Ipsos

Good morning from Paris and welcome to the half-yearly results for Ipsos. I am Ben Page, the Director General. I'm joined by my colleague Dan Levy, our CFO. And before we dig into these numbers that you've just seen in the video, I just wanted to comment on public opinion globally because, of course, we are Ipsos and that's one thing that we look at constantly. And I think what's important to remember is just the way in which inflation has for years now been the number one concern of the public globally. When we ask them what their biggest problem is, you can see one in four say it is their key problem and half are mentioning it as an overall issue, along with their own finances. And that's well ahead of any of the geopolitical tensions that bothered us in business or the march of technology. So it's very important to remember that because we're still facing consumers all over the world who despite inflation having fallen can remember of course what prices were just a few years ago and of course you can see here the overall proportion of people who say that they feel at high risk of from inflation. And in the last year, of course, we've seen inflation coming down, but the proportion of the public who are thinking about it as a key problem hasn't really changed at all, 32% to 31%. And so that's really important, I think, to remember when you're thinking about the general challenges facing many sectors of the economy who depend on consumer spending. Of course geopolitics is always with us and last time we spoke when I was presenting the Q1 results of course we remarked on the fact that for the first time ever in our tracking of different countries' reputations we had more people saying that China was a force for good in the world than the United States. This month you can see the proportion of people who say that they're avoiding American products is 7 in 10 in Canada, 6 in 10 in China. I'm not saying that what they do is always what they say, and a major part of our work is understanding the difference between what people say and what they do. But the fact that you've got so many people, 4 out of 10 people globally, saying that they're trying to avoid buying American products, is just an indication of the upheaval that we face at this point of change in our geopolitical system. So with all of that, what's happening at Ipsos? And I'm pleased to report our total growth in the first half of the year is 1.5%. You can see that the profile of this year in terms of growth is much more like our 2023 performance. than our 2024 performance we decelerated during 2024 in 2023 we accelerated and we can see that same pattern happening this year and so in the last quarter growth of 0.7 percent our profitability at 8.3 which will strengthen during the year and Dan will explain that in a little bit more detail free cash flow at 54 million about the average or slightly ahead of the average for the last three years and again reflecting the profile of revenue recognition during the year. So overall a reasonable return to growth in Q2 but of course we're expecting it to strengthen during the rest of the year. And I'll now look at, of course, a little bit more detail. And here is the United States. You can see minus 1.7 in the first quarter, plus 0.5 in the second quarter. And so we're encouraged by that with our management team now well embedded, new management team well embedded in the United States, working very cohesively and effectively together. They are still heavily affected by the activities of DOGE and cuts in federal spending, which is dragging them down. If you look at the other parts of the business in the United States, we have an organic growth of 2% in the first half, and we can see that our CPG clients, who use us for a whole range of things around innovation, brand development, brand growth, They have continued to spend money and with a new leadership in our pharmaceuticals business, we can now start to see some real growth in our pharma sector globally. So we're encouraged by what we saw in the last quarter. Lots more to do, but some encouraging signs. We've also, of course, completed the acquisition of the BVA family. This gives us a stronger position in France in particular, but also in Italy and the UK. And it brings us new expertise that we can now roll out to our whole network. And in particular, they are world leaders in pack testing, which we'll talk about in a minute. but also they bring a strength in mystery shopping and in work for government and the public sector, particularly in the transport sphere. And so we will be, because of the strength of those brands, we are renaming Ipsos in France as Ipsos BVA, Ipsos in Italy will become Ipsos Doxa, and the PRS in vivo brand for the pack testing will be rolled out all over the world. They've got some really innovative research techniques that we can now roll out. They are stronger in luxury, but also in behavioral science. There's a range of things that they bring to Ipsos that, as with previous acquisitions, we will now be able to roll out. And if you look at PAC testing in particular, which is the PRS in vivo business, they are a recognized leader. this space, a huge database of examples to build on and to use and to put into AI to speed up decision-making, really profound expertise in this space and great relationships and long-term relationships with many of the CPG players and others. And so now we're able to take this to a geographic footprint that by my estimate is around ten times larger than which should really give this team now, combined with our innovation team at Ipsos, some real impact. So I'll hand over now to Dan to talk through some of those details and the phasing in a little bit more detail. But thank you.

Thanks, Ben.

Ladies and gentlemen, good morning. So let's begin by the breakdown of organic growth by region, performances improving in H2 across regions. EMEA, the first half comes in at 6.3% growth, driven essentially by the acquisition of Infas in Germany. Organic growth comes in at 0.8%, 1.8% achieved in Q2, reflecting good results in continental Europe, but also in the Middle East. Conversely, a more challenging business in France, heavily affected by the political situation, notably on our public affairs business. The Americas delivering organic growth of 0.6% in Q2, 2.5% in the US, as Ben said, measures taken by the management team in the US are beginning to bear fruit. Of course, the political context remains volatile in the US and affects our public affairs business, but the performance of other service lines is encouraging because overall, They're up 2% in the first half, driven by consumer clients and health business, which, as you recall, affected activity in 24, but picking up in H125. Business in Asia Pacific impacted by the absence of recovery in China, hurt by the structural difficulties the economy is facing against the backdrop of disinflation. Asia is also affected by our drop in public affairs after many elections in a number of Asian countries in 2024. Performance is also up in Q2 across audiences. Service lines for employees, service and clients, 0.8% in Q1 and 1.6% in Q2 in spite of an unfavorable base effect. Strong growth same time last year. It's driven essentially by market positioning. optimizing marketing spend, measuring the impact of ad campaigns and mystery campaigns. Our activity with citizens is down sharply, 11% since the start of the year because of the political situation in the U.S. And as Ben recalled, the Doge impact, but in France and in Asia the electoral cycle and certain budgetary constraints led some public clients to adopt a wait-and-see attitude. Medical and patients, plus five versus last year. Innovation in terms of oncology, rare diseases, and TLP1 should drive growth going forward. We prefer to remain cautious, notably in the US, because the political context could impact both vaccine development, but also the marketing of new medicines. digital platform delivering excellent performance 26 growth in h1 operating margin of ipsos digital is almost twice that of the group. We continue to enrich the offering. New solutions on Ipsos Digital. Our annual target is of 140 million euros. Moving now, having discussed the top line, let's move to the comments on the P&L gross margins. 68.4% in the first half is against the 68.5 same time last year. This decrease is due to the integration of Infas in Germany. The gross margin is sharply lower than a group level. The integration plan to restore profitability is underway. Like-for-like gross margin is up 30 bps over last year, notably due to the strong growth of Ipsos Digital. Turning now to operating costs, payroll is up 3.1% because of a scope effect and a constant scope. Payroll is only up 0.7%. We continue to adapt our cost base to the evolving business and our headcount. is down by about 2% June 30th versus 31st of December 24th. The full impact of this headcount reduction will accrue to profitability in H2. As Ben said, H2 will be sharply off in terms of profitability. general expenses up seven million that's a scope effect because of acquis because of it tech and panel acquisition spend in line with our roadmap and then other expenses and charges negative balance of 10 million these are severance costs but also negative forest impact with because of the sharp depreciation of the dollar, notably in Q225. Lastly, for H1, the operating margin comes in at 8.3%. Below the operating margin, other non-current expenses impacted by about 5 million of acquisition costs, acquisition of BVA, and in fact 3 million for the depreciation of net asset in Russia. We're looking at the impacts of the vote by the Duma on the 15th of July. Last of the law as of 2026 will limit the capital of market research companies held by foreigners. This bill has been under discussion at the Duma for two years now. We've depreciated the net book value of Russian operations in our balance sheet. Adjusted net income comes in at 72 million as against 82 million last year. I think it's important to recall that we're expecting a significant improvement in profitability in H2 of the year driven. by the expected acceleration of growth in H2, as Ben said, we'll have a year whose profile will be closer to that of 23 than 24, with an accelerating growth and full effect of cost containment measures in H2, which should drive profitability, as you can see on this chart. H1 profitability close to that of 2023. And of course, we maintain our operating margin target at 13% at constant scope. The operating margin of H1 was impacted by unfavorable Forex, notably the slide in the dollar. Now to the cash flow. The change in working capital is stable versus last year, thanks to the optimization of our billing and settlement procedures, reducing the payment terms and lower level of receivables due to the negative growth of Q4 and Q5. Investments are up at $38 million in line with the implementation of our tech roadmap. And all in all, free cash flow comes in at $40 million. It would have been $54 million, a constant scope, excluding acquisition, as you can see at the table at the foot. $54 million is lower than that of 2024 last year. H1 was favored in free cash flow by a shift of part of the cash because of the strong growth at Q4 23. As you can see, free cash flow early 25 is higher than that of 23 and 24. Lastly, we've spent 174 million in acquisitions all in all. essentially with the acquisitions of BVA family and infast. Cash at close comes in at 250 million euros. Net financial debt stands at 250 million at the end of the first half, 57 million. at the end of last year. A slight increase of the leverage at 0.6 times EBITDA, a link, of course, to the acquisition of Infas and BVA. An excellent level of liquidity of 450 million untrown credit lines after renegotiated of 5,150 million euros, as you can see on the right, after the issuance of a bond of 450 million at the start of the year. We have no significant debt maturities before 2030. Thank you. Back to Ben.