Wpp Plc Ord New

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to WPP 2024 third quarter trading update, conference call and webcast. At this time, all participants are in listen mode only. If you have a question, please press star one on your telephone keypad. Today's conference is being recorded. Now, I would like to hand it over to WPP CEO, Mr. Mark Reid. Please go ahead, sir.

Thank you very much, and good morning, everybody, and welcome to WPP's third quarter training update. I'm Mark Reid, and I'm here with Joanne Wilson, our CFO. We're going to take you through our results for the quarter and then answer your questions. Back at the interim results presentation, I said we've been extremely busy in the first half, and that's very much continued in this third quarter. We're making good progress against our strategic objectives, but we're starting to see concrete benefits with the return to form in recent new business outcomes and encouraging growth in our top clients. Our offer, based around fewer, stronger brands, underpinned by AI and new technologies, making us more competitive while making the company structurally more efficient to improve our profitability. There's more work to do, but I am very pleased with our progress. So before we start, please read the important quarterly statement on page two. And on page three, in terms of the agenda, I'll just go through the financial and strategic highlights before handing over to Duran to take you through the financial performance. We'll then briefly cover our strategic progress in the third quarter, before we get into questions. So turning to page four and the highlights for the quarter. I think our third quarter delivered a return to growth, which is important with 0.5% growth in net sales led very much by Group M. We saw growth across four of our top five markets and a broad based improvement across most client sectors, including the technology sector, which has weighed in us by 9% in Q1, 1% in Q2, returned to growth at 1.3% in the quarter. For the quarter, Group M grew 4.8% after 1.9% growth in the first half. It is a slightly easier comparative last year and a slightly tougher comparative compared to Q4, but the performance in the third quarter was encouraging. Our integrated creative agency declined 3.1%, driven by three factors, the impact of Pfizer, the macro and business conditions in China, and declines in project-based work against the more challenging macro backdrop. We can use to make strong strategic progress against the objectives we laid out for you at the beginning of this year, driving adoption of WPP Open, our intelligent marketing operating system, and leveraging our simpler structure. That progress drove tangible benefits in the third quarter with good growth in our top 10 clients. Our top 10 clients increased 7% in the quarter, despite the drag from the loss of a healthcare client. And you can see, really, a very good performance with our key clients. In terms of new business, we had a much stronger quarter. We said last quarter we wanted to be more competitive in new business. We are seeing that coming through. We won Amazon's media count outside the Americas with a pitch built around WPP Open and led by a team drawn from across GroupM and WPP, leveraging our unmatched global footprint. It's the world's largest advertiser, so a very important win for us. Unilever we've consolidated the creative work with additional key beauty brands and expanded our media relationship in the US in particular with retail media and activation. We remain Unilever's most significant media partner by some way. And Q4 also started well with our creative win at Starbucks at a pivotal moment for that business. and the retention of Honor's global media account, winning additional work, including within China. So we're encouraged by performance within the quarter, but with recent new businessmen primarily impacting 2025 and continuing macro pressures, our expectations for the full year remain unchanged. I'm sure we'll get into that in the Q&A. We were reiterating the guidance we gave back in August for light-for-light net sales of minus 1.0 to flats, with 20 to 40 basis points in margin improvement, proven very much by our structural initiatives and cost discipline. So Joanne, if you'd take us through the financial form.

Thank you, Mark, and good morning, everyone. So let me take you through some more detail on our financial results for the third quarter, and I'll start on page six. Revenue left past three costs fell 2.6% on a reported basis and was up 0.5% on a like-for-like basis. The point of growth includes a 2.9 percentage point headwind from FX due to sterling strengthening against a number of currencies. The contribution from M&A in Q3 was a small negative, reflecting some small disposals and the discontinuation of unprofitable business in smaller markets, which more than offset a small contribution from acquisitions. Like-for-like growth of 0.5% reflected a sequential improvement versus Q2, with Q3 lapping the softest like-for-like bombardment. Now moving on to page seven, and our performance by business. Global integrated agencies grew 0.5% in the quarter. Within this Group M, our media planning and buying business grew 4.8%, with broad-based growth in all major markets, partially offset by continued weakness in China. Group M saw good growth from both existing and new clients, with some benefits from a softer comp of 1.6% growth in Q3 23. Across our integrated creative agencies, we saw a like-to-like decline of 3.1%. This is broadly consistent with our first half. Hogarth continued to grow well, benefiting from new business wins and growing demand for its technology and AI-driven capabilities. Ogilvy grew well in the U.S., benefiting from recent client assignment wins. This was offset by weakness in China. VML continued to be impacted by the loss of a healthcare creative assignment, partially offset by growth in spending. by auto and tech clients. As in recent quarters, AKQA's performance was impacted by macro pressures weighing on project-related spend. Moving large PR, revenue-less pass-through costs grew 0.2% in the quarter, and within this burst and declined mid-single digits as the business continued to be impacted by the loss of Pfizer assignments and the impact of macro uncertainty on some areas of client spending. This was offset by continued growth at FGS Global. And finally, our specialist agencies grew 0.8%. Within that, CMI Media, our specialist healthcare media planning and buying agency continued to grow well. Lander and DesignBridge performance declined at a similar level to the first half, also impacted by pressures and project-based spending. This was partially offset by stabilization in some smaller agencies against easing comps. Page 8 highlights performance across our geographic segments. North America grew 1.7%, reflecting good growth in Group M and across the auto and financial services sectors, offsetting a weaker performance in healthcare. UK net sales were stable year-on-year in Q3, with strong year-on-year growth at Group M, benefiting from an easier comparative, offset by weakness in project-based spend at smaller agencies. By client sector, CPG delivered good growth, offset by weaker spending from healthcare, retail and automotive clients. Western continental Europe improved sequentially with 2.2% growth in Q3, reflecting growth in Germany, France, and Spain. CPG and automotive were the strongest performing client sectors. The rest of the world declined by 2.2% in the quarter, with growth in most markets offset by a decline of 21.3% in China on client assignment losses and persistent macroeconomic pressures impacting both our media and creative businesses. Central and Eastern Europe and the Middle East and Africa grew mid-single digit in the quarter, with LATAM growing low single digits. And now moving to trends across our key client sectors on page 9, where we saw an acceleration across most sectors. We continued to deliver strong growth in consumer packaged goods, our largest sector, which grew 7.6% in Q3, reflecting continued brand investment by our largest CPG clients. The technology sector saw further stabilisation, with growth of 1.3% in the quarter, which, although modest and against the soft comp, is encouraging. Automotive grew 5.8% on strength in the US and Germany, and financial services grew 5.3%, helped by new client wins and growth in our largest clients. Telecom, media and entertainment declined by 2.3% as the anniversary 2023 new business wins Healthcare and retail continue to decline, impacted by past client losses, however, at a slower rate than in the first half. Turning now to page 10 and the movement in adjusted net debt, as of the end of September, adjusted net debt was around £300 million lower than September last year. We continue to expect adjusted net debt at year-end to be broadly flat, and this excludes the impact of expected proceeds from FGS. As part of that, we continue our focus on disciplined working capital management as we work towards our target for a flat working capital movement for the full year. The lower level of adjusted net debt in September versus last year also reflects a lower level of M&A spend in the last 12 months. For the full year, the benefits net debt from lower M&A spend will be partially offset by some accelerated earn-out payments and higher year-on-year cash restructuring costs, which we expect to be in line with guidance. Moving on to guidance for 2024 on page 11, we are reiterating our guidance for like-for-like revenue-less pass-through cost growth of minus 1% to flat for the full year. The midpoint of this range implies Q4 like-for-like of minus 0.5%. Q4 is always the largest quarter, and there remains uncertainty with regards to client spending plans in the balance of year, reflecting a continued uncertain macro and political environment. This environment, together with the tougher comparatives in Q3, will likely weigh on Q4 relative like for like. And of course, our recent new business wins will not impact until 2025. We are also reiterating our guidance for improvement in headline operating margin of 20 to 40 basis points of constant currency, despite the short-term costs of staffing up for new business wins and continued investment across our business. This margin improvement reflects the strong execution of our three strategic initiatives which as well as setting us up for accelerated growth are also reducing structural costs in our business. We expect a 3.2 percentage point headwind to reported net sales from FX over the full year and expect to have an adverse impact of 20 basis points on full year margin based on current FX rates. This is based on an FX rate of 1.3 sterling to US dollars has up mid-October 2024. The impact of M&A on the full year is likely to be slightly negative with some sensitivity to the timing of the closure of the disposal of FGS global. This also reflects the small disposals and portfolio optimization actions mentioned earlier. So thank you, and I will now hand you back to Mark to update on our strategic progress.

Thanks very much, Joanne. So turning to our strategic progress on page 12, and I think I'd overall describe it as a time we've been very busy. We need to make very good progress on building a simpler, more efficient company through the simplification at GroupM, the creation of VML, and Burstyn. At GroupM, you can see the results of the simplification, greater sharing of resources, and the impact of WPP Open in terms of new business performance. And there were two important strategic wins for GroupM and for WPP that I highlighted at the beginning of the call. The first was Amazon, where there seemed an integrated global approach and we rewarded the media business outside the United States. I'd say that the factors that contributed to this win were a very strong team with top talent sourced from across Group M, the demonstration of WPP Open and how it helped Amazon to improve its media effectiveness and its operations, a very close collaboration with VML throughout the pitch, demonstrating both how we can bring creative ideas to life through media and also the VML shopper capability in the United States and in Luxembourg. reflects the acquisition of the Amazon Marketing Expert Marketing Ignition in 2017 in Seattle and two sales in Luxembourg in 2018. And finally, it is to demonstrate the depth and breadth and strength of GroupM's media business globally. I think we saw the same factors come to play at Unilever, where we're the incumbent on much of the business. And after a very competitive review, we came out, broadly speaking, ahead of where we started. Most importantly, we consolidated the retail media and retail activation business in the United States that we lost three years ago. We demonstrated a very strong integrated approach across media and commerce and how we can help you leave the win in retail, which is really where it matters. Secondly, for VML, the merger is now behind them. You know, they have been impacted by the loss of a healthcare client in 2023, so they have had very good wins. They're part of the key WPP win of the U.S. Starbucks creative work, along with a number of our other agencies. And Burstyn have been working through the merger this year. Corey and the team have done a very good job of bringing the two organizations together. I think I'd say it probably had more of an impact than we anticipated on the top line, but they have been able to attract some very, very strong talent into the company, excellent and will further strengthen the business for next year. And while we're discussing the performance of our individual brands, I would like to recognize Ajaz Ahmed and AKQA. Ajaz founded the company 30 years ago. It's an amazing business. I'd like to thank him and recognize the creative excellence and reputation of the company that he built in AKQA. The strategic process at the WPP Open and the adoption of AI across WPP As you know, we do believe AI will be fundamental to WPP's future. We can see its potential to make our people more productive, to produce more work at high quality and lower cost, and to make our work more effective by delivering campaigns that are more targeted and relevant to consumers and drive higher ROI to our clients. We're investing more than £250 million in WPP Open, some of that incremental, and all of that investment really focused on the scaled adoption of AI across WPP's agency. We're using WPP Open to deploy AI tools into the workflow. For example, I now have WPP Open on my iPhone, allowing me to demonstrate the power of AI in the creative process to clients. The other benefit of WPP Open is to allow us to streamline how we work together across the company and to bring creative media and production activities together more seamlessly. It's being architected in a way that allows work to flow across the company and also, importantly, data. This is going to be critical to delivering both efficiencies in production, as well as more effective media plans, and driving data into the creative process. As we roll out WP Open across the organization, we are seeing continued steady growth in adoption across the enterprise. Monthly active users are up 107% since the start of this year, and LLM usage up 300%. So not only are more people using it, but they're using it more often. And I would make one more point on AI. While it's fundamental, I still think that 2024 is a year of, let's say, proof of concept where we see what AI can do and its potential. Next year, we very much start to see its impact more fundamentally on the business. That said, where we are seeing the impact is in new business, where clients are starting to look much more at technology usage and adoption. I say at the start of this year, client RFPs barely mentioned AI. That's starting to change and clients are looking for partners who have strong capabilities and platforms powered by AI. The third area is to highlight the sale of our stake in SGS Global to KKR. It's a strong company, and we're very pleased with our partnership with management that allowed us to create more than $500 million in value for WPP shareholders over the last five years. The sale was a very strong valuation and allowed us both to strengthen our balance sheet and give us more financial flexibility over the medium term. As you'll understand, we expect the transaction to close before the end of the year, and we'll be using the proceeds to reduce debt and leverage. We also acquired NCA in the UK, a very strong creative and experience agency led by James Murphy and David Golding, being brought together with Ogilvy in the UK and will further strengthen Ogilvy's offer here in this important market. So in conclusion on page 14, I'd say it's been a very productive quarter. We've made continued progress on our teaching objectives, returned to growth in the quarter, which while it was expected, is a positive step. We've got significant new assignments, but we are reiterating our guidance given the impact of those assignments will start in 2025. So perhaps I can close on why I am and our leadership team is positive for the future for WPP. I think to start with, you know, it hasn't been an easy 12 months with pressures from technology clients, a very tough market in China, a softer macro environment where some of our more project-related businesses as well as the painful loss of a healthcare client. We also had to be more both internally focused on the further restructuring that's been needed to prepare the company for the future and externally focus the major clients to defend and to pitch. I'd say as a leadership team, we've had a busy time, but that's the reality. We're not making excuses. I do think in that context, the last quarter is important when we go into 2025 with more confidence the more external focus on being more competitive. It's early days, but I do believe we can see how we can be more externally focused now in much of the restructuring behind us. We're winning more new business, critical pitches with two of the world's top 10 advertisers. We have a strong new business pipeline with some at risk, but no more than at any time. We won't win everything as we have strong competitors, but I do believe we're in a much better position than we were this time last year. We have a very well-balanced business in media, production and creatively and geographically in the United States and internationally with real strength for major global clients. And most importantly, I believe that AI is a once-in-a-generational shift, just like the internet was 30 years ago. Sadly, I'm old enough to remember its impact, but it's very reminiscent today of that time. Where we are now is very similar. The early adopters, and I believe we are an early adopter, can see the potential of It's not quite ready, but it will be. And the critical task ahead of us is to focus on delivering that and staying the course. That's certainly what we're going to do. Thank you very much for listening. And now we'll take your questions.

Thank you, sir. If you would like to ask a question at this time, please press the star one on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you are also watching the webcast, please make sure to mute the computer's volume to prevent feedback through the phone while asking a question. If you find that your question has already been answered, you may remove yourself from the queue by pressing star 2. Again, please press star 1 to ask a question. We will pause for a moment to allow everyone to signal. We will now take our first question from Laura Metayer with Morgan Stanley. Laura, your line is now open. Please go ahead.

Good morning, Joanne and Mark. Three questions for me, please. The first one is what will need to happen in Q4 for you to reach the top end of your full year 2024 guide? Second question is on the recent wins. So first of all, congratulations on your recent wins. Could you give us an idea of the impact of the net new business on 2025 growth and when do you expect your recent wins to impact your revenue? And last question on Gen AI. So you mentioned you expect Gen AI to be a revenue contributor in 2025. Do you expect the pricing model of ad agencies to evolve with more Gen AI products being levered or is that too soon to know yet? Thank you.

Okay. Why don't I take the JNI question and then Joanne can take the two questions on the guidance in 2025. But I think that we are seeing the impact of our investments in our new business and in assignments with clients. I think it's too early to say how it will impact the pricing model. I think we talked before that we do have significant parts of our business that are on fees, relatively smaller parts on commission, and a number of parts of our business we do within Group M and Hogarth have output-based pricing. I think, broadly speaking, we can expect GNI to lead to more output-based pricing. I think we'll have to see what happens over time. There's also the opportunity, as we said before, for us to earn technology license fees and other technology fees as a link to those investments. But I think, broadly speaking, I think we will start to see more of an impact of GNI on our revenues in the next year. I think there's nothing to suggest so far that that will be negative. And certainly, at the moment, it's contributing positively to our revenues. Joanne, do you want to talk about guidance in the next year?

Yeah. So thanks, Laura, for the question. Look, our full year guidance of minus one to flat would imply a range of minus 2.3% at the bottom and 1.4% growth at the top end for Q4. And the midpoint of that is minus 0.5%. And where I probably start with is the differential in the comp is about 90 basis points between Q3 and Q4. So that is going to be a factor within that. And then other factors to consider, I think perhaps most importantly is the macro. Q4 is our biggest quarter and therefore it does tend to be a little bit more volatile. And we're not seeing an easing in that macro. You know, there remains a lot of uncertainty across the economic and geopolitical landscape. So That will be a factor. We would need to see an improvement in China. At this point, the central cases will see continued trends as we've seen in the last couple of quarters in that market. And then, of course, is tech. So we're encouraged by the stabilization, the further stabilization of tech in the third quarter. It is a tougher comp in Q4. So we were down almost 13% Q3 last year for tech. And in Q4, it was down 5%. So those are some of the factors to think about. And and all of those who need to move in the right direction to hit the top end of that range. And then to your second question on the impact of net new business on 2025, we've said before that in any year, net new business tends to have a plus or minus one and a half percentage points on like for like. And now for 2025, we're certainly not expecting to see to have the same drag on the top line for net new businesses we had in 24, most notably that healthcare loss will largely fall away in 2025. And we are encouraged by the wins that we've seen in Q3. At this point, we're probably neutral on the impact of net new business. And so to move that into positive territory, we'll need to continue to build on the recent new business success that we've seen in Q3.

Very helpful. Thank you. Thank you. Our next question is from Nicolas Langlet with BNP Powerpass. Nicolas, your line is now open. Please go ahead.

Hello, good morning, everyone. I've got three questions, please. The first one on Group M. So we are now a couple of months after the nomination of Brian Lesser as new CEO. Curious if there have been any new key initiatives that have been discussed for Group M and when do you expect the benefit of those actions? Secondly, on M&A, this year will likely be a light year. Anything in the pipeline that could impact 2025, and are there any specific areas you are looking at at the moment? Finally, on the mid-term margin, at the capital market day, you mentioned steady improvement beyond 2024. Considering the current market condition, the disposal of FGS Global, and the current level of reinvestment, do you still expect this steady improvement, or it's more back-and-rooted? in your mid-term plan. Thank you.

Okay. So I'll cover Group M and Jan will take the other two questions. I think Brian's been with the business I think five or six weeks. I think it's too early to be specific. What I would say is that I think he would say and we would feel that the Synergy project, the simplification of Group M that we started last year is is very much a step in the right direction, so he's very much about continuation of that process. I think he's focused on talent, technology, data, and the product. I think the product is important. Brian came from DAXIS and 24-7 Real Media that we acquired in 2007, and he was the founding CEO of Zaxis. I worked very closely with him at that time. And I think we led the way at that time in new media models and new media products for clients. And I think that's something that very much he plans to continue. So I think we'll update you as that progress goes. But I think there's nothing more to say at this point, Joanne.

Yeah. Nicholas, just starting with your question on M&A. Look, at the start of this year, we said that the focus this year would really be on organic parts of the business. That's the three strategic initiatives on our investment in WTP Open. And as Mark has shared with me, really good progress on those. I wouldn't read too much into M&A being a light year. I would expect that from next year, we'll get back to more normalized levels. And of course, there has been some M&A activity in the market, and we have looked at those opportunities as we do. There's nothing significant that we have in the pipeline currently. In terms of your question on mid-term margin, nothing really has changed since setting that financial framework in January this year to Capital Markets Day. We remain confident that it's the right financial framework for us and we will deliver against that. The three big drivers of that margin improvement, first of all, is the cost out and we're absolutely on track to deliver that net saving of £125 million, which we'll fully realise in 2025. We then talked about efficiencies across the front office and the back office, which we are getting on with, and also operating leverage as we move towards that medium-term growth of target of 3% plus. So those all still stand. We talked about the 16% to 17% range being really reflective of the investment that we already make in our business and will continue to make, with the priority being around open and AI, as you've seen and heard. With regards to FGS, the impact of margin will probably be about 20 basis points. It will be broadly neutral on EPS because we really consolidated that business. So it's not material enough to have a significant impact on that medium-term guidance of 16 to 17%.

Okay. Thank you.

Our next question is from Adrian de St. Hilaire with Bank of America. Adrian, your line is now open. Please go ahead.

Yeah, thank you. Good morning, everyone. First of all, can you just remind us, like, what was the headwind from account losses in 24? I think you called out the healthcare loss being a one-point drag, but was there anything else for 24? And then, Mark, recently there's been a number of profit warnings in the automotive sector. Some consumer good companies have also been talking about logo growth. I'm just curious across these two groups, like what's been the tone of conversation with these two companies? Are they still keen on investing more on marketing or are you seeing the usual, I would say, knee-jerk reaction that when sales go down, they tend to reduce marketing spending? Thank you.

Yeah, I think on the question on headwinds, I think Joanne said it's plus or minus one one and a half. We always win business and we always lose business, but I'd say if you said this year was minus one and a half beyond what we would expect, given it was not a good year, I think that's not an estimate to be a million miles away. I think on the second point, look, I think we're seeing companies continue to invest in what I would call ongoing marketing, brand building, sales, things that drive consumer demand and build brands. I think where we're seeing pressures is on the more discretionary elements of the marketing mix. And that means within CPG and auto, look, if you look at our top 10 clients and the growth, it's very strong, up 7% in Q3, despite the impact of Pfizer. So I think you can see that in the numbers. Where I think we're seeing more pressure is smaller clients, more discretionary business. I think automotive is definitely competitive. I don't see companies certainly not slashing spending or pulling back. I think it's really about getting the right balance between price and volume and innovation. But I think the general tone we've seen from clients is, particularly in CPG, you know, return to, you know, since COVID, consistent investments in marketing. And I think you see that across the sector. Okay.

Yeah, thank you.

Thank you. Our next question is from Tom Singlehurst with Citi. Tom, your line is now open. Please go ahead.

Yeah, thank you. Tom here from Citi. You specifically called out the impact of Media Studio within WPP Open in winning new business. Can you talk a bit more about the broader impact of Media Studio on existing clients? How broadly deployed it is and what the benefits are for advertisers? That's the first question. And then the second question, if it's okay, other big holding groups have sort of talk again about the role smaller, more project-related networks play, even considered sort of sales or disposition of the route to go down. With respect to WPP, is there any chance this might be something you'd consider for AKQA given its challenges? Thank you.

Yeah, I'd say on Media Studio, what we've really been building is taking the existing systems that we're using at GroupM and as part of the Synergy project, really building one new system within WPP Open for Media Studio. So many clients, you know, the clients that run on the business today use many elements of Media Studio, and we're deploying it gradually, you know, with a focus on the US and the UK across the organization, and that's, you know, started this year and will continue next year. I mean, the benefits to all clients will be, you know, an improvement in media effectiveness and ROI, greater... speed of work, more efficiency, more visibility. And the real benefit is more visibility into what's happening in real time. But we do have strong technology products that are being used across GroupM. In terms of the role of project business, look, I think businesses like AKQA and Landor and DesignBridge are very strong companies. And there are times when they're more impacted by macro pressures. And, you know, if you remember coming out of COVID, they all bounced back very strongly. So I think we see them as critical and differentiating parts of WPP and would expect them to remain so.

One quick follow-up for Joanne, if it's okay. I mean, we, I mean, obviously mainly focused on net revenue, revenue less pass-through costs, but feels like there's a little bit of a gap opening up with, organic revenue. Are there any factors that are particularly driving that? Is that just Group M or is there anything else at play there?

I think that's really just the relative growth of Group M in the quarter that you're seeing, Tom, and a bit more production as well, some more pass-through costs going through as a result of that growth.

Super clear. Thank you very much.

Our next question is from Joe Thomas with HSBC. Joe, your line is now open. Please go ahead.

Good morning and congratulations on the results. A couple of questions, please. Firstly, some success in winning new business, which is great. And I just wondered if you could... And you've called out the impact of WPP Open on that. I just wondered if, in the feedback, what you were getting from clients... in terms of what they were valuing about your AI and WPP open solution versus what they're able to access elsewhere. Just try and draw out some differences there if possible. And then secondly, China, remains weak in that geography. Can you just perhaps talk about how you're going to turn that business around and at what point we might see it stabilizing? Thank you.

Yeah, so I think in terms of... I think clients look at WPP Open in two respects. The first is, can we deploy AI into the workflow? Can we deploy AI tools to our people and enable them to use them doing work in a safe and secure way? And then the second is, does it help with the workflow within WPP because we're the people using it and with the clients and to some extent with broad adoption across the enterprise? I think both of those things are important And I think when we talk to clients, they would say that our ability to deploy AI and then the breadth of the vision would be, let's say, the things that they see as positive within WPP open. On China, I don't think we expect Q4 to be very much in line with the pattern for this year. And I'd say we see some stabilization going into 2025. The macro environment remains challenging. We've seen results overnight and in the last week that do talk to that. And given our client mix is very skewed towards luxury, FMCG and automotive, there are three sectors very linked to consumer confidence and consumer demand. We have brought new leadership into the business from within China and from without China. I was there six weeks ago. I'd say that the mood in China remains subdued. I was there before the stimulus. I don't think the stimulus has changed people's views greatly of China. And if we look at 2025, we don't expect it to be a repeat of 2024. And I'd say we expect... at stabilization over the course of the year i think that's the way to to think about sort of modeling the business if that if that's what you'd like to do yeah thanks i also wondered if there's been any incremental client losses in china no i don't think so i mean we were we were pleased to win uh the honor business i think that's um that's important so i don't think we've seen any anything anything beyond that anything beyond beyond the ordinary you know we do have a half-billion-dollar business there, so there are always things that are positive and negative. I think that the Chinese market is a highly competitive market, a highly price-competitive market, and I think what we're looking for the people to do is probably collaborate more to drive growth. We have got important and growing Chinese clients and Chinese clients with ambitions beyond China. Um, I think we're looking at, you know, everything we can do to support the team. I mean, it was in China. They built, you know, um, I wouldn't say a Chinese version of WPP open, but, uh, effectively a Chinese version of WPP open because the tech stack and tech partners are different there. So they're enabling the business with AI as well. And, you know, I was impressed by the meetings I had with our people and our clients there. So I think we will, you know.

And it's from Steve Lesty with DB Numis. Steve, your line is now open. Please go ahead.

Yeah, good morning, everyone. Three quick ones from me. One is, can you just remind us in terms of project-based business skew in the fourth quarter? I know Omnicom always talks about a big number that makes it very volatile. Just remind us your views on volatility there. Second, on AKQA, highly regarded CEO Gaunt, What does that actually mean for the business here? I know it's been underperforming. Are you going to continue the business as it is? Consolidation possibilities, rationalization possibilities. What are you thinking there? And then I just wanted to confirm what you said on the new business net effect in 2025. I think you said it was roughly flat now and you'd have to win further stuff to get a tailwind there. I just wanted to confirm what you said there. Thanks.

Yeah, so I think, why doesn't Joanne take the first and third question? You know, on AKQA, as I said, it's a highly differentiated business. I think it has had a tougher time like other businesses in its sector over the last 12 to 18 months. And I think we're very much, you know, working with the team there on the leadership. There'll be an announcement on that in due course. And we don't anticipate, you know, restructuring it or changing it, you know, in other areas. in other significant directions? Do you want to build on the legacy of the company that Pajars created?

Yeah, I'll take the last one first because it's an easy one. Yes, Steve, the impact so far would be net neutral on 2025 and so let's keep up the momentum that we've seen in Q3 and shift that into positive for 2025. In terms of the project-based businesses, it's most useful to think about it as AKQA is more exposed to that project-based work, just given the tech nature of the work that it does. And then also our brand agencies, Lander and Design, Bridge and Partners. And all three of those have seen a significant impact from, you just kind of caution, I would describe it, around those discretionary projects. And that has resulted in quite a significant impact on their performance in the last couple of quarters. Now, we expect that to continue into Q4. So it's not getting any worse, but it's not getting any better. So I think the way to think about the project-related spend on Q4 is similar to Q3 and Q2 for us.

Great. Thank you.

Our next question is from Simon Baker with Bernstein. Simon, your line is now open. Please go ahead.

Yeah, thank you for taking the question. So reiterating the congratulations on the results. Two quick questions. One is in terms of following through to the net new business impact for 25. You mentioned, Mark, the strong net new business pipeline that you have right now. And you did mention some at risk. I just wondered how you feel about that strong pipeline compared to, say, year on year, you know, where you were this time last year. Does it feel better if we got a bit more that you may be able to add to 25 at this stage rather than be at risk? So that was the first question on that. And secondly, on the tech, I mean, tech spend. Coming back a little bit in the third quarter seems good to see, although I recognize what you say about the comps getting a little bit tougher maybe in the fourth quarter. But how do you feel about the sort of green shoots of product cycle spend flowing through into increased marketing spend and the potential for that actually to be more of an increase going forward? Thank you.

Yeah, look, I think on the new business pipeline, I think, look, it was strong this time last year. But I think there were a lot of opportunities that, I think in part that was because a lot of things sat in it for a long time. So if someone sits there for six months, it feels big, but actually things take a long time to work through. And I think that's a little bit the story of 2024. I think if I look at it today, there's some sizable opportunities, but also things that will close over the next one, two, three, four months. We've had a major win recently. in the US actually about four or five months ago, and they won't start delivering revenue until 2025. So I think that some things have been slower to come through, and I sort of feel that the clients that are determined to make a move are perhaps moving a little bit more quickly now than they were a year ago, or maybe that's sort of instinctively how I feel about it. On tech spend, I don't want to sort of get everyone carried away. I think it's positive, it's in positive territory. I was with a big tech company this week, and I think they're looking at doing more. So I do think that we will see some more spend in 2025 in that area. And I'd say broadly, we do believe that our strengths in that area are long-run competitive strengths at WPP, both in terms of the clients and their importance. Clients like Google, which is one of our top three clients, are critical to our future and critical to the future of marketing. In working with them, we learn a lot about what's important, the way things are going, and it's a great credential for other clients. So we have got those important technology partnerships with companies like Google. And that is important to us. So I think that, again, I'd say they'll be positive in 25 in line with our overall performance. Thank you.

There are no further questions at this time. This will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.