over the course of the quarter. And as I mentioned in our prepared remarks, ManpowerGroup grew at 16% in the second quarter, so very strong growth. And that marks five quarters of Manpower brand overall growth. But in the US that's eight quarters.
So strong growth in commercial staffing continuing in the US and it was great to see Experis cross back to flat in the quarter as well. And we said that last call that we expected that to happen and it did happen. So we're seeing some improved momentum on the Experis side as well. And I'd say France was very stable over the course of the quarter overall. So you saw France come in at flat. You may have seen some of the, I think you comment on the industry data when it comes out, Mark, and you would have seen that that was very stable.
And our revenue trends moved pretty much in line with that stability as well. So that was really good to see. And I'd say for Italy, pretty much a pretty even revenue trend over the course of the quarter started maybe a tad bit stronger, but still strong, solid growth as we exited the quarter. And maybe the last one, the fourth biggest business for us would be Japan, and Japan was very steady, pretty even during the entire quarter.
Mark Marcon (Equity Analyst)
Great. Part of the reason for the question is, was this, you know, no ill effects from Iran so far that you can discern? That was part of that question. And then I was wondering, for Jonas or Becky, you talked a lot about the advanced AI-powered screening and the interview experiences. Are you actually seeing improvement with regards to fill rates and a decrease in terms of time to hire? Are you tracking those metrics and is it really discernible?
Becky Frankiewicz, Chief Commercial Officer (CCO), President NA
Yeah, Hi, Mark, it's Becky. Yes, to answer your question, we are now in our ninth month of using some early in the funnel interview tools and we're seeing a 67% decrease in our time to fill. And so that has been material for us. One, for our speed, but also for our ability to delight our candidates, which is important in a talent-constrained market. And so we're feeling, you know, it's still early for us. We're going to hit 70% of our revenues in terms of scale by the end of the year.
But we're feeling good about the progress on that front.
Mark Marcon (Equity Analyst)
That's great to hear. Got tons of questions, but I'll jump back in the queue in respect to everybody else.
OPERATOR
Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. Your line is open.
Jeff Silber (Equity Analyst)
I have to apologize. I'm in transit, so it's a little noisy here. But I just was wondering if you could comment on the general tone of business from your clients, how that's been changing over the course of the year and what are the expectations for the back half?
Becky Frankiewicz, Chief Commercial Officer (CCO), President NA
Hi, this is Becky. As you heard me in my prepared remarks, I was able to spend a tremendous amount of time in this quarter with our clients. And I'd say we're hearing a couple of things. You know, one, they continue to be very resilient in the face of a changing landscape, whether it's geopolitically or economically or demographically. But in these times of uncertainty, customers are increasingly seeking flexible workforce solutions. And as you know, that's where we shine, that's where our business excels.
And you're seeing that as we posted our results, particularly in Manpower and the improvement in Experis. Aside of that, when you talk to them about AI, they're really not struggling anymore to access AI technology. I mean, that's becoming available. They're really struggling to get benefit. And again, that's where we're coming in. You heard me talk about our strategic partnerships mostly on the Experis side, but that's our proof point that AI can be a growth and a profit multiplier for us because we're leveraging it with our customers and to improve the candidate experience.
OPERATOR
Thank you. Our next question comes from Andy Grobler with BNP Paribas. Your line is open.
Andy Grobler (Equity Analyst)
Hi, good morning. Can I just ask about gross margin, the decline in the temp margin through the quarter. Can you just talk through the extent to which that is mix and whether there's any price impact and also on that this kind of early cycle decline is pretty normal. When would you think that's going to trough out and we can start to see gross margin stabilize and improve?
Jack McGinnis, Executive Vice President and Chief Financial Officer
Thanks for the question, Andy. This is Jack. I'll take that one. So yeah, to your point on gross profit margin trends and as we've laid out in the slide, I guess maybe I'll start with staffing. So I'd say very close to our expectations, you heard me carve out the disposition of the Jefferson Wells sale that we absorbed. That was five basis points during the course of the quarter. We were very close to the midpoint considering that. And what I would say is if you look at Q1, we were down 70 basis points year over year that improved into Q2 to down 60 basis points.
And actually our GP margin improved sequentially. It was 16.0 in Q1 and it rose to 16.1 in Q2. And that's absorbing the JW disposition and also absorbing the significant additional growth above expectations which was largely driven by Manpower enterprise. So I think that's a very good signal that pricing is rational, continues to be very stable. As you heard Jonas in the prepared remarks talk about how disciplined we've been on pricing and that continues.
So underlying staffing margin quite stable considering all of that and also considering the additional growth that we had during the course of the quarter, we saw perm improve as well. Quarter over quarter, that was a 20 basis point drag in the first quarter. Year over year improved to 10. We actually saw perm crossover to flat in the second quarter overall. So that was a big positive. And to your point, as we go forward and we look at mix, we have seen in this early part of this recovery that enterprise, commercial staffing enterprise has been leading it.
A lot of that mix has worked its way through. If you look at the first nine months of the year here with my guide for Q3, you see a pretty stable gross profit margin about 16.0 to 16.1 during the first nine months of the year and that's showing underlying stability in our staffing margin and the mix shift as well as we go forward as convenience starts to resume. And we're seeing some early signs that's starting to happen in the US that will be a benefit for Manpower margin.
But also as we know, Experis and perm have been lagging and as those come back, we'll see some additional strength in GP margin going forward as well. So that's what we would expect. I think that's what we're starting to see early on here and that would be the outlook.
Andy Grobler (Equity Analyst)
Thank you. Just one housekeeping follow up just on the JW impact in Q2. What would you expect that to be?
Jack McGinnis, Executive Vice President and Chief Financial Officer
Yeah, it's about 10 basis points.
Andy Grobler (Equity Analyst)
Brilliant. Thank you very much.
OPERATOR
Thank you. Our next question comes from George Tong with Goldman Sachs. Your line is open.
George Tong (Equity Analyst)
Hi. Thanks. Good morning. You've now delivered five consecutive quarters of growth in Manpower and are seeing improving trends in Experis and Talent Solutions. To what extent does that performance reflect a recovery in underlying staffing demand versus company-specific actions? And how do you expect the relative contribution of market growth and share gains to evolve over the next year?
Jonas Prising, Chairman & CEO
Good morning and thanks, George. We think we're executing very well in our Manpower business and as ManpowerGroup overall, we think we're leading the market in many markets. When I look at the strong growth that we're having in the US at 16% for Manpower, double-digit growth in countries like Spain, Canada, Poland, a lot of countries in Latin America, and then high single-digit growth in the UK and Italy, along with improving trends in Northern Europe, we believe we're executing and competing very well in those markets.
As Jack has just mentioned to Andy, we're also very pleased to see the continued progress of Experis and Talent Solutions as well as perm. So I think we have, it's really been executing well and part of the explanation of that you heard Becky talk about in her prepared remarks, our ability to target the industry verticals that are growing and shifting in an agile way to where the opportunity sits both in terms of verticals, in terms of geographies.
That's really a capability we have been honing over the last couple of years and I think that's starting to come through in a very nice way.
George Tong (Equity Analyst)
Got it. That's helpful. And then can you provide some additional detail on the timing of the $200 million in permanent cost savings from the transformation program? Specifically how much of the benefit you expect to be realized in the second half of this year versus 2027 and 2028 and which functions or geographies you expect to contribute most to the savings.
Jack McGinnis, Executive Vice President and Chief Financial Officer
George, this is Jack. I'd be happy to talk to that. So you know, as Jonas talked about in his prepared remarks, we're tracking very well on the transformation, on the strategic transformation for the front office that we launched at the beginning of the year. As you think about the benefits from that and going back, I'd say generally everything is pretty much still in line with what we announced last quarter as we laid out the multi-year progression.
What that means is we'll see the back office moving to profits this year. That was 20 million. I would say that is pretty even over the course of the year. Probably a tad better in the second half of the year. And then the overall transformation program moves to $80 million with the front office kicking in next year. I'd say think of that as at this stage. I'd say think of that as more weighted towards the second to the fourth quarters of 27. We'll give a further update on that of course, as we get to the end of the year and then in 2028, that's when we expect the 200 million to come through for the full calendar year and we'll talk more about that in the future. But I'd say on an overall basis, you know, when we look at the cost for the program, pretty much in line, exactly as I guided to last quarter, we said we expected that would be 10 to 15 million dollars a quarter. We came in at about 13 million this quarter and that guidance still is the same trend for the rest of the year from a cost perspective for Q3 and Q4.
George Tong (Equity Analyst)
Very helpful, thank you.
OPERATOR
Thank you. Our next question comes from Manav Patnik with Barclays. Your line is open.
Ronan Kennedy
Hi, good morning, this is Ronan Kennedy on for Manav. Thank you for taking our questions. I think for several quarters you had described improving trends as gradual stabilization. Understandably, the commentary this morning is confident and constructive. And if I'm not mistaken, Jack did just say early part of the recovery. Can we just ask for your holistic assessment as to where we are? Is it stabilization, moving on to recovery? Your assessment of that, please?
Jonas Prising, Chairman & CEO
Well, I would say based on our track record now with Manpower in the US and Manpower globally in the fifth quarter, we could say that Manpower has moved from stabilization into a recovery. No question about that. And as Jack also mentioned earlier, we're very encouraged by the progress that we're seeing with Talent Solutions, with Experis, with their improving trends as well as PERM and its improving trend as well. And as you can tell from our guide, we're expecting that to continue into the third quarter as well in those areas, though we would probably still characterize this as stabilizing.
But we are very encouraged and confident in their trends heading forward into Q3 and beyond.
Ronan Kennedy
Thank you for that. And if I may, I think George touched on Manpower, I think more broadly as a brand, but for the US Manpower strength specifically. Can you just unpack the elements of market recovery or share gain there and you know, whether it's underlying market demand, better sales targeting, enterprise wins, bill rate inflation, or anything to call out from a vertical mix or particular segments of strength standpoint?
Jack McGinnis, Executive Vice President and Chief Financial Officer
Yeah, I'm happy to take that. Yes, demand in the US has improved around Manpower. And yes, our ability to adapt and target specific areas of growth has also improved. As Jonas alluded to, we're seeing growth in manufacturing, particularly around consumer goods, retail, aerospace, logistics. So we positioned ourselves in a sales perspective towards those high growth verticals and, and literally adapted in real time to go after that growth. And so we feel really good, yes, about the market and yes, about our ability to take share in that market given our own actions.
Ronan Kennedy
Thank you. Appreciate it.
OPERATOR
Thank you. Our next question comes from Trevor Romeo with William Blair. Your line is open.
Trevor Romeo (Equity Analyst)
Morning. Thank you for taking the questions. I had one on your internal headcount. So I guess the last few years we had been talking about headcount coming down. Now that you're kind of solidly back into revenue growth mode here, how are you thinking about headcount from here? Do you need to kind of ramp up for this demand you're seeing now, or do you think you have enough capacity to hold about where you are?
Jonas Prising, Chairman & CEO
Well, thanks. I think as we've talked about, we're very disciplined both in our sales activities, as Becky just mentioned, and from a cost perspective, as Jack has talked about as well. So I would say at this point we're really feeling good about how we're positioned. We think we have additional capacity to leverage the headcount that we have and we'll be very careful in terms of looking at where and how we add headcount to continue to drive. So the important part is for us to continue to be very strong in our sales activities and also very agile and quick at adjusting our recruiting capability to the market demand and with the tools that we're now deploying across the organization. It also gives us further flexibility to leverage our existing headcount for further productivity. And we're laser focused on that.
Trevor Romeo (Equity Analyst)
Appreciate that, Jonas. And then maybe quick follow up either for you or for Becky. You know, we are kind of in this era where AI is rapidly changing. I think what companies are looking for in their labor and talent and it seems like having that flexibility that you have is a huge advantage right now, specifically kind of focusing on Experis here. So what are you seeing in real time in terms of what IT skills clients are demanding now and how that's changing and for the new skills that are in high demand, how difficult is it to find that talent right now?
Becky Frankiewicz, Chief Commercial Officer (CCO), President NA
Yeah, I'll take that question. So for Experis first to address the first comment you made. Yes, of course we're seeing clients want flexibility as they navigate both their own plans, but also the execution of their plans to realize value. That's really discussion with clients is how do we realize value? And we know that technology can get you to the pilot, but it's humans that have to get you to the realization of the benefit. And that's where we come in to your question on skills that are growing a lot around the infrastructure side.
So database architects, data scientists for data centers, we're seeing computer network engineers taking off a little bit of cyber, but really it's more focused on the infrastructure side in terms of skills in difficulty to find the skills. Right now we're able to shift people, upskill them. We run an academy called Experis Academy where we're actually teaching and training the skills to make sure we can meet the demand. So we feel pretty good about our position now.
And again, you heard that from Jack saying the improvement, we're shifting ourselves in this example into those skills that are in demand in the marketplace.
Trevor Romeo (Equity Analyst)
Okay, that's great. Thank you very much.
OPERATOR
Thank you. Our next question comes from Josh Chan with UBS. Your line is open.
Josh Chan (Equity Analyst)
Hi, good morning. Congrats on the quarter. I guess you guys are seeing, based on your numbers, some very classical signs of early cycle recovery. So I was wondering how you're interpreting the macro environment in light of not having an overall economic recession, but then seeing this early cycle recovery signs.
Jonas Prising, Chairman & CEO
Well, good morning, Josh. Yeah, we're very encouraged by the momentum and also equally excited about the long term market opportunity. And I think as you've been hearing from us over some time now is, our intent for us is to be the architects of our own future and to take the actions needed to position the business to win in any environment. And with that in mind, our focus is less on predicting the exact timing of or form of a traditional cycle rebound, but more on executing against the levers within our control, including structural cost actions, portfolio prioritization, and the continued investment in higher value capabilities.
And you heard Jack just now give a great example of that in his discussion around our 200 million transformation program that aims at providing or is going to provide permanent savings of 200 million in 2028. As an industry and as a business, we have almost 80 years of experience in adapting to a changing environment. So just as Becky talked about, the demand may not be that different, but their shift happens within the demand between the skills, especially on the technology side at this point, but also within other parts of our Manpower business as well as our Talent Solutions business.
And our strength is to adjust to those changes, anticipate them, and then drive towards where the higher value opportunities lie. So all of this to say we're very encouraged by what we've seen in our second quarter performance and we're delivering market leading growth. And as you can tell from our guide, we expect this trend to continue also into the third quarter.
Josh Chan (Equity Analyst)
That's great. Yeah, thank you for the color there, Jonas. And then I guess Jack mentioned that you're seeing early signs of convenience resuming in the U.S. I think that's the first time we've heard that in a while. So could you elaborate on what you're seeing there in terms of this convenience market possibly getting better?
Jack McGinnis, Executive Vice President and Chief Financial Officer
Yeah, so I'll take the market part of that. Yes, we are starting to see the first signs actually of convenience improving in the US with our smaller and up to middle sized customers starting to recreate their demand re engage in the market. It's early, but once we start seeing that, we expect that we'll continue to grow and we're seeing evidence of that in our pipeline.
Josh Chan (Equity Analyst)
Great. Thank you and congrats on the quarter.
OPERATOR
Thank you. As a reminder to ask a question, please press star 11. Our next question comes from Toby Sommer with Chuas. Your line is open.
Tyler Barashan (Equity Analyst)
Good morning, this is Tyler Barashan for Toby. You mentioned AI as a growth multiplier. Can you discuss some areas where AI has brought new business to the company?
Jonas Prising, Chairman & CEO
Yeah, I'll take that. So on last quarter's call, I talked about the sales targeting engine. We have deployed that first in France. We're now scaling that across all of our major markets expecting to reach 70% of our revenue by the end of the year. That helps us better target the opportunities that are growing in the market and where we have existing capability and talent. And so that is a specific area where we're leveraging AI and I would also say automation to help be a profit and growth multiplier in our business.
We're also doing work on the front office where we're partnering around interviews, where we can do those when we're not actually in business operating hours. In fact, 30% of our interviews are taking place outside of normal business hours. And those are AI powered, automation enabled. And so those are a couple of examples where we're seeing AI both drive growth and profit. The last place I would say is on the commercial side because we see AI as two pronged.
We're using it inside our organization. As mentioned, we're also using it to create new products in the market. And last quarter I talked about the partnership with Soundhound AI. This quarter I talked about the relationship we have with IBM WatsonX. I mean, this intersection of ensuring we're partnering for capabilities to better deliver and again, drive measurable outcomes. That's what clients want. They want measurable outcomes, not just implementation.
And it is our learning now that it is taking humans to realize that outcome. And again, that's where we shine.
Tyler Barashan (Equity Analyst)
Thank you. And can you discuss the decision not to repurchase any shares? And should we expect the return to repo in the second half?
Jack McGinnis, Executive Vice President and Chief Financial Officer
Tyler, you were a little faint there, but I think you were asking about share repurchases. And so what I would say is from a capital allocation standpoint, I wouldn't expect any changes in the very short term. I think we've talked about the fact that we've strengthened the balance sheet. It was great to have that cash influx in the second quarter. From the disposition, you can see our net debt improved quarter over quarter. So I think for right now I wouldn't anticipate any changes in the very short term, but we're very proud of our track record and you should expect that that will continue to be part of the mix as we move forward as the business progresses into the future.
Tyler Barashan (Equity Analyst)
Thank you.
OPERATOR
Thank you. Our next question comes from Mark Marcon with Baird. Your line is open.
Mark Marcon (Equity Analyst)
Thanks for squeezing me in again. So just with regards to the gross margins, I was wondering what percentage of gross profit is now from PERM? And if we do have a full recovery, where do you expect it could go to?
Jack McGinnis, Executive Vice President and Chief Financial Officer
Thanks for the question, Mark. So in the quarter, perm GP was 15.3% of total GP. And you know, that's pretty much in line with where we were a year ago at this time as well. And as I mentioned, Perm did cross to flat in the quarter on an overall basis. As we go forward, I think Perm has been in the 15.5 to 16.5% of GP in more stable conditions. I think, of course, we saw it during the recovery, the early recovery of the pandemic. It reached 20% when we saw the significant PERM activity that peaked in 2022.
But I think in a more stable environment, it should be somewhere in the 16% range, 15.5 to 16.5. And that's what I would consider. I think as we go forward, we would expect it to continue to be in that range as we move through the second half of the year. And we're encouraged by the trends we're seeing in perm in the US. We saw RPO growth, very strong RPO growth overall. That certainly that's our biggest RPO business. So that's clearly a good sign.
And as I said, perm was stable last quarter as well. So we're seeing encouraging signs. But I think that percentage range is what I would expect going forward.
Mark Marcon (Equity Analyst)
Great. And then with regards to Experis, you're doing a lot of things, a lot of different partnerships. As you think about the year during the second half and going into next year, how would you anticipate growth for that evolving? And if it starts improving materially, what sort of impact could that have on gross margins?
Jack McGinnis, Executive Vice President and Chief Financial Officer
So I guess what I'd start with, Mark, is Experis overall. So you saw in the quarter, Experis overall improving the rate of revenue trend from the first quarter into the second quarter. So we got to the -2% globally, which is a big improvement from where we were in the first quarter. So we're encouraged by that. The U.S. business specifically, as I just mentioned, was at flat. We're encouraged that based on the current trends, we expect that to flip to slight growth in the third quarter.
So good ongoing momentum from Experis overall. And in terms of the partnerships, I'll turn it over to Becky to say a little bit about that.
Becky Frankiewicz, Chief Commercial Officer (CCO), President NA
Mark. I'd just say first, I think the realization that what the market's demanding now is a bit different. They're demanding technology, talent and services into an integrated solution that delivers outcome. And we obviously play in the integration, the talent and the integrated services that drive the outcomes. And we have partnerships that help us with the technology. So in terms of how big that can be, you know, it's relatively new for us. I talked about it, the new revenue stream.
But we're in progress of delivering between 50 to $100 million this year from partnership driven revenue. And I think most importantly, or maybe equally importantly, we have almost 100 qualified leads in our pipeline. And so we expect this number to continue to grow.
Mark Marcon (Equity Analyst)
Great. Thank you.
OPERATOR
Thank you. That concludes our Q and A session, and I will turn it back to Jonas.
Jonas Prising, Chairman & CEO
Thank you, Michel. And thank you, everyone, for participating in this morning's earnings call. We look forward to speaking with you again when we meet next for our Q3 earnings call. Thanks very much. And until then, have a great rest of the week.
OPERATOR
This concludes the program. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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