Publicis Group Sa S/Adr

Good morning. This is the conference operator. Welcome and thank you for joining the Publicis Group first half 2024 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and 1 at any time. Should anyone need assistance during the conference call, they may single an operator by pressing star and 0 on their telephone. At this time, I would like to turn the conference over to Mr. Arthur Sadun, Chairman and CEO. Please go ahead, sir.

Merci Judith. Bonjour and welcome to Publicis Group first half 2024 result call. I am Arthur Sadoun and I'm here in Paris with our CFO Laurie Snould. Jean-Michel Bonamy is also here and will be available to take all of your questions offline after this session. I will begin by sharing RH1 results. Loris will then provide more details on our numbers. And I will conclude with our outlook for the rest of the year. As usual, we will take all of your questions together after the presentation. But before we start, please take the time to read the disclaimer which is an important legal matter. Ok, let's get into the presentation. There are three highlights to take away from our H1 performance. First, we continued to win market share, outperforming our peers by close to 400 basis points on average in Q2 as we did in Q1. Second, once again, we achieved the best financial KPIs of our industry. Last but not least, we are upgrading our full-year organic growth guidance despite continued microeconomic pressures. Now, let's get into the details. We had a very strong first half of the year with plus 5.4% net revenue organic growth. As some are measuring their growth on revenue, we thought it would be useful to give you an indication of what it looks like for us. So, this means like-for-like revenue growth is plus 7.4% in H1. Still, we believe that the right reference for the industry and ourselves remains net revenue organic growth. At plus 5.6% organic growth, Q2 came ahead of expectation, on top of a tough comparable of 7.1% last year and accelerating versus a strong Q1. In a global context that is still challenging, our unique revenue mix continues to show its strengths. The combination of Epsilon and Media, representing circa 50% of our revenue, remains strongly accretive to our performance with double-digit organic growth in Q2. Epsilon delivered plus 6.1% organic growth, driven by continued high demand for identity-based media solutions in a soon-to-be cookie-less world. Media was up double digit again, due to no contract wins and gains with existing clients. As in Q1, Publicis Sapiens experienced a slight decline in the context of client cautiousness toward capped spend as reflected in the result of all IT consulting firms. Meanwhile, Creative was once again resilient with low single-digit growth driven by solid momentum in production and new business win, including scoping expansions. We performed well in all of our regions, thanks to the strength of our offer. The US, our largest geography, continued to post strong organic growth this quarter at plus 5.3% on top of plus 5% last year. Europe delivered a solid plus 4.2% organic growth, building on double-digit organic growth in 2022 and in 2023. This includes the UK, our second largest market, which recorded double-digit growth across its media and creative businesses this quarter, while Publicis Sapiens faced a tough comparable of plus 32% last year. Asia-Pac recorded plus 7.7% organic growth, with a very strong China at plus 10.5% on top of 7% growth in Q2 last year thanks to continued new business wins. In H1, we continue to achieve the best financial KPI of our industry thanks to our platform organization. Our operating margin reached 17.3%. We maintain this record level in line with our 2023 number while investing materially in our talent and spending circa 45 million in H1 on our AI strategy presented at the beginning of the year. Headline EPS was €3.38 up 5.3% versus H1 2023. When it comes to free cash flow, we delivered €744 million in H1 above 2023 record level. Over the last six months, we doubled down on Bolton acquisition, investing 230 million euros, more than what we spent in the whole 2023. This allowed us to reinforce our existing offer and geographical footprint. We acquired Spinnaker SCA to support Publicis Sapiens AI capabilities in supply chain consulting. Acre Asia to reinforce our influence offer in the region, and Downtown Paris to strengthen our production backbone for our luxury clients. Looking at the rest of the year, our current pipeline for M&A is strong, with a number of advanced negotiations. This means we will accelerate our investment in H2 and deliver on our objective of the 700 to 800 million euros worth of acquisition for 2024 in line with our capital allocation plan for the year. Finally, our average net debt was 375 million euros in H1. Before handing over to Loris, let me say a word about our creative success this quarter. Not only were we awarded a large number of Grands Prix during this year's Cannes Lions Festival, but Publicis Conseil, the founding agency of our group, created by Marcel Bluestain Blanchet, was named Agency of the Year. agency that started as a small creative workshop in Montmartre almost 100 years ago, recognized as the best in the world, was an incredibly proud moment for Maurice and myself, who both ran this agency in the past. This is a great recognition of the work done by Agathe Bousquet and Marco Vantorelli, and of course all of their team. What makes this award even more special is that the work rewarded was for some of our biggest and often historical clients like Renault, Orange, AXA or BNP Paribas. Here is just one example from Renault, our partner for 60 years, which won two Grands Prix.

Today, as soon as we leave the center of the cities, public transport is 5% of the travel.

My name is Marie. Where I live, there is not necessarily public transport. I am looking for a job. The job offers I have seen are often more than one hour from home.

In France, one out of five unemployed finds a job more than 50 kilometers from home.

In France, when you start a new job, you have a three-month trial period before you can start securing your contract. And during this period, you can be fired at any time. You don't have access to a bank loan and you can't buy a car. That's why Renault Group launched Cars to Work. Cars provided for free to people during their trial period that they only start to pay at affordable conditions once the job is secured. We have 50 cars to work dealerships in mobility deserts, offering 6,000 cars to work to people in need of mobility.

I'm going to have a fully electric car.

I found a job on a logistics platform.

I'm a night nurse, I'm a social worker. OK, I hope you enjoyed the creative break.

Now back to Excel charts. I will leave the floor to Loris to take you through the detail of our numbers. I will then come back to share our outlook for the rest of the year and the reasons for our confidence in upgrading our full year organic growth guidance. Loris, over to you.

Thank you, Arthur, and good morning, everyone. Let me begin with the key highlights of our H1 results. Revenue was 7 billion and 650 million euros, up 7.7% versus H1 2023. Net revenue was 6 billion and 688 million euros, up 5.9% versus H1 2023, and up plus 5.4% on an organic basis. Operating margin was €1,160,000,000, up by 6.1% versus H1 2023, representing a 17.3% operating margin rate at the same rate as last year. Headline net income was €857,000,000, up 5.4%. And free cash flow before change in working capital was €744,000,000, up 2.6%. I will now get into the details of the P&L, free cash flow and balance sheet, starting with the net revenue. In Q2 2024, net revenue was 3 billion and 458 million euros, up 6.8% on a reported basis. This includes plus 5.6% organic growth, which comes on top of plus 7.1% organic growth in Q2 2023 and is ahead of our expectations. A small net positive impact of currency, thanks to the USD and the pound sterling versus euro, partially upset by some negative impact from the Argentinian peso and several APAC currencies. Finally, a contribution from acquisitions, net of disposals of 25 million euros, mostly reflecting the revenue of our recent acquisitions, Spinnaker and AKA Asia, as well as the revenue of acquisitions closed in 2023, such as Practia and Cora. Let's move on to the next slide, which shows our Q2 net revenue by region. North America remained strong this quarter, up 7.6%, including plus 5.2% organic growth. There was a positive impact of the USD versus Euro, contributing to circa 1 percentage point to growth in Q2. Europe recorded plus 5.8% reported growth. Organic growth was robust at plus 4.2%, coming on top of a very challenging comparable with Q2 2023 at plus 15.2%. There was also a small positive impact of the pound sterling versus euro this quarter, contributing to 0.7 percentage point to growth. Asia Pacific posted a very strong plus 7.7% organic growth fueled by China at double digit accelerating from the previous quarter. The region was adversely impacted by currency and reported growth was plus 2%. Middle East and Africa and Latin America continued to perform well with 9.1% and 18% organic growth respectively. Let's get into more details for each region, starting with North America. The region was up plus 5.2% this quarter, mainly driven by the US at plus 5.3%, while Canada posted plus 2.9%. In the US, the group's largest geography, all activities continued to perform well, with Media and Epsilon remaining strongly accretive in Q2. Media sustained its double-digit growth on top of the double-digit last year and the year before. This remarkable performance is fueled by new business wins and scope expansions, notably in healthcare, financial services, and TMT sectors. As anticipated, creative activities remained broadly stable due to localized cuts in classic advertising. Publicis Sapient posted a slight organic decline due to the continued wait and see attitude from clients. It is worth noting that organic growth was slightly positive over H1 2024. Epsilon posted a mid single digit organic growth in Q2, still benefiting from a strong contribution from digital media driven by ongoing demand for identity led and first party data solutions. Let's turn to the performance in Europe on the next slide. Europe recorded plus 4.2% organic growth this quarter. The UK, which is 9% of group net revenue, was broadly stable in Q2 on top of a very high comparable of plus 17% in Q2 2023. Media and creative activities could double-digit, like in Q2 2023, driven by new business wins and scope expansions. Publicis Sapient, which represents more than one-third of revenue in the country, posted negative organic growth in Q2 against a particularly high comparable in Q2 2023. France, which represents 6% of net revenue, posted a plus 4.2% organic growth in Q2. Media was very solid after double-digit growth in Q2 2023. Publicis Sapient was softer on the back of a double-digit growth last year. Germany, which represents 3% of our net revenue, posted plus 3.4% organic growth after plus 9.5% in Q2 2023. Lastly, our operations in Central and Eastern Europe continue to grow strongly, posting a plus 17.4% organic growth on top of plus 17% last year. Turning to the next slide for our performance in the rest of the world. In Asia Pacific, which represents 9% of our group net revenue, we delivered plus 7.7% organic growth, accelerating from Q1. Overall, media grew double digit, on top of double digit in Q2 2023, and Publicis Sapient also posted double digit in Q2. Importantly, China recorded a very strong plus 10.5% organic growth this quarter, sequentially accelerating from plus 6.7% in Q1, still largely driven by market share gain. In the Middle East and Africa, we posted a strong plus 9.1% organic growth in Q2, largely driven by media activities and publicity sapiens growing double-digit. Latin America posted a plus 18.9% organic growth, driven by both creative and media activities, in particular in Brazil, Mexico, and Colombia. For your reference, you will find on the next slide the H1 net revenue by region. As you can see, all regions posted strong organic performance in the first half, leading to plus 5.4% in total for the group on top of plus 7.1% growth in H1 2023. On the next slide, you will find the group performance by client industry for the first half. In H1, most of our client industries posted positive growth. The TMT sector, which represents 13% of our net revenue, continues to perform very well, posting plus 11% organic growth in Q2, just like in Q1, and despite the tougher comparable. Healthcare posted plus 26% organic growth on top of double-digit growth in H1 2023, thanks to new business wins across different activities and scope expansions at the existing clients. Automotive and food and beverage both delivered mid-single-digit growth after mid-single-digit and plus 20% growth respectively in H1 2023. As anticipated, financial and retail were both down by mid single digit in H1 due to a tough comparable, particularly in the UK. Moving to the next slide and our simplified P&L down to the operating margin. Operating margin was at 1,160,000,000 euros leading to a margin rate of 17.3% in line with the record level of last year. This includes circa 45 million euros or a 70 basis point impact for the AI plan as announced in January. Personal expenses increased by 6.9% on a comparable basis as anticipated. Other operating expenses were broadly stable, demonstrating our strong cost management. I will not detail the different parts on the next slide. FX and perimeter FX were negligible. Personal costs, including restructuring costs, were up 75 basis points, largely attributable to our AI investment, mainly made of additional headcount in H1. Incentives and restructuring were broadly flat in H1 2024 versus 2023. Other operating expenses, including depreciation, contributed to a net improvement of 75 basis points, notably due to lower discretionary costs such as professional services or research costs. As a result of all of this, our operating margin rate in H1 2024 was 17.3%, fully in line with H1 2023, while investing circa 45 million in our AI plan. Moving now to our consolidated income statement below operating margin. Headline net financial expenses were, as 7 million euro charge, roughly flat versus 2023. For the full year, we expect an interest charge of 40 to 50 million euros. This represents an improvement versus our previous guidance of 50 to 60 million, with the assumption of US interest rate cuts now occurring later in the year than previously anticipated. Headline and income tax was 289 million euros with an effective tax rate of 24.9% in line with 2023. For the full year, we anticipate an effective tax rate of 25%, slightly above the level of 2023, which benefited from a one-time positive item relating to the tax audits. Further details are available in the appendix. Headline net income was 857 million euros, up 5.4%. Moving below headline net income and focusing on the key variation versus H1 2023. Amortization of intangibles arising from acquisitions amounted to 92 million euros in H1 2024, down 13 million euros versus H1 2023 due to the end of the amortization of various intangibles related to acquisitions. Impairment losses, mostly related to the rights of use of real estate assets, amounted to €34 million, a reduction of €49 million compared with H1 2023, last year being impacted by some real estate optimisation. Last, the revaluation for earnouts was an income of 28 million euros in H1 2024. As a result, group net income was 773 million euros, up 24.1%. Next slide, our headline EPS fully diluted is growing by 5.3% year-on-year and reaches €3.38. EPS growth of plus 5.3% is in line with headline net income growth. Overall, our EPS has increased by 52% since 2021. Moving to the next slide, free cash flow. Our free cash flow before change in working capital reached 744 million euros, up 19 million euros compared to H1 2023. This increase is mainly driven by an additional 66 million euros in EBITDA, reflecting the strong activity in the first half and partly mitigated by a 17 million euro increase in lease repayments, due to several new leases that have been signed following our return to the office policy and a 43 million euros increase in capex reflecting increased investment in our platforms and cloud infrastructure our erp deployment across the entire organization as well as additional refurbishment expenses related to the new leases that i've just mentioned Next slide, use of cash. In H1, as usual, change in working capital represented an outflow which reached 1,629,000 euros. This is in line with our expectation and we confirm our guidance of a change in working capital outflow between 100 and 200 million euros for the full year 2024. Acquisitions, including earn out and net of disposals, amounted to 224 million euros, which is above H1 2023, actually above what we spent for the whole of 2023. On share buyback, we spent 119 million euros in H1 and will continue to purchase shares for our LTI plan in H2. I remind you of our objective of 200 million buyback for the year. Other non-cash items represented a positive €229 million, largely coming from the change in earn-out and buy-out, fair value of cross-currency swaps and the currency translation adjustment on the balance sheet, due to the USD-EUR exchange rate. Moving to my last slide, net financial debt. The group closing net debt reached 99 million euros at the end of June 2024, lower than the 226 million euros at the end of June 2023, thanks to the strong cash generation of the last 12 months. The average net debt on the last 12 months is 375 million euros, fully in line with our expectations. We confirm our guidance of 2024 average net debt in line with 2023. When we include the average lease liability, this represents a leverage of one-time EBITDA, again in line with the full year of 2023. This concludes my financial presentation, and I now give the floor back to you, Arthur.

Thank you, Loïs. As you have just seen in H1, we continue to demonstrate that our model and our assets are built to sustain our outperformance. Actually, we have been growing close to twice as fast as our peers since 2020, with an organic growth CAGR of plus 4.7% versus the industry at plus 2.9%. Even more importantly, at a time where the microeconomic landscape is dominated by ongoing conflict, political uncertainty and high interest rates, and when the IT sector and some of our peers are facing difficulties, we have the potential to accelerate in the second half of the year. We are raising our guidance and now expect to deliver a full-year organic growth of 5% to 6% in 2024, up from an initial 4% to 5% bracket. This represents a clear acceleration compared with our 4-year CAGR of 4.7%. We now see plus 5% organic growth as the new floor in the current global context, factoring in ongoing delays in client business transformation projects, reduction in classic advertising spends, 6% is our new stretch, and it is dependent on an improved micro-context that will lead to clients resuming capex spends on DBT projects, fewer reductions in classic advertising spend, some positive impact from increased client budget in Q4, which is typically an adjustment quarter. At the same time, we will continue to deliver our industry high financial ratios. We will maintain an operating margin guidance of 18% as well as our free cash flow expectation of 1.8 to 1.9 billion euros while sustaining our record high bonus pool as we have done in previous years and investing 100 million euros in our AI journey. We are in this position of strength today, despite a challenging environment, thanks to the effect of our profound transformation. As you know, since 2017, we made three strategic bets to shift from a communication partner to a transformation partner for our clients. We invested over 9 billion euros in data and technology, notably through the acquisition of Sapient and Epsilon. We broke down the silo of our organization through the country model and the power of one to seamlessly connect our data, creative, media and technology capabilities. And we created Marcel to transform our culture and embark our people on our transformation. As a result, by executing those strategic bets, we now have three reasons for our confidence going on to the second half of the year. First reason, our go to market. It will continue to allow us to strengthen our relationship with existing clients and win the trust of new ones. It has positioned us at the top of new business ranking for the last five years. Since 2019, we have won over $14 billion of new media billings, more than twice as much as our closest competitors. We maintained this momentum in 2024. In the first six months of the year, Publicis was ranked number one in new business with billing of $3 billion, close to three times as much as the second best performer. Second, our capabilities allow us to take the leadership in personalization at scale. Our ability to capture a disproportionate part of the increasing demand for data-led marketing transformation boosted by AI in a soon-to-be cookie-less world is reflected in the double-digit performance for the third year in a row of our combined data and media offer, which represents circa 50% of our net revenue. To get a bit technical, it is now proven that the future of marketing lies on identity and first-party data. We are leading in this domain thanks to Epsilon acquired in 2019. Since then, we have built and invested in capabilities to connect our identity graph with a booming paid and owned media segment, like Connected TV, the fastest growing media channel globally, which will soon represent almost 20% of all video ad spend, like retail media, which now account for 37% of all search ad spending, or like social and CRM. This is not only allowing our clients to take back control on their customer relationship and truly own the full final consumer journey, but also link investments to business outcomes. It is how we are unlocking growth for our clients and for ourselves today, and it represents still a huge potential for our future. Last but not least, we are uniquely placed to partner with our clients in their AI-led transformation in the near future. We have the proprietary data owning 2.3 billion profiles globally, 35 years of digital business transformation data, millions of creative assets, and billions of daily media impression beats. These are now infused through our organization with Core AI. We have a single infrastructure to connect those trillions of data points and make sure they flow through our entire organization. And we have 45,000 engineers and data analysts between Epsilon, Publicis Sapient, and our media operation to leverage them thanks to AI in partnership with our client. There is a huge appetite on this form from our clients, which include 70% of the top 100 US companies. We saw this for ourselves during our 30-plus closed-door session we held on AI with many of them in Cannes. We demonstrated how our vertical-based approach and best-in-class capabilities can accelerate their business and marketing transformation. Now, we have to recognize that AI is going through a paradox today. While 98% of CEOs agree their organization will benefit from implementing AI, macroeconomic uncertainty prevents many of them from committing the necessary capital this transformation would require, as reflected in IT consistency's performance today. To cut a long story short, clients have the right vision for the opportunity AI represents, but many are still cautious when it comes to capacity investments due to continued global uncertainties. So despite Publicis Sapient experiencing some softness today, like the rest of the IT consulting industry, we are very confident in the growth opportunity beyond AI-led business transformation. And I have absolutely no doubt Publicis Sapient will capture a disproportionate share of those future investments. Our Q2 results are ahead of expectations, demonstrating once again the strengths and the sustainability of our model. We are performing our competition on growth and continuing to win market share. We are delivering the best financial ratio of our industry while investing in our talents and on our AI capabilities. We are upgrading our guidance from 4 to 5 to 5 to 6% in what is a still very challenging environment. We are accelerating our growth on a four-year stack, thanks to our new business performance and our ability to lead in personalization at scale. Finally, we believe that despite client cautiousness when it comes to capex investments, our AI-powered business transformation will soon represent an additional source of revenue, which makes us even more confident in the future. I would like to end this presentation by thanking our clients for their trust. I would also like to recognize the incredible efforts of our people. Sustaining this performance by executing our strategy in such a difficult environment is an everyday battle, and we are truly grateful for all of their efforts. Thank you for listening. And now with Loris, we are ready to take all of your questions.

Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Adam Berlin at UBS. Please go ahead.

Hi, good morning everyone. I want to ask a couple of questions on Sapient. I just wanted to understand where you think that the pipeline is at the moment for new work versus where it was say 12 months ago. Has there been any improvement at all or is it still kind of roughly the same level? And the second question I want to ask is, can you give us some examples of the type of work Sapiens is being asked to do that has a kind of generative AI dimension to it, just to make it a bit more tangible, exactly what you are doing for clients? That would be really helpful. Thank you very much.

thanks adam um let me take a step back on on sapient and and of course answer your question as you know us you have seen that we have restructured pretty massively sapient in 2019 and since then it has been a very strong growth driver for the group we have grown by 30 over the last four years and And even last year, which was a year where most of the IT consulting firms were negative, we actually grew 3%, coming from a very tough comparable of 19% in 2022. Again, we said it in the presentation, we repeatedly said it in the last quarter, our competition and the leader of the market in this area said it again a couple of weeks ago, we are still in a wait-and-see attitude when it comes to capex spending in business transformation. And to answer your first question, it doesn't mean that the pipeline is not strong. I would say the pipeline is as strong as it was a couple of quarters ago. We are winning clients, meaning we are presenting some bid and winning them. We are actually, in most of the cases, building the strategic phase, meaning our clients and new clients spending a bit of money to make sure that we have a plan to truly transform their business model. Where it stops, it is in the execution. Because this is where they need material amount of capex, and this is where they are in this kind of wait-and-see attitude to see how the macro improves. Okay? What is important to note, which is your second question, which is what kind of work SAPIEN does? I would say you have a full range of strategic and engineering consulting, depending on the industry vertical. The way they work and the products they bring are very different if you talk about financial services, CPG, or any other category. If you take financial services, for example, it should be how do you break the silos between the different business of a bank and make sure that you create relationships. full consumer journey driven by AI to bring personalization. If you talk about CPG, it could be about how do you bring content in a personalized way in an environment where they are not using to do this kind of thing. I think what is important to take out of your question is what they bring is a true complement. of what we do in terms of marketing transformation. And so when we are telling you that on one side, we are leading in personalization at scale by bringing the data and the media together to actually lead in retail media, in connected TV, what Sapient does in this case is to make that possible on an infrastructure level. And by the way, This is where AI is helping us a lot. Because AI, for the sake of AI, as we all know, is nothing. It is just a mean to an end. And AI is a way now for our client to bring together marketing transformation and business transformation, which is exactly the example that I gave you, which, by the way, has been the vision of publicists for almost a decade now when Maurice made the acquisition of Sapiens.

Okay. Thank you, Atul.

Thank you very much. The next question is from Nicola Langley, BNP Paribas. Please go ahead.

Hello, everyone, and congrats on the strong H1. Two questions for me, please. First, on the fuller guidance change, so you are upgrading the H2 outlook from 3% to 5% to 5% to 7%. What are the key drivers of that upgrade? Is it linked mostly to your own initiatives, or you are also becoming a bit more optimistic about the market conditions? And secondly, on the GenAI tools, can you update us on the progress made by Core AI since the beginning of the year? What are the next key milestones? And you have been showcasing the solution to clients during Cannes Festival. Any feedback you can share on their appetite to use those tools? Thank you.

Thank you, Nicolas. So actually, and I will come back to that in a second, but we are passing from 4% to 5% to 5% to 6%. As I said at the beginning, we think that the right measure is net revenue. So it will be higher if it was in growth. But as we are publishing in net, it's 4% to 5%, moving to 5% to 6%. But I'll come back to that. Let me answer your question about are we being more optimistic? What are the reasons? First, I mean, let's be clear. We are facing strong microeconomic pressure like all of our peers. It's clearly not an easy world out there. But despite those elements, we believe that the strengths of our model give us very good reason to be confident in upgrading this guidance, to come back to your point. It's not that we're getting more optimistic. It's that factually... we have good reason to be confident in upgrading this guidance, again, in a challenging environment. But it's not like the challenging environment started yesterday. You see what I mean? It's something that we have been living for for a while now. And so, what are the reasons, to come back to your question? First, it's pretty obvious, we had a stronger than expected H1, which, of course, gives us more confidence. The second is what I tried to explain in my second part, which is the combined of... between data and media allow us to lead in what is the most important thing for our client at the moment, despite all the difficulties they can see, which is personalization at scale. And when you know that Epsilon plus Publicis Media represent 50% of our revenue and has been growing double digits for the last years and continue to do so in H1, it gives you the second reason For our confidence. And the third one, and you see, although we're spending a lot of time on that, and me personally, is that we definitely have a very strong new business style win. I mean, I went fast onto that. As you know, we don't disclose anymore a particular account. But if you look at the stats that are done by third parties and take only H1, what we have won in new business is close to three times as much. as the second best. So this, again, encourages a strong H2. Now, to come back on the guidance, because I want to make sure that everyone on this call is very clear about what we are seeing. We see 5%. as a rock-solid new floor. It is our new floor. And it factors in a couple of important things. First, continued cuts in classical advertising. And second, publicity sapien that remains soft for the full year, as we have heard from all of their competitors in the IT consulting. There is still this wait-and-see, and it's factored in the 5%, okay? Now, 6% is a stretch. But it would be achievable if three things come together. First, of course, the macroeconomic condition improves. That will basically lead to fewer cuts in classic advertising. Second, coming back to Sapient, clients resume capex spend, benefiting, of course, to publicity Sapient. And last but not least, and this is something that you have heard already, Q4 is an adjustment character. Q4 in the US is about the election, and we need to see how this evolves. But again, coming back to your question, and to make it very simple, we are not immune to the macro pressure, clearly, but we are winning market share. And that is what makes the difference. In this challenging environment, we are clearly winning market share. And I will make two points about that, that for me are very good examples. One in the US, one in China. In the US, we have our tech sector growing double digit for the second quarter in a row, knowing that last year in Q2, we were already positive. while some, if not most, of the competitors are struggling. And so it's a great example of how our data, our technology, our engineer culture make a difference and create a favorable arbitrage to publicists versus peers of the tech sector that is growing overall. And the second is China. China is a great example. I don't know if Jane, the CEO of China, is listening to this call. And Laurie, that is next to me, was the former head of Asia, so it's thanks to those guys. You know, the fact that we are growing double-digit in a place where basically our competition is negative and some of our clients are suffering shows again the strengths of our offer and our ability to win market share. So that's for the first. Hopefully it answers your question on the guidance. I'm going to make it shorter because, I mean, I could spend an hour on this one. We've been very clear that for us, the use of AI was way more than what we can do with Gen AI on content. There are great things we can do. And you have seen it with us. You have seen it with some competitors. We can do things cheaper. We can personalize it. We can use it to make sure that we bring regulation around the world. And I think we are definitely leading in this area. And as one of our competitors said recently, we are actually leading in production. So this is something that we do well. You know. Maybe better than the other, maybe not, but we are doing well. Where we made a big difference versus any of our competition, and that goes to system integrator too, is we are able to bring to our clients what is the most important thing when it comes to AI, is to truly transform their marketing model where it matters. And the reason why we are the only one that can do that is that we have three competitive advantages that every of our clients that we met in Cannes and we did 30 plus meetings there understood. First, we have the data. AI is nothing if you don't have the data. And we own the data and identity, which make a big difference. Second, we have a single infrastructure. If you don't have a single infrastructure where the data can flow, again, it doesn't work. And third, we have an engineer culture. We have 45,000 people coming from Sapien, coming from Epsilon that can implement that. And so to come back to your question, we have shown very concretely how AI can help some of our clients to enrich and update their data real-time better than anyone else. We show to our clients how they can connect this data with a new media ecosystem, retail media, social, CRM, everything that will make a difference tomorrow, like connected TV. And this is where, again, we have a huge advantage. We are now capable, thanks to AI, to link investment to business outcome. And when you link investment to business adcom, you pass from being a communication partner to a business partner. And I guess this is what they understood. I'm being too long. Jean-Michel is telling me, sorry. I'm going to do shorter answer now. But as you can see, I'm pretty passionate about this topic.

Thank you very much, Arthur.

The next question is from Nora Metaille and Morgan Stanley. Please go ahead.

Bonjour, Arthur and Loris. Congrats on a very strong quarter. I wanted to ask a few questions on the topic of personalization at scale, which you've mentioned a few times on the presentation. I would like to better understand how personalization at scale is linked to the creative business, because you've mentioned how it can impact your media and data business. But how do you see the impact on your creative business? And secondly, if you could talk about what do you think is crucial for another agency such as Publicis to be successful in personalization at scale and how do you differentiate? And then lastly, can you comment on whether you're seeing any changes in the way you're pricing when you sign contracts that involve personalization at scale? Thank you.

Thank you very much. I'm going to start with the last question, which is pricing. When we were having disappointing organic growth, to say it like this, but already a very strong financial ratio, many people were telling us, you know, just lower down your margin to get your growth back. And we said at the time we would not buy market share. We are here to build a model that will be valued by our clients. I think what is interesting, too, as I can't give you any more details, I think what you should look at is our ability to grow double-digit on 50% of our business, which is personalization at scale, and still not only having the best margin of the market and improved over the year, but continue to invest massively while maintaining this kind of margin. The question you ask about the creative businesses, and thank you for asking, is a great question. I come from a creative background. And I thought during many years that creative was due to decline because of the pressure we can get through procurement, to cut a long story short. I always thought, and I still think, that creativity is at the heart of our business because it's a big differentiator. You'd be surprised to see the kind of pitch publicist media or even sapients can win thanks to creative ideas at the heart of their recommendation. But I was worried about a decline in this area. Don't get me wrong, I don't think it will grow at the pace of what we see today to an epsilon or a publicist media or a sapient if you take a long run. But we see opportunity to grow for a very simple reason, is that personalization at scale means more content. And we are in a position today where maybe on the ideation part, i.e. proposing an idea to a client, we might be stagnant and not growing that much, but our ability to have a production backbone that truly links, by the way, data to content, because this has become highly technological, is a huge opportunity to grow. And by the way, we are growing double digits in this portion of our business that is material but not having such an impact that all the creative work is growing more than low single digits. But again, it is a way of growing through production. And then to cut a long story short, the opportunity for creative impersonalization at scale is production. Then your question about what is critical to deliver personalization at scale. I would say there are three things where we have a unique competitive advantage. And the reason why we are growing so fast, again, you take concrete example as a tech sector, as China, and are roughly the 400 basis points of our performance versus our peers. Everyone, including CPG, has realized that the future of marketing is on identity, first-party data. And of course, with Epsilon, we have a massive competitive advantage. Second, if there is one thing that is changing more than anything, it is the media landscape. And I think it's important for you to note that we have continued to invest in areas that we're seeing are critical for the future. So thanks to Epsilon, we are leading in connected TV. Thanks to Citrus that we bought a couple of years ago, we are leading in retail media. Thanks to what we are doing with Razorfish, we are leading in CRM. And there are areas like this where on social, on commerce, where we are also very strong, there are areas there that are necessary and capabilities in media that will make the difference. And last but not least, which comes back from the first question, Adam, it's about the technology. Because you need a system integrator to put all of this together. And this is what Sapient is doing. So to cut a long story short, if you want to lead in personalization at scale, you need the data. We are leading in that. You need to be strong in media. We are number one in the U.S. with the best capabilities and continuing to invest. You need the technology, which is what Sapient is doing.

Thank you.

The next question is from Julien Roche, Barclays. Please go ahead.

Oui, bonjour, Arthur, Laurie, Jean-Michel, Lorraine. Félicitations. Two questions which are actually echoing Nicolas. So on the increase of guidance, I heard everything you said and your confidence, but macro is still a factor, and we could have a big macro slowdown in Q4. So maybe you can give us some, like, concrete ideas numbers on what benefit you see in the second half in terms of acceleration. So, for instance, as you highlighted, you want a lot of businesses in the first half. So, is net new business higher Tailwind in the second half than in the first half. Are we tweaking an extra 100 basis points, 200 basis points, some color there? And then on Sapient, it's got easy comps in Q4. So in your two scenarios, the five and the six, what do you think Sapient can do in Q4? That's my first question. And then on AI, I mean, you gave the answer earlier. that it was not only about Gen AI, but also the biggest difference was truly transforming the marketing model when it matters. But still, you were supposed to present the minimum viable product of Core AI at VivaTech, which I believe you didn't do. So can you tell us where you are on Core AI? When is it going to be released to employees? Or maybe it's been already, if that's the case, how many employees are using it already? These are my two questions. Thank you.

Thank you. I'll start with the second one. We actually did present the minimal variable product, and actually even more than that, but we kept it for our client at this stage for a very simple reason, is that we realized that when we released our film in Jan, it has given an opportunity for our competitors to either build on it or try to go against it. So we prefer to keep it internally. We have a big question, which is, are we going to come back to you guys by the end of the year? to publicly show where we are. It's probable, but hopefully you will understand that in this kind of things, we have to keep it a bit more confidential than we thought at the beginning. I invite you to ask our clients what they thought about it, and then you call me back, okay? So I think you'll be surprised on how advanced we are. Now, don't get me wrong, it's super tough. If it was easy, it's very difficult to put in place. We have hundreds of engineers working with data analysts and people for all around publicist to make it work. I've got a weekly meeting with those guys to make sure that we're on track. And so far, we are very, very happy with the progress we made. We just decided not to show it publicly for a reason that you can hopefully understand. On the guidance, I mean, what can I tell you more? First, and maybe I'll start with this, because this is the 18th quarter where we are over-delivering and keeping our promises. As you know, it has not always been the case under my tenure. We made a very, very strong point to try to regain your trust. Hopefully, we did part of it. And so, when we are saying five to six, It is 5 to 6, meaning that the 5 is a flaw. And so we feel extremely confident about the number we gave you. If not, we will simply not have done it. So we feel very strong, very confident. Now, maybe the granularity, so I talked about the reason why, which is stronger H1, personalization at scale that will continue to accelerate and be very accretive in H2. Maybe the granularity I can give you that matters is that if you look at H1, we had some material wins and we did not have any material loss, which means that honestly the year when it comes to new business is done. even if we were having bad news tomorrow, it won't have an impact on this year. It would have an impact on next year. And don't get me wrong, maybe we would. But at the moment, and looking at H1, again, we had some material win that give us tailwinds and no material loss. And so when you add that to the fact that We see again strong growth between Epsilon and Publicis Media. We feel very good about it. I would say, to come back to your point, that one of the big variables between the 5 and the 6 is definitely Sapient. The problem on Sapient, honestly, is that the growth does not depend that much on us. And we are listening to our IT peers as much as we are listening to ourselves, which is when is the market is going to pick up again. And so the assumption we are making is that if it doesn't pick up by the end of the year, it is completely included into the 5%. This is why we are so confident. And if it was to pick up with, as you said, better comparable, then we could go closer to the 6%. This is where we are. But maybe to close on that, and it comes back to your first question about AI. I mean, it's a bit like epsilon, by the way. There is a growth that those guys generate by itself, and there is a growth they generate for the group overall. The success and the thought leadership we're having today on the market, and the fact that we are not perceived by our client anymore like a media partner or a creative partner, but definitely as a transformation partner, which explains not only our growth, but also our margin. We are 300 basis points better than our competition at the moment. is in part due to sapient leadership and our ability to bring those guys in any of our meetings and having a very different conversation versus our peers, including AI. It's like media. Don't get me wrong. The work done on media is outstanding. And Dave Penske and the team are doing really an awesome job. But the fact that they can connect so well with Epsilon means that Epsilon grew by itself, but is also decisive in some of the major wins we had in the past. By the way, I could tell you that also, Tech Profitero, which is this digital chef company that we bought, the fact that today We are able to connect our identity to the inventory of our client and tell to the client, look, your competitor is running out of stock. So don't do a promotion. Go with a full price and do more margin. It's helping us to win new business on the part of the profitable growth that we're having at the moment. So all is in all, if you want. And this is the beauty of what we have created. And this is why we are so focused on Bolton Acquisition is... We are building a model that is, in our opinion, is clearly leading and won't be catch-up because we started early with 9 billion investments. We did the hard work when it comes to our structure. We embarked everyone through Marcel. And now we are accelerating on Bolton, as you have seen, only in order to make sure that individually and collectively we grow our business.

Super. Merci.

Merci. The next question is from Tom Singlehurst, Citi. Please go ahead.

Good morning. Tom here from Citi. Thanks for taking the question and thanks for the presentation. First question, I know it's too early to give guidance, but is there any reason why that 5% floor shouldn't sustain into 2025, at least in theory. I appreciate you're not necessarily going to give us 2025 guidance at this stage, but that structural acceleration feels like it's a sort of medium-term development. That was the first question. And then second, perhaps linked, your China performance is superb, obviously defying the market there. Can you just talk about how the landscape has changed as a result of the faced by Group M in that market. And so I suppose the question is, can that growth just continue to sustain, if not accelerate? And then the final question, you did mention it a couple of times in passing, but can we talk about retail media and Unlimitale in particular, just how this is progressing and what the opportunities are there are for M&A in particular, which appears to have sort of begun to ramp up in the first half, if there's scope to supplement what you're doing with CitrusAd and Profitero. Thank you very much.

Thank you, Tom. I will leave China to Loris as an expert on China. I will take the one and three first. 2025, of course, it's too early. The only thing I can tell you is that we are on our fifth year of outperforming. We have been growing organically roughly the double of our peers. We are winning market share. And again, let's wait a bit to see how 2025 looks like. On the retail media and the unlimited question, we are making real progress. I mean, strong progress in two of the most important areas for me. First, as you would remember, when we started a year ago, we had 13. partner, one three, we are already at more than 28, which is exactly what we want as we want to build a coalition that allow our client to have access to the best retail media offer. When it comes to publicists, the biggest interest of this move is to make sure that we can start collecting and activating identity, first party, better than anyone else. And what is very interesting there is when we started the partnership, Carrefour had roughly 40 to 50 million. We are today at 160 million. identity, which means that what we can propose to our client, and again, you see it in our new business and in our growth on media, is, bar none, the best consumer understanding will it be our client of prospect that any CPG could use. So this is progressing very well. And on M&A, again, commerce is a big area for us. We are leading the market today by far because, first of all, we started earlier. And second, thanks to Epsilon, everything, again, is based on identity. And you have seen the acquisition. This is definitely an area where we're going to continue to invest. And when we were talking about M&A, the 700 to 800 envelope for M&A this year, part of it, and at the moment we have some discussion, is for this kind of acquisition. But maybe, Loris, I'll let you talk on China.

Thank you, Arthur. Hi, Tom. I mean, maybe to take a step back on China, I mean, first, I mean, and you are well aware of it, I mean, the macroeconomic environment is challenging. I mean, given the low consumer sentiment, the major indexes trending down. and the continued softness of the real estate market. And our performance in China is not recent. I mean, we've been outperforming the market for the last three years and delivering what is a cumulative growth of more than 20%, which is if you put it in perspective, four times as much as our largest competitor. But it's true that there is an acceleration. As you saw, we posted plus 10.5% in Q2, after a strong Q1 at plus 6.7%. So we've been accelerating sequentially in the last quarters. And the outperformance that we have been delivering in China is driving, obviously, market share gains. And this can be in some ways attributable to three factors. The first one, as we've mentioned before, is the investments we've made in very differentiating capabilities. I mean, we today have leading commerce tech data capabilities in this market, obviously, that we're putting at the service of our clients. Second is our media offering. We have the scale, and we're connecting our data solution to media. And equally importantly, we have earned over the years what is an unrivaled reputation for rigor and transparency. And the third point, which Arthur mentioned early on, is the leadership and the overall talent pool. I mean, Jane, Lynn Baden, and the team have been doing just a fantastic job attracting some of the very best talents in the industry. One last comment that I would make, let's be clear on our new business situation in China. We have not just been winning against one competitor. We have been winning against all competitors across multiple pitches. And so, you know, you really have to look at that performance for what it is.

I will just add one point on that, which is China in itself is important for publicists, and it's great to see the growth we're having there. The most important point for me is that it is the second and sometimes the first market for some of our most important clients. And our ability to lead on innovation in a place that is so innovative is having an halo effect with our clients that go way beyond China. And that's a very important point. More and more, we are showing to American or European clients what we are doing in China. because it's so advanced, it's so unique, it's so close to what will happen everywhere in the future, to be honest, that we have more and more meetings showing our capabilities in China to clients outside of China.

That's super clear. Thanks very much. Thank you.

The next question is from Connor Oshie. Captain Chauvre, please go ahead.

Yes, thank you. Three quick questions for me as well. Firstly, just to be clear on Sapiens, sorry to come back on this, but I think Accenture said they expected a better performance in the next quarter, but you're not necessarily seeing that. If I understand correctly, the delays in execution remain unchanged. Do you see in this market a risk that pace of innovation in of ai is making clients reluctant to commit for fear of of uh whatever they create being quickly obsolete and that this this could persist for a while uh that's the first question second question on epsilon um above average growth but growth slowing a little bit sequentially in the last couple of quarters are are you concerned that you know growth could return you know, below mid single digit, uh, you know, going in the next few quarters, um, which would make your outperformance at a group level, very dependent on the media business, um, which has good new business wins, but, you know, uh, you know, would make it very narrowly based. And then the last question just on, uh, maybe for Loris on the, on the headcount, um, You mentioned hiring in AI, in the 45 million, a lot of that was new hires. Could you give us a sense of how much the group headcount increased in the first half of the year?

Thank you, Conor. First, I'll start with Sapiens. Currently, we don't see one client that is not excited and committed to an AI-led transformation. And we have a couple of studies that we show 98% of CEOs are there. So I don't think they're scared by anything. I think they understand the absolute necessity to do it. I just think that, again, as it is a long-term investment, they have no problem to pay for the first phase, as I said, which is what should we do. And this is why we are having still a good performance. The question is, when are we starting with a CapEx to put that in place? So there is honestly, at this stage, absolutely no fear when it comes to that. You mentioned the leader of the market, but I guess it's true for everyone. Where you have to be careful is, within those guys, you need to look at the part that is the same as the one we are doing, which is IT consulting and business transformation, engineering, and system integration. When you look at that, No one knows at the moment, and again, I'm just talking about public data, no one knows exactly when the rebound will really happen. What I can tell you is that if it starts to benefit to our competition, it will benefit to us too, because again, we have many projects that are already in the pipe, that are just waiting for clients to gain confidence. So that's on that. On Epsilon, thank you for raising the question, because this is a very important point. I mean, first of all, as you might remember, when we made the acquisition in 18, we bought it on a multiple that was assuming a growth for Epsilon going from 0 to 3%. And at the time, by the way, the market said it's a good multiple for 0 to 3. For the last three years, Epsilon has been growing double digit. And even if you look at this year, we are roughly at 6%, which is, when you take the comparable and the market condition, a very, very strong performance. Now, coming back to your question, it is becoming increasingly complex. to disconnect the epsilon performance from the publicist media performance. Because one is nourishing the other. The vast communicant, as we say in French. On one side, epsilon is doing a tremendous job to give a huge competitive edge at Publicis Media, though the win we're having, which are three times bigger than the second, this won't happen without the competitive edge we're having with identity. And on the other, by the way, Publicis Media is also working with Epsilon to deliver personalization at scale. So I really believe that you should look at the performance together. And by the way, this is how I look at it, even on the incentive system. What matters to me today is not how much one is going to grow versus the other. The only question I have as a CEO is how fast can we accelerate in winning market share, which you can imagine are huge when you look at the growth of those two versus the rest of the group. How much market share can we win in the coming year in order to truly have a leading position that makes publicists the obvious choice, whatever the pitch is. And so, again, it's really about combining those two, encouraging them to combine. And so you should really look at the performance together.

And now it's on you, I guess. I think there were two parts to your question. The first is around the AI investment, and we've mentioned it earlier. We have a plan to spend about $100 million this year. Half of it is around headcount investment. Just to remind you, in Q4, we invested $25 million. In H1, we are at roughly 45 million, so completely on track. And exactly half of that is going towards staffing and headcount investment, primarily on the Sapien side. When it comes to the overall headcount question, I mean, obviously, given the strong momentum that we have on the top line, we can and we must continue to invest in our talents. In H1, our net recruit were roughly 3,400, which is slightly above H2 2023. And it's primarily connected to the ramp up we've had on several sizable wins since the beginning of the year. But then if you step back and you look at the net recruits increased in the last 12 months, it's fully in line with organic growth. So we have a really good control of our headcount, and we'll continue to do so for the remainder of the year.

If I can build on this one, because this is something that is – and Julian asked the question first – We can't be more optimistic on what we are building on AI at the moment, honestly. It's a very hard work, as I said, but I will truly encourage you to test it with our clients to have some feedback about the kind of progress we're making. The second thing that I guess is important is it's not because we are having good results at the moment that we are not obsessed about staying ahead. We are not staying still in any area. We are making sure that we are investing and innovating to continue to outperform. And everything we are discussing at the moment, which is bringing new talent on board and retaining the best talent we have thanks to our bonus pool, making sure that we build this kind of new platform with Core AI, or continuing to invest in capabilities, particularly in data and media, that can, again, nourish the growth and the outperformance, is what we are obsessed about.

Great, Leah. Thank you.

The next question is from Christophe Cherblanc-Bernstein. Please go ahead.

Yes, good morning. Thanks for taking my question. The first one is on health care. Super impressive, plus 26%. So that's more than half your total organic growth. The question is how much of that is related to new business? And given you had additional wins in creative in 24, is it fair to expect the category to be more than 15% at the end of this year? That's the first question. And the second question is on working capital, so possibly more for Loris. Working capital historically was linked to media buying. You have had a super strong performance in media buying for three years, and yet you negative working cap on an absolute basis has been basically flat. So is it because the terms of payment on media buying are changing? Is it because other parts of the portfolio are more working capital demanding? What is the explanation for the change in working capital over a multi-year basis? Thank you.

Loris is going to take the second one, but I'm going to start with health care very briefly. First, you're right. We see a very dynamic health care, and I come back on the reason in a second. It's a mix of new business and existing clients, to cut a long story short. You know, there is a similarity between tech and health care. It is two categories that are leveraging data and technology, I would say, maybe more than the other. Tech, because it's platforms, so it's pretty obvious. This is why we are growing so fast versus our competition, is that they need first-party data that can complement there. They need a partner that knows how to connect paid media when they buy advertising to their own digital ecosystem, which we do with Sapient. And they need enough engineers to feel that they have the right culture. When it comes to health, and the reason why we are winning so much on health and growing so fast, it's a bit the same. I mean, health is a sector that is highly regulated, that needs not only the data but the technology. to go personal while respecting the regulation all around the world. And by saying that, you understand why we grow. Because we are the only one with this kind of capabilities that can truly understand not only patient but HCP, and then make sure that we can connect them, taking into account the local regulation and deliver personalization thanks to technology. And this is why the model we have been building is having this kind of favorable arbitrage for us when it comes to tech, but honestly also when it comes to health.

Bonjour, Christophe. To answer your question on working capital, and maybe I will start with the conclusion, which is, and I mentioned this earlier, we are confirming our guidance for the full year of a change in working capital anywhere between 100 and 200 million. But just to take a step back and to look at H1 and maybe give you more granularity, I mean, the first comment that I will make is, as you know, there is definitely strong seasonality in the change of working capital. But I think what is relevant for this specific quarter is we've had some swings on client payments between the very end of Q2 and the very beginning of Q3. We've been undergoing the ERP implementation, which is almost complete, as you know, and that's created some slight delays in invoicing on certain clients in June. So it's really phasing at the end of Q2, and if I put phasing aside, obviously goes back to us confirming our guidance. What we take into account this year is there's been some strong ramp up in new clients' wins, notably in production, which is why we gave you that guidance six months back. There is no specific issue on payment terms or any of that matter to your question. And working capital is simply a function of the strong commercial activity that we have in phasing. So it's definitely an amount that we fully anticipated for H1. Okay.

Thank you. Next question.

As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Adrienne de Saint-Hilaire, Bank of America. Please go ahead.

Yeah. Good morning, everyone. Sorry if my question sounded a little picky. So first of all, on the margin side of things, since growth is being driven by the high margin areas of media and epsilon, why are we not seeing a benefit on the margin guidance from the higher organic sales growth? Or maybe ask differently, where are you investing? Secondly, CapEx had a bit of an increase in the first half. How much is a one-off bump related to the ERP implementation and how much is permanent? And then the third question, TMT grew 11% in the first half, so about the same in Q2. Forgive me if I've missed anything, but I don't think there was any particular client win in that space except for maybe Spotify. So just curious, what's the driver behind the improvement in tech? Is that related to general improvement in marketing spending there or something else related to your offering. Thank you so much.

Thank you. I'm going to take one and three. You too. So I'll take three after. As you're picky, allow me to be picky a little bit too. When I took my job, I spent like three years explaining us that our margin was too high and it was at the expense of our growth. Today, we have the double of the growth of the other and we are beating competition by 300 basis points on our margin. That's the reality. The reason why we keep our margin at 18, and as I said, by the way, we could improve it, but... We are very clear on one thing, which is we want to make sure that we put our cost structure at the service of our growth. This is what matters to us more than anything else. We want to make sure that we continue to sustain the momentum we're having. And the way you should look at the 18% is that not only we have the biggest bonus, and you know that it's an adjustment variable for our competition that is still and already in place for the year, but we are absorbing the 100 million cost on AI. which means that you see the kind of room we are creating thanks to our platform model. Thanks to our platform model, we're able to absorb 100 million, keep by far the highest margin, and continue to invest in our people. And it comes back to what I was telling you before. It's a choice, a choice, by the way, that we make with the board. We want to continue, and we're going to continue to sustain our momentum. and outperform the market and to do that we need to invest in talent and we consider today that we should go for the best talent of the industry and we are independently even of our growth we want the best talent within publicis because we have the best journey and people are joining in an incredible way we want to make sure that we build a solution on ai that is truly helping our clients at the core of what they do and not only on the tip of the iceberg which is content And we want to continue to invest in new capabilities that bring the model to life. So to cut a long story short, we are outperforming on growth, outperforming on margin. Yes, we have rooms, but we are using our room not only to grow, but to continue to really stay in your head as a market leader.

Bonjour, Adrien. To take the question on CapEx, I mean, in many ways, it's very similar to the response Arthur gave on margin. It's directly correlated to our top-line performance. But to give you more clarity on H1 this year, there are three main factors accounting for the increase in CapEx when you compare it to the same period last year. The first one is some investments in our platform and cloud infrastructure, notably at Epsilon. The second, as I mentioned earlier, is the acceleration of our ERP deployment across the entire region, and we're nearly completed. And the third, again connecting it to our growth, is there are some costs associated with new leases. to support the return to the office policy and obviously our strong organic growth. But all of that is well included into our guidance of free cash flow for the year, you know, at 1.8 to 1.9 billion.

On the tech question, you're right. It's not new business wins. We had some, and you mentioned one, but what is making the real difference and the material improvement is something different. If I take a step back, those platforms and tech company went through a challenging time, I would say 24, 18 months ago, and start to drastically reduce their spend when it comes to marketing. I'm sure you will remember that, that it was public, roughly, okay? And we all suffer from that. I mean, more or less, but we all suffer from that in a way. Then, already a year ago now, because you just have to look at our Q2 last year, they started to invest again. The difference is that they did not allocate the money they were spending exactly with the same kind of partners. They used this opportunity also to reset the kind of capabilities they were looking for and though the kind of partner they have to work with. And this is why, by the way, we are now benefiting from this arbitrage, because, again, we have first-party data that they need. We have an ability to connect those data with paid and owned, which is how you create an ecosystem for the tech. And we have this engineer culture. So, yes, it's a bit of a new business, but you're right, it's not the biggest part. It is an arbitrage made by those guys at the moment where they are starting to spend again, and this is why a Q1 double-digit on the negative and a Q2 double-digit on the positive, because it is a trend that started roughly last year at this time.

Thank you.

Thank you.

And the last question is from Jérôme Baudin, Adobe HF. Please go ahead.

Yes, good morning. Just two quick follow-up. The first is on the other expenses optimization. So could you give a bit more color on what costs have been cut there? So you said professional and research. And is it structural savings or this cost should come back at the end of the year? And what are exactly professional costs? So that's the first one. And the second one is just to make a follow-up on the topic around synergies between creative and Epsilon. Do you see that bundle as a relay to the media data bundle from 2025? And do you think that you get the technology to generate these synergies, or should we expect M&A in this very specific field of production within Epsilon, or will it be at constant Epsilon technology? Thank you.

Thank you so much. We're going to start with the expenses and Loris, I guess.

Yes, Jérôme, I will give you a very, very simple answer, and you're right. We have been driving the efficiencies primarily from discretionary costs, i.e. SG&A, and also very strict cost control in areas like professional services and research costs. And again, these efficiencies are designed to fund our investment, our ramping up, and once again prove that we have a strong elasticity in our cost base and are managing our costs very, very tightly. But you're right, that's the origin of the savings.

Jérôme, the question you ask is a great question, and by the way it will allow me to close this meeting. You're absolutely right. I think that the opportunity to connect data and media, as you have seen in our results, is delivering a lot of growth and allow us to win market share in a material way. The next big thing is definitely to connect data with content. Where are we on this? First, we definitely already have the leading capabilities. So to come back to your point, we don't need a big acquisition to do that. We are doing it. I think we might be number one in terms of size today. And we have that already in-house working for many clients. We don't, again, disclose any new business pitch, but we have been winning a lot of production pitches for big clients where we are starting to put the backbone together. Second, it's all about talent. And we are building what I think would be the best team in the industry. We already have great talent in place. But what is interesting here is that we are shifting from traditional production, as I knew it when I was in charge of creative agencies, to something that is way more around tech and personalization. And the kind of talent you need for tomorrow's production are not even the one that we needed really yesterday. So we have to be very, very thorough on how we pick our people for the next step that we are doing. And last but not least, which is something very important, we are starting to have some great cases of what we do for clients. And again, this is not something that we can share with you, but we have a unique ability in our industry to show to some clients what the future looks like when you truly connect the data with the media and the content thanks to technology. And maybe I'll finish with this, because this is the vision that Publicis had for years now, which is if we want to truly be at the service of our clients and appear as a transformation partner that can accelerate their growth while reducing their cost, it's about connecting the best data that we have with Epsilon to media where we are leading with Publicis Media, to content thanks to our creative agency and make sure that all of this works together thanks to technology delivered by Sapiens. And then for us, as I said, and that hopefully you have seen today, it's about winning market share and use those capabilities to truly lead the market in terms of growth and outperforming as we did overall. And we show you a couple of buckets of example, like the tech of China. It's about continuing to invest to keep this leadership and this advance while delivering the best financial ratio, which is once again what we did. And then it's about making sure that we prepare the future. Would the micro be complicated or not? Because independently of that, we have to strive, which is hopefully what you have seen in our new guidance. So I'm going to thank you very much for your time. I wish you a good summer and a good Olympic Games for those that are in Paris. And hopefully see you soon. Merci beaucoup.

Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.