WPP plc

Thank you very much, and good morning, everybody. Welcome to our first quarter trading update, and thank you for joining us. I'm joined on today's call by Joanne Wilson, our CFO, and Tom Singlehurst, our Head of Investor Relationships. Before we get started, please have a look at the cautionary statement, which you can see on slide two, and look at that carefully. So turning to the overview on page three. I'll quickly summarize where we are for the year. Joanne will take us through the financial performance. We'll review their strategic progress and then tackle the Q&A. So on the overview on page four, firstly, in terms of the first quarter 2025 performance, when we met In February, we talked about the challenging macro environment, as well as how the timing of our new business would impact the shape of growth at WPP throughout the year. And as you know, we had a challenging fourth quarter. So we were cautious giving our guidance for the year, as well as being aware of some of the tariff issues and discussions that have been taking place. We did highlight those in our release. And I'd say that our performance in Q1, which saw sales drop, net sales down 2.7% is consistent with what we're saying at that time and therefore very much in line with our own expectations. At the same time, I don't want to give the impression that we're happy with these results. We're not. It's not where we want to be. And we have concrete plans to address the areas of competitive underperformance, including some steps like the acquisition of Infosum that we have taken this quarter. The first quarter did include some encouraging signs like overall performance in the U.S. improved from Q4, albeit benefiting from a slightly soft comp, and also encouraged by the improved new business momentum at VML and Burson following the heavy integration work last year, and it was good to see Hogarth return to strong growth after a challenging fourth quarter. Against this, Group M's growth stepped down in Q1, in particular in Europe, due to the impact of the soft and medium environment. And while the U.S. business for Group M saw growth in low, mid to single digits, it's still below what we would consider to be our competitive performance. And we'll come later to talk about Group M in more detail. The second point is this is a more challenging macro environment with tariff uncertainty. And while W3 is not directly impacted by tariffs, they will undoubtedly impact many of our clients, where and how they prioritized their margin investments in advertising and promote and promotion at this point we haven't seen any significant change in spending patterns from our own clients and our four-year guidance remains within the range we set at the beginning of the year which did anticipate broad macro uncertainty we are though very vigilant on the outlook and very disciplined on how we are managing the cost base so in the immediate short term We need to manage and protect the P&L, but longer term, what is important is that we continue to invest and make strategic progress, particularly with WPP open, and that's what will underpin our competitive performance and growth longer term. And then finally, in terms of strategic progress, in February we talked about three specific actions, drive, further adoption of WPP Open is seeing good growth in that, strengthen the Group M proposition, get Group M back to growth activity access and infosum, and importantly, win more new business. I do think there's some encouraging signs of progress on all of these three fronts. So I'll take you through details of those in a moment, but before I do, I'll hand you over to Joanne to take you through the details of the first quarter performance.

Thank you, Mark, and good morning, everyone. So let me take you through some more detail on our first quarter 2025 performance, starting on slide six. Like-for-like revenue-less pass-through costs fell 2.7% in the quarter, which was broadly in line with our expectations. Consistent with messaging under failure results, the drivers of like-for-like performance were a continuation of the challenging macro environment seen in the fourth quarter, coupled with the sequencing of historical client losses. A continued challenging environment to China and the mildly dilutive effect of the FGS disposal on like-for-like growth. The move in reported revenue was amplified by the full runway effect of the FGF global disposal, which represented a drive on reported sales of 3.3%, as well as the headwind from FX moves, in particular the strong pound versus the Euro in Q1. Overall, revenue-less pasture costs were down 7.6% in the quarter. Moving on to slide seven, and looking at performance across all this, global integration agencies saw a like-for-like decline of 2.8% in the quarter. Within this, Group M was down 0.9%, which reflected growth in the US, offset by the impact of prior year client losses, performance in the UK, and a more challenging media environment across Europe. Group M saw good growth in India, which only partially offset continued weakness in China. Like for like for our other global integrated creative agencies fell 4.4% in the first quarter, and compared to the decline of 6.5% in the fourth quarter of 2024. Within this, we continue to see an impact on continued weakness in project-based work, weighing on NKQA's performance, a tougher camp at Ogilvy, and further impacts from a challenging environment in China. Against this, we saw a return to high single-digit growth within our production business, Hubarth, driven by strong trends across CPG, tech, and also a new business. The re-acceleration of growth here is particularly encouraging given the more challenging performance in Q4 2024. Turning to public relations, like-for-like declined by 6.6% in the first quarter. While overall performance has not much changed from the fourth quarter, affecting more challenging environments for client discretionary spend, in particular in Europe, we are encouraged by improved momentum on UBC North America. Finally, specialist agencies saw like-for-like revenue left past due costs grow 1.2% in the quarter, with particularly strong growth from CMI Media Group, our specialist healthcare media agency. and moderating declines at Landor and Design Bridge and Partners. Turning to performance by region on slide 8, North America declined by 0.1% in the first quarter, lapping a mid-single-digit decline in 2024. The automotive, TME, and financial services sectors grew, as well as technology client spend, which continued the recovery seen in the second half of 2024. While CPG client spend saw mild declines, Group M grew in the first quarter in North America, but were offset by declines at Ogilvy and AKQA. The United Kingdom declined by 5.5% in the first quarter of 2025, impacted by its higher weighting towards project-based work and the impact of client losses at Group M. The client sector, growth in tech, automotive, and financial services was offset by pressure on CTG and CME. Western continental Europe saw a overall like-for-like decline of 4.5% versus a challenging comp from 2024. The region was weak across the board in the result of pressure, primarily on our businesses, and the impact of a more challenging media environment . The rest of the world declined 3.8% in the first quarter, largely driven by persistent pressures in China, which declined 17.4% in the quarter on the back of continued macroeconomic pressures, and client assignment losses. We expect performance to continue to be challenging in China in the first half of 2025, with some improvement later in the year. Against this, we saw strong performance in India, which was up 5.5%, driven by Group M. Central and Eastern Europe also saw robust performance, up 2% in the first quarter. Slide 9 shows Q1 performance across our client sectors. This reflects growth across our designated clients, which represent 82% of our net sales. Despite the high single digit come from Q1 2024, TPG showed a stable performance during the quarter, with growth of 0.3%, protecting pressure in the US and the UK, offset by growth in the rest of the world. The technology client sector showed further sequential improvement, with growth increasing to 4.5% in Q1 and 2.5% in Q4 2024, with growth relatively balanced across the world. Healthcare started to stabilise with flat growth in the quarter, so X23 client losses start to roll off. Automotive and financial services performed well, with growth of 5% and 2.6% respectively. We saw weaker performance from telecoms, which was impacted by client losses, while retail sector time spent declined by 2.9%, compared to a high single-digit decline in 2024. The performance of our top clients continues to be robust, with our top 25 clients growing 2.5% in the first quarter. And moving on to slide 10, we've chosen movements in net debt to the end of March, with adjusted net debt at 3.7 billion pounds, down year-on-year, but from year-on, reflecting our typical cash cycle. Average adjusted net debt better captures the normal pattern of working capital moves across the year, and this is slightly down through the first quarter at 3.4 billion pounds, and should improve as the impact of the SGS global disposal annualises. The average adjusted net debt to headline EBITDA ratio is expected to be within our 1.5 to 1.75 times target range in 2025. The weighted average maturity of our £3.8 billion has gone debt in seven years, and this is an average coupon of 3.6%. Meanwhile, our total available liquidity across the group stood at £2.9 billion at the 31st of March 2025, including a $2.5 billion revolving credit facility, which returns in February 2030. It is important to note that neither our bond debt nor our RTF have any covenants. And in March, Moody's reaffirmed our BAA2 rating with a stable outlook, coupled with our BBB rating from SMB. Our credit is comfortably investment grade. And finally, turning to slide 11, which shows our guidance for the full year. At the beginning of the year, we set our guidance based on a like-for-like range of flat to minus 2%. This reflected a degree of caution in light of what then appeared to be an uncertain macro environment, as well as our expectation of the impact of net e-business during the year. Since then, the macro environment has remained uncertain and is likely to be so for a large part of 2025. For now, we remain confident this is reflected in our like-for-like range for the year. We do think that heightened uncertainty on the macro outlook has potential to further impact second quarter performance. This, coupled with the sequencing of client wins and losses through the year, means we don't anticipate a material change in trajectory in the second quarter compared to the first. We continue to expect like-for-like performance to improve in the second half as more recent wins fully ramp up. Overall, we expect to hold headline operating margin broadly flat, excluding the impact of FX, with the benefit of annualized structural cost savings and continued discipline cost management, offsetting incremental investment in WPP open AI and data. We expect Group M to continue simplifying its structure to accelerate the move to a more client-centric operating model. The impact will be largely P&L neutral over the course of 2025. However, the timing of associated costs will weigh on the H1 margins, which will also be impacted by the phasing of revenue growth. Looking beyond revenue and headline operating profit, we make no major changes to our guidance. On cash flow, we continue to expect a reduction in our cash restructuring costs to £110 million versus £275 million in 2024, and adjusted operating cash flow before working capital of around £1.4 billion. The one change I would note is that we now expect the impact of FX moves to be closer to a drag of 2% for the full year versus around flat at the time of pre-limits. reflecting a stronger pound relative to the dollar. At current rates, we estimate this is having a circa 20 basis points impact and margin, given the relative weighting of a North American business. So thank you, and I will now hand you back to Mark.

Thanks very much, Joanne. So turning to our strategic progress on page 12, and then uh page 13. before we dive into that i think we do need to deal with the broader market environment i think it's fair to say that it is challenging we're absolutely seeing much greater economic uncertainty impacting uh business and consumer confidence so our prelims in february we made the point that the macro environment would be challenged we've seen that in q4 and i think it's fair to say that since then this uncertainty has increased the decision by the U.S. administration to initiate tariffs has created much greater uncertainty for all of our clients, whether or not they are directly or indirectly impacted. And historically, in uncertain environments, not necessarily hugely favorable for investment of any kind, whether it be longer-term capital projects or investment in brand building or short-term investment in activations. But in the time I've been doing these calls, we have had COVID, the Ukraine war, inflation, and now tariffs. There's nothing we're not used to dealing with. And clients, I think, as well, have learned how to prioritize their spending. They see it to some extent as a cost in the short term and an investment in the long term. And when they do cut, we should have the confidence to know that they will come back into the market. The impact of tariffs is also going to have an asymmetric impact, both in the U.S. versus the rest of the world, and also by industry. If we take our top 25 clients, five or so are most directly impacted by the tariffs on the cost of their product. Of the rest, around half have a more minor impact, and the other half have limited direct impact, but may be affected by the broader economic impact in the U.S. and the rest of the world. So the pattern does vary by clients. So what's the response we're seeing from our clients? I think, as we said in February... we'd already seen a more cautious outlook from clients from Q4 onwards. We've not yet seen any major step down in spending patterns from this. At the same time, we do have to be vigilant and agile. There's no doubt that there's a range of economic and political outcomes over the next day, month, quarter that could cause clients to take a different view on spending. And while that creates an uncertain environment for WPP, I do think it's important to note that our absolute and relative exposures are somewhat different from peers. We've long seen our geographic exposures a key strategic advantage with the current global agency group with 60% of our business outside the U.S. And while the U.S. is an incredibly important market for us and always will be, geographic diversity does have its value. Likewise, WPP's balance of exposure by client industry is one of our key strengths. And while there will never be disruption for some of our clients, our strong positions, in particular within CPG and technology, should be supportive of our growth. I think you saw some of that in the comments over the last 24 to 36 hours from some of the major CPG companies. And thirdly, there's the nature of our clients to consider. In the first quarter, it's important that we're spending by our top 10 clients up 4.6%. and by our top 25 clients, up 2.5%. So continued investment by major clients in marketing has continued into the first quarter, despite the impact on specific markets and sectors. And a final point that I would make is that regardless of the short-term uncertainty created by the macro environment, our clients' focus on and interest in the impact of AI is undiminished. Indeed, if anything, based on my conversation with clients, the level of interest and focus has increased as clients consider how AI and automation can be used to deliver marketing effectiveness and efficiency, both in the short and medium term. And on this point, I think the current macro uncertainty is actually acting as a catalyst for some advertisers to revisit how they approach marketing to deal with cost pressures. I think we feel more strongly than ever that WPP via WPP Open has an enormous opportunity to help clients to drive ROI on their marketing spend, as well as save money through deliver greater efficiency. to reduce the number of suppliers and reduce costs, but also to embrace a new way of working with more strategic partnerships. And clients are looking at marketing partnerships much more like technology partnerships, with more of the rigor and discipline perhaps that IT departments bring on supplier selection. And again, this background in industry moving from four players to three players is undoubtedly beneficial to us. And with that, we're being very proactive, as you would imagine, taking our integrated AI proposition to clients. So looking forward, let's cover priorities of 2025 on slide 14. We met in February. We highlighted three priorities in which we were laser-focused as an organization. First, The importance of driving take-up at WPP Open within our organisation, embedding it in our daily work. Second, to support Brian Lesser and his team in re-accelerating growth at Group M. And thirdly, to deliver and improve our new business success rate. Starting with WPP Open, we continue to see strong progress and take-up. The number of 48,000 users represents about 60% of our clients facing people using WPP Open last month, up from about 40% at the end of the year. It's important for a number of reasons. First, from a practical perspective, our people are using the platform and delivering greater efficacy and efficiency and understanding how they can do that. There are around 80,000 clients facing people within WPP, and it's our strategic objective that all of them are using this to deliver daily better work, certainly by the end of the year. Secondly, our conversion in new business pitches does move up by around 10% when we put WPP at the heart of our offering, which we're doing in every pitch, not just because it increases the chance of success, because it unlocks the potential to explore more innovative commercial models, allowing us and clients to share in the value we create, and deal with some of the pricing pressures that sometimes we're seeing in the market. And I hope we'll see continued progress on this metric as the year goes on. Turning to Group M, I mentioned at the prelims that the lion's share of the growth gap between us and our leading peers is attributable to the gap in performance of our media business, in particular in the US. As Brian outlined in February, we see some encouraging signs of progress from the strategy we launched in January 2024 to simplify and integrate the Group M offering But it is important that we redouble our efforts, but there also have been some challenges. Brian talked about five key priorities he's pursuing around data and technology, people and talent, innovation, collaboration, and the organization. And we're making good progress on each of these areas. But I'd summarize the overall progress of business plans. First, we have to make sure our go-to-market is as simple and integrated as it possibly can be. Further simplifying GroupM not only drives greater cost efficiency, but makes it a simpler and easier business for our clients to do business with. And that's what we mean by moving to a more client-centric model, taking out silos and barriers and cost within the organization to focus all of our resources on client success. Secondly, essentially not only do we catch up, But leapfrog, a competitive set in terms of how we use AI, data and technology to drive business outcomes. And I'll talk about InfoSum in a moment, but that's a significant step forward in that area. And then lastly, in terms of new business, it is lumpy, but I do think we're making progress. The loss of the Coca-Cola North American media business in the quarter was difficult initially. but we do have a very detailed debrief from the client and a good understanding of our strengths and challenges. We're making good progress towards renewing our broader agreement with that client. Meanwhile, in the first quarter, there are some important tangible signs of success, whether it be the win of the media mandate for EA, Godrej Consumer Products in India, the global consumer shopping market for Heineken, and many, many other new business pitches which are less public but work through the system, including the expansion of scope from our existing clients, which you do see in the results of our top 10 and top 25 clients. And an important common thread across all of this is WPP Open. We are putting that at the heart of what we're doing. So before we wrap up, turning on page 15 to InfoSum and why we believe it is an important step forward. Now, as you know, data... It's central to delivering the best execution for our media clients, but actually more broadly across the work that we do with clients. And this transaction transforms the breadth and scale of data intelligence for WPP's clients in a way that we think leapfrogs traditional identity-based solutions. Think of it as improving our access to more data and unlocking the power of AI on that data. connecting that data to more premium and quality inventory, and doing so using privacy-compliant technology. So how does it do that? InfoSum allows WPP's clients to maximize the value of their own first-party data with privacy-enhancing connections to data providers and media partners across the marketing ecosystem, and that's something that WPP can strengthen. In this context, it's important that it's not only does it have the world-leading cloud-based technology, but it's an established player with an extensive global data network. That includes hundreds of billions of data signals across multiple dimensions of data from media platforms including Channel 4, DirecTV, ITV, Netflix, News Corp, Samsung Ads, as well as major retailers around the world, and identity and data partners including Experian, TransUnion, Sakana, Denata, and NC Solutions. All of that data we're able to better integrate into our media planning and media activation and results measurement. So even before joining WPP and having the strength of our relationships to broaden that data set, it's a real world leader in data collaboration. But the power of the transaction, what it means in the context of WPP Open and GroupM more broadly, and by integrating data, InfoSum's capabilities within WPP Open, our clients are able to unlock the full potential of their customer data in reach-through AI in strong quality media environments that's not always available to people using legacy first-party data systems. And using federated learning techniques, clients are able to build, trade, and deploy custom AI models that can use that in a privacy-compliant way. They can generate insights and audiences to create precise predictive models, optimize campaigns, and deliver measurable improvement in real time. So the conversations we've had with clients have been very positive, dozens of conversations over the last few weeks, and the feedback very positive. And we're confident the deal works. alongside our broader simplification efforts, will drive a step change in performance, particularly in competitive reviews. And it happens to be as well a business that Brian knows well, so the integration, I think, is proceeding extremely well. So to wrap up on page 16, I think in summary, there's three key points that we wanted to make in this presentation. In the first, that our first quarter of performance, while weaker than we would like, is in line with our expectations. and we remain confident on achieving our full year guidance. At the same time, there's some important developments in the first quarter that encourage our belief that we're on the right track, whether it be the strong performance of our top clients or the improvement to new business momentum at VML Burson. Secondly, while the macro environment is uncertain, we view the diversified nature of our business, both by geography and by time, as a key strength. It's an important hedge in the short term, and we'll be seeing an opportunity longer term. And thirdly, I said, in February, there's three projects in 2025, staying at the forefront of AI, fixing Group M and winning more new business. And we are making progress on each of those. So I'm sure you all have questions and we're ready to take them. So operator, maybe hand back to you and Joanne and I will take people's questions. Thank you.