WPP plc

Good morning, everyone. Good morning and warm welcome to our 2025 Preliminary Results and Strategy Update. By the way, that's our new brand refresh. I hope you like it. Created by Landor, AMP, and Man Vs. Machine, WPP agencies, all powered by WPP Open. So look, I'm delighted to welcome you all here to one South Fork Bridge to our campus here in London, which in many ways is symbolic of the future of WPP. It's modern, it's adaptive, it's collaborative workspace for our talent, our clients, and our partners. So the plan this morning is I'm going to start with some opening remarks and then I'm going to hand over to Joanne Wilson, our Chief Financial Officer, to share our 2025 preliminary results. Then I'll share our strategy update, and then we'll open up to Q&A. Before we start, I'd like to recommend that you take a moment to read this cautionary statement while I get out of your way. Have you all memorized that? Okay, good. So Joanne and I will be joined on stage later by Brian Lesser, who is CEO of WPP Media, when we get to the media section of the presentation. And most of my senior management team are here in the audience as well. Let me start by saying that WPP is an extraordinary company. We are built on agency brands with remarkable histories going all the way back to the 1800s. Some are still well-known today. Others have evolved into new parts of WPP, but together they have roots in creating iconic work that moves people and shapes culture. We serve some of the biggest, most demanding clients in the world, and we steward and grow some of the most well-known brands on the planet, several of whom you'll hear from and see referenced throughout today's presentation. And our business model is actually very simple. We exist to make our clients successful. We help our clients build brands that matter, drive meaningful engagement with their consumers, and drive outcomes for their business. It drives growth for them and growth for us. However, it's really clear that what has made us successful in the past will not make us successful in the future. And as you can see from the numbers that we released this morning, our performance is not where it needs to be. Yes, of course, there are externalities we can point to, market volatility, economic headwinds, but really the results point to the need for us to embrace a single, unified growth strategy to execute with increased rigor and evolve as the needs of our clients evolve. After several years on the WPP Board of Directors, I took this role with a clear thesis in mind as to what we need to do differently. We've spent the past six months as a team validating this thesis through rigorous analysis and by speaking directly to our clients and actively listening to their feedback. And the good news is we haven't been waiting for today's presentation to take action. We've already made several decisive changes, and you can see the positive results in our recent new business success. In the fourth quarter of 2025, WPP was number one in J.P. Morgan's net new business rankings for the first time since 2020, with a series of excellent client wins across media, creative, and our integrated offer. These include being appointed the U.K. government's lead media agency, Reckitt and Henkel Media in Europe, Tenview and Halion Creative Globally, True Green Media in the U.S., Norwegian Cruise Line Global Media, Suncor Media, just to name a few. And I'm delighted to say we've maintained this strong momentum into 2026, winning Jaguar Land Rover, Global Media, and Integrated Services. In fact, the impact from new business wins in 2026 already exceeds the impact of new business wins for all of 2025 combined, and it's only February. So while the turnaround of our business will take time, our momentum is undeniable, and these wins give me huge confidence that we are firmly on the right path. My team is united, committed, and hungry to win. Today's session is the culmination of months of detailed work by our team. We have a bold plan to make WPP a simpler, more integrated company, one that's fit for the future, relentlessly focused on growth and brilliant execution, Personally, I'm very excited to be here at a time of such revolutionary change, and I feel quite privileged to lead WPP as we play a defining role in shaping the future. So I'll come back shortly and talk about our view on the evolving landscape and our growth plan for the new WPP, which we're calling Elevate 28. But first, I'm going to hand over to Joanne to take you through our 2025 results. Joanne? Thank you.

So thank you, Cindy. Good morning, everybody. And can I add my warm welcome to you here today? So let me start by taking you through the main financial headlines for 2025. Our like-to-like revenue, less pass-through costs fell 5.4% for the full year due to client assignment losses and spending cuts. Now, this is slightly better than our most recent guidance for a decline of 5.5% to 6%, and it reflects a Q4 like-for-like decline of 6.9%. And that's a deterioration from the third quarter decline of 5.9%. In the context of the weaker top line, we delivered a headline operating margin of 13% in line with our expectations and down 180 basis points year-on-year on a like-for-like basis. Our fully diluted EPS was 63.2 pence, a decrease of 28.4% year-on-year, with the impact of reduced headline operating margin and a higher headline effective tax rate, partially offset by lower net finance costs and non-controlling interests. Turning to cash flow, our adjusted operating cash flow before working capital was £1.2 billion, down from £1.3 billion in 2024, and at the top of our most recent guidance range, and includes £82 million of cash restructuring charges. On my next slide, I provided some colour on our net sales performance, both for the fourth quarter and across the full year. And please note that we have included more detail in the appendix to this deck. Now you have some of the detail here on trends by business, by region and by client sector, but I thought it would be more useful to unpack some of those trends by theme to help give a sense of what is WPP specific and what is more market driven. And when we consider what is WPP specific, the major negative impact to call out both for the full year and for the fourth quarter is the impact of gross client losses, which deteriorated through the year. Now, this is driven by the impact of incremental losses in year in 2025. And by segment, this particularly weighed on media, by geography on the US and the UK, and by client sector on CPG and TME. Now against this, we had the positive impact of new business wins from 2024 and 2025, which indeed contributed progressively through the year. The aggregate level of in-year wins, however, was lower than we initially expected and significantly below what we've experienced over the past number of years. This was in part because of a lower win rate, but in the mean it was because of a lower level of aggregate new business activity. Industry estimates of the global pitch activity was down double digit in the year. While we saw an encouraging new business performance in the fourth quarter with the wins of Reckitt, Henkel, the UK government, Pizza Hut, NCL and JLR, the impact on our like-to-like performance is expected to take time to ramp up. And we expect the overall net new business headwind to sustain into the first half of 2026. The final theme to call out is spend by existing clients. We characterized the year as one of more cautious spending from clients with a higher degree of volatility than we would typically expect to see. Now, the impact was seen most strongly across the CPG, auto, and the tech and digital services sectors. And while many of our businesses were impacted, it weighed most heavily on Ogilvy. The waterfall chart in this next slide bridges our headline operating margin from 15% in 2024 to 13% in 2025, a 1.8 percentage point deterioration on a like-for-like basis. There are a number of moving parts, starting with staff costs, excluding our severance and incentives on the left. Now, these reduced by £576 million on the back of lower permanent headcount, which ended the year down 8.7%. and reduced use of freelancers, which was down 14% year-on-year. However, due to that lower revenue, this resulted in a 180 basis points drag on our margin. This is amplified by the impact of increased severance and other associated costs, which was up 89 million in the year, taking a further 100 basis points of margin. We did increase investment levels in WPP Open, in AI and data, and this is more than funded by a reduction in back office costs, leading to a net reduction in tech spend and other costs of 128 million pounds. Again, with the impact from those lower revenues, this translated into a 60 basis point drag on margin. These drags on margin were offset by a future percent reduction in staff incentive payments to £182 million, providing a margin cushion of 140 basis points, which is equivalent to 120 basis points, like for like, if we exclude FGS. And taken together, this resulted on that net margin move of 200 basis points on a reported basis and 180 basis points on a like for like basis, which includes 20% of the impact from the disposal of FGS and from FX. Now, moving to my next slide, we show our headline income statement. Overall reported revenue last past three costs was £10.2 billion, a decrease of 10.4% year-on-year on a reported basis. Our headline operating profit was £1.3 billion, which is down 22.6% year-on-year on a reported basis and is consistent with that 13% operating profit margin. Our net finance costs of £274 million were slightly down year-on-year on lower average net debt and lower interest rates. And our effective tax rate increased to 32% given that lower profit base and the impact of non-deductible fixed elements. By contrast, non-controlling interest of £43 million was down year-on-year partially driven by disposals. Our headline diluted EPS, as I said, was 63.2 pence and down 28.4% on a reported basis. The board has recommended a final dividend of 7.5 pence, giving a total dividend of 15 pence for 2025. Now, while this is a reduction year-in-year, it represents a stable dividend from the first half, and it underlines our commitment to maintaining shareholder returns. In full reconciliation between our headline and our reported financials in the appendix, the main items I would call out are the impact of restructuring programmes, as well as further goodwill impairments of £641 million, which primarily relate to our integrated creative agencies and property impairments of £114 million, both of which are non-cash in nature. Now, this next slide bridges the year-on-year movement in net debt, which ended 2025 at 2.2 billion versus 1.7 billion pounds in 2024. Our adjusted operating cash flow before working capital was £1.2 billion and reflects a lower level of cash profit, partially offset by a lower level of capex and a year-on-year decrease in cash restructuring costs, which came in at £82 million. Our working capital saw an outflow of £334 million, primarily driven by the temporary impact of reduced staff incentives, adverse FX movements and business mix. Within this, our trade working capital, excluding the impact from FX, was broadly flat year and year. We remained disciplined on our working capital management and saw an improvement in underlying operating metrics year and year, including reduced overdues. We saw an outflow of £17 million from earnouts of £65 million and the net impact of dividends to minorities and from associates. And earnouts have decreased year and year and are expected to continue to progressively fall in 2026. Our net interest in tax contributed to a total adjusted free cash flow of £202 million and note that the tax payment includes £43 million of one-off taxes related to the disposal of FGS Global. And turning to the uses of cash, M&A spend was 147 million pounds and largely related to the acquisition of Infosum, while cash dividends amounted to 343 million pounds. Adding in the impact of buybacks of 97 million pounds to offset the dilution from incentives and other factors including FX, our spot net debt was 2.2 billion pounds, up 500 million pounds year-in-year. Now, my next slide provides more detail on our overall net debt and our leverage profile. As we've already said, we think it's more prudent to look at average adjusted net debt through the year rather than the year-end level, which typically benefits from a favourable working capital position. Now, our average adjusted net debt was slightly down year and year at £3.4 billion compared to £3.5 billion in 2024. However, given that lower headline EBITDA, the average adjusted net debt to headline EBITDA ratio for 2025 was 2.2 times, which was up from 1.8 times in 2024. While our average leverage ratio has increased, our maturity profile stands at 5.8 years, and the average coupon on our net debt is 3.5%. We of course also completed a successful €1 billion bond issue in December 2025, which more than covers our €650 million bond maturity in September 2026. We have no covenants and as of December 2025, we had £4.4 billion of liquidity, including an on-drawn committed RCF of $2.5 billion, which does not mature until 2031. And furthermore, I'm very pleased to share that today, Fitch Ratings has assigned WPP a BBB rating with a stable outlook, reinforcing our investment-grade balance sheet. And on my final slide for now, I have shared guidance for 2026 across key financial metrics. Now, we will talk about the impact of our strategy update later this morning, but for 2026, we're setting the following parameters in terms of our headline guidance. Our like-for-like net revenue growth is the most important metric for judging our business, but it is a lagging indicator, with account losses continuing to drag for around 12 months after they first start to impact. And meanwhile, new account wins take time to bed in and move toward a steady state. For the year as a whole, we estimate the gross client losses will represent a 500 to 600 basis point drag, an increase from the 300 to 400 basis points in 2025. At the same time, the positive impact on like-to-like from gross client wins in 2026 already exceeds that for the full year 2025. Now, while it is still early in the year to indicate the impact of new business in the full year, we do expect it to be a more significant drag in the first half in 2025. We are encouraged by the new business performance in the first quarter, in the performance year to date and the nature of the pipeline. And as a result, we anticipate a progressively improving impact from that new business through the course of the year. Now, reflecting all of this, we are guiding to like-for-like revenue, less pass-through costs, down mid-to-high single digits in the first half of 2026, with an improving trajectory in the second half. And we also anticipate that the first quarter will see the weakest like-for-like for the year. On profit, there are a number of moving parts that will impact our headline operating margin. On the positive side, we will benefit from the annualized impact of cost actions, which were taken in 2025, alongside a part-year benefit from the cost initiatives we are implementing as part of our new strategy. We also expect a lower impact from headline severance costs. Against this, we will continue to invest in WPP Open, in AI and in data, as well as our growth drivers, and also expect to rebuild our incentive pools. Cindy and I will share greater detail on both the growth drivers and the cost initiatives as part of our strategy update. Taking all of that into account, we anticipate headline operating profit margin in the range 12 to 13%. And turning to cash flow, we continue to focus on adjusted operating cash flow before working capital as the most important metric, reflecting the potential for volatility in the year-end working capital position. Including those anticipated costs associated with historical plans, as well as restructuring costs linked to the Elevate 28 plan, we anticipate adjusted operating cash flow before working capital of 800 to 900 million pounds. This includes total anticipated cash restructuring charges of around 250 million pounds, of which around £190 million are associated with the Elevate 28 plan. Excluding these charges, we would anticipate adjusted operating cash flow before working capital of £1 to £1.1 billion. And finally, in terms of leverage, given the expectation of a further moderation and headline EBITDA, we would anticipate our average leverage metrics to move up further in 2026. We do, however, expect average net debt to remain broadly stable, and we note that any proceeds from asset disposals during the year will be used to strengthen our balance sheet, providing a greater degree of financial flexibility. Now, you will find more detail on other modelling assumptions for 2026 in our preliminary results press release. And that is it from me for now, and I will hand back to Cindy, who I know is very keen to share our strategic update.

Thank you, Joanne. Thank you. Look, the first thing I want to say to you is that I fully recognize that recent years have been disappointing from a shareholder perspective. I acknowledge our performance on core metrics like net sales, margin-free cash flow. It's disappointing. No one is more determined to turn that around than I am. And as I said in my opening remarks, I took this role with a clear thesis as to what we needed to do differently. We've spent the past six months as a team really validating that thesis with rigorous analysis and by actively listening to feedback from our clients. There are plenty of reasons for optimism, and I'm going to get to those in a moment. But first, I thought it just appropriate to share with you some of the feedback that we have received from. It's clear and consistent and not only supports my thesis, but provides us with an excellent blueprint for what we need to do differently going forward. Clients pointed to the fact that our complexity got in the way of true client obsession. We were siloed. We were hard to navigate. We haven't been intentional enough about evolving our integrated proposition to adapt to the changing needs of our clients. It's taken us too long to land our data proposition, and our media business has suffered as a result. Now, the good news from my perspective is that all of these issues are fixable, and as I said, we've already started to do so. So while it's true that our performance hasn't been where we want it to be, it's also true that WPP is full of potential and has all the ingredients that we need to win. We have incredibly talented, hardworking people with deep domain expertise who do amazing things for our clients, for some of the most demanding clients in the world, I might add, every single day. We have world-class capabilities that span the entire marketing workflow from media to commerce, creative PR, production, digital experiences, software engineering, data, AI, and more. We've made really smart investments over the years in technology that have now enabled us to build WPP Open into a powerful, future-facing, agentic marketing platform, giving us a real competitive advantage over We have a presence in over 100 countries around the world, which means we can serve most complex multinational, multi-client brands in the world. We have a scaled media offer and partnerships with every relevant player in the ecosystem. But maybe most importantly of all, we have an ambitious, competitive, high-energy team that is ready to embrace change and hungry to win. So notwithstanding the challenges, which are clear, I stand here with immense optimism because we're at a really pivotal moment in WPP's journey. We're not just adapting to change, we're actively shaping the future. We are building a WPP that is more agile, more connected, more powerful than ever before. A WPP that is simpler to work with, fit for the future, and built to win. a WPP that is obsessed with the success of our clients, and as a result, that drives better returns for our shareholders. So our strategy starts with a new mission, to be the trusted partner for the world's leading brands in the era of AI. valued for combining cutting-edge media intelligence, trusted data solutions, world-class creativity, next-generation production, and transformative enterprise solutions to help our clients navigate change, capture growth, and capture opportunity. Now, there's four key objectives of our strategy, and we're going to unpack these in some detail. But just to summarize, our objectives are to drive superior growth for our clients, to become a simpler, more integrated company, to leverage our agentic marketing platform, WPP Open, for competitive advantage, and to create firm financial foundations for the future. As I said earlier, this is going to take time, but we've already made a promising start. And to support our growth strategy, we've built a very detailed execution plan that broadly spans these three distinct phases. Our immediate priority is to stabilize the business, make the structural changes needed, strengthen our execution, win and retain clients to sustain our current market momentum. The next phase is about building on these foundations and returning the company to growth sometime during 2027. And the third phase will be about accelerating our growth so we can capture our fair share of the market from 2028 and beyond. And just to summarize what you can expect from this plan in terms of outcomes, you can expect the stabilization of our performance in the near term, a return to growth sometime in 2027, gross cost savings of 500 million pounds over three years, a reallocation of investment against our key growth priorities, and a more focused portfolio, an investment-grade balance sheet, as Joanne said, and greater financial flexibility. So that's the basic framework. the timeline of our growth strategy, and what you can expect in terms of outcomes. We're going to unpack all of this in more detail. But before we do, I would like to step back, if I may, and just do a bit of scene setting to offer some perspective on how we see the world changing, the needs of our clients evolving, and the opportunity of AI. So for some time now, we've known that our industry is experiencing dramatic transformation. With the rapid diffusion of AI, we're not just seeing incremental shifts in consumer behavior. Like, this is a complete metamorphosis of the commercial ecosystem. Brands are now discovered in AI-driven conversational search. All the old barriers that protected established brands are gone. Creators and influencers have reshaped consumer preference and can launch brands in an instant. Media is everywhere. It's in everything. It's no longer episodic and campaign driven. It's continuous, always on, a stream where social, search, and physical spaces all blend together. Commerce is the new organizing principle. Every action, every interaction is shoppable. And we're rapidly shifting to agentic commerce, where AI agents do the shopping on our behalf. Trust is scarce, right? It must be earned every day in this world of synthetic content and deep fakes. Brands need to balance hyper-personalization with personal privacy. And as the world is flooded with AI-generated content, the demand for verifiable human creativity, craft, empathy, taste is increasing as key brand differentiators. These changing dynamics are not fleeting trends. The acceleration of AI is unstoppable. And as I said, it's driving a complete metamorphosis of the commercial ecosystem. And this is the reality our clients are navigating every day. The fragmentation, the complexity, the pace of change is dizzying for our clients. And the paths to growth are much harder to find. It's never been more urgent to build compelling, trusted brands. that endure for generations and provide competitive advantage and long-term enterprise value. To cut through this noise and find new growth audiences in this environment, brands need to embrace new strategies grounded in deep data insights, real-time signals, and AI that acts on these signals at the speed of light. In this perpetually changing environment, clients don't need more traditional marketing agencies. What they need is a new playbook for growth and a trusted partner who can help them build it and operationalize it. A partner that operates as an intelligent orchestration layer across creativity, media, commerce, data, and tech, who fuses technical expertise with breakthrough creative thinking into one cohesive approach to modern brand building. At WPP, we work with some of the most consequential brands and clients on the planet. Coca-Cola, Unilever, Nestle, Kenview, Ford, so many more. We know how to navigate disruption. We know how to find signal in noise and help clients build new paths to growth. Now, for many clients, this new playbook for growth means real transformation at every level. I spent the last decade delivering large-scale technology transformation to enterprise clients around the world. And I can tell you, it's not easy. Clients need to have AI-ready data foundations, an agentic tool and governance in place. They need to be trained and skilled. Processes need to be reimagined. There's really no shortcut when it comes to AI transformation. Every client I meet is going through it, and they all need our help. So for WPP to seize this opportunity, we need to evolve. from being a collection of traditional marketing agencies to being a trusted partner for growth and transformation, helping our clients build modern marketing capabilities and move boldly and confidently into the future. A wonderful example of this kind of partnership in action is the Coca-Cola Company. Let's hear from Enola. Thank you.