Wpp Plc Ord New

Thank you very much, and good morning, everybody. Welcome to our first quarter trading update, and thank you for joining us. I'm joined on today's call by Joanne Wilson, our CFO, and Tom Singlehurst, our Head of Investor Relationships. Before we get started, please have a look at the cautionary statement, which you can see on slide two, and look at that carefully. So turning to the overview on page three. I'll quickly summarize where we are for the year. Joanne will take us through the financial performance. We'll review their strategic progress and then tackle the Q&A. So on the overview on page four, firstly, in terms of the first quarter 2025 performance, when we met In February, we talked about the challenging macro environment, as well as how the timing of our new business would impact the shape of growth at WPP throughout the year. And as you know, we had a challenging fourth quarter. So we were cautious giving our guidance for the year, as well as being aware of some of the tariff issues and discussions that have been taking place. We did highlight those in our release. And I'd say that our performance in Q1, which saw sales drop, net sales down 2.7% is consistent with what we're saying at that time and therefore very much in line with our own expectations. At the same time, I don't want to give the impression that we're happy with these results. We're not. It's not where we want to be. And we have concrete plans to address the areas of competitive underperformance, including some steps like the acquisition of Infosum that we have taken this quarter. The first quarter did include some encouraging signs like overall performance in the U.S. improved from Q4, albeit benefiting from a slightly soft comp, and also encouraged by the improved new business momentum at VML and Burson following the heavy integration work last year, and it was good to see Hogarth return to strong growth after a challenging fourth quarter. Against this, Group M's growth stepped down in Q1, in particular in Europe, due to the impact of the soft and medium environment. And while the U.S. business for Group M saw growth in low, mid to single digits, it's still below what we would consider to be our competitive performance. And we'll come later to talk about Group M in more detail. The second point is this is a more challenging macro environment with tariff uncertainty. And while W3 is not directly impacted by tariffs, they will undoubtedly impact many of our clients, where and how they prioritized their margin investments in advertising and promote and promotion at this point we haven't seen any significant change in spending patterns from our own clients and our four-year guidance remains within the range we set at the beginning of the year which did anticipate broad macro uncertainty we are though very vigilant on the outlook and very disciplined on how we are managing the cost base so in the immediate short term We need to manage and protect the P&L, but longer term, what is important is that we continue to invest and make strategic progress, particularly with WPP open, and that's what will underpin our competitive performance and growth longer term. And then finally, in terms of strategic progress, in February we talked about three specific actions, drive, further adoption of WPP Open is seeing good growth in that, strengthen the Group M proposition, get Group M back to growth activity access and infosum, and importantly, win more new business. I do think there's some encouraging signs of progress on all of these three fronts. So I'll take you through details of those in a moment, but before I do, I'll hand you over to Joanne to take you through the details of the first quarter performance.

Thank you, Mark, and good morning, everyone. So let me take you through some more detail on our first quarter 2025 performance, starting on slide six. Like-for-like revenue-less pass-through costs fell 2.7% in the quarter, which was broadly in line with our expectations. Consistent with messaging under failure results, the drivers of like-for-like performance were a continuation of the challenging macro environment seen in the fourth quarter, coupled with the sequencing of historical client losses. A continued challenging environment to China and the mildly dilutive effect of the FGS disposal on like-for-like growth. The move in reported revenue was amplified by the full runway effect of the FGF global disposal, which represented a drive on reported sales of 3.3%, as well as the headwind from FX moves, in particular the strong pound versus the Euro in Q1. Overall, revenue-less pasture costs were down 7.6% in the quarter. Moving on to slide seven, and looking at performance across all this, global integration agencies saw a like-for-like decline of 2.8% in the quarter. Within this, Group M was down 0.9%, which reflected growth in the US, offset by the impact of prior year client losses, performance in the UK, and a more challenging media environment across Europe. Group M saw good growth in India, which only partially offset continued weakness in China. Like for like for our other global integrated creative agencies fell 4.4% in the first quarter, and compared to the decline of 6.5% in the fourth quarter of 2024. Within this, we continue to see an impact on continued weakness in project-based work, weighing on NKQA's performance, a tougher camp at Ogilvy, and further impacts from a challenging environment in China. Against this, we saw a return to high single-digit growth within our production business, Hubarth, driven by strong trends across CPG, tech, and also a new business. The re-acceleration of growth here is particularly encouraging given the more challenging performance in Q4 2024. Turning to public relations, like-for-like declined by 6.6% in the first quarter. While overall performance has not much changed from the fourth quarter, affecting more challenging environments for client discretionary spend, in particular in Europe, we are encouraged by improved momentum on UBC North America. Finally, specialist agencies saw like-for-like revenue left past due costs grow 1.2% in the quarter, with particularly strong growth from CMI Media Group, our specialist healthcare media agency. and moderating declines at Landor and Design Bridge and Partners. Turning to performance by region on slide 8, North America declined by 0.1% in the first quarter, lapping a mid-single-digit decline in 2024. The automotive, TME, and financial services sectors grew, as well as technology client spend, which continued the recovery seen in the second half of 2024. While CPG client spend saw mild declines, Group M grew in the first quarter in North America, but were offset by declines at Ogilvy and AKQA. The United Kingdom declined by 5.5% in the first quarter of 2025, impacted by its higher weighting towards project-based work and the impact of client losses at Group M. The client sector, growth in tech, automotive, and financial services was offset by pressure on CTG and T&E. Western continental Europe saw a overall like-for-like decline of 4.5% versus a challenging comp from 2024. The region was weak across the board in the result of pressure, primarily on our businesses, and the impact of a more challenging media environment . The rest of the world declined 3.8% in the first quarter, largely driven by persistent pressures in China, which declined 17.4% in the quarter on the back of continued macroeconomic pressures, and client assignment losses. We expect performance to continue to be challenging in China in the first half of 2025, with some improvement later in the year. Against this, we saw strong performance in India, which was up 5.5%, driven by Group M. Central and Eastern Europe also saw robust performance, up 2% in the first quarter. Slide 9 shows Q1 performance across our client sectors. This reflects growth across our designated clients, which represent 82% of our net sales. Despite the high single digit come from Q1 2024, TPG showed a stable performance during the quarter, with growth of 0.3%, protecting pressure in the US and the UK, offset by growth in the rest of the world. The technology client sector showed further sequential improvement, with growth increasing to 4.5% in Q1 and 2.5% in Q4 2024, with growth relatively balanced across the world. Healthcare started to stabilise with flat growth in the quarter, so X23 client losses start to roll off. Automotive and financial services performed well, with growth of 5% and 2.6% respectively. We saw weaker performance from telecoms, which was impacted by client losses, while retail sector time spent declined by 2.9%, compared to a high single-digit decline in 2024. The performance of our top clients continues to be robust, with our top 25 clients growing 2.5% in the first quarter. And moving on to slide 10, we've chosen movements in net debt to the end of March, with adjusted net debt at 3.7 billion pounds, down year-on-year, but from year-on, reflecting our typical cash cycle. Average adjusted net debt better captures the normal pattern of working capital moves across the year, and this is slightly down through the first quarter at 3.4 billion pounds, and should improve as the impact of the SGS global disposal annualises. The average adjusted net debt to headline EBITDA ratio is expected to be within our 1.5 to 1.75 times target range in 2025. The weighted average maturity of our £3.8 billion has gone debt in seven years, and this is an average coupon of 3.6%. Meanwhile, our total available liquidity across the group stood at £2.9 billion at the 31st of March 2025, including a $2.5 billion revolving credit facility, which returns in February 2030. It is important to note that neither our bond debt nor our RTF have any covenants. And in March, Moody's reaffirmed our BAA2 rating with a stable outlook, coupled with our BBB rating from SMB. Our credit is comfortably investment grade. And finally, turning to slide 11, which shows our guidance for the full year. At the beginning of the year, we set our guidance based on a like-for-like range of flat to minus 2%. This reflected a degree of caution in light of what then appeared to be an uncertain macro environment, as well as our expectation of the impact of net e-business during the year. Since then, the macro environment has remained uncertain and is likely to be so for a large part of 2025. For now, we remain confident this is reflected in our like-for-like range for the year. We do think that heightened uncertainty on the macro outlook has potential to further impact second quarter performance. This, coupled with the sequencing of client wins and losses through the year, means we don't anticipate a material change in trajectory in the second quarter compared to the first. We continue to expect like-for-like performance to improve in the second half as more recent wins fully ramp up. Overall, we expect to hold headline operating margin broadly flat, excluding the impact of FX, with the benefit of annualized structural cost savings and continued discipline cost management, offsetting incremental investment in WPP open AI and data. We expect Group M to continue simplifying its structure to accelerate the move to a more client-centric operating model. The impact will be largely P&L neutral over the course of 2025. However, the timing of associated costs will weigh on the H1 margins, which will also be impacted by the phasing of revenue growth. Looking beyond revenue and headline operating profit, we make no major changes to our guidance. On cash flow, we continue to expect a reduction in our cash restructuring costs to £110 million versus £275 million in 2024, and adjusted operating cash flow before working capital of around £1.4 billion. The one change I would note is that we now expect the impact of FX moves to be closer to a drag of 2% for the full year versus around flat at the time of pre-limits. reflecting a stronger pound relative to the dollar. At current rates, we estimate this is having a circa 20 basis points impact and margin, given the relative weighting of a North American business. So thank you, and I will now hand you back to Mark.

Thanks very much, Joanne. So turning to our strategic progress on page 12, and then uh page 13. before we dive into that i think we do need to deal with the broader market environment i think it's fair to say that it is challenging we're absolutely seeing much greater economic uncertainty impacting uh business and consumer confidence so our prelims in february we made the point that the macro environment would be challenged we've seen that in q4 and i think it's fair to say that since then this uncertainty has increased the decision by the U.S. administration to initiate tariffs has created much greater uncertainty for all of our clients, whether or not they are directly or indirectly impacted. And historically, in uncertain environments, not necessarily hugely favorable for investment of any kind, whether it be longer-term capital projects or investment in brand building or short-term investment in activations. But in the time I've been doing these calls, we have had COVID, the Ukraine war, inflation, and now tariffs. There's nothing we're not used to dealing with. And clients, I think, as well, have learned how to prioritize their spending. They see it to some extent as a cost in the short term and an investment in the long term. And when they do cut, we should have the confidence to know that they will come back into the market. The impact of tariffs is also going to have an asymmetric impact, both in the U.S. versus the rest of the world, and also by industry. If we take our top 25 clients, five or so are most directly impacted by the tariffs on the cost of their product. Of the rest, around half have a more minor impact, and the other half have limited direct impact, but may be affected by the broader economic impact in the U.S. and the rest of the world. So the pattern does vary by clients. So what's the response we're seeing from our clients? I think, as we said in February... we'd already seen a more cautious outlook from clients from Q4 onwards. We've not yet seen any major step down in spending patterns from this. At the same time, we do have to be vigilant and agile. There's no doubt that there's a range of economic and political outcomes over the next day, month, quarter that could cause clients to take a different view on spending. And while that creates an uncertain environment for WPP, I do think it's important to note that our absolute and relative exposures are somewhat different from peers. We've long seen our geographic exposures a key strategic advantage with the current global agency group with 60% of our business outside the U.S. And while the U.S. is an incredibly important market for us and always will be, geographic diversity does have its value. Likewise, WPP's balance of exposure by client industry is one of our key strengths. And while there will never be disruption for some of our clients, our strong positions, in particular within CPG and technology, should be supportive of our growth. I think you saw some of that in the comments over the last 24 to 36 hours from some of the major CPG companies. And thirdly, there's the nature of our clients to consider. In the first quarter, it's important that we're spending by our top 10 clients up 4.6%. and by our top 25 clients, up 2.5%. So continued investment by major clients in marketing has continued into the first quarter, despite the impact on specific markets and sectors. And a final point that I would make is that regardless of the short-term uncertainty created by the macro environment, our clients' focus on and interest in the impact of AI is undiminished. Indeed, if anything, based on my conversation with clients, the level of interest and focus has increased as clients consider how AI and automation can be used to deliver marketing effectiveness and efficiency, both in the short and medium term. And on this point, I think the current macro uncertainty is actually acting as a catalyst for some advertisers to revisit how they approach marketing to deal with cost pressures. I think we feel more strongly than ever that WPP via WPP Open has an enormous opportunity to help clients to drive ROI on their marketing spend, as well as save money through deliver greater efficiency. to reduce the number of suppliers and reduce costs, but also to embrace a new way of working with more strategic partnerships. And clients are looking at marketing partnerships much more like technology partnerships, with more of the rigor and discipline perhaps that IT departments bring on supplier selection. And again, this background in industry moving from four players to three players is undoubtedly beneficial to us. And with that, we're being very proactive, as you would imagine, taking our integrated AI proposition to clients. So looking forward, let's cover priorities of 2025 on slide 14. We met in February. We highlighted three priorities in which we were laser-focused as an organization. First, The importance of driving take-up at WPP Open within our organisation, embedding it in our daily work. Second, to support Brian Lesser and his team in re-accelerating growth at Group M. And thirdly, to deliver and improve our new business success rate. Starting with WPP Open, we continue to see strong progress and take-up. The number of 48,000 users represents about 60% of our clients facing people using WPP Open last month, up from about 40% at the end of the year. It's important for a number of reasons. First, from a practical perspective, our people are using the platform and delivering greater efficacy and efficiency and understanding how they can do that. There are around 80,000 clients facing people within WPP, and it's our strategic objective that all of them are using this to deliver daily better work, certainly by the end of the year. Secondly, our conversion in new business pitches does move up by around 10% when we put WPP at the heart of our offering, which we're doing in every pitch, not just because it increases the chance of success, because it unlocks the potential to explore more innovative commercial models, allowing us and clients to share in the value we create, and deal with some of the pricing pressures that sometimes we're seeing in the market. And I hope we'll see continued progress on this metric as the year goes on. Turning to Group M, I mentioned at the prelims that the lion's share of the growth gap between us and our leading peers is attributable to the gap in performance of our media business, in particular in the US. As Brian outlined in February, we see some encouraging signs of progress from the strategy we launched in January 2024 to simplify and integrate the Group M offering But it is important that we redouble our efforts, but there also have been some challenges. Brian talked about five key priorities he's pursuing around data and technology, people and talent, innovation, collaboration, and the organization. And we're making good progress on each of these areas. But I'd summarize the overall progress of business plans. First, we have to make sure our go-to-market is as simple and integrated as it possibly can be. Further simplifying GroupM not only drives greater cost efficiency, but makes it a simpler and easier business for our clients to do business with. And that's what we mean by moving to a more client-centric model, taking out silos and barriers and cost within the organization to focus all of our resources on client success. Secondly, essentially not only do we catch up, But leapfrog, a competitive set in terms of how we use AI, data and technology to drive business outcomes. And I'll talk about InfoSum in a moment, but that's a significant step forward in that area. And then lastly, in terms of new business, it is lumpy, but I do think we're making progress. The loss of the Coca-Cola North American media business in the quarter was difficult initially. but we do have a very detailed debrief from the client and a good understanding of our strengths and challenges. We're making good progress towards renewing our broader agreement with that client. Meanwhile, in the first quarter, there are some important tangible signs of success, whether it be the win of the media mandate for EA, Godrej Consumer Products in India, the global consumer shopping market for Heineken, and many, many other new business pitches which are less public but work through the system, including the expansion of scope from our existing clients, which you do see in the results of our top 10 and top 25 clients. And an important common thread across all of this is WPP Open. We are putting that at the heart of what we're doing. So before we wrap up, turning on page 15 to InfoSum and why we believe it is an important step forward. Now, as you know, data... It's central to delivering the best execution for our media clients, but actually more broadly across the work that we do with clients. And this transaction transforms the breadth and scale of data intelligence for WPP's clients in a way that we think leapfrogs traditional identity-based solutions. Think of it as improving our access to more data and unlocking the power of AI on that data. connecting that data to more premium and quality inventory, and doing so using privacy-compliant technology. So how does it do that? InfoSum allows WPP's clients to maximize the value of their own first-party data with privacy-enhancing connections to data providers and media partners across the marketing ecosystem, and that's something that WPP can strengthen. In this context, it's important that it's not only does it have the world-leading cloud-based technology, but it's an established player with an extensive global data network. That includes hundreds of billions of data signals across multiple dimensions of data from media platforms including Channel 4, DirecTV, ITV, Netflix, News Corp, Samsung Ads, as well as major retailers around the world, and identity and data partners including Experian, TransUnion, Sakana, Denata, and NC Solutions. All of that data we're able to better integrate into our media planning and media activation and results measurement. So even before joining WPP and having the strength of our relationships to broaden that data set, it's a real world leader in data collaboration. But the power of the transaction, what it means in the context of WPP Open and GroupM more broadly, and by integrating data, InfoSum's capabilities within WPP Open, our clients are able to unlock the full potential of their customer data in reach-through AI in strong quality media environments that's not always available to people using legacy first-party data systems. And using federated learning techniques, clients are able to build, trade, and deploy custom AI models that can use that in a privacy-compliant way. They can generate insights and audiences to create precise predictive models, optimize campaigns, and deliver measurable improvement in real time. So the conversations we've had with clients have been very positive, dozens of conversations over the last few weeks, and the feedback very positive. And we're confident the deal works. alongside our broader simplification efforts, will drive a step change in performance, particularly in competitive reviews. And it happens to be as well a business that Brian knows well, so the integration, I think, is proceeding extremely well. So to wrap up on page 16, I think in summary, there's three key points that we wanted to make in this presentation. In the first, that our first quarter of performance, while weaker than we would like, is in line with our expectations. and we remain confident on achieving our full year guidance. At the same time, there's some important developments in the first quarter that encourage our belief that we're on the right track, whether it be the strong performance of our top clients or the improvement to new business momentum at VML Burson. Secondly, while the macro environment is uncertain, we view the diversified nature of our business, both by geography and by time, as a key strength. It's an important hedge in the short term, and we'll be seeing an opportunity longer term. And thirdly, I said, in February, there's three projects in 2025, staying at the forefront of AI, fixing Group M and winning more new business. And we are making progress on each of those. So I'm sure you all have questions and we're ready to take them. So operator, maybe hand back to you and Joanne and I will take people's questions. Thank you.

Of course, no worries. If you wish to ask a question, please press star followed by one on your telephone keypad now. If for any reason you want to remove your question from the queue, please press Start followed by 2. When preparing to ask your question, please ensure that your device is unmuted locally. Our first question comes from Nicholas Longway from BNP Paribas. Your line is now open. Please go ahead.

Hello, Marge and Anton. I've got three questions, please. First of all, on group time, so you referred to... You referred in the press release to acceleration of the simplification at Group M. So does that mean you expect increased cost efficiencies compared to the previous one? And when do you expect to see the full benefits of the initiatives at Group M? Are we talking end of 25 or more, 26? Secondly, on net new business, what was the impact in Q1? And what phasing should we assume for the next three quarters? You said in the past you expect a neutral impact for the full year. Is it still the case? And finally, on margin, it seems there is a lot of headwind in H1 and then better trend for H2. So what sort of margin decline should we assume for H1? Thank you very much.

Okay, well, I think I'll let Joanne take the questions from the financial perspective. Just one comment on Group M. I think we are expecting strategic progress from Group from today as a result of the actions that we've taken both last year, also this year with Infosum. So that's ongoing. I think Joanne can talk to you about how you think about that from a financial question. And I think your first and third questions are largely related to each other. But Joanne.

Yes. Thanks, Nicholas. So I'm just saying Brian said about his five priorities in February and he and the team are executing against those. And That will build on some of the simplification work that we did last year to simplify both how we operate a driving work client-centric operating model and simplify our go-to-market. There will be cost efficiencies as a result of that, but I think more importantly, it sets Group M up to deliver market and above-market growth over time. In terms of the impact on the P&L We do expect to see an impact on the first half margin from that for the full year. We expect it to be broadly neutral in 2025, and so most of the benefits will be in 2026, just from a pure P&L perspective. In terms of the net new business impact in Q1, it was slightly down year in year, and that reflects some of the loss and new business activity. In terms of the next three quarters, I would just reiterate what I said in February, where we said that we expect in the first half net new business to be a drive, just reflecting those historical client losses that we saw in 2024, and really seeing the full impact of those in age one. In age two, we'll benefit more from the ramp-up of recent new business wins, which will help offset some of those losses. So, a drag in H1 and a better performance in H2 from that new business. And then in terms of margin, there's two factors as you really think about margin through this year. In H1, we talked about the impact of that, but also our performance, we've talked about it improving through the year, and therefore that H1 top line performance will have an impact on our operating leverage and on margin. So those are really two factors to think about in H1. But I think it's important to reiterate that we are delivering, we're expected to deliver a flat margin for the year, excluding FX. And that really is driven by the full year benefit of the structural cost actions that we took last year. Continue to be very disciplined around our discretionary spend and delivering back office efficiencies, which is also enabling us to invest in open AI and data.

Thank you. Thank you very much.

Thank you. Our next question comes from Simon Baker from Bernstein. Your line is now open. Please go ahead.

Yes, good morning, and thank you for taking the question. So three quick questions, please. Firstly, you mentioned the economic uncertainty has increased. I just wondered at a high level what your thoughts are in terms of the way that the ad market behaves versus, say, the last major downturn in 2009. I mean, clearly, social media is a lot more, digital is a lot more, marketing funnels, et cetera. So the question really is, today, is it faster or slower to wind up and wind down in terms of marketing campaigns? And similarly, is it sort of sticky or less sticky today, please? And the second question is, any early thoughts in terms of the third quarter versus fourth quarter today? phasing, specifically in terms of the way that the China and net new business and improving tech spend factors all sort of interrelate, whether the third quarter is sort of broadly the same as the fourth quarter, or whether you'd say anything in terms of the bias there. And finally, one for Joanne, please, in terms of the Cantar Group tax reference base value. Have you made any comments on that? Can you give any indication on the tax reference value, please? Thank you.

Okay, well, I'll take the first question, perhaps, as I think I've been around for most of that time. And Johan can take the second. Look, I think you referenced 2009 as the last major downturn. I think there was COVID in between. And then I think a couple of years ago, actually exactly the same point in the year, we had what happened in Ukraine. Maybe that's before the prelims. Look, I think that... I don't know... that we sit today looking at 2025 as we would have looked at 2009. I guess there's a very broad range of outcomes where we are today and at the most severe it could be, but I don't think that that is what people expect to happen. I mean, the major banks have a range of probabilities on the US recession rather than a certainty. I do think that clients have learned from COVID and Ukraine I said in my statement that the marketing is a cost in the short term and an investment in the long term. And there's no doubt that faced by pressures, they balance it out. I think you saw the results from Unilever, Nestle, P&G yesterday, and you can see it in our top clients. They're continuing to prioritize sort of ongoing marketing investments and the pressure, I think, as we identified in Q4, is more around the discretionary areas of spend. But we have to see what happens with tariffs. I don't think things will be faster or slower than $2,000. Maybe they'll be a little bit faster because people have commitments. Maybe because people can spend – I could argue it will be faster because people have commitments before and they can change those commitments. I could argue that clients are more willing to wait and see because they can pull things more quickly if they need to. So you can make the argument one way or another. I think it's really – Until we get clarity on what's actually going to happen with tariffs, I don't think people feel we have clarity now. We're not yet going to see a major pullback in spending until we have one clarity on tariffs or two clarity on the direction of the economy. And so I spoke to a number of clients over the last few days ahead of this call. I think to date, we haven't seen any major pullback. you know, step down beyond what I think for us was already a relatively cautious outlook for the year. So I hope that gives you some sort of colour on what we're seeing. Joanne.

Yeah, we don't guide by quarter, but just as you think about by H2, obviously, you know, Q3 is a tougher company, 0.5%, Q4 was down 2.3%. You specifically mentioned China, you know, its balance comes between Q3 and Q4. And we'll see the impacts of net new business and that ramp up, as I've talked about, as we go through the year. So overall, I think at this point, it's probably fair to assume that it will be fairly balanced between Q3 and Q4. And then on the Cantor tax reference, making good progress in Cantor, I think we need to see what happens with the remaining business There will be some tax, but I don't think it will be significant just based on the structure of that business.

Brilliant. Thank you.

Thank you. Our next question comes from Adrian de Saint-Hilaire from Bank of America. The line is now open. Please go ahead.

Thank you. Good morning, everyone. A few questions or points, if that's okay. So I think the link between the advertising market and the economy is pretty clear, but maybe what's less clear to me is the link between ad spending and the agency's organic sales growth. So could you just elaborate a bit in terms of how your fee structure has evolved, how much of your revenue is tied to actual media dollar spending, or how much is based on retainers? Secondly, I think, Joanne, you highlighted that you assumed that new business contribution would be a positive contribution in H2. But since you provided that guidance, Coke was lost. I think there were some headlines about PayPal the other day. Mars is under review, and I think you're defending that account. So what sort of elements do you have to be sure that H2 is going to be positive indeed for net new business? And then thirdly, if I look at your performance by sector, automotive was really quite strong in Q1. Do you think there was maybe some pull forward there in terms of spending ahead of tariffs or anything that you would call out? Because that seems a bit counterintuitive. Thank you.

Yeah, look, I think on your last question, just to tackle that directly, I don't think there was any sort of pull forward. I think that we've had some good new business success and expanded our assignments for some of our automotive clients, and they have been spending. I think it's fair to say it's one of the sectors that could be most affected. That may not be the pattern that goes through the year, but to date, again, even in that sector, we haven't seen any specific pullback. The outlook's too uncertain. I think on your first question around the relationship, you know, the ad market and the economy on ad spend, especially ad spend and organic service. I mean, ultimately, they're clearly related. I mean, clients' investments with us are linked to their overall ad spending, whether our fee arrangements are, you know, linked to business success or billings or indeed retainers. Clients have the ability to vary those up or down. at their discretion. And so I think that if clients pull back at spending in a major way, that would clearly have an impact on our fees, whether or not we have a retainer. No retainer, sadly, is forever. You know, at the same time, as I said, we haven't yet seen that degree of pullback from clients. Although we have been maybe more cautious, some of our peers from the beginning of the year, perhaps as we reported a few weeks later, and perhaps because we saw some of the impact on discretionary spending Q4 that perhaps others didn't see for the year overall. So I think that's the way to think about it. Joanne, do you want to talk about the new business phasing?

Yeah, so just in terms of the contribution age too, I think I'd say a few things on this, Adrienne. So first of all, we have talked about that. a ramp up of new wins from H2 last year, which we'll see a fuller impact on that in H2 than we have done in H1, which will help offset some of those historical current losses. Second thing I'd say, you talked about Coke and PayPal, but we've also seen new business wins in the first quarter. So Electronic Arts, Hannigan, others that we've shared in the release. and linked to that is that the pipeline is helping so broadly at the same level as last year and we've seen good momentum on VML and Burson as they've come through a lot of the merger activity that they were focused on last year so we expect to continue to improve that new business performance as we go through the balance of year and I think The final thing just to say is we talk a lot about new clients and new client wins and losses, but there are other factors. So we talked about growth with our existing clients, top 25 growing at 2.5%. There's plenty of headroom with our existing clients. We're seeing our existing clients move more towards integrated opportunities. And so we see an opportunity to continue to grow with those existing clients. I think we need to think about that as well as new business wins as we look at second half.

Very clear. Thank you.

Thank you. Our next question comes from Steve Leichty from Deutsche Numis. The line is now open. Please go ahead.

Yeah, good morning. I've just got two left, actually. One is on Group M in the first quarter. Can you just explain your comments on Europe a little bit more? Just I guess that minus 0.9 took me a bit by surprise. What's the danger that European pressure continues through into further quarters? So just more clarity there. And then the second question is, your comments on healthcare being relatively more stable. I don't know if I got it wrong, but I thought Pfizer was still a drag into the first quarter and a bit into maybe the second quarter as well. So just help me there in terms of that better performance than I expected. Thanks. Yeah.

So on healthcare, I think Pfizer was a drag in Q1. I think it stopped I mean, this amazing decision was made in May 2023. We're still dragging Q1. So I think it stops from Q2 onwards. But we have had some success with other healthcare clients. And so I think that's provided a better environment on healthcare. Joanne, do you want to talk about Group M in Europe?

Yeah. You know, in Europe, I think you look at Western continental Europe rather than UK, where the UK was really impacted by some of those client losses. We had a tougher camp. But in media specifically, we saw some weakness in the environment, particularly in Germany and France. And that weighed on, I guess, the tier of clients that we have in media. And we have a weaker comp in Q2, so we'll have to see how that plays through in the second quarter. But it was really that tier where we just saw softness, which is more macro-related clients. than anything else, Steve.

Great, thanks.

Thank you. Our next question comes from Lisa Yang from Goldman Sachs. Your line is now open. Please go ahead.

Hi, good morning. I have a few questions, please. So firstly, just on the cost, I mean, you mentioned the cost flexibility that will help you mitigate the macro uncertainty. Can you maybe talk about the actions you're taking currently and what are the main levers you have? The top nine words you did iterate further. Maybe you can maybe quantify the size of your freelancers, how much discretion you spend, the size of bonuses. I think that would be helpful. That's the first question. Secondly, just in terms of the the actions taken at GroupM since the start of 2024. You mentioned you've seen some encouraging signs. Maybe can you give us a bit more detail in terms of how that has fed through in terms of client retention or expansion of scope or let new business win? Why accelerating the simplification today or now or this year? And how much more simplification is there to come in other years? Or you think this is the last leg and It would be helpful just to understand, like, you know, how that could basically help the group kind of return to growth. And just the third question, just on the level of new business, do you expect to see any sort of slowdown in the overall marketing pitch given the level of certainty, or do you expect to see maybe a pickup going forward? And how do you think, how do you assess, you know, potential risk versus opportunity for WC for the rest of the year? Thank you.

Okay, well, I'll tackle the Group M and your business question. Look, I think on Group M, as you know, as I referenced Pfizer, a decision made in May 2023 is still weighing on our results in the first quarter of 2025, so the impact on the business is very long-term, and I think Group M didn't perform as we had wanted in Q1, but some of that is a result of decisions made some time ago. If you look at it, if you look at sort of the big New Business wins in Group M last year. We did retain and expand our Unilever relationship. We did win J&J in North America. We did win Amazon outside the United States. And those are three of the world's 10 biggest advertisers. So we are not without our success in New Business. And we did retain EA in North America. Q1, again, competitively. And we won that business against some of the toughest competition in the industry. Now, it's true. We didn't retain Volvo after a pitch. And while we're renewing the overall Coca-Cola relationship, we won't be working with them in North America. So it is balanced. But I do think that we are seeing more competitive success in new business. And we can be the best when we're at our best on the best day. And the infosum transaction is going to strengthen significantly our data proposition. And we're seeing that with clients. So I think greater clarity on that is perhaps the thing that we have been missing a little bit. And one of the reasons we brought Brian back was to strengthen the growth in proprietary media. which would drive both financial success and a little bit greater financial flexibility. So I think we know what we need to do in our media business, and I think we can start to see some of the impact of that, although we're not seeing it necessarily in the quarter-by-quarter numbers. On that new business, I think that the pipeline might be a little bit smaller than last year, and as ever, there are some things at risk and some areas of upside. I do think that clients... I think major clients are starting to look at and review bigger, more integrated assignments. Many of those things, you know, I think we tend to over-focus perhaps on some of the big media reviews because with the billing numbers, they look much bigger than they are and they're more public. But, you know, I can assure you, we take part in, I mean, more than I would like to imagine. I think we've done 6,000 or 7,000 new business pitches this year you know, very few of them hit the headlines. So, you know, there's a daily cadence of new business opportunity. And I do think we're seeing some bigger consolidation from clients, things that are not necessarily in the headlines and things people don't necessarily know about that, you know, support what we're doing. And again, within that, I think we're seeing the advances and our ability to demonstrate what we have operating today in WPP over here, not a Figma not a mock-up on Figma, but an actual operational tool has been very compelling to clients who take the time to really dive into what we're doing. Joanne?

Yeah, so Lisa, thanks for the question. So I think in 2024, we demonstrated an ability when the top line is softer to really manage that through the P&L and And we set the margin forward in 2024. As we look at this year, we will benefit from the annualization of the structural cost actions that we took last year. But in addition, you know, we continue to take action on headcount where we see that softer top line. We have a flexible cost base, and I think we've demonstrated, as I said, that we do that well. Specifically, you asked about freelancers. Freelancers make up about a high single-digit proportion of our staff costs, and we manage those tightly. We've seen improvements in that as we've gone through the last 12, 18 months. The other bucket to look at, and that we've talked about before, is back-office efficiencies. We're encouraged by the progress that we've made in those. We've seen back-office costs coming down, and there's an opportunity to do more of that, and we're focused on that. And that's partly enabling us to make the right investment in our business over the medium term. And we call that investment in open AI and data. And finally, just I'd say on discretionary spend, we are very disciplined. I think we've all learned how to be disciplined as we work through COVID on discretionary spend and we carry that into the business. And we have a number of levers. around discretionary spend that we can pull as we go through a tougher external environment.

That's clear, thank you. Thank you. Our next question comes from Adam Berlin from UBS. Your line is now open, please go ahead.

Yeah, hi, good morning. I've still got three questions if that's okay. My first question is, when you look across, now you're the fourth of the large agencies to report, the growth across the four agencies on average was about 0.5%, which was the lowest quarter we've had since, I think, the first quarter of 2021. Do you have any theory on why the sector was so weak in this quarter? I know there's been a lot of business changing hands, but I really appreciate any thoughts you have on that and why it should get improved in the rest of the year. That's the first question. Second question is, you know, another quarter where AKQA continued to be very weak and depressed the growth in creative agencies. Should we be thinking this like an RGA huge situation that we saw at IPG? Is this an asset that you may need to dispose of to kind of improve the growth? Or are there some reasons that you can explain about why things should improve and it's different from what we saw within those assets in IPG? And then the third question I had was, if what you're saying about Q2 is similar, so let's say minus 2.7 again, H2 would need to be positive to get to the midpoint of the range. And I'm just trying to understand, you know, is that realistic? Should we be thinking more of the bottom end of the range, or is the change in new business wins very material in H2, and therefore that allows you to have a positive second half, even as the macro potentially toughens?

Yeah, I think on... you know, on your last question, I don't even look at sort of changing your business quarter by quarter, balancing the balance of the year, but I'll let Joanne tackle that. I think on your first question, so why is it 0.5 and why is it the weakest quarter since Q3? I think that's the economy, Adam. I mean, you only have to look at what's going on, you know, and we saw some of it in Q4 maybe ahead of our peers, you know, weighing on discretionary spend and maybe smaller companies. We are seeing, as you've seen in our numbers, strong spend from our biggest clients. Maybe we're gaining some share with our biggest clients, but also I think that big companies are continuing to invest behind ongoing marketing, but things are a little bit tougher around digital technology areas, more discretionary spend. I think that links to your second question. And, you know, there have been management changes to AKQA. Actually, although we haven't yet seen the results, AKQA had a very good first quarter in terms of new business wins. We are looking at performance of that unit improving over the year. I don't think we want to do that. what IPG did with RGA and HUGE, you know, frankly, you know, our job and the reason we get paid is to fix the businesses that we have in our portfolio. I think that AKQA is a very strong business. You know, JAR's built an amazingly strong agency with a very strong brand. They get amazing access to new business opportunities and talent. And, you know, the read through from RGA and HUGE, I'd say, is the economic outlook on that sector has been tough. But within that, I think that we have a really strong asset and our job is to, you know, put the right management in place and get the business growing. And that's what we're very focused on, not just disposing of it. We're not ready to, you know, surrender yet. I mean, Joanne, do you want to talk about the guidance and expectations of the first half?

Yeah. Our guidance for the two-year return, reiterating today, is really based on knowing that new business impacts. We've talked about the sequencing of BAPT. and client spending plans as they are today. And as e-business ramps up, we'll see a benefit in the second half. And we're also talking about existing, our largest clients, the growth of the largest clients. We were very thoughtful when we set our guidance over the four years we talked about at the time. We started to see talk of tariffs, we exited 2024 a little bit softer than what we were expecting. And so we built a range of outcomes into that guidance for the full year. It's too early to know the guidance. We're reiterating it today. I think we'll have to see how recent events play through in the balance of year before we look at knowing the guidance.

Okay, thank you. Thank you.

Thank you. Our next question comes from Laura Matea from Morgan Stanley. The line is now open. Please go ahead.

Hi, Mark. Hi, Joanne. Two questions from me. The first one is on InfoSum. Do you mind talking a little bit about the competitive environment? Who do you consider is the closest competitor to InfoSum? And how quickly do you think you can integrate it to WPP and Group M more specifically? And when do you expect to see benefits from it? And then the second question is more on the visibility that you have into revenues. I think you've talked about this with more of a follow-up question. Is there a proportion of the revenues that are in 25 that is guaranteed today where you have full visibility? Or do you mean that all of the revenues could basically be impacted by the macro environment. Thank you.

So on InfoSum, I think that actually their two biggest competitors have both been bought by cloud providers to integrate into their cloud data platforms. I think it shows the attraction of the sector. There's not necessarily standalone businesses out there that do something similar. It takes a different approach to the application of data from classic first-party data systems, you know, the classic sort of CRM-based system is, you know, you see a cookie or you see a phone number or you see an email address and you try to use those identifiers to link one data set to another. And InfoSum takes a more AI-driven, you know, federated learning is a technical term, approach to combining those data sets. I think that's both more privacy compliant but also more nuanced. And because of that, it enables us to take that data into more premium media environments. You know, some of the social platforms don't let sort of traditional systems integrate into them. So it gives us a broader range of media environments for our clients, which is important. In terms of the integration, I mean, relationships within the business and the ceo has taken on a role with group m i think it's pretty seamless you know it's it's it's as fast as it takes to integrate info some into a client which i believe you know can be done you know in the matter of you know days days and weeks so um they're already working with existing clients. They work with Coca-Cola in Europe already and many of our media partners. So I think it's really sort of integrated from day one and it will only get stronger as time as we bring more data sets and more media owners into the ecosystem. Joanne, do you want to take that?

Yes, of course. Thanks, Laura. So in terms of visibility, let's The vast majority of our clients are large global clients and we have multi-year contracts with them. So to that extent, there is a good level of visibility into their spending plans for the year. But of course, when the macro environment changes, those spending plans can cut. And we've seen that in past tougher macro environments. But as we said, our guidance for the full year reflects that because we saw some of that We also talked about project-based spend, so that really impacts some of our smaller agencies and agencies like AKQA who tend to do more digital work. And that is more discretionary spend for clients, which, you know, it is, you know, there's more flexibility for clients to either delay those projects or cut those projects. So not something that, you know, we've seen in the last, you know, 12 months or so. But obviously good visibility into the next quarter and also in terms of the net new business that we have secured already and the pipeline and that visibility improves through the year. Thank you.

Thank you. Our next question comes from Julian Rock from Barclays. Your line is now open. Please go ahead.

Yes, morning, Mark. Morning, Joanne. Three questions, please. Revisiting a full year new business, now that you have more clarity, is that fair to say that newbies was about minus two last year and should be about zero this year, based on what has been done so far and excluding future wins and losses? Second question is, how bad does organic need to be before you cannot be around flat margin? Is it minus three, minus four, minus five? And then on kind of macro and reiterating guidance, now, it's pretty obvious to everybody that you are a macro-sensitive business, right? And IPG yesterday was very clear that their guidance reiteration was based on current performance and clients not changing behavior, but if macro was weakening, it could change guidance. Now, what about you? I mean, normally, the answer is pretty obvious, but you said many times during that call that... you had put in some, um, uh, conservatism in your, in your folio guidance, because you've already seen that, that macro was weakening. So, uh, kind of, you know, what kind of, uh, conservatism and, and, and anticipation of macro weaknesses in, in the folio guidance is kind of my question. Thank you. Yeah.

Look, I think, I mean, I think to some extent, all those three things, uh, are, are, are related. Um, I think we said new business was a headwind last year, and it will not make a positive contribution this year. And the more negative contribution is at the beginning of the year. We'll have to see how things go throughout the year. I think that sort of tackles the first part. I think the second question is we've given the guidance as it stands, and so those things hang together. And then in terms of changing the guidance, you know, I think you're trying to get me to say something I didn't want to get, which is I think what we've been making is we did build some caution. I think it's very difficult to be scientific about the level of caution we built in. But having seen where we were in Q4 and having seen, you know, where we started the year with pressure on discretionary spend, leaving that level of caution, pressure to continue for the rest of the years, the basis on which we gave the guidance. We're not anticipating within that a massive recovery in the second half of the year to make our guidance. I don't think you can push us to say what would cause us to change it at this point. We can only see the world as we see things today. We don't see the need to change the guidance, but obviously there's a range of outcomes. We are as you put macro-sensitive, where it would need to change. I think the range back to the tariffs is both positive and negative indeed. So I think, like many companies, we're saying that we are where we are at the moment. And that does bake in because of when we reported in our experience in Q4 and Q1 a somewhat more sensitive macro environment, which is why we're holding our guidance as at today's date. If that helps you understand our thinking, I think.

I mean, and just on the second question on, you know, how bad does it need to get before margin stocks are impacted? I mean, if I just... Oh, sorry. Julian, did you want to say something else? No, go ahead. Yeah, so if I just step back and look at, you know, the industry as a whole, but... Okay. If you just step back and look the industry as a whole, you know, maybe during COVID and maybe 2008-9, you know, the peak to 12 was 8% and the margin impact was around 150 to 200 basis points. But the more important thing is the margin bounces back because of that flexible cost base that exists in our industry. I mean, for us, we've guided zero to minus two. We said we'll hold margins to last at the bottom end. Obviously, that requires more action around that flexible cost base. and, you know, given the negative operating leverage. But, you know, beyond my assuming, I don't really want to go there because that's not really our guidance. And if we were in that situation, we'd have to look at, you know, what other actions made sense for us to take on the P&L. You know, it's important for us, as well as, you know, being disciplined around our cost base, making sure that we're investing for the medium term and making sure that we're continuing to reallocate investment into open AI and data. So that's very important for us as we go through this year and think about both the near term and the medium term priorities.

Thank you. We currently have no further questions. So I'll hand back to Mark for closing remarks.

Thanks very much, everybody. So I think we've discussed the main points on the call, particularly related to the economic environment. I think there's no doubt that it is challenging. Overall, I think we're making good progress strategically. We'll see the benefits of that. So we look forward to updating you on the current, over the coming months, Thanks very much and we'll look forward to seeing you soon.