Ipsos

Good morning and welcome to Ipsos' 2024 results meeting. And thank you to everybody joining us in the room in Paris and to other people online. And it gives me pleasure to take you through the latest numbers and to update our investors on what is happening inside the business. So looking back at last year, of course, you will have noticed that we have maintained good profitability despite lower growth by careful control of costs, and we've also achieved a very good level of cash flow generation, which is reassuring, and I think a credit to the managers in the business in terms of controlling costs at a time when growth has slowed down. It was in some ways... A year of contrasts. We had a good performance in Europe, a good performance in the Middle East and in LATAM. Our Ipsos digital solution grew again by 30%, and our CPG clients, who are our historic core clients, showed resilient demand for the second year in a row. We continued to make acquisitions. I think we've now done 15 since 2023. And we launched, of course, many AI solutions, which I'll talk about today. The gross margin improvement of 120 basis points is encouraging. And, of course, client satisfaction has remained at 9 out of 10. So, again, all of those things are good. But, of course, there is a but. And the but is headwinds, particularly in the United States, which makes up a large part of our revenue and, of course, the majority of this industry globally. And there we had a very mixed performance. Some parts of our business there actually performed incredibly well. particularly platform-based businesses, but others, like government, public sector, healthcare, were not where they needed to be, and I'll talk about what we're doing about that. Overall, if you look at the state of the world, and indeed the news headlines, thanks to the new US president, are never more exciting, it seems. One word is uncertainty that we can see. We've talked about that in this room before, but last year we saw uncertainty France and the UK with political upheavals leading to a slowdown in orders and in some parts of Asia. In China, we outperformed the market by some margin, and we are number one in that market, but we saw very limited growth. There was no real recovery. And all of those headwinds, of course, have reduced Ipsos's overall growth. So overall revenue up 2.1% at 2.4 billion. Organic growth, though, at 1.3%, with a scope effect of 2.3% and a negative FX effect, particularly with the dollar at 1.5%. All of those things then mean that while we've got strong profitability and cash generation, there's 120 basis point improvement in our gross margin to, I think, a record level at 68.7%, a maintained operating margin even as we continue to invest in AI and technology, and, of course, very strong free cash flow up from 168 million last year to 216 million this year. Those are all positive, but, of course, we need more growth. And I'd now like to hand over to Dan. I'll take you through later our outlook for the year, but Dan please take us through the detail on those numbers.

Thank you, Ben, ladies and gentlemen. Good morning. I'd like to begin with the regional breakdown by growth, as Ben said, mixed results by regions. EMEA, the most significant in our regions, posted growth of 5.5% with double-digit growth across major regions. Thank you very much. owing to elections in France and the second part of the year, and that weighed on client demand in Europe. It's worth noting total growth comes in at 8.4%, three-point contribution of acquisitions linked to the acquisitions of I&O in the Netherlands and Germany and the U.K. America's LATAM delivered good performance, close 10% organic growth, but the full region is down 10%. given a decrease in business in the U.S., so the order of 5% in the U.S., political uncertainty around the presidential election, as well as general drop in professional services, not just market research weighed on our business. In particular, public affairs and health care are most impacted, whereas... We delivered good performance across the consumer analysis. Ben will return in a moment in greater detail to the U.S. What's important to note is organic growth of the group, excluding the U.S., comes in at 4.5%. That's a very commendable performance. ASPAC region, we delivered growth of 1.6%. organically and China hardly any economic recovery business is flat but we're outperforming the market in China as Ben mentioned the rest of the regions up slightly over 2% with a slowdown during the course of the year notably in India after very good performance in previous years 2023 we posted almost 20% growth in India turning now to the split of growth by sector our activity with consumer clients. That's about a quarter of our business is faring well in 24. Organic growth of 6%. This reflects in particular the good maintenance of our activity. innovation, product testing and ad testing and also illustrates the relevant of Ipsos digital do-it-yourself platform has been set up 30% in the major confluence of the consumer sector to understand consumer dynamics. An increasingly complex world. 2024 marks a return to growth of the major tech industries Thank you very much. that part of the demand has shifted from the marketing teams of the clients to product development teams, far more upstream in the product cycle, upstream of innovation. We, of course, adjusted to that change. On the health care sector, 2024 was marked in the U.S., By continuing restructuring and some of the clients in the pharma industry declining sales because of the expiry, a major patterns level of drug approvals lower in the U.S. than in 2023. One of our business drivers and a degree of uncertainty regarding health regulations, notably with the advent of the new Trump administration, public health. sector. Our business, aside from the U.S., is up in spite of a significant number of elections in 24 across the world. But in the U.S., our business was hurt by uncertainty surrounding the U.S. presidential election, as well as internal organization and legal issues that are addressed. And Ben will return to those in a moment. I've put here the Revenue split by audience, I won't comment. It broadly summarizes what I just set out on the sectors. We continued our acquisitions roadmap. As Ben said, 15 acquisitions achieved since the beginning of 2023. essentially in public affairs with I&O Research in the Netherlands. In FAS in Germany, as you probably noted yesterday, we announced the acquisition of IPEC in Brazil. We strengthened it. data analytics, acquisition of Germany in the U.S. That's in the U.K. That's going to be key for market research going forward. We analyze together, combine very varied data, structured, unstructured data, quantitative, qualitative data from social networks, client CRM surveys. This ability to get all these data to interact will be key going forward. So this Germany acquisition is key in that respect. Turning now to... The P&L I've already amply discussed, top-line growth, 2.1%. Gross margin held up very well in 2024, sharply up by 4%, as shown here. Significantly more than revenue growth, with gross margin up 120 basis points today. The growth of Ipsos Digital, as I mentioned, up 30% in 2024, also linked to efficiency gains achieved in our operations thanks to investments undertaken, increasingly has allowed us to internalize our own panels. And lastly, business mix effects. The payroll is just up 3%, even if it's not shown on this slide. We adjusted during the course of our headcount in terms of activity across our market. Automation and digitization continues to drive efficiencies. Payroll over gross margin is improving increasingly. In 2023, 4.5 at 65% against 105% in 23. SG&A up close to 10% on the back of our tech roadmap and investments in platforms and panels. But SG&A of a gross margin ratio is way below what it was pre-COVID. And so, as you can see, all in all, operating margin comes in at 13.1%, demonstrating once again, and this now for two years, Ipsos' ability to preserve its profitability. in a context where growth is weaker than anticipated. Adjusted net profit, the group is up close 7% at $244 million. Adjusted net per share at... 5.7 euros. Turning to cash flow generation, 430 million is against 413 last year. WCR 18 million, a significant improvement over last year. Last year we were in a negative contribution of 65 million euros. We invested in 24 for about 70 million, up over 23 once again. in line with our strategic tech roadmap, and CapEx in panels, platforms, and Gen AI, and all in all, free cash flow comes in at $216 million up, $47 million over last year. which is, of course, a very good level of cash generation and below free cash flow. We have 39 million of acquisitions. The acquisitions of I&O and Germany mentioned previously, we bought back 39 million. million euros of shares as part of the employee share program when we paid 71 million in dividends and cash position at closing 343 million that's up 65 million euro last year Lastly, the group is in an excellent financial position, very strong balance sheet. We have a level of debt net very low, 57 million down, 63 million over last year, and leverage net debt EBITDA almost nil at zero, one times. In terms of liquidity and having been rated invested grade by Moodings and Fitch to BA3 with stable outlook and stable outlook from Fitch, a bond issue of 400 million euros, early 25, five-year maturity. That was an issuance that was very significant. successful, 10 times over strong tightening spread, very satisfactory coupon. This new bond issue will allow us to reimburse the bond 300 million maturing in September this year. So once this reimbursement has done, Ipsos will have no significant debt maturity before 2030, so an excellent level of liquidity. Thanks for your attention. Back now to Ben for more business insight.

Thank you, Dan. So let me just take you through a little bit more detail and color on what's going on inside the business. The first key question, of course, is what's happening in the United States. Outside the United States last year, the business grew by 4.5%. With the US, it only grew by 1.3%. And in some ways, we're in a very strong position in the US. We have very good client relationships. We have a very comprehensive range of offers and solutions. We are a place where people want to work. We have no trouble recruiting talent. We've got some great thought leadership coming out of the US. And, of course, they're able to use our global network to sell. At the same time, I think we've seen certainly macroeconomic, but also, of course, political uncertainty in the US during 2024. There is a general decline in demand for professional services in some sectors. And we can see that while our CPG business and CPG clients in the U.S. are growing well, our government business needed a refocus. We have got two new very strong managers there now who joined in the last few months. And despite anything Doge may or may not do, I think we're on the right tracks. Healthcare similarly, and actually next week we will announce the new global head of healthcare at Ipsos. And then I think overall, in terms of the leadership in the U.S., now we've got a new leadership team in place. Those changes took a bit of time to find the right people and get the right structure. The global leadership team spent a week there in January with the U.S. leadership team. And I think the changes that we need to make are now in place and we should start to see recovery. It's focused around three key pillars. Obviously, cooperation. revitalizing those businesses like public affairs, like health care that have been responsible for a lot of the decline, really focusing in and leaning in where we can see great growth. So our Ipsos digital solution, which is selling well, our data analytics businesses in the U.S., our ad testing business, innovation businesses. and customer experience. Again, nearly all platform-based businesses and all performing strongly. And then, of course, looking at the opportunities there for Gen AI, more analytics, and, yes, M&A in the U.S. And that's something that, you know, we've made a number of good acquisitions around the world. We're still looking for good acquisitions in the United States. So that's the US. On tech and AI, which is on everybody's lips, an awful lot is going on. And when one stops and steps back from the trees to look at the forest, just thinking about AI in our business, in our industry, we have over 13,000 people at Ipsos now. many more than any of our individual clients in market research who are certified in the use of Ipsos Facto, a platform that is added to daily in terms of the sophistication of what it can do and which of course didn't even exist two years ago. So just showing how quickly things are changing. Ipsos Digital, on a good growth trajectory, of course double the level of profitability of the rest of the business. Clients and our staff love it because it's much, much faster. It's available 24-7 with DIY tools. You can go on your phones now and launch a survey with a credit card if you want to. And it allows us to roll out very rapidly new solutions like Creative Spark AI, FastPak testing, etc. And I'll talk a little bit about those. Similarly, on GenAI, we launched a whole host of new solutions during 2024. And indeed, we've just announced our partnership with Stanford University in the US to work on synthetic data and AI. And I'll talk about that in a second. Highlights, I think, perhaps three of those that I would draw your attention to. The first is InnoExplorer. And this is where we can take the 150,000 different ideas and concepts that we have tested in the past and then see how new ideas of our clients, new innovations, compare with those with fresh new consumer data. Creative Spark AI does something very, very similar to predict reactions to advertising in just a few minutes. again using Ipsos Digital. And I'll give you an example of how that's been used to produce one of the best ads at the world's biggest advertising event, the Super Bowl, this year. And then Signals Gen AI. This takes our host of data that we have gathered from social media over the last decade and then allows clients to analyze that in just a few minutes. or even seconds. And indeed, L'Oreal say about this that if they'd had this product a year ago, in some of their work that they're doing looking at, for example, women, beauty, and mental health, they literally say it would have saved them a year of thinking in terms of its ability to analyze data that just wasn't possible in any way before. So just three examples of the Gen AI solutions that we now have out in the market. In 2025, of course, we will continue to roll it out, looking at ideas like synthetic users. One of the challenges in market research is that certain groups of the population are harder to find than others. Can we use generative AI to create synthetic generatives? characters to replace people that might be harder to find. We will test that, and I'll talk a little bit about that. A genetic AI is hugely important. This is the ability of AI to have a conversation about data. It can host a conversation with a community, replacing a human moderator, but it can also become a persona for a client to talk to about a segment in their market that they're looking at, that we have looked for them or created for them, or indeed about their entire history of data. And now, rather than having to think about what was it and what do I want to ask, you can have a conversation with an AI that reasons and looks through the data and adjusts its answers. And so that's going to be incredibly important as we go forward. Image analysis, again, our ability to start looking ingesting more and more video and sound to really understand what people are saying and dig into that. And of course, social and text analytics, which I've already talked about. Insights that, new ideas that were just lurking in the data that couldn't be found very easily or would have taken months and months of research to identify, can now be found in literally just a few seconds. So all of those will continue in 2025. And on synthetic data, I think this is, of course, an area with huge potential. We spend hundreds of millions each year on data collection, on interviewing people. you could replace some of that with synthetic respondents based on large masses of data. You have instant access to potentially unlimited data sets. You have the ability to look at target groups in much more detail very quickly, incredibly cost-effective, and, of course, no privacy concerns. And to make that work, you need things that only a few companies have, and one is access to proprietary data. particularly if you're looking at things like ad testing, if you're looking at things like innovation and new concepts. You need high-quality data, you need regularly updated data, and you need the ability to compare what the synthetic models with AI are telling you with what real-world evidence from real people tells you. I was in China for a week last week, and I was fascinated to see my Chinese team's work for one of the biggest dairy producers in China for their advertising during the Paris Olympics last year. The client was challenging our Chinese team to go faster, and they were able to build a whole collection of persona bots, so creating these individuals based behind them on vast amounts of data, and then get those to react to advertising with great effectiveness. And, you know, we will need to keep validating these ideas. But 75% to 80% accuracy. Our colleagues at Stanford are claiming that we will be able to. Again, it needs to be validated. They claim that we would be able to get to 90% accuracy. But we are very aware... because we are fundamentally researchers and used to looking at real-world data, and that is what ultimately Ipsos is about. We are very aware of potential downsides. One is just biased data, biased interpretation based on whatever else is in the model. potentially inaccurate insights, or even worse, perhaps just mediocrity. And that is something that we have already seen in some uses of AI to replace qualitative research, which I'll talk about. And then, of course, there are a whole set of legal and reputational risks that we're very, very aware of. We are publishing a series of papers as we progress in this area. They're on our website, looking at responsible adoption, looking at things like product testing. But it's It's a very, very exciting era. It's one of the biggest shifts in this industry in recent years because we've always, of course, used algorithms. We've always imputed data, but generative AI allows us to do it at much more scale and speed than we were ever able to do in the past. In terms of working with our very diverse range of clients, and the great thing about our clients is that we very, very rarely lose one. I was just looking at the data with Dan, and I think out of 397 major clients that we were working with in 2023, only one lost. didn't work with us again in 2024. We have these long ongoing relationships because we're able to bring value in areas like GLP-1, the wonder weight loss drug that has taken America and parts of Europe by storm. And this is, of course, incredibly important. It has all sorts of benefits. It may turn out to help with other disease, more than just obesity, but also things like potentially diabetes. We're tracking how patients are using it. We are tracking how physicians are now prescribing it as this drug takes off around the world, helping drug companies, pharma companies understand how drugs are actually being used in the real world, how they need to refine their messaging and communications. And, of course, also looking, and this is very important to our non-pharma clients, particularly in food and beverage, where if your appetite is going to disappear or your taste for alcohol is going to change, clients will need to know what it might mean in future. So we are measuring that for them as we speak. Elsewhere, we are looking at the usability of technology. And all businesses in Europe need to comply with new EU regulations, which come on stream in June this year, around the accessibility of our websites and our data. And so one of the things that are growing, and it's had a very good year in 2024, our UX business, which works for some of the biggest techs, tech companies in the world, and the tech sector was back to growth with Ipsos last year. But here, you know, identifying accessibility issues for different sorts of people. A large percentage of the world's population, as we all get a bit older, has disabilities of various kinds. Making sure that they're accessible, doing manual audits, and real-life user testing to find the issues that perhaps scanning a website with a computer would miss. And building now, we're able to then build for them a remediation plan. So some really interesting new services that we're offering. For established clients like Danone, some great work on innovations being chosen by Danone as their global innovation partner, using our Ipsos Digital very fast, very accurate ability to measure the potential of many, many more new ideas than we were ever able to test in the past, looking at those ones that can then be scaled, across 30-plus countries, and the fact that we have our footprint in 90 markets is hugely important in this context. And then, of course, checking the learnings with AI, mixing human intelligence and AI. For Pringles, you may like these things, you may not. Personally, I'm prone to them. But a really interesting example here of using the Creative Spark solution, which tests consumers' reactions to advertising. Of course, the Super Bowl is the most expensive set of advertising slots in the world. Here, for Pringles, we took three different ideas, tested the one that was going to be most successful, and then... helped them identify exactly how they should optimize that ad. Ultimately, the proof of the pudding, as we say in England, is in the eating. And when it was aired, it was one of the best performing at the Super Bowl based on Ipsos research. So great to see that happening. For Microsoft, one of the world's largest tech companies, we're working there. with our Germany business, our data analytics business, to help them improve their own commercial forecasting. And you might say, surely Microsoft doesn't need Ipsos to improve its commercial forecasting. But actually, in our portfolio of businesses, we have some unique skills, some unique abilities. to build statistical models that then help them improve their accuracy. And in terms of analyzing the vast amount of data that's available at Microsoft, and this business, Germany, just works by analyzing client data. It doesn't collect new data. We cut it down from what was taking them two weeks to two hours on average. So even in a very complex ecosystem, there's a very important role that we can play in data analytics. Another interesting tech-led solution is Root. This is a project that looks at out-of-home advertising. We have this in the UK, in France, and a number of other markets. In the UK, we are measuring the value of hundreds of thousands of sites across the UK to work out if you are an advertiser, the price you pay. So whether it's in Piccadilly Circus, on an enormous folks poster, or even on a small sticker online, on the London Underground, the machine with the smartphone app that we've built and the algorithms that we've been able to develop has meant that we've got a world-first innovation in terms of giving advertisers confidence in the price that they pay on each of those sites, using machine learning and AI again. So, again, really, really encouraging to see that. We've also, of course, won a lot of prizes in different... events and seminars, conferences around the world. One of the ones that we were most proud of is the work that we did on empathy or emptiness, looking at the application of AI in qualitative research. And this won the Global Best Paper Award last year in our industry body, SMR, but also for the first time ever, the Peter Cooper Award for Best Qualitative Paper, which again, for us, this is all good stuff. And it's great to see that recognition, a really thoughtful examination of where AI can help and where it risks actually just producing very dull, bland answers. So we're working hard on that. We were also mentioned by Newsweek as one of the world's most trustworthy companies last year, one of the best companies by time, a climate leader by the FT, one of the top companies for women in 2024. And we've continued to increase the proportion of women in senior management roles at Ipsos. and perhaps most importantly by our clients in the GRIT report, again rated the number one most innovative insights and analytic company in the world, which again was great to see. In terms of ESG, in some places ESG is no longer fashionable. At Ipsos we do not change our principles when governments change. We believe in climate change, we think it's happening, we think we have to play our role and we believe also that making sure that we are as representative of the world that we seek to understand as possible in terms of the diversity of who we employ to help us really understand is actually a superpower at Ipsos. So overall, on climate change, our near-term and net-zero targets have now been validated by the Science-Based Targets Initiative. We have set ourselves a pretty challenging target of 50% reduction in direct emissions by the end of this decade and also cutting our suppliers' emissions by 27.5%. And, of course, by 2050, we'll have done 90%. It's a challenge. It's a challenge that I think many of us and many people, you know, for our young people, it is a real motivator that we are making progress in this area and that we take it seriously. And on that, we've got very good, I talked about our client satisfaction earlier, but actually our people satisfaction is just as important. Market research isn't the best paid industry in the world. We want to pay people well and fairly. It doesn't pay as well as investment banking. But what's nice to see is that 89% of people now say they're proud to work in the company. That's up five points. Engagement is, I think, a near record high. And that's really important because it is that discretionary effort by tens of thousands of people all over the world that lets us deliver for our clients and for our investors. So with all of that, what do we say about 2025? What's the outlook that we can see? And I think the first thing to say, if any of you know exactly what's going to happen in tariffs, world trade, geopolitics this year, please come and see me afterwards because it's a pretty exciting time. I think what we can say is that the dividend, subject to a vote at our AGM in May, will increase to a record 185 per share. We have record earnings per share this year. We want to share that back with our investors, which is you and me. And so it's good to see that subject, as I say, to a vote. And on the outlook, I think given the level of uncertainty and the fact that The visibility that we have at Ipsos on our revenue is around three to four months. We can say that organic growth should be above 2024. The operating margin at constant scope, around 13%, as we continue to invest to enhance our competitive position and also improve, hopefully, our gross margin. But those are where we sit. And with that, I look forward to seeing you again soon. We have on the 17th of April our first quarter results, which will start to give us more visibility on 2024. And, of course, our AGM in May, when we'll discuss again exactly what is going on. But with that, I'm very happy to take your questions. And thank you.