Publicis Groupe continues to be the best performing of the holding companies, reporting 5.3 per cent organic growth in Q3 2023. However, that was down from 7.3 per cent in Q2.
Publicis’s media operations were the standout performer with data arm Epsilon also performing well. By region, the US (Publicis’ biggest market) was up 3.2 per cent, Europe 10.7 per cent and Asia Pacific (where Australia operates) up 3.8 per cent. Publicis has slightly raised its forecast for the year to 5.5-6 per cent growth with operating margins forecast to rise to 18 per cent.
The Paris-based agency has been on a hot run of late, with revenue growth ahead of the peer group so far this year, and Q3 is the second quarter in a row when it has upgraded its forecast.
That contrasts with Dentsu, IPG, S4 Capital and WPP, which cut their annual guidance at their Q2 results, blaming the results on a decrease in tech spend.
Publicis employs close to 100,000 people globallyand generates roughly one third of revenues from media, data and tech and creative.
Highlights of the numbers included:
- Q3 organic growth at +5.3 per cent thanks to revenue mix and New Business tailwind
- Very solid US up 3.2 per cent after two years of double-digits, standout performance in Europe at 10.7 per cent, Asia Pacific improving to 3.8 per cent
- Acceleration of organic growth versus 2019: +22 per cent in Q3, after +20 per cent in Q2 and +18 per cent in Q1
- Further upgrade of 2023 guidance despite persistent macroeconomic uncertainties:
- Organic growth expected at +5.5 per cent to six per cent, vs. circa five per cent previously
- Operating margin rate at 18 per cent, vs. close to 18 per cent previously
- Free cash flow close to €1.7 billion, vs. at least €1.6 billion previously ($A2.84 vs. $A2.67 billion, respectively)
Arthur Sadoun (lead image), chairman and CEO of Publicis Groupe, said: “Despite a macroeconomic context that became more difficult over the quarter, we delivered strong organic growth of 5.3 per cent 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 per cent on top of double digits in the last two years, Europe at a standout +10.7 per cent and APAC improving again at 3.8 per cent.
“Looking at our journey since the pandemic, the acceleration of our growth amid persistent macroeconomic challenges is clearly visible, with Q3 at 22 per cent compared to 2019 levels, coming after 20 per cent in Q2 and 18 per cent 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 per cent to six per cent organic growth for the full year, while upgrading our operating margin to 18 per cent 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. ”