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Hello and welcome to the Randstad Second Quarter Results for 2022. My name is Jesse and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen-only, however, there will opportunity to ask questions. [Operator Instructions]
I will now hand over to your host Sander van 't Noordende CEO to begin today's call. Please go ahead sir.
Thanks a lot Jesse and good morning everybody. I'm here with Henry and Bisera and Akshay from Investor Relations and I'm pleased to share our Q2 results with you.
I would say the global labor dynamics are quite unique these days. We're still seeing a combination of solid demand and talent scarcity which creates opportunities for us to grow our business.
However, the macro environment has not been without its challenges for our clients. Many of them are still dealing with supply chain disruptions, inflationary pressures, softening consumer confidence, and continued disruptions from COVID. Yet at the same time consumers are still spending albeit more on experiences than on goods.
Despite these challenging conditions we have delivered a strong performance in the second quarter with group revenues reaching record levels and solid profitability. Our diverse portfolio of services has served us well in terms of agility and flexibility across our markets. And this has been by our targeted investments which have strengthened our offerings to our customers.
During the quarter we also continued to evolve our business with bolt-on acquisitions such as Side the French staffing platform; and Finite one of the leading IT talent and solution groups in Australia and New Zealand. I would like to give a warm welcome to our new employees through our acquisitions.
Revenue growth for the quarter was 9.1%. Growth was broad-based and particularly strong in perm and RPO which contributed to an excellent gross margin of 21.2%. And the expansion we have delivered in our gross margins reflects pricing discipline as well change in business mix that now around 21% of gross profit generated by perm and RPO combined. EBITA came in at €308 million for the quarter with a solid profitability of 4.5%.
So, demand was strong for talent in the quarter and we continue to see solid demand across geographies from clients and talents alike. This trend was similar in early July where we saw strong demand for perm and RPO and the number of temporary employees working broadly in line with the second quarter.
We believe that a broad range of services client and continued investments in our digital capabilities position us well to benefit from the structural drivers in the labor market, most notably talent scarcity.
Although we remain cautious as visibility is limited, we think Randstad is very well-positioned to respond quickly and effectively through a diverse portfolio, our scale and data insights, and high operational adaptability and flexibility.
But you may also wonder Sander what have you been up to? Well, in my first quarter as CEO I've been meeting with over 50 clients and teams around the globe and the feedback from clients is very strong. Randstad is a trusted partner that delivers on its promises. And they are asking for more a broader set of services to address the global talent challenges they are facing.
In the quarter, I've met with the teams in France, Italy, and Germany. And in the US, I met with the Sourceright team and the staffing and technology teams. And I've been impressed with the quality experience and entrepreneurship of our leadership teams.
Randstad is in good hands and we are ready to address the big challenges in the market. First clients looking for broader partnerships as I mentioned before; second talent scarcity and the need to become an even more attractive talent destination; and last but not leastm using digital technologies at scale.
Finally as you have seen we are evolving the leadership team with the appointments of Audra Jenkins as our Global Chief Equity Officer; Myriam Beatove as our CHRO; and Martin de Weerdt as our CIO. I congratulate all three of them with their new roles.
Let me now hand over to Henry to present the results in more detail.
Thank you Sander. So, yes, good morning everybody. I'm excited to report back on yet another strong set of numbers. However, let me start with walking you through the performance of our key regions first.
So, starting with North America, which delivered another strong quarter with growth of 10% year-over-year. Perm is doing exceptionally well reaching record levels, especially in the IT professional space.
Our US Staffing & Inhouse grew 8% year-over-year with the Staffing business delivering a broadly stable growth sequentially. High demand and talent scarcity is definitely a factor also in this market, and we are fully utilizing our insight engines to identify the right talent, while making sure that our pricing appropriately reflects the extra effort involved.
US Professionals continued their strong run with 13% growth year-over-year performing especially well in sectors like technology and financial services. And Canada grew 16% in quarter two and a pretty similar landscape as compared to the US.
In Canada, our perm and IT professionals business continues to perform strongly mainly as a result of our focused investments and accelerated activity-based field steering. The North American EBITA margin showed up strongly with 6.2%, up 150 basis points compared to last year providing an excellent return on our targeted and well-executed investments made into the more attractive parts of the market.
Going on to France, which continues its market outperformance with organic revenue up 7% year-over-year, throughout the quarter the French business saw increased effects from supply chain disruptions, higher COVID-related sickness and talent scarcity.
Staffing & Inhouse business held up well with growth of 5%. And our Professionals business continued to perform well up 14% year-over-year driven by health care finance and engineering. In addition, our perm business also performed strongly up 20% year-over-year. And we ended the quarter with a solid EBITA margin at 4.9%.
Moving on to slide 8, the Netherlands delivered a resilient performance in the second quarter. Revenues were up 1% year-over-year despite the expected declining revenue from COVID-related activities. The Dutch perm business performed at record level up 65% benefiting from strong client demand and our ability to find talent in an increasingly talent-scarce market.
Our Professionals Yacht business continued its strong performance, up 12% year-over-year as utilization rates continued to improve. And also in the Netherlands EBITA margin came in strongly at 5.8%.
In Germany, revenue was up 4% year-over-year despite ongoing supply chain disruptions. Perm is holding up strongly up 52% year-over-year. And Professionals are bouncing back and delivered a solid 3% growth year-over-year. EBITA margin for the quarter came in at 2.3% a gradual improvement sequentially and year-over-year, but still below our ambition for the country.
That brings me to Italy and Belgium on slide 9. So Italy saw yet another excellent quarter with organic growth of 20% year-over-year and a very strong profitability, also clearly benefiting from targeted and well-executed investments. Growth continued to be broad-based.
Our perm business reached another record quarter with 50% year-over-year growth. Italy ended the quarter with a strong EBITA margin at 6.8%, up 50 basis points year-over-year. And Belgium delivered a robust performance in the quarter, with revenue up 4% year-over-year. Throughout the quarter, our business was confronted with supply chain disruptions, higher COVID-related sickness and unprecedented level of talent scarcity. Our Staffing & Inhouse grew by 6% where in particular Inhouse saw higher demand with existing clients. EBITA margin for Belgium came in at 4.6%.
Moving on to slide 10. Spain also delivered another inspiring quarter an excellent performance with revenue growth up 15% year-over-year. Perm, Professionals and RPO business performed exceptionally well. Portugal is further improving and holding its own in the quarter. And with regards to the labor reform law in Spain, it is still too early to call out the effect on Randstad. It goes without saying that we're staying very close to the changes.
EBITA margin came in strongly at 6.1%, up 60 basis points with last year also driven by an improved business mix. And the rest of Europe also contributed to a solid quarter with 6% growth year-over-year and improving profitability. The UK benefited from a strong perm business and reported overall growth of 5%, but also Nordics with 14% growth and Switzerland with 10% did very well in the quarter.
Poland revenues were down 8% year-over-year, primarily reflecting supply chain constraints. And overall, we ended the quarter with a solid EBITA margin of 3.6%, up 90 basis points year-over-year.
And that brings me to the rest of the world on page 11, which also continues to do well with 12% profitable growth year-over-year. Japan showed a strong performance, growing 11% performing well across professionals in IT and engineering and also in perm. And Australia and New Zealand also delivered a strong growth up 16% year-over-year.
We also further strengthened our portfolio in Australia with the announced acquisition of Finite Group, which specializes in technology recruitment, IT consulting and the broad area of IT and digital professional services. This acquisition will further strengthen our position as the market leader within the IT sector in Australia and New Zealand and will be a strong addition to our current service offering. India grew 16%, continuing its successful journey adding more and more recurring profitable business to its portfolio. And LATAM continues to do well, as expected Argentina and Brazil motored on using the RPO engine to drive an even more profitable mix.
And EBITA margin for this part of the portfolio was 4.9% in quarter two yet again a very significant contribution to our overall results, demonstrating the power of a broad-based diversified set of businesses adding to the success of Randstad.
And last but certainly not least our global businesses reported a strong 25% year-over-year growth on the back of a continued solid demand and talent scarcity. Main driver here is certainly our very strong Randstad Sourceright business with 32% accretive profitable revenue growth in the quarter. Within that RPO more than doubled in size to €119 million. Coming to Monster, which contributes greatly as a sourcing talent engine within Randstad, supporting our staffing and other services amidst talent scarcity. This quarter it grew by 1% year-over-year. As you know Monster is undergoing a transformation and has experienced ups and downs over the past years. However, our platform is getting better and more efficient and we will continue to fine-tune this talent engine as an integral part of our talent sourcing strategy.
And that concludes the performance of key geographies and I'm now excited to walk you through our group's financial performance on page 13. The strong top and bottom line momentum continued. Revenue growth in quarter two came in at 9% year-over-year reaching another record level. Our perm business grew 38% in the quarter and our RPO business topped the ranking table with 108% growth both reaching record levels in size and profitability also proudly leading the performance in the marketplace.
Gross margin showed up strongly 21.2%, a 170 basis points improvement year-over-year and 70 basis points up sequentially definitely bolstered by our strong perm and RPO growth but also supported by our ability to price appropriately for our increasingly differentiated services. Perm now accounts for 30% of gross profit with €192 million revenue and RPO was €119 million representing about 8% of group gross profit.
Also quarter two was impacted by ongoing supply chain and COVID-related disruption. However, we try to apply a positive attitude to it and see it as an opportunity to delight our customers with an extra level of agility and partnership. The OpEx increase of €54 million organically sequentially is representing a very focused and disciplined approach to support our fast growing RPO perm and IT professionals business in addition to some extra marketing to support our talent acquisition efforts. It goes without saying that stringent field steering principles and conversion hurdle rates are being fully applied that the agility of that cost base is being safeguarded.
EBITA came in at €308 million at 4.5% EBITA margin, up 20 basis points year-on-year representing a Q2 organic incremental conversion ratio of 28% on the last four quarters basis, obviously, impacted by the size and growth momentum for our EBITA accretive perm and RPO business.
Integration and one-offs came in at €43 million cost this quarter, mainly reflecting some IT-related costs minor fine-tuning with operational structures across some geographies and integration costs from our recent acquisitions. And lastly on that page, the underlying effective tax rate amounted to 25.7% for the first six months. For full year 2022, we expect ETR to be between 24% and 26%.
And with that let's turn the page and look at our gross margin bridge on Page 14. The gross margin came in at 21.2% with a further improvement of 170 basis points year-over-year. And the temp margin had a 40 basis points positive impact, reflecting positive value-based pricing, partially offset by some COVID-related productivity issues. The middle blue bar reflects the margin effect of a strongly growing perm business, 40 basis points improvement year-over-year. Our perm business continued to do very well and increased by 38% year-over-year.
The next bar on the right, our business reported under HR Solutions improved our overall gross margin by 90 basis points year-on-year. Here our excellent growth momentum in RPO plays a key role. Whilst our gross margin path remains difficult to predict, it is important to consider the very significant portfolio transformation that happened in the last three years with considerable shift in size and growth momentum for our perm and RPO businesses representing already about 21% of total gross profit compared to about 15% in 2019.
And that brings me to the OpEx bridge on Page 15. OpEx came in at €1.149 billion €54 million higher sequentially excluding ForEx and M&A, mainly to fully support and benefit from an ongoing strong demand, but also reflecting significantly accelerated RPO growth at attractive EBITA margins. Close to all of the net 1860 FTEs added in quarter two are in support of our fast-growing businesses with more than 50% of consultants can be attributed to RPO growth alone. As mentioned earlier, excellence in field steering and conversion is a non-negotiable operating principle at Randstad. Given the uniqueness of the current market environment, it goes without saying that we are staying extremely close to our customers and volume development. Flexibility of the cost base and the ability to react fast to new developments comes at a premium.
And with that in mind, let's now move on to our cash flow and balance sheet on Page 16. Our free cash flow for the quarter came in at €55 million. This is a function of an improved EBITDA more than offsetting working capital movements and timing of tax payments. DSO was 52.1 stable year-over-year and the last four quarters moving base. And our ROIC continues to show up strongly. We are now at 19.2%, up from 14% last year reflecting the improvement of our last 12-month EBITA and moderate increments of capital investment. Our balance sheet remains to be very strong showing €147 million net debt position and the leverage ratio of 0.1 excluding IFRS 16 accounting.
As scheduled and announced at the beginning of April, we paid the regular dividend of €2.19 per share, totaling about €400 million. And we're also pleased to say that we have successfully refinanced the multicurrency RCF of €1.075 billion so -- €1.750 billion which matures May 2027. The facility agreement contains the same covenant with respect to the net debt-to-EBITDA ratio, which we call the leverage ratio.
And that brings me to my last chart already in conclusion and outlook on Slide 17. As we have discussed, demand for talent was strong in the second quarter despite some dynamic market circumstances. This trend was similar in early July where we saw the number of employees placed on a temporary basis broadly in line with the second quarter and strong demand for perm and RPO. Of course, we are carefully monitoring the macroeconomic situation and continue to stay very close to our client and talent needs we believe in the resiliency of our portfolio and the agility of our very experienced leadership group and all our employees around the world. Q3 2022 gross margin and operating expense are both expected to be broadly in line sequentially. And lastly, I would like to mention there will be an adverse 0.3 working day impact in quarter three.
Well, this concludes our prepared remarks and we are now looking forward to taking your questions. Back to Jess.
[Operator Instructions] The first question comes from the line of Sylvia Barker from JPMorgan. Please go ahead.
Good morning. Thanks for taking the question. Three please for me. First of all on RPO, could you remind us the profile of that in terms of gross profit margins and also operating margins? And secondly on RPO, can you talk about the length of some of these contracts, or how much visibility do you have over that business? And then on perm, can you give us a split of the perm revenue at the moment by end market? And then just a final quick one just clarifying the €42 million of one-offs. Could you talk about the IT write-down size and just the background behind that? Thank you.
Yes, maybe I get started. Sander feel free to chip in. So RPO, I don't want to go into too much detail but just want to give you reassurance that it's EBITA margin accretive. It's a very attractive business for us, where we secure the cost base we are building to be very agile. The length of contract is – you have everything in there. We have agreements going up to three years. But of course, it is a volatile business. So we are very close to our customers in there. But the most important Sylvia, it's margin accretive and we have an agile cost base. So those are the two things which are most important.
Yes. And maybe Henry to add to that that way of doing business with clients positions us as a strategic partner in the recruiting space. So this is not sort of a one-off relationship you find a few people no. This is like a longer-term relationship where we are really proactively working with the client, doing the workforce planning and really work side by side. I think that's a very important distinction there.
Yes. Maybe to your question Sylvia around perm end market, we're not disclosing the details here but it's probably an open secret. We have a very strong business in the US, which is helping all of us. It's very, very profitable and beneficial for us. So I would like to say that.
On your question around the one-offs you know us for many, many years where we are running a very tight ship when it comes to assets on the balance sheet. So quarter two for us it's a very kind of normal moment where we're kind of looking into the validation of those assets being capitalized. And we've taken a view here that we are just writing off some of the things we've capitalized in the past and that is amounting to about €30 million of that about €40 million and then there's another €10 million on just minor adjustments to shape an organization for today's market and for the future.
Thank you. Thanks very much for that color. Just going back to perm – sorry my bad, I wanted to actually ask about the end markets in terms of customer segments more than geographies. So can you just give us a feel of how much of that perm is more industrial in nature versus let's say IT or any other color that you can give around that?
Yes no absolutely. I mean it's – the nature of the market that we are at a lot of value in today's market in recruiting technology profile that's a very, very big segment for us. But frankly it goes across all markets. But it's – at this point in time the biggest momentum is probably in technology automotive in those parts.
Okay. Thanks so much.
The next question comes from the line of Anvesh Agrawal from Morgan Stanley. Please go ahead.
Hi. Good morning. I've got two questions really. First just on the drop-through rates of 18% in the quarter. Clearly you're investing a lot in sort of RPO and perm business but it seems like it's not dropping down to the profitability level at this stage. So if you can sort of steer us through how should we think about that? And really like if this is margin accretive then is there a part of the business where the margins are going back and because of it we are not seeing the sort of incremental beat at the EBIT level even with the growth -- organic growth and the gross margins are much better than consensus? And second really on the -- if you can just talk about -- you obviously have benefited a lot over the last couple of years on things like logistic, e-commerce businesses, especially in the US and maybe just some color on how those are trending really?
Yes. Yes, we -- I'd like to dive a little bit on the profitability part, Anvesh. I'm -- actually we have yet another EBITA accretion 20 basis points in there. We also make sure that we're investing into the future of the business. So, we still apply a very, very focused investment plan looking at good returns. And we just see different conversion rates. So, given the size and momentum of RPO and perm especially, we're now looking more into each of those business units and require the profit conversion rates in there. So, there's nothing underlying in the other parts, which is losing me or costing me sleep frankly. In terms of -- what was the second question?
I think the second question was on the end markets in the US Is that correct, Anvesh?
Yes. So like obviously, we have seen benefits from things like logistics e-com over the last couple of years. I was wondering, how those are trending now?
Yes. So, automotive, very strong growth. Transport and distribution, so logistics were double digits. Financial services, double digit. Public health and education also double digits. So, I would say very strong growth across the board in the US which is of course very pleasing and a testament to the excellent performance of the team there.
Yes. Maybe Anvesh to just double down on my numbers, so our investment strategy has really delivered very, very good and clear results. So we have not only a bigger, more profitable, more diversified portfolio with a ROIC of 19%, we also increased EBITA by 20 basis points year-over-year, but also €48 million in absolute terms, because we are just a bigger business. So, yes, I'm -- there's always things that can be done better for sure, but overall, we're quite satisfied with that.
Yes. I would say, if the business is growing 100%, you need to invest in the people and making those people productive. So, that's the nature of the game that we're in here.
Okay. Very clear. Thank you.
Your next question comes from the line of Konrad Zomer from ABN AMRO. Please go ahead.
Hi, good morning everybody. My first question is on the performance of your Belgian operations. It's one of the few countries where you show a decline in EBITA margin and you do not show the growth rate in permanent placement. So there might be a relation between those two items. Maybe you can explain that a little bit more?
And my second question, we've talked about it a little bit already, but I do question given that the company continues to be in investment mode with organic operating expenses up 18% with your topline slowing down to still a respectable number of 9% at some point I guess that has to change. So, maybe you can talk a little bit more about that, how you see that in the second half of this year?
And my final question, net debt is very low and you've refinanced the RCF. So nobody is worried about your balance sheet at this point in time. But I was just wondering, given that most of your debt is financed at variable interest rates and interest rates are going up, can you maybe tell us, what the impact would be on your finance charges if interest rates continue to go up globally? Thank you.
Right. So let me start with the Belgium business. So let me first start, we have an absolutely stellar excellent team in Belgium. And Belgium has been not particularly easy marketplace to operate in the last quarter. So I don't want to go into much more detail there, but I can reassure you that, actually there is structurally everything in the right place and we have the best operators there. So, we also expect the Belgium performance in the next couple of quarters looking good.
Your question on OpEx, yes, I mean, that is what we do for a living here. We -- gross margin and the OpEx ratio are sort of communicating vessels. It's probably still a little bit underplayed how much our portfolio has changed for the better.
It's more diversified, more profitable in its components, but we also need to look at in a more differentiated way than just like in the old days, where it was just kind of a general staffing business. So, therefore, looking at each of the components, it's important. And yes, we will make sure that we run kind of an OpEx ratio, which communicates with the gross profit development.
Yes. And maybe to add to that, your question was also about, at some point in time it has to stop. Obviously, no one knows when that will be. But it's clear that we are on top of things and starting to see, I would say, in pockets some challenges here and there and dealing with that in a very effective way.
Yes. And then, maybe, Konrad, your question about the RCF. Let me first start, I'm incredibly proud of our team who've negotiated that renewal in a good fashion and good trust with our banking partners and with a good timing frankly.
We remained our policy to stay with floated rates. It has always served us well over a long period of time and it's pretty much impossible to pick any time in the past where we're picking up, where fixing rates has really served -- would have served us better.
Also, hedging at this point in time would just be speculation. So it will be -- with the debt levels we have, it will be serving us extremely well and we made a very conscious decision about that.
Okay. Thank you very much.
Next question comes from the line of Suhasini Varanasi from Goldman Sachs. Please, go ahead.
Hi. Thank you. Good morning, everyone. Just two for me, please. Given the news flow around gas in Europe, specifically from June, can you comment on whether you've seen an incremental slowdown on the industrial side due to this? And then, the second one is on your outlook for ICR going into Q3 and second half, if you could give some color there. Thank you.
No, on the gas in Europe, we haven't seen a slowdown. Actually, we've seen the opposite. We have seen our industrial sectors across the board growing well, automotive electronics. So they have performed quite well.
I mean, you are right to point out that the gas in Europe is a precarious situation at this point in time. And again, we're watching it closely and staying extremely close to our clients to find out what's going on there.
Yes. And regarding ICR, yes, just I'm afraid I need to repeat myself, but the size and strong momentum of our perm and RPO businesses requires us to look at conversion separately for each of our business units. And both businesses, perm and RPO, are EBITA margin accretive, so we make sure they're attractive. And our focus on securing attractive returns and the application of disciplined field steering remains, of course, fully in place.
So -- but it becomes not really helpful to kind of -- to look at an ICR level over the entire business with that kind of dynamic and momentum we have. So, therefore, I'm afraid, well, let's look at conversion separately and look at what drops out on the EBITA margin level, whereas I said, OpEx and gross margin are communicating vessels and will be carefully managed.
Understood. Thank you very much.
Next question comes from the line of Dominic Edridge from Deutsche Bank. Please, go ahead.
Hi, there. Thanks for taking the question. Just two for myself and apologies to sort of rather rehashing some old ground. But in terms of thinking about your headcount, how much spare capacity do you feel there is if you exclude the RPO business? And in terms of your gross profit per FTE where is that at the moment in your ex-RPO business versus maybe where you were a year ago? Because I'm aware that RPO does complicate these things.
And just on that, are you currently planning to add further headcount ex RPO at the moment to the year-end?
And then the second question was just going back onto the restructuring costs and the write-down of the software. Could you just say what was the trigger event around that? Is it the software was obsolete you're not using it anymore, or was there some other issue? Thank you very much.
Yes. On the headcount so we have about 1,800 extra headcount in the quarter added more than half was RPO related and pretty much all was related to supporting our growing businesses our Professionals business, our IT business. And so it's very, very focused. And yes, we will add headcount, if we have very strong growth momentum. But of course, we're also reading the news flow and we are just living in the current world. So we stay extremely close to our customers and volume developments in there.
What was your next question? Was it about the -- oh, no, I wanted to talk about the productivity for a second. So if you take the RPO numbers out of the equation, our kind of GP per personnel expenses field is pretty much in line to pre-COVID level, it's around 2.5, so and that is where our field steering kicked in. Also there, of course, we try to drive productivity up, but we're definitely making sure it's not dropping.
And the last one was the write-down. Yes, there's -- actually, there's balance sheet reviews we do on a regular basis. If we see that we have cost capitalized where we are probably not using that piece of software in its form, because it has evolved in a new version, for example, we just take a prudent look and just writing those off. It's not cash involved. It's just kind of a balance sheet write-off and cleaning up, because we never want to be in a position that we are carrying balance sheet items, which are not carrying value.
Thank you very much.
The next question comes from the line of Thomas Truckle from Jefferies. Please go ahead.
Yes. Thank you. Thomas Truckle here on behalf of Kean Marden. I just have one question if I may. Looking at France and the Netherlands on the presentation, looking at EBIT margins, they're clearly down against the prior year. And I appreciate there's been supply chain issues there. But I haven't seen revenue increase year-on-year. I would have expected sort of that to drop through. Please can you remind me what the factors are for suppressing margins? Is that your organic investment or other reasons that may be keeping that a little lower? And how should we think about that going into the second half of this year? Thank you.
Thank you Thomas. A couple of things in the Netherlands. As Henry already alluded to we had the COVID business dropping off which was expected. Then, of course, we had to go out and find other business, which the team did a phenomenal job of because there was still albeit a little revenue growth in the Netherlands. That came with some extra expenses on the sales and marketing side, because we had to go to clients and pull them in so to speak. On top of that we had a few one-offs in the profitability last year. So those combined the one-offs and the additional sales and marketing costs they make up for that.
Yes, we've been -- actually, we've been pretty transparent when we had the high margins in the Netherlands last year where we said don't expect that to go forward. It was I think at 6.8% at a certain point in time. And we -- the margins we currently have is probably more sustainable than what we've seen in that time.
Thank you.
The next question comes from the line of Rory McKenzie from UBS. Please go ahead.
It's Rory here. Just kind of quick follow-up on the Netherlands. Have all of the COVID-related volumes dropped out now? So is this the kind of new base of the business?
And then secondly and Sander more broadly, you've highlighted talent scarcity as one of the key themes you think Randstad has to address to be able to deliver for clients and maybe in the business for a while. Can you talk about the kind of services you think Randstad might need to invest in or grow, or maybe any new directions do you think the business is moving to try and help connect talent supply with demand? Thank you.
Let me get the first one out of the way. First on the COVID one, actually there's still some left. There's probably about half to the number I've quoted last time this quarter. So, there's still some left but it's getting really immaterial now.
Yes. And on the second question, I mean talent scarcity is clearly here to stay. So that means that both our clients and ourselves we need to reconsider how we engage with talent on a more ongoing basis, almost like a career long relationship with talent to enhance the value -- their value throughout their careers, their value in terms of skills and training, but also their value in terms of the salary that they can make.
And in terms of clients, clients are clearly asking for a broader set of services. They want us to partner more strategically with them, think about workforce planning, workforce strategy, think about also training scaling, think about internal and external mobility services. So, we're looking to see how we can further expand our services there.
Comprehensive. Thank you very much.
The next question comes from the line of Marc Zwartsenburg from ING. Please go ahead.
Yes, good morning gentlemen. Two questions for me, left. Maybe -- and I know you talked already a bit about the RPO business and the profile, but Henry or Sander can you provide a bit more comfort maybe on the RPO cost base because what will happen in case the market comes down? I know it's a strategic contract for maybe up to three years. What if the market accelerates downwards, how fast can you yes then -- yes flip that business around and still protect your margin in the RPO sense? So, what proportion of cost are fixed? Can you provide a bit more color on how that would work?
And then on the second question a bit on -- just to get a bit of a feel for the temperature of the market. I know in your outlook you mentioned that trends are still roughly stable in terms of volumes compared to Q2. But yes, we also have that same comment a bit in April. And of course, comps are getting tougher and revenue growth came down a bit from what was it, 15 [ph] in Q1 to now plus 9.
What do you feel when talking to a client? What is the feedback in terms of length of contracts renewals that kind of stuff to get a bit of a feel for the trend into Q3 except for being more or less in line with Q2?
No, so I can give you a bit more feel there. I would say the temperature of the market is still warm, but maybe not as hot as it was. And what do I mean by that? I mean we've all read the news about some clients slowing down some of their hiring, slowing down hiring not stopping hiring. It's a very important distinction by the way.
The urgency to make decisions that was there, let's say six months ago. We're going to start tomorrow I mean things -- sales cycles are growing a little longer these days. So, I would say it is more back to normal versus the very hot situation that we had before. That -- I guess that's a bit more color than I can give.
On the RPO cost base, we eat our own dog food and that means that we have quite a bit of flexibility built in into the teams that we have in RPO. So, we can flex with the demand of our clients. One interesting tidbit maybe to know is that, generally our clients they operate in three buckets. They have their own recruiting team they have a bunch of freelancers and they have us as a more strategic RPO partner. Well you can -- you will understand that in a way we are the last ones to go in that scheme or the last ones before the clients', people I would say to be precise.
Thank you very much.
We currently have no questions in the queue. [Operator Instructions] We have no further questions in the queue, so I will hand the call back to your host for some closing remarks.
Yes. Thank you very much Jesse and thanks all for joining the call today. We're absolutely pleased with the quarter and I would like to express a big thank you for all the 40,000-plus men and women who are out there representing Randstad every day in the market with our clients and talents. Thanks.
Thanks everybody.
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