Third Quarter 2023 Revenue
Strong Q3 with organic growth at
+5.3%-Upgrade of FY 2023 guidance
on all KPIs
October 12,
2023
-
Q3 organic growth at +5.3% thanks to revenue mix and New
Business tailwind
-
Very solid U.S. at +3.2% after 2 years of double-digits,
standout performance in Europe at +10.7%, Asia Pacific improving to
+3.8%
-
Acceleration of organic growth versus 2019: +22% in Q3,
after +20% in Q2 and +18% in Q1
-
Further upgrade of 2023 guidance despite persistent
macroeconomic uncertainties:
-
Organic growth expected at +5.5% to 6%, vs. circa +5%
previously
-
Operating margin rate at 18%, vs. close to 18%
previously
-
Free cash flow1 close to
€1.7bn, vs. at least €1.6bn previously
Q3
2023
|
|
2023 Net revenue |
€3,241 m |
Reported growth |
+0.1% |
Organic growth |
+5.3% |
|
|
9M 2023
|
|
2023 Net revenue |
9,559m€ |
Reported growth |
+4.9% |
Organic growth |
+6.5% |
|
|
1. Before change in working capital
requirements
Arthur Sadoun, Chairman and CEO of Publicis Groupe:
“ Despite a macroeconomic context that became more difficult
over the quarter, we delivered strong organic growth of +5.3% in
Q3, ahead of expectations.
Our media capabilities, which continued to gain market share,
and Epsilon’s data offer were the main drivers of this performance,
achieving high single-digit and double-digit growth respectively.
At a moment when the comparable consulting firms experienced
project delays, Publicis Sapient nonetheless continued to grow, and
Creative confirmed its resilience once again, in spite of
industry-wide cuts to classic advertising activities.
All of our regions posted solid organic growth, with the US at
+3.2% on top of double digits in the last two years, Europe at a
standout +10.7% and APAC improving again at +3.8%.
Looking at our journey since the pandemic, the acceleration of
our growth amid persistent macroeconomic challenges is clearly
visible, with Q3 at +22% compared to 2019 levels, coming after +20%
in Q2 and +18% in Q1.
Today we have a differentiated go-to-market, that allows us to
gain market share; a uniquely balanced revenue mix that makes us
more resilient to business cycles; and a platform organization that
enables us to post industry high financial ratios.
This gives us the confidence to further upgrade our 2023
guidance, even in a context of rising global socio-economic
tensions. We now expect to deliver +5.5% to 6% organic growth for
the full year, while upgrading our operating margin to 18% and free
cash flow at close to 1.7 billion euros.
For the rest of the year, we intend to lead what
we believe to be the two major priorities for our industry today:
bringing our teams back together in person, and accelerating the
AI-ification of our operations, which we are uniquely able to do
through Publicis Sapient. ”
* *
*
NET REVENUE IN Q3 2023
Publicis Groupe's net revenue in Q3 2023 was 3,241 million
euros, broadly stable compared to 3,237 million euros in Q3 2022.
Exchange rate variations had a 189 million euros negative impact.
The acquisitions (net of disposals) have a positive impact of 32
million euros this quarter.
Organic growth was +5.3% in Q3 2023 compared to
2022. Media, one third of revenue, continued to experience strong
new business momentum and grew high-single digit on top of
double-digit last year. Data and tech activities, another third or
revenue, posted very solid growth overall. On the one hand, in a
context of slowdown in digital business transformation experienced
by comparable consulting firms, Publicis Sapient nonetheless
achieved a +1.2% organic growth despite a very strong comparable
base of +18% in Q3 2022. On the other hand, Epsilon’s strong
performance further accelerated to double-digits with +10.5%
organic growth in Q3 after double-digits also last year,
benefitting from increased client demand for first-party data
management. Creative, the remaining third, posted a
resilient performance with organic growth in the low-single
digits for the quarter.
Breakdown of Q3 2023 Net revenue by
region
EUR million |
Net revenue |
Reported |
Organic |
|
Q3 2023 |
Q3 2022 |
Growth |
growth |
North America |
1,999 |
2,076 |
-3.7% |
+3.0% |
Europe |
769 |
694 |
+10.8% |
+10.7% |
Asia
Pacific |
288 |
303 |
-5.0% |
+3.8% |
Middle East
& Africa |
95 |
90 |
+5.6% |
+18.2% |
Latin America |
90 |
74 |
+21.6% |
+6.9% |
Total |
3,241 |
3,237 |
+0.1% |
+5.3% |
North America net revenue was
up +3.0% organically in Q3 2023. Taking into account a negative
impact of the US dollar to Euro exchange rate, reported growth was
at -3.7%. The U.S. posted a very solid quarter
with a +3.2% organic growth. Media grew mid-single digit on top of
double digits last year. Creative activities were slightly negative
on the quarter, affected by localized cuts in classic advertising
and on top of a high base in Q3 last year. Epsilon posted
double-digit organic growth this quarter on top of +14% in Q3 2022,
largely driven by digital media and data divisions. Finally, in the
context of delays in IT consulting projects, Publicis Sapient was
stable, facing a particularly strong comparison base of +21% in Q3
2022.
Europe net revenue was up by
+10.7% on an organic basis (+10.8% reported). It grew +10.2%
organically when excluding the contribution of our Outdoor Media
activities and the Drugstore. The U.K. was again very strong at
+10.0% organically on a particularly high base of +23% last year,
mainly led by Media and Creative, while Publicis Sapient grew
mid-single digit. France recorded a +6.5%2 organic growth, driven
by Media as well as Creative. In Germany, organic growth was up by
+4.0%.
Net revenue in Asia Pacific
improved sequentially to +3.8% organic this quarter (-5.0% on a
reported basis), led by growth in India and Singapore by New
Business wins. This was achieved despite a slower China at -2.5%
organic growth, due to delays in spend this quarter in a tougher
macroeconomic context.
Net revenue in the Middle East and
Africa region was up by +18.2% organically (+5.6% on a
reported basis), largely driven by strong dynamics at Publicis
Sapient.
In Latin America, net revenue
was up +6.9% organically (+21.6% on a reported basis), led by
Argentina while Brazil was slightly down and Mexico stable.
2. Excluding Outdoor Media activities
& the Drugstore
NET REVENUE IN 9M 2023
Publicis Groupe's net revenue in the first nine months 2023 was
9,559 million euros compared to 9,110 million euros in 9 months
2022, up +4.9%. Exchange rate variations had a 201 million euros
negative impact. The acquisitions (net of disposals) have a
positive impact of 72 million euros in the first nine months.
Organic growth was +6.5% in the first nine months of
2023.
Breakdown of Net revenue for the first 9
months 2023 by region
EUR million |
Net revenue |
Reported |
Organic |
|
9M 2023 |
9M 2022 |
Growth |
Growth |
North America |
5,892 |
5,736 |
+2.7% |
+4.5% |
Europe |
2,321 |
2,065 |
+12.4% |
+12.7% |
Asia
Pacific |
838 |
853 |
-1.8% |
+2.4% |
Middle East
& Africa |
274 |
255 |
+7.5% |
+13.5% |
Latin America |
234 |
201 |
+16.4% |
+6.8% |
Total |
9,559 |
9,110 |
+4.9% |
+6.5% |
Breakdown of Net revenue for the first 9
months 2023 by sector
Based on 3,478 main clients representing 92% of
the Groupe’s net revenue.
Net debt and liquidity
Net financial debt amounted to 714 million euros
as of September 30, 2023, compared to 226 million euros net debt
position as of June 30, 2023 and to a net debt of 919 million euros
at the end of September 2022. The Groupe’s last twelve months
average net debt as of September 30, 2023 amounted to 451 million
euros compared to 870 million euros as of September 30, 2022.
Acquisitions and disposals
On January 4, 2023, Publicis
announced the acquisition of Yieldify, a
London-based marketing technology company. Founded in 2013,
Yieldify’s leading platform and service enable companies to better
personalize consumers’ website experiences, driving incremental
revenue and other desired outcomes by delivering the right message
at the right time based on a consumer's profile and stage in their
purchase journey. Yieldify will become part of Epsilon, and its
onsite personalization, conversion optimization and customer
journey offerings will complement Epsilon PeopleCloud to better
address the mid-market.
On January 10, 2023, Publicis
announced the acquisition of Advertise BG, one of
the leading performance marketing agencies in Bulgaria. The
strategic acquisition will further reinforce Publicis Groupe
Bulgaria’s competencies in digital transformation, adding firepower
to its existing offering across digital strategy, data, social
media, and digital content creation.
On March 30, 2023, Publicis
announced the acquisition of Practia, based in
Buenos Aires, a leading Latin America independent technology
company and provider of digital business transformation services.
With its 1,200 experienced professionals, this acquisition will
position Publicis Sapient to enter the Latin America market while
establishing a foundation for a nearshore delivery platform that
will enable the company to better service clients based in North
America.
On May 23, 2023, Publicis
announced the acquisition of full stake in Publicis Sapient
AI Labs, an innovative artificial intelligence research
and development joint venture launched in 2020 in partnership
between Publicis Sapient, Elder Research and Tquila. The
acquisition will further strengthen Publicis Sapient’s data &
AI capabilities and enable the company to develop innovative
solutions across industries for a wide range of applications, such
as generative AI, natural language processing (NLP), computer
vision and autonomous systems.
On June 5, 2023, Publicis
announced the acquisition of Corra, based in New
York, an ecommerce leader recognized by Adobe as one of the top
commerce firms in North America. Corra will augment Publicis
Sapient’s existing expertise in commerce solutions, including Adobe
Commerce, while extending Publicis Sapient’s offerings in digital
and omnichannel commerce. By acquiring Corra, Publicis Sapient will
further establish itself as a global leader across the entire Adobe
Product Suite, in addition to further cementing its already leading
capabilities.
On June 15, 2023, Publicis and
Carrefour announced the launch of their joint venture
Unlimitail, to address the booming retail media
market in Continental Europe, Brazil and Argentina. The launch of
the company comes six months after the initiative was announced and
has been unveiled during VivaTech. Unlimitail will partner with
retailers and brands, bringing the scale, connectivity and
consistency for retail media to reach its full potential in those
geographies. It is built on the most advanced technologies,
“CitrusAd powered by Epsilon”, and the deepest retail expertise
from Carrefour. Unlimitail has already converted its first 13
retail partners, representing together more than 120 million
loyalty customers.
Outlook
Thanks to the strength of its model and a better
than expected Q3 performance, the Groupe is in a position to
upgrade once again its 2023 guidance despite ongoing macroeconomic
uncertainties.
When it comes to organic growth, the
Groupe now aims at +5.5% to 6% for the full year, compared
to circa +5% previously.
Our +5.5% is solid and factors in:
- Economic and social tensions that
are likely to continue to affect client spend,
- Further delays in digital business
transformation,
- And negative end of year
adjustments of advertisers’ budgets.
Organic growth could move closer to the higher
end of the guidance range under the following assumptions:
- Fewer cuts in classic
advertising,
- A faster ramp up in new
business,
- Some positive impact from increased
client budgets in Q4.
This means that Q4 organic growth is now
expected between +3% and +5% at a stretch.
The Groupe anticipates to continue to deliver
industry-high financial ratios, upgrading its operating
margin guidance to 18% (from ‘close to 18%’ previously)
and its free cash flow before working capital requirements
to close to 1.7 billion euros (from ‘at least 1.6 billion
euros’ previously).
New business
EUROPE
Santen France (Health), Glaxo Smith Kline
(Health), Comité Colbert (Creative), Speedy (Data), Carlsberg
(Creative), Abeille Assurances (Creative), Visa (Technology &
Creative), DomusVi (Technology), DocuSign (Creative), The Football
Association Premier League (Creative), Allwyn (Creative), Pivovara
Daruvar (Creative), heroal (Creative), Deutsche Telekom (Creative),
DATEV (Influence), Samsung (DTC), PepsiCo (Media), L’Oréal (Media),
Tesco (Creative), Asda (Technology), Renault (Influence), FoodWell
(Media), Notino (Media), Casavo (Creative), La Poste (Media), Dream
Games (Media), Cassa Depositi e Prestiti (Media), Meggle (Media),
Île-de-France Mobilités (Creative), TotalEnergies (Creative),
Bioderma (Creative), Pernod Ricard (Influence), Ovo Energy
(Creative), Le manège à bijoux (Creative), Inserm (Media), SNCF
(Digital), John Lewis (Creative), Alfa Romeo (Air France KLM
(Influence), Ikea (Creative & media), Gruppo Iren (Creative),
Bulgari (Creative), Gruppo Campari (Influence), Western Union
(Media), Beko (Influence), Société Générale (DBT), Iveco (Media),
Sony Music (Digital), Legrand (Creative), Nexity (Creative), Skoda
(Social Media), Charlotte Tilbury (Media), Ferrero
(Media/Creative/Influence), Laya Healthcare (Creative),
PublicJobs.ie (Creative), ADAC (Influence), Innomotics (Media),
Bosch (Media), ASOS (Media), Sodexo (Media, Portu (Media),
Bundesministerium fuer Arbeit und Soziales (DBT), Belvedere Vodka
(Creative), SAS Bagel Chef (Creative), Answear.com (Creative),
Miele (Commerce), Sandoz (Content)
NORTH AMERICA
Krafton (Influence), Intuit (Creative), Shelter
Movers (Influence), Universite de Sherbrooke (Creative), Steak 'n
Shake (Creative), Loblaws (Cretaive), Mattress Firm (Creative),
Jasco Games (Creative), Wondery (CRM), McDonalds (CRM), Milton
Hershey School (Influence), University of Oklahoma (Production),
Progress Residential (Production), Wyndham Hotels & Resorts
(Production), Robert Walters (Production), HP (Commerce), Sun Life
of Canada (Commerce), Rite Aid (Media), The PUR Company (Media),
MTY Food Group (Influence), General Mills (Commerce), Dunkin’
(Creative & Digital), Walgreens (Media), KB Home (Creative),
Burger King (Creative), Sanofi (Influence), Virgin Mobile
(Creative), Toronto Parking Authority (Creative), HealthPartners
Canada (Influence), Groupe Atallah (Media), Kicking Horse Coffee
(Creative & Influence), General Motors Company (Production),
Tillamook County Creamery Association (Creative), Signet Jewelers
(Media & Production), Blue Diamond Growers (Media), Turo
(Creative & Production), UPS (Creative), LVMH (Media), Shark
Beauty (Creative), New Age Products (Media), Samsung (Commerce),
TGI Fridays (Media), National Life Insurance (Media), Sierra Nevada
Brewing Company (Creative), Coopers Hawk Winery and Restaurants
(CRM), Haribo of America (Creative), Air Transat (Influence), The
Cadillac Fairview Corporation (CRM), Kellogg Company (Content), The
Procter And Gamble Company (Influence), Duracell (Creative),
Kimberly-Clark (Media), The Container Store (Data), Dicks Sporting
Goods (CRM), ConAgra Foods (Creative), QuadReal Property (Content
& Influence), GlaxoSmithKline (Production), Edo Japan
Restaurants (Influence), Starbucks (Influence), Olymel (Creative),
Insurance Brokers Association of Ontario (Influence), Foresters
Life Insurance (Production), The TJX Companies (Content)
ASIA PACIFIC/MEA
Miele (CRM), United Homeware Company (Creative),
Krungthai Bank (Creative), Anker (Media), Royal Automobile Club
(Media), Charles & Keith (Commerce), Nick Did This (Media),
Nine Network (Creative), Essity (Media), OSHO (DBT), La Trobe
University (DBT), LVMH (Production), Cathay Pacific Airways
(Commerce), Pepsico (Production), Duolingo (Creative), Aeries
Financial Technologies (Media), Central Provident Fund Board
(Production), AIA Company (Media), Haleon (Production), LOréal
(Media & Production), The Standard Bank of South Africa
(Creative), Sanofi (Creative), Nestlé (Production), Diageo
(Commerce), Mondelez (Production), Pizza Hut (Creative), Cancer
Council Victoria (Media), Emirates NBD (Creative), Grupo Bimbo
(Creative), Microsoft (Influence), JioMart (Creative), AkBank
(Media), Novartis (Creative & Production), United Breweries
(Production), Charlotte Tilbury Beauty (Creative), Genesis Motor
(Creative), Torrent Pharmaceuticals (Creative), More Retail
(Media), GlaxoSmithKline (Creative), Crocs (Creative), Shanghai
Neobio (Creative), FWD Group (Media), Bank of China (Media), Yili
(Creative), Singhealth (Digital), P&G (Digital), Oritain
(Creative & Media), Neom Company (Creative), Renault (Media),
Bosideng (Production), HSBC (Creative), BASF (Creative), Union Bank
of the Philippines (Creative), Roborock (Production), Indeed
(Influence), Samsonite (Media), New Balance (Production), Keypath
Education (Media), Jio-bp (Digital), Enamor (Digital), UniScholars
(Creative), The Procter And Gamble Company (Commerce), Friesland
Campina (Media), Sony Playstation (Creative), TPG (Media), Iveco
(Media), Sace (Media), PUMA (Creative), Microtek (Creative),
BikesOnline (Digital), Reliance Retail (Creative), Shimao Hotel
Group (Influence), Hong Kong Technology Venture Company (Content),
Honor (Influence), Hang Lung Properties (Creative), Amway
(Production)
LATAM
LOréal (Media), Bayer (Media), Samsung (Media),
Nestlé (Creative), PicPay (Creative), Pizza Hut (Commerce), Polla
Chilena (Media), Telecom Argentina (Media), Paper Excellence
(Media), Comgás (Media), Sportingbet (Content)
GLOBALAdobe (Media), Mondelez
(Production), King (Creative), Ninjacart (Creative), Alvarium
Tiedemann (Creative), Amplifon (Creative), Pfizer (Creative, Media,
Data, Production), Miele (Media), Ancestry (Media)
* *
*
Disclaimer
Certain information contained in this document,
other than historical information, may constitute forward-looking
statements or unaudited financial forecasts. These
forward-looking statements and forecasts are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected. These forward-looking statements and
forecasts are presented at the date of this document and, other
than as required by applicable law, Publicis Groupe does not assume
any obligation to update them to reflect new information or events
or for any other reason. Publicis Groupe urges you to carefully
consider the risk factors that may affect its business, as set out
in the Universal Registration Document filed with the French
Autorité des Marchés Financiers (AMF) and which is available on the
website of Publicis Groupe (www.publicisgroupe.com), including an
unfavorable economic climate, a highly competitive industry,
risks associated with the confidentiality of personal data, the
Groupe’s business dependence on its management and employees, risks
associated with mergers and acquisitions, risks of IT system
failures and cybercrime, the possibility that our clients could
seek to terminate their contracts with us on short notice, risks
associated with the reorganization of the Groupe, risks of
litigation, governmental, legal and arbitration proceedings, risks
associated with the Groupe’s financial rating and exposure to
liquidity risks.
About Publicis Groupe - The Power of
OnePublicis Groupe [Euronext Paris FR0000130577, CAC 40]
is a global leader in communication. The Groupe is positioned at
every step of the value chain, from consulting to execution,
combining marketing transformation and digital business
transformation. Publicis Groupe is a privileged partner in its
clients’ transformation to enhance personalization at scale. The
Groupe relies on ten expertise concentrated within four main
activities: Communication, Media, Data and Technology. Through a
unified and fluid organization, its clients have a facilitated
access to all its expertise in every market. Present in over 100
countries, Publicis Groupe employs around 101,000 professionals.
www.publicisgroupe.com | Twitter:@PublicisGroupe | Facebook |
LinkedIn | YouTube | Viva la Difference!
ContactsPublicis Groupe
|
Amy Hadfield |
Corporate Communications |
+ 33 1 44 43 70 75 |
amy.hadfield@publicisgroupe.com |
Alessandra Girolami |
Investor Relations |
+ 33 1 44 43 77 88 |
alessandra.girolami@publicisgroupe.com |
Lorène Fleury |
Investor Relations |
+ 33 1 44 43 57 24 |
lorene.fleury@publicisgroupe.com |
Maxine Miller |
Investor Relations |
+ 33 1 44 43 74 21 |
maxine.miller@publicisgroupe.com |
Appendices
Net revenue: organic growth
calculation
(million euro) |
Q1 |
Q2 |
Q3 |
9 months |
|
Impact of currencyat end Sep.
2023(million euro) |
2022 net revenue |
2,800 |
3,073 |
3,237 |
9,110 |
|
GBP (2) |
(21) |
Currency impact (2) |
61 |
(73) |
(189) |
(201) |
|
USD (2) |
(95) |
2022 net revenue at 2023 exchange rates (a) |
2,861 |
3,000 |
3,048 |
8,909 |
|
Others |
(85) |
2023 net revenue before acquisition impact (b) |
3,065 |
3,213 |
3,209 |
9,487 |
|
Total |
(201) |
Net revenue from acquisitions (1) |
14 |
26 |
32 |
72 |
|
|
|
2023 net revenue |
3,079 |
3,239 |
3,241 |
9,559 |
|
|
|
Organic growth (b/a) |
+7.1% |
+7.1% |
+5.3% |
+6.5% |
|
|
|
(1) Acquisitions (Practia, Profitero, Corra,
Tquila, Yieldify, Tremend, Retargetly, Wiredcraft, Bizon,
VivNetworks, Cheat, ARBH, Changi, Perlu, Advertise Bulgaria,
Publicis Sapient AI Labs), net of disposals (Russia, Qorvis, Makers
Lab)(2) EUR = USD 1.0835 on average in 9M 2023 vs.
USD 1.065 on average in 9M 2022EUR = GBP 0.871 on average in 9M
2023 vs. GBP 0.847 on average in 9M 2022
Definitions
Net revenue or Revenue less pass-through
costs: Pass-through costs mainly concern production and
media activities, as well as various expenses incumbent on clients.
These items that can be re-billed to clients do not come within the
scope of assessment of operations, net revenue is a more relevant
indicator to measure the operational performance of the Groupe’s
activities.
Organic growth: Change in net
revenue excluding the impact of acquisitions, disposals and
currencies.
Net Debt (or financial net
debt): Sum of long and short financial debt and associated
derivatives, net of treasury and cash equivalents, excluding lease
liability since 1st January 2018.
Average net debt: 12 month
average of monthly net debt at end of month.
Please find the press release here
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