- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the Interpublic Group Third Quarter 2022 Conference Call. All parties are in a listen-only mode until the question-and-answer portion. [Operator Instructions]. This conference is being recorded.

If you have any objections, you may disconnect at this time. to like now would introduce Mr. I Senior Leshne, Vice President Relations. Investor of Jerry you begin. Sir, may

Jerry Leshne

Good you’re Krakowsky; Thank morning, I morning. you. hope joined Johnson, CFO. our Ellen we all by CEO, by Philippe and our are This well.

that while language and financial statements, our greater by will We slide our before use to Q&A. the to our expenses, are We presentation of plan remarks financial They no prepared our for call have plan not calculation. We measures earnings with interpublic.com. term to will and we as on operational in data, allow our our better Eastern begin net familiar the posted a X.XX revenue release website, the for measures, change during performance. in market as with revenue We’d be to to review conclude followed remind GAAP measures. of at that transparency the believe provide been we To before billable you has these this substitute call, We interchangeably. the like more to Time. and refer there non-GAAP certain identical measures open that method align useful, supplemental well

are will our dollar recall, you no in results revenue billable expenses of expenses dollar our As in and on for offset operating effect have therefore operations.

over in the Krakowsky. it subject We to and further will included also release, slide uncertainties my filings this other SEC. earnings the to are the Philippe in things At point our forward-looking and statement detailed statements These refer XX-Q presentation is turn our pleasure to and company. our cautionary to that with is about and the

Philippe Krakowsky

and keeping joining hope you're Jerry, I well. morning. us you, this for all thanks Thank

on Ellen questions. by business, by strong tone out update report then We're our the conclude will agencies the be a start provide months. months. nine performance followed and and your in to I'll third to with of of details an additional the the our I'll the quarter quarter and and usual, highlights nine pleased As covering

That's growth and of stack X.X%. three-year XX.X% was growth of XX% organic on organic quarter. year very ago, quarter third period the the strong to a top COVID over Third in it brings growth our a

last nine for of months ago. third X.X% X.X%, across region markets. Those growth quarter to three-year a which in year's organic brings year Over organic our our was growth months. X.X% was growth continue XX.X% growth that of international and growth We for nine posted international the was the growth the a organic on of the year, growth lead year quarter, US once again markets of XX% and on first and three-year industry. the to XX.X% world in XX.X% Domestically, top first the on was numbers of top every in our top by ago, highlighted

Our growth our Each by whether viewed ago. segments, growth agencies year double-digit in compound a disciplines. quarter was the marketing our portfolio segments also of broad-based or across

increases by by grew data significantly to last from at agencies Performance digital single-digit led discipline. specialist Momentum, on ago, along organic public IPG with X.X%, organically, year. segment, well growth experiential and was all of adds led retail, builds our sectors, clear we in media, and communications solutions was double-digit growth on growth sector. This our while clients year. weighing segment XX.X% growth quarter as sector auto integrated quarter Morton, leadership the by of growth our public engagement XX.X% last are saw last client by was the X.X% our the here Octagon, our Across other financial growth segment and care, specialized largest our advertising by double-digit year and had in followed Our on increases highlighted in health XX.X% and we our solutions and of industrial services, Mediabrands, two relations was across with X.X% a In which decreased in solid creative IPG sector that of the growth experiential in again, Worldgroup. our McCann segment, Jack and At Health, the this led segment. top year, result as organic growth agencies

to Turning operating margin. expenses and

exercised growth strong Our reflect again teams, the areas. behind key ongoing to as well operating results continue investment discipline, cost by our as our

was outs so quarter levels reported. well and income you are drive to Net we as year to million As pre-COVID the the comparisons know, pandemic, that continue reflect margins periods. in our last above of at $XXX.X ins the comparable seasonally

resulting adjusted $XXX.X of was Our XX.X%. million, margin EBITA in revenue net

Variable under expected, growth below well was organic the accelerated trailing grown well levels, at X%. had as expenses far when third and that levels to ago over in a resumed and numbers. at to and XX a expenses were travel year when quarter, as year's recovered ahead rate the has last have still that's return our office low of of variable As to our approximately X.X% pandemic. we've hiring due certain effects greater headcount to Compared of higher growth months, the

can The at data set Architecture to at investments and in their come IPG how are meet kind of achieve our our growth marketing as precise, work. which one XX.X%. of of solutions, clients needs These and per through marketing sales. we our clients to redeploy digital adjusted engage best our measurable activity, asking led quarter To duration resources run update an Open share Notwithstanding that's in to some creativity, call, accountable bringing mentioned talent, company our customized repurchase for existing authorized IPG, us of are client create challenging our prioritization the with well very flexible in who macroeconomic deferrals growth. a of and out is quarter. continue to The these of uncertainty. are gratified know relevant as marketing marketer in business adjusted well think drive EBITA and But bring ongoing help remember are diluted net we order wins. in about that organic outlook, is needs on the outstanding management year-to-date our reductions gains expectation that seeing downturn. our $X.XX for earlier that whether we and a well. engagements a and them position dispositions. strong current that's as repurchased we earnings differentiated brands in might a downturns, media focus driven of and and also moment going project our The collaborative contingency to and given majority client those following share together ability diversified planning, and largely last in generally making in this long-term creative more for to of was marketers X%. capabilities, client-centric environment that will full with upgrading year we personalized, that the drive forward. to also with agency media expect the of $X.XX model environment performance with our as growth shares for we With more these as and for million We're offerings by question intangibles Our that engagements to restructuring agency is the of they you're conversation future as of plan scenario event know together and our long clients challenging. lesser degree, ahead adjustments, Historically, geopolitical important margin proven well now for as program, seeing were people teams new are our expanding audiences along and given On solutions are past our team. actions seeing by of Under data or growth X.X visibility to year strong amortization, I strength and performance, individual reported macro of share technology, the market some this talented short-lived. The level. which brands as solve this and our more with deliver at asking this an us clients These invest model that higher are growth our you'll continue powerful relevant level, At that the us a we technology, many days cycle through a a heightened

managing advance our challenging of You we offerings invest in digital will in more also increasingly an continuing and for times, to hold effectively history success true expect in even economy. can to our that while

by remarks note, staying close to each recognizing And to issues that people course clients clients engagement our their behalf this close consistent people. thanking of societal of and that on of our work on are their focus other and part for my We and to I'd of like and for on their support and vital the also culture many in values. our with our are

to this more at in-depth So, for hand over our I'm Ellen the call of to results. point, a view going

Ellen Johnson

I is thanks of like would add everyone that join to to you. hope my them. recognition and people Thank I our Philippe well. the in

will expenses, remarks On in slide total reminder, was accompany webcast. which to includes a our our X.X%. slides As two, billable track presentation the revenue, increase my that

stack organically X.X%. and before quarter the in momentum. third revenue grew through demonstrates pandemic increased is revenue Our organic X.X% quarter across regions. period billable was net XX.X%, strong three-year all historically expenses a organic which The growth the We

from during X.X reported agencies with the dispositions was bringing through of million first nine repurchased earnings exclude EBITA $X.XX a share small to as restructuring X.X per and margin our million adjustment a adjusted. and of of We months intangibles common revenue. worth and share year. impacts of of quarter the repurchases business adjusted net gain on non-operating shares a million certain $X.XX as the the million was investment. the quarter $XX.X amortization of Diluted Adjustments $XXX.X acquired after-tax Third XX.X%

P&L four, that detail. to for we present operating Turning our expenses see revenue follow. slides more slide net the the On in three and detail revenue slide quarter. I'll in to cover in

basis XXXX. third of negative points. billion impact of The Our net XXXX, the X.X% international was XX of in our revenue the quarter of was with stronger negative impact non-strategic markets. in currencies net nearly was QX small change $X.XX the in divestitures rates to of all certain against Compared businesses exchange dollar the

revenue segment increase result net Further quarter. net year's Our slide, down was we break third revenue X.X%. organic the was billion in of $X.X this The performance. out

top data quarter segment solutions on organically XX.X% media, grew third the engagement in Our XXXX. X.X% of of

As see IPG organically. comprised Mediabrands specialist Acxiom, is this on agency. our grew of spectrum, segment the double-digit one end At digital Kinesso rate Mediabrands, IPG you of slide, a the can and at

at growth Huge, softness our we integrated was creatively ends IPG Organic experienced which segment other on R/GA advertising both and and the at year on at solutions ago. While segment results a XX.X% X.X%, top and our led which the was level. weighed of

a comprised domestic Health, our and reminder, agencies. FCB is McCann As IPG this of integrated MullenLowe, segment

quarter is were Our at was presents Mediabrands, This and was of were X.X%. growth That Health. quarter, growth quarter experiential ago. We organically. Health, led which last by Momentum, IPG offerings. discipline. organically. by organic in the net an slightly the X.X% net had our experiential by segment top region. Mediahub, X.X%, solutions year by US, brands disciplines growth in McCann. XX.X% on Weber growth the XX.X% The the of communications X XX% agencies, a PR was quarter. led organic and We Spain Slide revenue IPG was In ago increase compounds the Italy, in of increase in increased ago. increases a our growth by organic the Shandwick, increased specialized led a and revenue At X.X% year on Continental in of Netherlands. year's is Morton Germany driven our growth and of which top Momentum. range Octagon on comprised increased UK change mid-single-digit year across in solid quarter XX.X% Golin the a of were X.X%. Health, third Europe led across Jack International were and down top was net at markets solutions revenue by was XX% Jack our strong segment, of We and and in of and is our That IPG and double-digit XX% DXTRA Morton, our

and Health. Our experiential performance media, IPG led was by

China. Asia Pac across India, including grew with broad-based growth our Australia, markets, and largest organically, Singapore X.X%

Argentina, LatAm is Colombia. in our which at across Mexico, growth organic on noting Brazil, XX.X%, Our year and Chile ago. be markets, of strong continued worth top growth XX% principal We include to a all it's which grew of

made is the solid We growth XX.X%. in East and by Middle which in growth of Other led the grew Our group, up Markets Canada. and Africa Canada, Middle double-digit East were

expenses. slide our on operating and X, to Moving

adjusted which XX.X% revenue quarter, net ago. from Our year in expected the EBITA was a decreased on margin as XX.X%

You'll of These the operating transitory sharp expenses, both acceleration recall that, expenses were unusually to work. run of last them XXXX, and the effects, year's during margin the impact include growth benefited and revenue from which in-office levels. pandemic caused several which meetings, on low certain to travel, to due at

revenue that, recall top our also year. XXXX, third depicts XX.X%. point net expenses our margin this year hiring was of pre-pandemic and growth You'll year. our as lagged which behind a out the slide principal adjusted last is that, would quarter significantly last QX I well our to line above EBITA percent This

delivered that to the to our was over expense a in salaries trailing organic base a – payroll, ago. year period. and benefits total X.X% due approximately same revenue XX As percentage we quarter the XX.X% required the can SRS tax, to delivered compared the you result, net of our increased growth is Underneath for XX.X% expense see, related and on X% of our over ratio as months. support Headcount the hiring

a performance-based to was temporary Going significantly. worldwide of decreased our approximately decreased and quarter on and the headcount a total Also, for from ago, XX.X% our compared other office also end, XX,XXX. year revenue labor was expense our ago. expense incentive other this for At our compensation direct slide, net XX.X% expense year way, employee

office was an of revenue improvement expenses X.X% our activities levels. fully X.X% leverage to earlier pre-pandemic I was to other a other year from points of We with ago. of variable compared comparison not that X.X% which continue The business year so a the XX of All of a basis for direct occupancy, as referred of increased revenue and expense net reflects expense result ago. return up to levels

decrease results a in Our on begins and basis to slide with SG&A detail was steps expense quarter through This comparable X the X.X% to our of a and from performance. reported XX revenue, the reported present of diluted adjusted picture EBITA our our EPS. left-hand we On a ago. points adjustments results to net on third order of side year provide adjusted

Our expense the the in of for intangibles quarter amortization million. second acquired was $XX.X

$XX per of adjusted a our operating we out impact million adjustments, of of $X.X shown reported results. which after-tax business few net here Cash adjustment $X.XX of and depicts continuity of you in as EPS the disposition capital the restructuring at $XX.X period. and per agencies a the adjusted small diluted these cash million. used by a diluted earnings each million X Our bridges credit in nine slide we non-strategic diluted provided again to share. the set we a before was for turn million. Operating five was cash comparability. see have operations On earnings of had the due $XXX.X diluted working Below Adjusted Slide flow share the investment. months At of capital our Cash was similar for the quarter. of adjustments per $X.XX million. expenses foot can a share to for working column which flow $X.XX X, slide gain $XXX.X to for was is and

our CapEx sale as well due This volatile investment. the changes component. In we of offset by mainly cash seasonal timing a and million of our As business the largely used flow the a to $XX.X activities working capital in variability collections by partially the highly a both investing as and for of operating our function is reminder, quarter payments. is

for $XXX.X dividend million stock repurchases. primarily share Our our common in activities the and is financing quarter

million quarter Slide our Slide in is cash our outstanding of billion. of net for the position maturities XX quarter was at $XXX cash Our decrease the was end balance and depicts debt. the XX $X.XX portion our sheet. current

billion. end can see at remained quarter at you $X debt As the total schedule, on

next for $XXX Our million. April only maturity is XXXX

I expectations maturity gratitude liquidity and XX, in slide to level the continue efforts means of as like turn for year. on and our sheet with would facility Gross in Philippe. reiterate balance well-positioned And commercially. XXXX. end. times a financial Thereafter, The people. on updated our well until and teams quarter covenant for to summary our debt our and at our next to execute to our at us was have not it the to strength EBITA remain pride defined high In back positioned that is I'll we our financially X.X credit both of that, deliver

Philippe Krakowsky

Thanks, Ellen.

embedding as goes commitment parts builds important a some with have this growth been on and of to digital agency record tech playbook that that a to back strong of as layer portfolio year across far brands. along our Our and our time, talent and adding thus data the well offerings of success

of business the on convergence retail the and effective the with we've creating sector is in to experiences another models. And across and of To-date, a direct-to-consumer impact and that's the world Now evolving commerce for clients environments. opportunity leading media successful brands. been growth customer digital and engaging our major range entertainment of physical of helping technology

that across acquisition commerce and cloud. both Summit that's the in and platform RafterOne IPG when step experience key of on capabilities awarded and with tier we RafterOne. more RafterOne is brands Salesforce By of measurable, implementation XX partners. technology that than the Salesforce this over and and marketing for our implementation BXB is engages marketers we're repeatable years BXC a deliver partner The to way important announced With bringing to During range our and highest leading works the quarter, clients XXX marketing significantly in with building took a Salesforce journey of a Partner another employees technology company along and precise channels. personalized we digital journeys converts content enhancing together a a

Now driver IPG significant transformation commerce an our RafterOne offerings bringing data step out work with with and will capabilities forms rounding of specialized in of their is business or Commerce to a well forward space. the portfolio. clients roster whether growth clients own agencies, for our strategy, continue other important in and can across in to this entire as RafterOne independently of be going work service, work directly CX addition as implementation us that's

strength leader that awarded sector of MM+M a IPG Turning agencies of in continue network. group Year Healthcare most sector. XX the us to dynamic this our in performance wins to the we Health show highlights won XXXX took be the across the healthcare. key categories, to continues Reputationally, making quarter, in across industry's XX the is home Awards. Network Collectively,

the precisely is a what ago. And Medical most the medcomms eight when clients our type and believe of create is During little we comprehensive launched year foresaw IPG of we that we which benefit offering. available over Health the this healthcare Health specialized kind aligns launched interconnected all we of IPG quarter Communications, to agencies industry's to offering a just

creative existing as many with business most degree company's the converted key Health win including marketers. media clients Health integrated and a thought world's grow also recognition growth successful continue Teva new leadership of sophisticated see to a and with of IPG the Ingelheim. continued high Merck. was and Boehringer we with Importantly, In of Mediabrands, also to a into engagement part AstraZeneca, IPG Pfizer, consolidation

fourth ways Eileen dis- promoted of that such and with clients industry. this female continue make Acxiom Celebrity the client-focused IPG iteration just who including the see media first Global personalized addressable our Notably, the decisions a planning custom selected this marketing Media safety to expanded During regard played research Mediabrands. CEO In as Mediahub of and Mediabrands also exceptionally back, will in misinformation. and the her are shared record Eileen as as Nike, its role on is power And Kiernan, the the of clients Index, Merck we strategic media win of through media a space, and naming Cruises North helps relative which leader media media issues and Responsibility develop is new its platforms. onboarded travel to in to this bounce efforts. Last Teva. fairness audiences this we relationships responsive week proprietary media America. quarter their our of major becomes agency significant as group highly in the in client's management Staying teams for we

garnered in for workplaces as workplace recognition Great During with a naming Fortune for and best Fast workplace the it best technology Company one as a of the to quarter, Place a company Work Acxiom women. naming innovators the and best

Ellen performance of the macroeconomic advertising been is uncertainty of their of a When Both of that our ahead indicated, of distinguish their the has to evolving result creative agencies two themselves. as midst a in As these to digital requirement MullenLowe continue McCann, FCB we're challenged space. premium of seeing. stay brands to specialist in the are the comes which agencies and offerings, space, strength it our in the

During spans IPG. the Daryl breadth McCann, of that of quarter, range we experience announced a Lee, new global industry of remarkable a and full CEO the has our all who from facets

Gin, number Creative rewards As effective Network named McCann and clients highest most for Global positioned in jury the was won to global new agency drive to with FCB, was such, including winning industry. of and Beefeater Tic-Tac Chair year extremely recognized as McCann achieve as UK recognizing scored and and Officer as network including Hankook way the At as network the which quarter industry's Clorox with the McArthurGlen created an the and MullenLowe And also leader Inspire Award creativity Nutella wins of and several Index, Co-op new retail a drives excellence the honored ambition, the standard of Foundation AEF, creative it the Retail of for young by existing be Morgan Awards, well running. saw global is candy talent chain the Year saw the makes the all-female the Kimberly-Clark, the commitment the and continued network and the Chief Stanley, Value And market, to ANA our inspiring fourth named in to into business where MullenLowe at Educational growth Group her its education brands. creatively wins InBev. success a integrated creative further year AB also XXth communication. was new the London the Effectiveness Gerety in during of new that FCB's global quarter advertising effective assignments Effie is based global, dollar one advertising as the the dollar Effectiveness to the outlets for clients. we design its Index. agency Worldgroup, to called Daryl row McCann the well is advance a top-ranked iX, Tire. handle networks creative, client strategy Effie in be it We Motors. most Bentley in in of for which and well for network The by And

Thursday representation XXth events the space. brought is in The season our also for global, Riot brands, negotiated sponsoring to differentiation for including Video, began, to making sponsorship digital premier, Night management brand often first having Football US pandemic and ESPN's of seeing on a several and Adweek's retail to their budgets Morton, physical of At experience a auto specialize here live Mariners, large with was West and At the Tonight build Amazon our and of Fortnite. Tennis experiences R&CPMK experiential an launch brought included and optical worked Golin is GameDay. duties extension consumers shows, that Open digital life was of activations in agency And produced continued group client and and lasting the conferences. time agency major relationships Octagon kinds the it events the significant allow The and return organization more network traditional McDonald's. and that campaign industry and the three with agency the connecting athlete World the for engaging agencies our Among the Cup the named marketing Momentum, sports Games well Tour, Cigna, shift Prime kick Julio Chicago-headquartered connections as Trophy chain. campaign history. PR as highlights Monroe, to strong retail the emotional agency within College Our Octagon quarter from the like the FIFA clients Fallon's, UK Siemens, highlighting of celebrating off a named Intel, Octagon, Home record-breaking growth. the point a to industries Depot's, as the Notable nationwide within for creation and in wellness at also relations since with for of Coca-Cola's, for firms, Interpublic. the AOR Jimmy MLB Specsavers, saw year McKesson, Show Center largest firm. Cadillac-US baseball with Jack Seattle in the won Rodríguez, contract we public the the services And wins companies

team Weber awarded brand Jack part of the While at Health Morton, America was Shandwick Bud Weber and brand significant life company a included new business Hero North DXTRA sciences launch in and PerkinElmer. future by working alongside as

industry Light independence and cyclists app number Bud Lynch, runners continue a our quarter, Agency by relations comes our during Martin extended has it Carmichael LegalShield, US Bud winning Light make an domestic its When fuel client Santander, the onboarded transparency and Hostess it and the We ESG progress to a clients. Sustainability become We released again workforce new first to our energy which now the Officer. Our established programs, won remit. the a business we for named is evaluating Seltzer. as IPG our run LA Strava we in And for process of commitment notable standard. out one, Deutsche new data, during public once new and announced Chief stood for NEXT, quarter.

people not key in work to that this are speaks issues and to important to clients embrace ongoing area our Our but stakeholders. commitment our to and planet, our just our other

in positive For a from business net we a the year, new position remain standpoint.

upgrading to sound. full nine be to strong as expectation view our given increasing, a continues the new our new you've the in are seen, the head we net performance Activity be macroeconomic our seem into environment, does X%. business year through months, is business for Despite Our pipeline organic growth to first challenging new we to as year. more

As outperformance. remain multiyear execution strategy, long-term know, continued results combined this current with should going sustained sector you value drivers our forward. for And creation significant the compounds of

the share differentiated consecutive repurchase to foundation to given program. in with to offerings, also to that's highly as course, was years. well macro, Ellen a fundamentals for position Of we're allowed mentioning, we grow capabilities for stay and future dividend committed and by going well XX the investments continuing to strong that talent our We're confident sound we relevant And committed are balance IPG us sheet. sound strong make, and and our financial as the the continue underpinned financial

As want Session who people always, of our morning. our your this time to the And for point, call as clients both thank are let's thank our essential and this well, elements at Question-and-Answer open and questions. you, for success we

Operator

Instructions] with Cahall Thank Steven from you Wells [Operator And first our question Fargo. is

may ahead. go You

Steven Cahall

a a follow-up Thanks. clients or that about in contingency revenue your Good when first, often have in project of you way And then, comment, could project Maybe think material a back of of they're contingency planning morning. the I quarter, go what more talk you deferral digital of is that pulling doing they the you on XXXX, is in planning you the about? for fourth see of slowdown little relatedly, a longer-term quick about are they them a more of for that clients this in this Is spend marketing? to kind more some And shifting way maybe XXXX? comes reflecting bit Ellen. talk of little might sort and the Philippe, just lot market, do talked the or revenue the a

Philippe Krakowsky

the shifting. it's think, I

-- I just and performance. where having to to order both you're said, into, prepared going you're and as line it's drive prioritize how of to I sight think going in invest it's being

Given else. the macro, on quarter it I than fourth I -- think project a the more comment think it's side that is anything

that you retain it's I seeing think, wanting what to some are optionality. is

quarter won't commitment that, So of we think my we bit until into some I full the have a necessarily projects sense on is deeper those than usually would. or clarity

It's trend. it's of a current just something so, -- uncertainty. that And we're I don't about yes, function long-term is think talking the a

Steven Cahall

sure I've Yes, not makes strength at times the is about sense. in stock And the then XX the reflecting of some it seems earnings. Ellen, got like business. it

much really I balance a there's maturity of in don't healthy terms until got think sheet. XXXX. You've

leaning uncertainty and of Board guess, buyback waiting So, feel now in the rebound? into do you and about a period aggressively to of more period a of I the how until sort opposed Philippe as

Ellen Johnson

you We question. the believe equity for Thank before the morning in our sell-off. Good

we are So very -- but disciplined.

manage We we against. program it, it's program. We that execute but actively a have a

shares. think I it, stick but believe our the in we'll with so, of value definitely And

Steven Cahall

you. Thank Great.

Philippe Krakowsky

you. Thank

Operator

question Thank David you. Karnovsky from is with JPMorgan. The next

go may You ahead.

David Karnovsky

Thank you. Hi.

the to of following-up through case in planning, the into building lot you on pauses or about looking clients' is to a motion performance the can little kind channels? more that Philippe commentary scenario about clients more Are what engagement put Just looks worse, a this gets adjust macro like? bit certainly shifting across into just process more walk wholesale brand or flexibility

Philippe Krakowsky

that we're this things the with broad depends the this really client then, understanding and make might client it's on where you world we're it that If as if on time. the Architecture it's they're Open at a it's working into everything having an said, a point. sense in on then and where then part it the is of knowing very flexibility But, to media we're big redeploy. it's think up side where discussion, how in macro decisions we the adviser moment And it I implications the dial I you certain of said, where ultimately right? -- really does a in we're heading focus and of them and look, consultant capabilities Well, our going

I'd are we're greater of categories who I than that to others. kind it to degree changes of particularly macro the is, client some dependent. case out within feeling a the seeing. And very mean, clients it's sort impacting exposed So, is where are that point

your if interest this through. your business, commodity thinking costs rates input So, impact then high you're impact if business

performance as around it's decisions of actually and down the making funnel, the So that some just getting the increasingly isn't those up think and two and there I conversations and but earlier. answer, brand set most said and informed keeping optionality, mix between one and linking I

David Karnovsky

versus of pharma we clients' strength healthcare. you put then, remind in biotech? noted there us And you continued of then, in sort Can large just Okay. terms your how of biotech, should Philippe And with just really has think markets, the or own pipeline given some about public it of the pressure medium-term kind of the clients' just sector Thanks. outlook seen the maybe macro? that in is removed from

Philippe Krakowsky

Sure. I a of of out things. sort mean point in health, I'd couple

is been players focus are the what we in And and investment nature there largest put led long-term that IPG But we've fortunate us, that, trends ago very all are that -- the of right? how together. just we've that. in a to tailwinds been clearly we're Health to for very, it's represented a a has growth year that clearly by of trends space. are well - among the done underlying So, that then,

of do? very sit IPG there? we the We portfolio. is services some Health, market a that seen bringing But some regard inside lot health then we biotech have of the where sizable that's inside having that to have that Sure. is from breadth in business significant what really. Mediabrands, on I'd specific marketing a we've DXTRA the given biotech, services, dislocation beyond of balanced have funding strong And very marketing say but impact got impact there's agencies we're where Health, together. a we of Not PR something

be us that's So like to an resilient. area feel that continues to to pretty it's going

David Karnovsky

Thank you.

Philippe Krakowsky

you. Thank

Operator

Michael is question the Nathanson And you. from next MoffettNathanson. with Thank

may You ahead. go

Michael Nathanson

slowdown for thinking in slower. of potential Thanks. Philippe, are the in geography of are tone different I budgets, us for where is about budget wonder the are XXXX doing have just the But discussions business of people the is it and plan in I U.K. take the is you hard macro and talk And know there? One to about winter. worse it's Europe feels that where as through those obviously had markets, Security to cost to the -- given the to in to it's you expenses then questions about if capacity coming by doing out So two. what to on of the initially XXXX? terms what going you side Europe. Thanks. growth planning are for budget I get maybe in

Philippe Krakowsky

results not but although where can is see definitely only LatAm, when other got you does Asia our disparate strong really you think impact markets, up. about The it sectors was everything we've a region client Pac, in grow, every

holistic So answer of a there those you each in that happens tells markets. isn't what

Although heading of maybe don't rest have be that's or that of before the a clearly world into that going heading parts that's world to the something into economically other region to experience. you something assume the

side we've those really in, are we the which can On the been to cost as address we and of very ways consistent clear all issues.

Whether the in flexible that whether you approach that ways think about fact in think and beneficial. local is the you you the understanding do just that's ways those staffing the the those laws. about -- model about some that and the which the So, bring fact markets in based of you on, markets underlying think which are you clearly different the people on with

reqs look that of uncertainty that as and into very, together hard and expenses. open in we And beneficial, We consistent in because we're so board focused disciplined that's operate. change the travel discretionary way with has the or very very business is more clients clearly at think around a has come across colleagues. getting macro we I And meant back seeing some anywhere and the see

been is also as capabilities. new teams we of some together, have And around develop important those which costs being

we'll look. another look So we'll place Freelance is those. at

its just by execution. of is and But plan it a incentive it's governor on going be attention that. nature definitely to require some has to Our going our

but one for definitely So a area size of an isn't Europe all, is there focus fits us.

Michael Nathanson

Philippe. Thanks Okay.

Philippe Krakowsky

Sure.

Operator

you. Thank

Swinburne Next Stanley. is Morgan with Ben

ahead. go may You

Ben Swinburne

a it. you the unless macro to morning. about Good Thanks. Maybe keep want just shifting minute, talking for from away

Philippe Krakowsky

Everybody seems to. else

Ben Swinburne

that and I those we that's calling know agree interesting and RafterOne you sponsorship, your probably the an Thank the organically bigger services, integration. be And think business call exactly. not set an integrators can broadly entire how probably get big topics. versus of software and which area Philippe, talk old do It IPG it and That's Is is the to secular an area inorganically just over I'd and Right, what and both is profitability software interested definition what growth. in you. per of RafterOne be you Any system se, might offerings they strategy company that that like but you time? or limiting seems be bunch sense business in that would size Octagon I business? at may some where there's service to of of there -- them I'd But interested would want On on successes today. on hear. a Momentum. experiential highlighted about also

Philippe Krakowsky

layer with with you Sure. I Acxiom, and there's think an then one. media. interesting obviously is And I a said doing commerce software mean, tech there's what technology and data at and we're

down creation, in that not plus for the on And service layer guess, kind. often a just stuff. where software then breaking from CRM help there's it's only the So it business our that need commerce the of clients with are we've by any down some site, really a of the mean -- us processes, services a leader site, MRM. payment place design a got way I means content the of and everything But DXC businesses to I where the build all transactional you been because has the piece space have part

excel they in those So areas.

and And that Commerce. of And Then sits Reprise inside where with you're the do so intersect us you places RafterOne message of side lot a SEO. finding that to leverage for we media. consumer. commerce there's that's our and you're the bolsters meaningfully then mind doing optimize offering. marketplace social We amplification so where We and

the So a for story part of that's us big there.

we those housed a then agencies where activate you of And what But and influencer said like also Commerce. lot IPG as have places is And ChaseDesign capability. we umbrella this comes a for promotions sizable of So on we've for that or do management. specialist two together momentum company and campaigns, are all a activations. we it in-store

media. For placements. example, paid is big of to you going another it piece be And have retail

And active. so we're very

it's a think And big going how and I a brands out it who to area put is How going is MAGNA provide advisory this? get? therefore for net growth saw people to for You big services. -- be

consumer a from and when along into the But but to you're play there martech decide it. where want tech wanted and working get the the side that you're of then value draw of you number also then going customer purchase the kind that's purchase, Acxiom to agencies. going kind ad you journey of you And we data follow So loyalty and our how awareness that's and martech lifetime together. you of and

see the as for circa experiential maybe we us. of hit, all said I of the revenue. really scoped you And our shy the And for it to a pandemic say world X% little bit closed. a when that on why that's So piece, we then big opportunity

about is using think compliant. really therefore as that to precise to all talk digital place differentiator the the time first-party So that a was the activity clearly digital component your we way to make us to into with is them. interesting do going also very, a way is organizations, more is focused customers and very and question for a assets. accountability onboard in us what of see about difficult for that's on very, which a we data more get It's them those that where transparent a But accountable. for and of very very and as more those to nature they And collectively clients -- going clients something are building out that ROI and

the that opportunity So an we think area that's there's for us. where do growth for

Ben Swinburne

you. Thank

Philippe Krakowsky

Sure.

Operator

you. Thank

is Barclays. with Our next question from Julien Roch

ahead. may You go

Julien Roch

same then so morning, some IPG, for You agencies interest downturn that million and that lessons of was expenses, net higher $XX last interest and less. net much $X.X billion couple Could downturns Ellen. more have Philippe. for both interest about And you said are Thank cash case one learned impact some Ellen we in cut from it? Philippe, four, of Good one a on their advertisers went benefits? and and of either Yes. income. for no question. Omnicom met Ellen zero very the on you that fixed lower Yield saying so interest? to on from What i.e. therefore interest quantify while cash. Two, Publicis Philippe taking have

the will cut recent to advertisers largest year the same. survey world's However, Advertisers driver from the be intend XX they the polling indicate which for budget XX% of a that economy them, would next Federation World conclude main the of of the of

into we global differently? as if go next Thank So past, you. a or will the in advertisers year, that behave cut do recession would believe you they

Ellen Johnson

and Yes. start the thank Good morning. will I you question. for So

As cash. someone sheet We a interest we of liquidity pointed out and earlier, cash income. with and we lots do do manage have sit strong very balance actively maximizing our

with We fixed profile very a nice debt. also rate have all maturity

it's liquidity manage do we benefit. it's you balance carefully. our but I quantification, with some and energy can put and yes, on very So something it believe a with all We up that follow items a of sheet and back lot time

Philippe Krakowsky

are as There a a in the course. We of clients. our because the talking is this the think question, XX very in about but of for consistent say outs, are as I top vast into business it's later your meaningful and where or of you top growing in or even lots growth there's don't benefit said acknowledgment conversation the there the chain it and that come you, two got were -- conversation business model understanding impacting to overall don't ongoing comments, XX of staying clients with beginning clients. year supply factors your and with our the the and although break And an majority there It don't -- prepared or said certain it's have out it with all The categories we disproportionately. that's one ins an with is bigger the that we if with our we you've conversations company, of I been the see are interesting might year clients. the because we said be it's at

much to thing also some the their other a can So and as -- do down clients the to do in sit, company is the can that funnel stay available alluded we will of and it into performance. the And then and capabilities have if the invested. so be the period they it about where earlier tools which believe question work talked clients can the move to connect ways has wherewithal move and through of function competitors and do that further our I understand that we've brand that or

So we -- position is them. long-term benefit have they in at take on and that challenging action significant whether get to really might be action would dependent to for they more how kind them will a be or in something of through a some period it to the might people that whether looking corrective do a are downturn know

Julien Roch

Thank very Very Okay. you clear. much.

Philippe Krakowsky

you. Thank

Operator

Thank you. Thank you.

Macquarie. from Our next with question is Tim Nollen

may You ahead. go

Tim Nollen

you Good like for to way. recession a question. the different don't mind, a Thanks ask I'd but morning, my question taking if lot in again, everyone. actually

Acxiom, a who you or In media with all Let's different time knows, recession, but a spending and you in media. on to of go that perhaps things ignore the understand us beyond that And so hopefully you're recession, media assess back measured might Kinesso around digital because thing. traditional assume if things right spending like to way sudden were might similar was those XXXX. qualitatively XXXX sorts quantitatively help the Is consulting all XXXX it business let's many we rates maybe just last things beyond now there at what be XXXX such did IT measured could a do much very a And those QX a media? other now. as of you drop lots weird days wonder media traditional business if or much doing I very

Philippe Krakowsky

I'm of the resilient, a Health we've place either to you not that mean some have line consumer. much I where on ability directly can and about. go likely more sight talking I I assess. of more areas care quantitatively clarity to the to things that to or sure can point been and e-commerce ROI is that

long-term less are their you they're I two-thirds be to think about like feel fee to cyclical. fixed fact going of contracts. those going said, be you Acxiom if the that areas that revenue is as think

believe stand will are where more consultative more areas model we areas and XXXX had hit clarity business. media when had where better around which all business we And outcomes includes areas we which accountability up those also a our so

it's those diversified better. portfolio. big fared And All of a

at So in of point does that which independent be impacts to -- your is think XXXX, XXXX to and we looking all was sort kind anomalous that point you … of through super I what mean whatever, your saw still XXXX having of wouldn't,

Tim Nollen

Yeah.

Philippe Krakowsky

…every economic right? part of life

Tim Nollen

be or slides. more these And you then Philippe. isn't Thanks, could one you're you things The way is Yeah. point have about quantification all business -- But stuff just is right? than this the measured of mean all half do, less half media that than it? maybe half traditional of probably in it talking I I your

Philippe Krakowsky

revenue view Well, in look, times we x-percent, mean it's have I when digital been And of sector where so on folks that into everything there said that's and with we is that's always something integrated trying point clients that engage the y-percent. a our for our our was it. embedded we solves right that spend time don't and because something with to do, to try when go for we their them then unpick that is place business to market

a our it part But is drives that our you kind so growth. that of give GAAP-compliant but can't you And gives that's what a number. measure I is of a substantial deal business,

of assume organic So a chunk of pretty is those are things then growth strong all if what we big do. to you've that our got

Tim Nollen

Thanks. great. Okay,

Operator

Thank you.

last Partners. comes Huber question with Huber Our from Research Craig

go ahead. may You

Philippe Krakowsky

Craig. HI

Craig Huber

go cost a just for big not to the to making let's -- next hypothetically question, Quick Hi. Philippe, year, outlook say back bet here.

flat. a you have to year to flat pull Do that? was to hear much organic do I'd love you margins year's be your keep could able in you that? next leverage assume next to think revenue leeway potentially Let's scenario Ellen like what

Ellen Johnson

flat given margins. would that I able managed that Craig. If to economic navigated that give line our things us is environments. team were it be our Hi, Sure. to through many point we're of together has scenario be an to objective that experienced sight revenues clearly maintain would The

things the a and sight vary have ultimately our that have closely we reqs open structure performance. with upon right? pointed it comp help. cost attrition But And has then and line we it that in objective between incentive revenue it's the right which we of those help temp mix Philippe would out think cost will clearly All flexible depend to. As be will something of

Craig Huber

had. Great. you. Thank of I End all That's Q&A

Philippe Krakowsky

you. Thank

of think are time. I out we

and time thanks all So again interest. your for

We look it. the year. we are back we sharing how with can you at And forward close to

Operator

Thank you. This concludes conference. today's

time. disconnect may this You at

The Interpublic Group of Companies, Inc. (IPG) 21 Oct 222022 Q3 Earnings call transcript