LFL growth of 0.5% in Q3. Continued progress against our strategic objectives with important client wins and retentions. Full year guidance reiterated
Third quarter |
£m |
+/(-) % reported1 |
+/(-) % LFL2 |
||||||
Revenue |
3,558 |
1.4 |
4.1 |
||||||
Revenue less pass-through costs |
2,765 |
(2.6) |
0.5 |
||||||
|
|
|
|
||||||
Year to date |
|
|
|
||||||
Revenue |
10,784 |
0.5 |
3.1 |
||||||
Revenue less pass-through costs |
8,364 |
(3.3) |
(0.5) |
Q3 highlights
- Q3 reported revenue +1.4%, LFL revenue +4.1%
-
Q3 LFL revenue less pass-through costs +0.5%, with
North America +1.7%, Western Continental Europe +2.2% andUK flat, partially offset by a 2.2% decline in Rest of World, reflecting a continued decline inChina (-21.3%) - Global Integrated Agencies Q3 LFL revenue less pass-through costs grew 0.5% (Q3 2023: +0.1%). GroupM growth improved sequentially to 4.8% (Q3 2023: +1.6%), offset by a 3.1% decline at integrated creative agencies (Q3 2023: -1.1%)
- Top ten clients3 grew 7.0% in Q3. CPG, automotive, travel & leisure and financial services client sectors grew well in the quarter. Technology client sector stabilising, with growth of 1.3% in Q3 vs -5.1% in H1 2024. Healthcare and retail sectors continued to be impacted by 2023 client losses
- Strong progress on strategic initiatives with new products, capabilities and solutions launched within WPP Open, our AI-powered marketing operating system. Burson, GroupM and VML on track to deliver targeted savings and build simpler, stronger businesses
-
Q3 net new billings4
$1.5bn (Q3 2023:$1.4bn ). Year-to-date$3.2bn (YTD 2023:$3.4bn ). Encouraging success in recent pitches built around WPP Open -
Client wins in Q3 included Amazon (media ex
Americas ), Unilever (media, retail media and activation, and creative) and Henkel (media). Strong start to Q4 with Starbucks (US creative) and Honor (global media includingChina ) -
Adjusted net debt as at
30 September 2024 £3.6bn, down £0.3bn year-on-year - Agreement to sell WPP’s majority stake in FGS Global on track to close in Q4, generating net cash proceeds to WPP of c.£604m after tax (link). Proceeds will be used to reduce leverage
- 2024 guidance unchanged: 2024 LFL revenue less pass-through costs of -1% to 0%, with Q4 facing a tougher comparative than Q3 and macro uncertainty. Improvement in FY24 headline operating profit margin of 20-40bps (excluding the impact of FX)
“Our third quarter delivered like-for-like growth in net sales5, with a strong performance from GroupM in particular. We saw growth in
“Most importantly, we returned to form in new business, winning Amazon’s media account outside the
“Our people are increasingly embedding AI in the way that we work and deliver creative and media campaigns to clients, with usage of WPP Open up 107%6 since the beginning of the year. Supporting this, the creation of VML and Burson, and the simplification of GroupM, are delivering a stronger business and structural cost savings.
“We are encouraged by progress during the quarter, but with recent new business wins primarily impacting 2025 and continuing macroeconomic pressures our expectations for the full year remain unchanged.”
Strategic progress
We have continued to make strong progress against each of our four strategic pillars.
Lead through AI, data and technology
At our Capital Markets Day, we laid out our plans to embrace AI and invest in the technology and data that is required. WPP Open, our intelligent marketing operating system powered by AI, is a critical component of our strategy, enabling us to use AI in how we work.
We have continued to invest in WPP Open as part of our annual investment of £250m in AI-driven technology. We have developed new functionality and integrated new AI models and, as a result, have seen growing adoption and usage across WPP and by our clients.
Since the start of the year, we are seeing monthly active users up 107%, LLM usage up 300% and image generation up 349% as we work to drive increased adoption across WPP. We are also seeing growing adoption by clients, with key clients using the platform including
Functionality and Model Integration
WPP Open is a single marketing operating system that powers all of WPP’s businesses. The core Studios – Creative, Production, Media, Experience, Commerce and PR – are designed to support key functional areas with AI-powered applications in a way that allows for integrated ways of working across the company.
During the quarter, we launched a new iOS and Android companion app for WPP Open, providing mobile access to key functionality within Open across WPP. This includes capabilities which enable our new business, client management, and strategy teams to deliver more effective and efficient work. Within
WPP Open’s
Combining owned data; data that we generate from planning, optimisation and campaigns across GroupM; partner and third-party data; and client owned data, we can discover insights, plan communications, optimise campaigns and measure effectiveness, all within Media Studio’s sophisticated web-based user interface.
Our Work with Clients
Not only is AI enabling us to innovate in how we work with clients and to produce work in new ways, it is also allowing us to develop new ground-breaking consumer experiences for our clients. We continue to lead the way in demonstrating the power of the technology to build more relevant and personalised experiences for our clients.
Some examples include:
- ‘Adscan by Makro’ uses AI-powered recognition of product images to harness brands’ outdoor advertising, directing them to Makro’s e-commerce platform to buy those products at a discount.
- Mondelēz’s ‘Cadbury Give a Cheer to a Volunteer’ uses AI to allow Cadbury consumers to create customised short animated videos to celebrate the generosity of sporting volunteers.
- Mars Wrigley’s Mars Bar ‘For You Who Did That Thing You Did’ leverages AI to reward Australians for their everyday achievements with a campaign through Amazon.com.au.
Partnerships
In August, in partnership with Pacvue, we launched an Integrated Commerce Management solution to enhance our retail media capability by unifying bespoke insights, media management, and retail operations exclusively for GroupM clients.
In October, we announced a global technology partnership with Roblox, a leading immersive gaming and creation platform, building on several years of collaboration on interactive 3D brand content and advertising. The alliance will help scale expertise among agency teams and brands in leveraging Roblox as a new media channel.
Accelerate growth through the power of creative transformation
Creativity is what sets WPP apart, and when combined with AI, technology, data and the largest global media platform, we have an unparalleled integrated offer to clients.
That offer is resonating well, as reflected in growth across our largest clients, driving expansion in scope for many top clients, with wins including both creative and media assignments for Unilever during the quarter and in new assignments such as Starbucks.
During the quarter we acquired New Commercial Arts (‘NCA’), a fast-growing independent creative agency employing around 90 people, with clients including Sainsbury’s, MoneySuperMarket, Vodafone, Nando’s and Paramount+. NCA was founded in 2020 by a team including industry leaders
Build world-class, market-leading brands
We have made excellent progress towards building stronger, world-class brands.
VML launched in
As announced in August,
Burson, which launched in June, continued to strengthen and broaden its PR offer and delivered new client assignment wins at
Execute efficiently to drive financial returns through margin and cash
As well as the structural cost savings relating to the initiatives above, we are making good progress in our back-office efficiency programme across enterprise IT, finance, procurement and real estate.
In real estate, our ongoing campus programme and consolidation of leases continues to deliver benefits. Four new campuses opened during the quarter, including WPP’s third
Purpose and ESG
WPP’s purpose is to use the power of creativity to build better futures for our people, planet, clients and communities. Read more on the ways WPP is working to deliver against its purpose in our 2023 Sustainability Report.
Third quarter overview
Revenue was £3.6bn, up 1.4% from £3.5bn in Q3 2023, and up 4.1% like-for-like. Revenue less pass-through costs was £2.8bn, down 2.6% from Q3 2023, and up 0.5% like-for-like.
|
Q3 2024 £ m |
% r eported |
% M &A |
% F X |
% L FL |
||||||||||
Revenue |
3,558 |
1.4 |
0.2 |
(2.9) |
4.1 |
||||||||||
Revenue less pass-through costs |
2,765 |
(2.6) |
(0.2) |
(2.9) |
0.5 |
||||||||||
|
YTD 2024 £ m |
% r eported |
% M &A |
% F X |
% L FL |
||||||||||
Revenue |
10,784 |
0.5 |
0.4 |
(3.0) |
3.1 |
||||||||||
Revenue less pass-through costs |
8,364 |
(3.3) |
0.1 |
(2.9) |
(0.5) |
Segmental review
Business segments - revenue less pass-through costs
% LFL +/(-) |
Global I ntegrated Agencies |
Public Relations |
Specialist Agencies |
||||||
Q3 2024 |
0.5 |
0.2 |
0.8 |
||||||
YTD 2024 |
(0.3) |
(0.5) |
(2.9) |
Global Integrated Agencies : GroupM, our media planning and buying business, grew 4.8% in Q3 (Q2: +1.4%), offset by a 3.1% decline at other Global Integrated Agencies (Q2: -2.4%).
GroupM saw broad-based growth in all major markets, including the US,
Our integrated creative agencies declined 3.1%. Hogarth continued to grow well, benefiting from new business wins and growing demand for its technology and AI-driven capabilities, as clients seek to produce more personalised and addressable content. Ogilvy grew well in the US, benefiting from recent client assignment wins, but this was offset by weakness in
Public Relations
: Burson, created in June from the merger of BCW and Hill & Knowlton, made good progress with its integration and launched additional AI-powered tools including
Specialist Agencies
:
Regional segments - revenue less pass-through costs
% LFL +/(-) |
|
|
Western Continental
|
Rest of World |
||||||||
Q3 2024 |
1.7 |
0.0 |
2.2 |
(2.2) |
||||||||
YTD 2024 |
(0.5) |
(1.8) |
1.9 |
(1.7) |
Western Continental Europe grew 2.2%, reflecting growth in
The Rest of World declined by 2.2% in Q3 2024 as growth in most regions was offset by a decline of 21.3% in
The new management team in
Top five markets - revenue less pass-through costs
% LFL +/(-) |
|
|
|
|
|
||||||||||
Q3 2024 |
1.9 |
0.0 |
1.4 |
(21.3) |
2.3 |
||||||||||
YTD 2024 |
(0.3) |
(1.8) |
(2.8) |
(20.6) |
6.2 |
Client sector review - revenue less pass-through costs
|
Q3 2024 |
YTD 2024 |
YTD 2024 |
||||||
|
% LFL +/(-) |
% LFL +/(-) |
% share, revenue less pass-through costs7 |
||||||
CPG |
7.6 |
7.3 |
28.1 |
||||||
Tech & Digital Services |
1.3 |
(3.1) |
17.2 |
||||||
Healthcare & Pharma |
(7.7) |
(8.6) |
11.2 |
||||||
Automotive |
5.8 |
2.9 |
10.5 |
||||||
Retail |
(5.9) |
(8.6) |
8.9 |
||||||
Telecom, |
(2.3) |
3.3 |
6.8 |
||||||
Financial Services |
5.3 |
2.2 |
6.3 |
||||||
Other |
(15.4) |
(15.3) |
4.7 |
||||||
Travel & Leisure |
10.8 |
5.6 |
3.7 |
||||||
Government, Public Sector & Non-profit |
4.1 |
(2.9) |
2.6 |
Balance sheet highlights
As at
The agreement, announced in August, to sell WPP’s majority stake in FGS Global to KKR at an enterprise valuation of
Outlook
Our guidance for 2024 is as follows:
Like-for-like revenue less pass-through costs growth of -1% to 0%; Headline operating margin improvement of 20-40bps (excluding the impact of FX) |
Other 2024 financial indications:
- Mergers and acquisitions will have a slightly negative impact to revenue less pass-through costs growth, primarily due to the expected disposal of FGS Global and limited M&A activity in FY 2024 (previously <0.5%)
-
FX impact: current rates (at
16 October 2024 ) imply a c.3.2% drag on FY 2024 revenue less pass-through costs, with a 0.2pt drag expected on FY 2024 headline operating margin - Headline income from associates8 and non-controlling interests at similar levels to 2023
- Headline net finance costs of around £295m
- Headline effective tax rate9 of around 28%
- Capex of around £260m
- Cash restructuring costs of around £285m
- Working capital expected to be broadly flat year-on-year
Medium-term targets
In
- 3%+ LFL growth in revenue less pass-through costs
- 16-17% headline operating profit margin
- Adjusted operating cash flow conversion of 85%+10
Business sector and regional analysis
Business sector11
Revenue analysis
|
Q3 |
|
YTD |
|||||||||||||||
|
£m |
+/(-) % reported |
+/(-) % LFL |
|
£m |
+/(-) % reported |
+/(-) % LFL |
|||||||||||
Global Int. Agencies |
3,011 |
2.1 |
4.8 |
|
9,127 |
1.1 |
3.7 |
|||||||||||
Public Relations |
292 |
(3.3) |
0.0 |
|
893 |
(2.9) |
(0.6) |
|||||||||||
Specialist Agencies |
255 |
(1.2) |
1.4 |
|
764 |
(1.9) |
0.1 |
|||||||||||
|
3,558 |
1.4 |
4.1 |
|
10,784 |
0.5 |
3.1 |
Revenue less pass-through costs analysis
|
Q3 |
|
YTD |
|||||||||||||||
|
£m |
+/(-) % reported |
+/(-) % LFL |
|
£m |
+/(-) % reported |
+/(-) % LFL |
|||||||||||
Global Int. Agencies |
2,268 |
(2.5) |
0.5 |
|
6,863 |
(3.2) |
(0.3) |
|||||||||||
Public Relations |
274 |
(3.0) |
0.2 |
|
842 |
(2.8) |
(0.5) |
|||||||||||
Specialist Agencies |
223 |
(2.3) |
0.8 |
|
659 |
(5.1) |
(2.9) |
|||||||||||
|
2,765 |
(2.6) |
0.5 |
|
8,364 |
(3.3) |
(0.5) |
Regional
Revenue analysis
|
Q3 |
|
YTD |
|||||||||||||||
|
£m |
+/(-) % reported |
+/(-) % LFL |
|
£m |
+/(-) % reported |
+/(-) % LFL |
|||||||||||
|
1,376 |
3.0 |
5.9 |
|
4,157 |
1.9 |
3.6 |
|||||||||||
|
550 |
7.7 |
7.3 |
|
1,608 |
2.1 |
1.6 |
|||||||||||
W Cont. |
693 |
(0.2) |
2.3 |
|
2,151 |
(0.9) |
2.0 |
|||||||||||
Rest of World12 |
939 |
(2.9) |
1.3 |
|
2,868 |
(1.2) |
4.0 |
|||||||||||
|
3,558 |
1.4 |
4.1 |
|
10,784 |
0.5 |
3.1 |
Revenue less pass-through costs analysis
|
Q3 |
|
YTD |
|||||||||||||||
|
£m |
+/(-) % reported |
+/(-) % LFL |
|
£m |
+/(-) % reported |
+/(-) % LFL |
|||||||||||
|
1,092 |
(1.2) |
1.7 |
|
3,299 |
(2.7) |
(0.5) |
|||||||||||
|
390 |
0.3 |
0.0 |
|
1,169 |
(1.3) |
(1.8) |
|||||||||||
W Cont. |
554 |
0.0 |
2.2 |
|
1,718 |
(0.8) |
1.9 |
|||||||||||
Rest of World |
729 |
(7.7) |
(2.2) |
|
2,178 |
(7.0) |
(1.7) |
|||||||||||
|
2,765 |
(2.6) |
0.5 |
|
8,364 |
(3.3) |
(0.5) |
Cautionary statement regarding forward-looking statements
This document contains statements that are, or may be deemed to be, “forward-looking statements”. Forward-looking statements give the Company’s current expectations or forecasts of future events.
These forward-looking statements may include, among other things, plans, objectives, beliefs, intentions, strategies, projections and anticipated future economic performance based on assumptions and the like that are subject to risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as ‘aim’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘forecast’, ‘guidance’, ‘intend’, ‘may’, ‘will’, ‘should’, ‘potential’, ‘possible’, ‘predict’, ‘project’, ‘plan’, ‘target’, and other words and similar references to future periods but are not the exclusive means of identifying such statements. As such, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the Company. Actual results or outcomes may differ materially from those discussed or implied in the forward-looking statements. Therefore, you should not rely on such forward-looking statements, which speak only as of the date they are made, as a prediction of actual results or otherwise. Important factors which may cause actual results to differ include but are not limited to: the impact of epidemics or pandemics including restrictions on businesses, social activities and travel; the unanticipated loss of a material client or key personnel; delays or reductions in client advertising budgets; shifts in industry rates of compensation; regulatory compliance costs or litigation; changes in competitive factors in the industries in which we operate and demand for our products and services; changes in client advertising, marketing and corporate communications requirements; our inability to realise the future anticipated benefits of acquisitions; failure to realise our assumptions regarding goodwill and indefinite lived intangible assets; natural disasters or acts of terrorism; the Company’s ability to attract new clients; the economic and geopolitical impact of the conflicts in
Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation, the
Any forward looking statements made by or on behalf of the Group speak only as of the date they are made and are based upon the knowledge and information available to the Directors at the time.
______________________________ |
||
1. |
Percentage change in reported sterling. |
|
2. |
Like-for-like. LFL comparisons are calculated as follows: current year, constant currency actual results (which include acquisitions from the relevant date of completion) are compared with prior year, constant currency actual results from continuing operations, adjusted to include the results of acquisitions and disposals for the commensurate period in the prior year. |
|
3. |
Growth in Q3 2024 for the top 10 clients by revenue less pass-through costs in YTD 2023. Growth rate includes the adverse impact of a client loss in the healthcare sector. |
|
4. |
As defined in the glossary on page 43 of WPP’s 2024 Interim Results. Note Q3 net new billings include expanded scope won alongside retentions at Unilever, Honor and Henkel. |
|
5. |
“Net sales” refers to revenue less pass-through costs. |
|
6. |
Increase in monthly active users January to |
|
7. |
Proportion of WPP revenue less pass-through costs in YTD 2024; table made up of clients representing 79% of WPP total revenue less pass-through costs. |
|
8. |
In accordance with IAS 28: Investments in Associates and Joint Ventures once an investment in an associate reaches zero carrying value, the Group does not recognise any further losses, nor income, until the cumulative share of income returns the carrying value to above zero. |
|
9. |
Measured as headline tax as a % of headline profit before tax. |
|
10. |
Adjusted operating cash flow divided by headline operating profit. |
|
11. |
Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Specialist Agencies. The impact of the re-presentation is not material. |
|
12. |
RoW includes - |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241022456069/en/
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Source: WPP