Publicis Group Sa S/Adr

Welcome, and thank you for joining the Publicist Group third quarter 2025 revenue presentation. 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 one at any time. If anyone needs assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Artur Sadun, Chairman and CEO of Publicis Group. Please go ahead, sir.

Thank you, Sherry. Bonjour and welcome to Publicis Group Q3 2025 Revenue Call. I am Arthur Sadoun and I'm here in Paris with our CFO, Loris Nold. Jean-Michel Bonamy is also here and will be available to take your questions offline after this session. I will begin by sharing the highlights of our Q3 performance and the outlook for the rest of the year. Loris will then get you into the detail of our numbers before I take you through how AI is making us win today and why it will be a strong driver of our growth tomorrow. As usual, Loris and I will take all of your questions after the presentation. But before we start, please take the time to read the disclaimer, which is an important legal matter. Okay, let's begin with the three key highlights from our Q3 performance. First, we deliver another very strong quarter with net organic growth of plus 5.7% in Q3, building on a strong H1 at plus 5.4%. Second, we are raising our full year net organic revenue growth guidance to a range of 5% to 5.5%, up from our initial 4% to 5%. on the strength of ongoing client demand, particularly for AI-enabled products. Third, we are already having good visibility going into 2026, thanks to a recurred first-half performance in new business and a continued strong momentum over the summer. Let's dive into the detail of these highlights, starting with organic growth. At plus 5.7% in Q3, our performance was even stronger than the plus 5.4% achieved in H1, confirming our ability to maintain our growth momentum. Once again this quarter, our results were driven by scope expansion with our clients, sustained strong new business momentum, and a competitive landscape that is increasingly favorable to us. Looking at our business practices, Connected media, representing circa 60% of our total net revenue, was once again very strong, posting high single-digit growth this quarter, driven by publicist media scale across geographies and channels, and powered by Epsilon data. Intelligent creativity, generating circa 25% of net revenue, recorded mid-single-digit growth, unlike market trends, which are negative. This performance was supported by significant growth in production and creative wins. Lastly, technology, with PwC Sapiens representing 15% of our net revenue, stayed in positive territory despite the AST consulting market remaining soft, as recently reported by the leader of the industry. Although clients are yet to embark in their large-scale AI transformation programs, We are seeing growing engagement on AI consulting projects for them to build their own agent network. When it comes to our results by geography, all of our key regions perform well. The U.S., representing 59% of our net revenue in Q3, achieved outstanding organic growth at plus 7.1% this quarter, accelerating versus H1, where all of our prestige has been contributing. Europe reported plus 2.8% organic growth against a particularly high comparable in Q3 2024 that included revenue from the Paris Olympics. Asia-Pac was again very strong at plus 6.5%, with China up 6.1% in Q3, driven by market share gains. Turning to our second highlight, our guidance upgrade. In July, on the back of an exceptional first half in new business wins, we had already increased our guidance to close to 5%. Today, we are raising it further to a range of 5% to 5.5%. As you may recall from Q2, we had included some potential contingencies into our raised outlook. However, in Q3, none of them materialized. In fact, we did not see any slowdown. Marketing budgets remain firm with no material cuts taking place. Actually, we saw further acceleration in client demands when it comes to AI-powered products and services, particularly in three areas. First, in connecting media, which is booming at high single-digit growth thanks to our ability to connect paid media with commerce and influencers through AI. Second, in our AI production platform, which is growing double digits on the strength of demand for personalized content. Third, in building agentic networks for clients who can no longer afford to have fragmented agent strategy and need to break down the silo within their own organization. This is why Publicis Sapiens is positive again this quarter. This gave us the confidence to raise our forecasts. Looking at our improved guidance in a bit more details, the lower end at plus 5% is rock solid. It implies delivering in H2 the same underlying high growth rate as in H1 after adjusting for the 70 basis point tougher comparable. The upper end at plus 5.5% will demonstrate an underlying acceleration versus H1, including a very strong Q4 despite the high comparable. The 5.5% is what we are aiming for. Achieving this net organic growth in 2025 on the top of a five-year CAGR above 5% and widening the gap with our holding company peers come down to one main reason. Our early and sustained focus on implementing our AI strategy at the heart of our unique capabilities in data and technology. This has translated into material market share gain and stronger client relationship. I will come back to this in more detail later, but if there is one thing I would like you to take away from this morning call is that we are winning today thanks to AI. Moving on to our third highlight, we are already in a favorable position of working towards next year thanks to our unparalleled net new business momentum we have had this year. As such, we expect to outperform again in 2026 for the seventh consecutive year. This confidence is built on our unique positioning, which has enabled our record new business performance in the first half and again in Q3, as shown by the latest JP Morgan data on billings. In the first nine months of 2025, net new billings reached $6 billion in close to what we achieved for the full year in 2024. These wins will now create a solid foundation for our growth as we head into 2026. And while you may be getting used to our performance, after six years of delivering above market growth, we plan to outperform again in 2026, building on a multi-year high comparable exceeding 5%, while our main peers will benefit from their very easy comparable of 2025. I will now hand over to Loris for a deep dive into our numbers. I will then come back to explain why we are uniquely positioned to continue to win thanks to AI in this rapidly changing environment.

Thank you, Arthur, and good morning, everyone. Let me go into the details of our Q3 net revenue. In Q3 2025, net revenue was €3,529,000,000, up 3.1% on a reported basis. This includes a net negative impact of currency of 520 basis points, mostly due to the decrease of the USD and pound sterling versus euro. A contribution from acquisitions, net of disposals of 260 basis points, mainly reflecting the revenue of Marshall Influential in 2024 and Atomic 212, BR Media, and Lotami in 2025. Finally, plus 5.7% organic growth, which comes on top of plus 5.8% organic growth in Q3 2024. Let's move to the next slide, which shows our Q3 net revenue by region. North America accelerated in Q3 up 3.6%, including plus 7.1% organic growth. There was a negative impact of the USD versus Euro, mitigating the contribution of acquisitions. Europe posted plus 2.2% reported growth, including plus 2.8% inorganic growth. There was also a negative impact of the pound sterling versus Euro. Asia-Pacific posted plus 6.5% organic growth, fueled by Greater China at plus 6.1%. The reported growth was plus 2.9%, impacted negatively by exchange rates. Middle East and Africa also faced a high comparable and was down minus 3% in organic terms. Latin America continued to perform very well with plus 9.6% organic growth. Let's get into more details for each region, starting with North America. In the U.S., the group's largest geography, which represents circa 60% of our net revenues, we delivered a strong plus 7.1% organic growth. Connected media accelerated to grow high single digits, and intelligent creativity was up mid-single digits. Publicity Sapient posted a low single-digit organic growth, with continued wait-and-see attitude from clients. Let's turn to the performance in Europe on the next slide. Europe recorded plus 2.8% organic growth in Q3. The UK, which represents 9% of group net revenues, was up 10.7%. Connected media and intelligent creativity combined were up double digits, driven by strong new business wins and scope expansion. while Publicis Sapient grew high single digits thanks to positive phasing on some large clients. France, which represents 5% of group net revenue, was materially impacted by the comparable of the Paris Olympics last year. In addition, Publicis Sapient continues to be affected by some capex delays. As a result, France declined 8.6% organically. Germany, which represents 3% of net revenue, posted a 5.3% organic decline. Excluding publicity sapient, organic growth was positive at low single digits. Lastly, our operations in Central and Eastern Europe continue to grow very strongly, posting a plus 9.5% organic growth fueled by global new business wins. Turning to the next slide for performance in the rest of the world. Asia Pacific, which represents 9% of group net revenues, delivered plus 6.5% organic growth, driven by connected media activities that were up double digits. Greater China remained very strong, delivering plus 6.1% organic growth in Q3, as we continue winning market shares. Middle East and Africa posted a 3% organic decline, as it faced a very tough comparable on Publicis Sapient. Latin America posted plus 9.6% organic growth thanks to the strong performance in Argentina, Mexico, and Chile, all growing double digits. Growth in Argentina partly benefited from inflation. On the next slide, you will find the group's performance by client industry for Q3. Nine sectors out of 10 posted positive growth. And as we indicated before, we are seeing a well-balanced growth among sectors this year. The financial sector was up double-digit accelerating versus 2024 thanks to new business wins. Food and beverage was up 19% thanks to new business wins and scope expansions. Healthcare remains strong at plus 8% in line with expectation and thanks to scope expansions with a number of existing clients. The TMT sector was up 5% against a tough comparable of plus 9% last year. Moving to my last slide, net financial debt. Average net debt for the last 12 months is 957 million euros, up 551 million euros versus at the end of September 2024. This reflects the impact of acquisitions completed since Q3 2024. Net debt at the end of September was 1.6 billion euros, up 2.4 billion euros in the first nine months of the year. The increase is due to the usual change in working capital outflow, as well as the impact of acquisitions and lower USD on our cash balance, all partly offset by free cash flow generation. Acquisitions, including earn-outs, amounted to 960 million euros in the first nine months of 2025. This concludes my financial presentation, and I now give the floor back to you, Arthur.