IPG - Earnings call 4 2022 | The Interpublic Group of Companies, Inc.

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Operator

Good morning, and welcome to the Interpublic Group Fourth Quarter and Full Year 2022 Conference Call. [Operator Instructions] This conference is being recorded.

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

Jerome Leshne

you our us. by CEO, our Thank are Ellen morning, joined CFO. by Philippe for morning. This joining we Johnson, Good Krakowsky; and

our and posted slide earnings have release We presentation our on website, interpublic.com. our

will be by to before open Q&A. prepared time. Eastern conclude followed at to our X:XX with plan We begin market remarks call We

substitute allow supplemental During that these believe greater this measures. data while the our non-GAAP that, We review call, measures, we performance. financial certain will for not in transparency and a provide for refer useful GAAP to of measures operational

We statements the filings further our XX-Q are cautionary These the refer the our will and is detailed subject in SEC. that and also and in included to about our with presentation other statement uncertainties and earnings forward-looking to the release company. slide

point, this to over to it Krakowsky. turn things pleasure is Philippe At my

Philippe Krakowsky

Thanks, Jerry, joining morning. this and you thank us for

high-level the outlook in start with performance followed view Q&A. updates I'll As our with conclude year the on additional for year usual, full then detail, ahead. Ellen and developments to our a be I'll agencies provide of by at will and and key quarter the our

another We're year performance. to strong share pleased of

That's to Before spanning creative clients marketing than whose turning dedication continues along our our expertise the and be exceptional what with performance. management. once to heart numbers, of to one around services, the again like and to thank more our colleagues at our I'd XX,XXX world another the data are technology

Turning to results. our

you X% the year at region organic sectors. a consistent in ahead of worth in looked world growth every grew multiyear XX.X%. the margin to comps, this levels year, and time, to top year noting update client broadly and increases drove that we We throughout ago performance X%. that shared on X%, EBITDA with October. was full very our challenging organic last across For our are growth and was in It's the at adjusted year we Both full

Our strength growth and therefore, at stack, sectors particularly XX%, to of accountability. stands relevance the the our and and organic offerings, level speaks precision services X-year of demanding performance that in

in organic growth that, In the portfolio certain brings U.S. strong of to economy was ago. in every that, and quarter. geopolitical markets growth which our consistent fourth on media performance expected, and across on means during our the as Overall, international all X.X%. year XX% a growth world slowdowns more marketing global cautious quarter the net was global which fourth ago. continued X.X%, with slowed the of That units organic X-year crosswinds, of. in a macroeconomic top environment, aware in revenue growth from quarter, Organic top was we're dilution a broadly X.X% despite our and, fourth a very growth Notwithstanding region year growth X.X% with XX.X%

By in the care. clients sector, our led sector transportation of other and health sector, growth the followed in by the auto fourth our by was and industrials retail, government, quarter and

finish quarterly of first impact the the QX and show the sector-specific Going for could for telco, but QX, of we're felt of Also sector, headwinds running second we to forecasting the beverage year. a to XXXX impact we at continue half our client food this which other us loss least is XXXX. client, end large the refer largest and off at began [indiscernible] which for the tech will guess in largest of of will I late present us way, issues, which

specialists, quarter Increases growth segment significantly called our growth group-wide on year. at segments the IPG at grew the Each weighed quarter. by digital our which Engagement & Data In operating was organically X%, led in in Media, Solutions, out growth and Mediabrands. we've of organic previously, and the double-digit

again Health, paced X.X%, grew which growth segment high Solutions single-digit posted Led Creativity by performance. & IPG Advertising Integrated Our

segment of experiential offerings. full our sports with organically range Our from marketing the X.X% Communications Experiential of grew and leadership Solutions & Specialized

to and Turning in profitability expenses the quarter.

turn, Our margin teams operating today's reporting led We've the quarter structural performance continued to further their our environment. invest estate in complicated in significant deliver and efficiencies been to we're result in that This, offerings quarter strong continuing going execution, effectively fourth outstanding today. this navigating able real forward. economic to will to the take our while actions

$XXX.X Fourth million income as was reported. net quarter

billion in those $X.XX in net was charge adjusted of Our quarter Adjusted adjusted year real on is actions. margin revenue million, brings to a XX.X%. EBITA $XXX.X for the estate before EBITA full EBITA was which XX.X%, the margin and noncash quarter that and

I I restructuring quarter as nonstrategic diluted share intangible we've Fourth mentioned $X.XX years, $X.XX X-year for earnings along real estate think charge, strong reported per earlier. X over level, and the was basis as was adjusted the with disposition small and businesses. of it's improvement last XXX consolidated of growth worth reflecting margin very successfully that the stat that, points that at margin that amortization

In year of sum, quarter fourth strong earnings metrics share. adjusted and the performance across our key a financial per of performance EBITA completes growth,

we acquisition quarter, and scale which strategic of and a During area RafterOne, also importance. additional leading on capability our to of the brings growth the partner, offerings in closed e-commerce implementation an

$XXX capital in Over to we of the share and repurchases. course between dividends the of XXXX, million shareholders returned also amount

IPG's dividends, $X.XX trajectory, of our know, our of through strategic continued strength higher which, again has results you This by uninterrupted consecutive operating year dividend share. our XXth pandemic. per our the the raised confidence marks once X% Given in as quarterly continuing Board and to

previous remaining the Our authorized Board top share repurchase in $XX an also million million $XXX additional of our authorization. on program

Turning There macroeconomic challenged. for Visibility, therefore, of and remains the uncertainty. outlook the is degree XXXX year. meaningful somewhat our a discussion to

fair the with deliberation. decisions it's And XXXX of in to to say year fair think there's within on our the with for conservatism. drive also their variability from client any significant to market That's increased invest it's to need not business. an say equal say portfolio we're level budgeting that clients client. approaching in or as they're to just to transformation are growth conviction the more to into made that well as client that in It's parts the seeing less I that new the be need of focused

We're data confident well consultative of as growth that and experiential broader as data sales despite marketing, management economic as our business, marketing, continue such perform commerce services, media areas the situation. the strongest strongly health-care will to

rigor We're also and cost operational our confident in model. flexible

our real opportunities efficiency. nearly and Our our the acting actions footprint further improve to by demonstrates business fourth and focus to consistent on quarter model ongoing identifying reduce on occupied and our in X% rethink estate

moving of X% of growth XXXX to industry-leading to we all bridging expansion together, of for on multiyear top parts X% revenue So adjusted these organic and our the those further year. expect margins comparators full XX.X% EBITDA net for of

consistent. year the for priorities Our remain

and build comes set solve into to solutions. differentiation, problems to strong of IPG's which business us to as a First, people, a further solutions talent us as enable our for on expertise on means that integrating agency's evolution our broader focus execution higher-value and when to strategic it which the architecture capabilities through well provider open

to economic to as all return more in to goals financial commitment but with our Second, year these of our never lead Delivering well should operational which uncertain targets climate. important creation is always excellence, new for and client-focused on of capital an so stakeholders. our than another offerings as of combine longstanding those value

view our things hand to I'm over for of Ellen more point, this a going results. At to in-depth

Ellen Johnson

I I to and their you. accomplishments. people Thank Philippe join is thank everyone hope for well. like terrific our would

a As presentation to slides will track our webcast. reminder, my remarks the that accompany

optimize was to real having our quarter feet identified the growth result severance flat our was presentation. we a million, of We approximately Beginning these quarter $XXX.X margin we or on net actions. resulting X involved of restructuring net essentially the footprint for X% Adjusted portfolio. million EBITA was The reduced estate growth in estate organic with charge charge revenue There from occupied X-year brings will was to Fourth growth further the $XX organic XX.X%, and in square from recent the real in to will forward. as net quarter That net most charge year before our expense year XXX,XXX by X.X%. ago in the XX%. which Slide a was of restructuring million $XXX.X revenue which permanent in move and on a no be opportunities realized expect savings, X.X%. quarter,

and recall XXXX, we in additional wake the that actions foot, our in a respect that, You'll changed model the office are reduced recognition pandemic, square has to lease operating by space. X.X with the million footprint of

the our While restructuring still normal course we to anticipate continue we business, in our of do additional footage charges. square not will optimize

restructuring nonoperating intangibles business the share exclude as Our in and from was the to as quarter diluted small $X.XX charge, reported adjusted dispositions. and earnings loss the of acquired amortization $X.XX a per

year. full Our $X.XX EPS adjusted the was for diluted

a of our with shareholders the credit debt on million balance our the repurchased and repurchases concluded fourth gross facility. X.Xx with shares our cash X.X We the in $X.X position $XXX XXXX. million year financial bringing million, EBITA to year to XX.X in to in billion in We financial returning sheet full quarter, as defined strong

and another $XXX million Our Board authorization. remaining increased authorized to program addition in dividend prior quarterly million the a to our $X.XX on repurchase $XX

X, I'll the in you'll that see Slide and slides cover operating P&L for quarter. the our detail expenses Turning in to follow. revenue

year increase impact Net fourth was ago. from was rates quarter points. of to of the change basis exchange the the negative to X. 'XX, an in the on Slide billion, full million revenue revenue XX year quarter Turning added a Net QX and Compared $X.XX acquisitions $X.X X.X%. in

on this us revenue for was increase organic Our net X.X%, X% of to side slide year. right-hand brings the full the which

break out Further performance. segment down revenue net we slide, the

grew of Media, in on of fourth segment & top Our Data quarter XX.X% the Engagement Solutions organically XXXX. X%

digital see Kinesso segment specialist of on the the and our comprised IPG Mediabrands, As you is Acxiom, agencies. slide, can

grew double-digit Mediabrands at IPG rate.

which organic the of on process overall will As third are their right-hand had and not the for until half That's growth. something significantly growth lap we side quarter R/GA Huge was segment year. full the this the in of and our business year. soft transforming of weighed call, performance, back first slide, X.X% noted models the on At the

Solution Organic year X.X%, & ago. XX.X% which growth of a on Creativity at was Advertising our Led was Integrated top segment

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

growth IPG in high single the Our grew strong in Health, a the increase digits. was which in quarter by led

For grew year, organically. X.X% the segment the

in is segment, last At This fourth Golin, Health. our which XX.X% year's of quarter. compounds X.X%, segment growth Octagon Experiential comprised Weber and & Momentum, Jack Solutions Morton, Specialized Shandwick, DXTRA Communications was organic

single-digit lap a high increases in Solutions. Experiential We our will

organically. For year, X.X% increased SC&E the the segment

fourth XXX Moving quarter. by We to year's revenue, Slide XX.X% of our X, which U.S., last in by Jack fourth IPG Huge the and rate strong weighed grew in top our and notably basis region revenue experiential. r/GA XX% our quarter. in net specialists of Health, on had quarter X.X% The Decreases points organically and Morton was our growth IPG growth at the MRM quarter. U.S. on at Mediabrands, digital growth

organically. International our and XX% markets net of in revenue quarter were increased the

XX% You'll year recall a the ago. markets increased same

quarter strong the growth Spain, was X.X% strong relatively France media, at organic growth experiential led Germany In by organically. X.X% led We very by in performance flat MullenLowe. were U.K., in the Continental grew and year-over-year. were Europe and in while notably

Asia decreased. with India while In we in strong the Pac, organically China, X.X% results quarter in Australia, growth was a top year grew organic In of X% ago. XX.X% LatAm, on Japan and

international a in grew which X.X% on strong the East of notably reflects followed group, the Africa, growth Canada, Middle markets Our which of XX.X% top East and other Canada. consists ago, Middle by year organically

expenses operating in Moving the quarter. and on to X Slide

the in to Our in increase was basis an fully XXXX, points. margin EBITDA XXX XX.X% adjusted quarter of XX.X% compared

see As each lines. we can of leverage cost operating had on on major slide, you this our

We quarter of quarter. Our pay, fourth percentage in related as tax of a as XX,XXX, to salary with of revenue we headcount ratio a XX.X% our last Underneath net and XX% the headcount delevered revenue for of growth. of support from base with on increased year year's compared increase that X% was ago. expenses an ratio, benefits expenses ended

than year for expenses temporary severance a ago. were all lower notably incentive labor, Our performance-based compensation and

expenses. leverage due decreased by basis expenses to of percentage lower XX.X%. net occupancy That office direct to as other reflects points revenue Our and a XXX

We and to lower expense as year last a compared reduced all of direct also revenue, which service expenses. percent other consulting client costs, net and other reflects office employee-related

of X.X% of decrease was points. basis expense a SG&A XX revenue, Our net

results fourth excluding to you X. EBITA, of picture in comparable detail of our results through transparency Turning the to restructuring reported a reported and better to begins to on left-hand on This and Slide performance. We order spun adjusted give steps and side our EPS. diluted our adjustments quarter adjusted

tax charges of million. expense estate are was nonstrategic restructuring benefit the businesses $XXX.X were acquired the operating column the expenses losses was intangibles the Our small for million and amortization dispositions in on second related was Below million, of At diluted $XX foot The per real see you which diluted $XX.X of $X.XX of bridges adjustments, adjusted to is diluted the impact share. the of as $X.X slide, our shown in the at column reported these earnings X. per can share which after-tax EPS $X.XX million.

depicts continuity for similarly adjustments X and for Slide full comparability. again, the year,

Our was $XX.X million. amortization expense

in Our The is charge the result $X.XX for over $X.X of $X.XX. of EPS resulted million. the diluted loss of year a was $XXX.X and million. billion restructuring adjusted course Dispositions of EBITA book

XX.X%. Our full adjusted effective tax year line expectations rate with for at the in was our

ago. we flow generated used the Cash capital with working in working of $XXX.X million. for year Cash $XXX.X full cash from On to million from cash X, operations compared Slide turn capital million a was $XXX.X year. was

of working had X years, over total X of in the we a billion. pointed $X.X capital the each generated strong we've last As very previous results. working In capital And is we volatile. years, the out past,

That RafterOne acquisition activities used reflects investing Our $XXX our in and year. mainly CapEx the million. our of

Our our financing shares. activities million, used repurchases common our $XXX.X stock of dividend representing and

in year net decrease million. cash for was Our $XXX.X the

$X.X of current year XX balance We the cash with and portion equivalents. sheet. of our billion Slide the is ended

XX schedule. the diversified of maturities and outstanding maturity depicts our $X.X debt was debt year-end at Slide our billion. Total

in the XXXX. scheduled million see XXXX, you on maturity not can then schedule, next $XXX our have maturity we As is until and

balance the recognize commercially. our of and on of a and liquidity record our to to continue I success, accomplishments summary, of well at to like would high have and positioned execute In level. sheet us XX, strength people, both our track Slide continue financially teams our again the

And to with that, Philippe. back I'll turn it

Philippe Krakowsky

Thanks, Ellen.

drive digital continue our that see to and culture fuel As you collaboration can increasingly creativity economy. from an strategy, results, and our clients' success innovation, our talent in

EBITA of our teams over well the revenue million as years, for $XXX as we've those by the strong to very XXXX. our business $X.X past adjusted start added of billion since X Over organically results. to increased Credit

what Throughout anticipated had technology-driven company accelerated behavior out we're our and which the play against significant this seeing media consumer in and are made investments. period, shifts we've that

while relevant media Our accountable performance their first-party in solutions expertise all management, business are brands also to marketers build marketing to looking and data delivering areas outcomes.

emerging -- and ways new strong performance clients specialized media, channels communication offerings our to individual services and our data help These to health-care with Vital are to their have and technology assets evolved offerings. combine is marketing identify interact find consumers. with to

connect talented network October, in As we look the you customers specialized clients investment. to RafterOne our strategic settings. architect work scaled and help team acquisition, marketing team digital BXC BXB will creative areas IPG solutions of for by our that platforms. end-to-end with continue campaigns commerce saw in relationships deliver us and With RafterOne we and through in both experiences building to for brands smarter Salesforce implement brought into a meaningful that The

a formed in Adobe and serve customer and Salesforce point our as their the these foundation between platforms, touch and bridge like brands' stacks, suites can marketing technology company the brands, marketing every journey. consumers strengthening so of Enterprise many those

in Officer. brought invest our Chief practice. their on this recently announced area where Commerce joins Accenture us first board we He to omnichannel important oversaw from continue he and We Strategy commerce growth that

And as IPG, At how teams connect as others and services our of they strong programs. platform supports MRM, out entire their integrate channel platform with as portfolio. our existing expertise, full he'll and commerce solutions a across and breadth media at company he'll marketing our RafterOne, IPG well including Reprise them scaled and clients orchestrate build

agency-level performance to the QX. now of in Turning highlights

Moneysupermarket client Australia, results CEO the the where quarter, retention out saw we year. we strongly at data major that welcomed were Cruises to the close at of performed notable on new a at of week, Energy assignments And the again Mediahub, Celebrity to Media a technology announced wins, initiative including Merck AWS of the media, once also Global and and successful addition led As mentioned, during of UM series and earlier onboarding agency. we've the this we Group very our by offerings.

and opportunities the Mediabrands including for in media which directly and LGBTQIA-owned agencies annual we which media Hispanic- As their with diverse-owned patterns Upfront, to black-, to Equity change buying can kinds partnerships of clients third IPG is provides industry. vital API-, establishing our that speak, the partners, hosting also is engage

our Acxiom continues as audience-led the a of agencies as how the to work. to strategic be performance in others incorporated creative develop who've insights media strong and contributor well methodologies into group they

automotive, leader a stack also contract new data customer to in Marketing in retail, services, brought were and Acxiom platform launched wins insurance, a with Tealium the Snowflake enhance integration capabilities. as recognized quarter, financial the and deterministic sectors. and Modern in renewals and During new travel report entertainment the CPG, a They logo modeling

IPG the -- we very ago. group strong network to to trailing since Turning quarter, for growth in us continued months strong the That me, Health. again, excuse compounding deliver XX results created approximately

growing also of And While alliances, awards, client, Network Large was work IPG nearly through network with Healthcare the in focused creative on the every notably expanding globally caliber at its their XXXX strategic where honored some was the named the of Health Europe. MM+M Year. presence existing

At who bears insights agency it driving in honored as during named benefit and again agencies as continue we're and Fast XXXX network, was in America creativity, our in power was under leveraging North in noting see top-ranked New and leaders new which offices audience network in and FCB of the once creativity. leadership to named data Toronto, full the overall York, thanks global again Festival's of Company. powerhouse networks, team, by of its first won are innovative to seeing investment again all #X that advertising distinctive XX advertising X the which It ideation strong and Chicago significant year most to accolades recognized Cannes, was the are differentiated its and industry. cultures, we our

With Smirnoff, Prudential. part Converse business clients make brands. the CEO with beginning of it at quarter, McCann work new a new the for the which and won and fourth roster, recently in saw of postconsumer place wins also McCann launched Diageo

the to McCann Mastercard's accessible and cited senior series the Prix Additionally, the XXXX the York at Innovation Year More X the for fifth agency for of key of and recently, won the agency. announced New internal elevating years, was new Network for named organizational a standard people. in leaders Grand Epica's partially blind card McCann Awards Card, executives and time Touch also changes, adding Epica

new to the continued had secure as business Group throughout MullenLowe it year.

of With National Lifestyle the Highways England, club and football in Fashion addition Ferrero [indiscernible], Spain. Barcelona in International, the in India

also who's a and organization, female announced driver champion We of as from to committed MullenLowe diversity new CEO someone key known promoting industry inclusion. and leader a global for across strong the fully our within growth a a creativity,

hire part content independent agency's for groups underrepresented domestic as Martin of our Among a of to their and commitment the directorial to goal their from Agency all production. agencies talent minimum editorial our reshape industry, the announced help XX% video

At all more Momentum, quarter. posted of strong and was active Jack our World and the year's in Octagon, decades With experiential growth by of this than of clients X range very with was earn tournament. Morton a agencies, led experience, performance at which Octagon Cup

in a client influencer Doha, the For and range in the nearly example, viewing events agency on-site who around with complex fans longtime managed are Budweiser, hosted consumers campaigns world. global million ran X.X activations of

to performance Web and Jack is innovation launched with with practice, consulting XX content X, which which and their deliver which build creates to Morton Jack sponsorship tech. is combined global continued continued experience X.X out outstanding events practice, a Jack dubbed

brand work the AOR manufacturer for named influencer communications alcohol during and Golin our wins, relations Among the launch including product firms globally. for a food had quarter, and then appliances new for products household being services several corporate brands, public

HP North launched corporate Weber design public also Shandwick in which America combines calling Business as as the wins what announced with Futures, client it's C-suite organizational affairs a And new affairs, the and consultancy. and and IKEA well offering Society U.K. in is that network the Society

XX, gains, was list strong in a in Week's Health from the assignment its is addition, of During individuals the PR most pharma leader named And influential winning which quarter, global to major posted health-care annual a client. large DXTRA Influencer communications. Health oncology

announced Equality first At D&I And as recognized included commitment for a Index level, ESG the to company week, as for consecutive seen key on ESG top-rated the holding know, year priorities. performer as longstanding Bloomberg was and the we last you been that as IPG have you time fourth a the may and strategic has we Sustainalytics. Gender have by

the as Responsible in Company well included the Newsweek's on again FTSEXGood and World's list once for us Large both XXXX, America's Female-friendly Companies also featured its Employers America Top were Forbes Best as and Index, We XXXX. Most

for culture, creative, As capital whether and a part human has roles, including of our attracting business in vital to in other that to a engineering of success, been intentional skillsets retaining to approach an evolving or an strategic, ESG, or analytics so our which our key data is offerings. across long our top important talent, become strategy range have

believe in well which digital that thinking as for help of years We ahead, and precision are problems disciplines actively in we data that, portfolio secular need develop more and we business to as our live a our in more using tap and exceptional into know into ever, that in offerings. the positioned marketing clients IPG remains revenue our widening increasingly health-care opportunities. These marketing growth well most solve world fueled continue by from growing our parts set to streams. capabilities is the us structural of Much was well Looking as future. for audience-led XXXX than and as recent of

marketers to leaders XXXX consolidate we services to in in this in value the solutions space, been the prepare will we and which expertise gains those of provide. to evolve we deliver further a which is and elevate the and this be way We've year

not in figuring forward. confident disciplines, to mix, going grow experiential our large we're will today as continue and addition, revenue In commerce that which our

that of a record expansion compounded level, of macroeconomic As number on growth XX.X%. X% stated consistent of strong at has with a earlier, we're to very the that EBITA to top despite years. for broader to we growth, deliver a And foresee XXXX X% expect adjusted we margin level in uncertainty of seeing that

balance Of strategic were value remains confidence course, by our which announced the in sheet and future in ongoing creation is liquidity. our Board to strong position today, And our prospects. and another capital returns key actions commitment that a area also the to speak of clear

Part of to approach focusing commerce by our on a growth balanced invest we'll to to media, and and strategic differentiate to includes offerings. allocation, approach capital further growth businesses our our consistent developing M&A, our of business with primarily continue and This performance disciplined continuing people the behind opportunities that transformation consultancy. are areas,

thank and people for questions. We floor this that, with open support. continued of those our our on clients, for the let's you call And your

Operator

our And Instructions] Karnovsky is JPMorgan. question from David with [Operator first

David Karnovsky

a think market? we're And little as upper or you all the the side client we on see remaining invested. some and the that to they economy? factors uncertainty provide them should manage the into than due the wider a end? are into I driver just used then pushing could maybe that what you your if in conversations towards that wanted Philippe, with the is lower main you to And of of keeping macro conviction guide and in overall, range marketers, Is to how seeing. tipped kind noted to insight stay of balance

Philippe Krakowsky

going them our And the is now. operators. larger think do, I at We we're you we're with that okay go that's look what's fact, if function backwards bottoms pointing as seeing about clients, to in a is by budgeting what's out with is there the them take our pipeline. client. We think with specifics I'll then obviously, it's what with directly. mean, I I our process, caution And think client we're if think that able less you up right happening you. just suggest, of right, I engage of on that Maybe

business look about downturn further factor bottoms go that budget, did clearly think a then pipeline, to a But again, And in the concern factor we're the the open-endedness, specific call the the out view XXXX. build going how of even us. clients, potential or in you up, a places. if just mix a to and along of we to geographic macro, into as we a back that's client I or it's somewhere line a couple we have at the get

direct taking think you quite As know, the business, in the and I going of we on business. about kind where we're clear what's are

where having year out things some look are some impact the things as an require So and ahead. attention, we places called at of a we couple

So I range. we of that say is range that would one of that's The reflective other how than the got that in uncertainty. broader is the see sense to would years fact

when I are would And we're companies going think the range. there. ranges broader of seeing I that you're out say at comfortable midpoint

David Karnovsky

about Okay. Ellen. maybe for I wanted question one to And then margins. ask a longer-term

value that trajectory? services margins translating other there are could growth? to higher-value offset kind we phrased as necessarily of of Should to a is think solutions you margin labor pushes partner, considerations higher specialized more to higher does IPG Or like higher So should as become your guys in it, how that addition of that we impact consider? potentially

Ellen Johnson

would for track forward. point at the so. XXXX. the long margins to, the a couple I record margins you we've have opportunity mean, I question. you Sure. points optimistic Thank to And going past doing increase XXX since if our basis of we years, look of increased Very about our

into services business our several out, a continuously high-value us. expansion. it's track So We record think manage a I translating good growth a margin opportunity factors. transformation. looking very in also, profitably a have we way. think I continued point I costs But think And One, as we're disciplined of you is opportunities combination on for of at

in our centrally. of services. shared manage We portion large a have our estate revenue We portfolio real

think do things expansion margin move ahead. I that together, as those for all is we put So there opportunity

Philippe Krakowsky

right? incentives aligned heavily quick just David, or plan any margin fully it's are whether that, more one to senior revenue. So And just corporate the objective, there, modestly the the of our that to across units, teams, is add is weighted than

to, so as to mind, a we're when growth, good and record that's profitable ensures of that got can demonstrated our profit. consistent more that circumstance there's we that Ellen still convert on growth, there's it to where able we've in uncertainty, And where there's that growth, make that said, we're incremental

Operator

Lina The from question with next is BNP Ghayor Paribas.

Lina Kim Ghayor

X, I please. have

Could first on a you impact on guidance. shape marginally, is inflation HX X the HX? do what of the And you tiny versus the example, growth expect elaborate revenue? on the the The bit to be, guidance for more regarding

wage on in second one, for assumptions? much what And The for you perhaps inflation taken in was wage XXXX Ellen 'XX? How have inflation. your

the sector? on come performance of to of the what by back is And just mentioned by clients your I Philippe, lastly, elaborate? at the you on beginning you ahead your generally, your more Could attitude think comment 'XX? telecoms. could sector point And you of remark,

Philippe Krakowsky

That's a lot. Sure.

provide to or I in will take sort a back -- so enter ability them. talk go of of a ultimately with to cost X changes, have there majority that our services to inflation written -- of the I are inflation world clients into and you about of That's clients. yes, kind them the conversation into that vis-a-vis the So requires contracts we terms of our guess growth, as the that automatically. questions. the negotiation It something not the triggers

that primary for scope how leads there most we to growing that growth to keen we forecast the our is existing And the that guidance, is believe were the the revenue on we're I what's existing talk if thinking our avenue clients. most from one growth, -- that with is growth -- gone build So into primarily and the about with clients. definitely

services. the bring deepen additional relationship, So

are the Then and new business to you secondarily, have pitches. opportunity when clearly, there add opportunities

to, we've we've So the is these part into able some that some and of I as are that, be baked that's what And on of with go to based discussed, services beginning it. services instances, clients data new the to think really building. technology in we're been then what

think third one Ellen question. for business, it and come I I'll I'll bakes So of sectors. piece that's then the second part your then Ellen And the cost let as take part, our into then the back -- and on

Ellen Johnson

accordingly. not take in us margins deter very cost on salary that but us that very the and expanding as far as transparent we So our on feel are inflation ones inflation been we've them from off trajectory will there's modest nor growth manageable been our that the base, line,

So 'XX our that into for was factored and forward. going guidance

Philippe Krakowsky

And Health category. retail, clients that strong, then financial services and mix modern got given be place where progressive, we've we continued other for that the got is transportation guess auto sectors, it to has we've continuing. the then And so see on a in care, clients. I of and quite us,

mentioned, for seeing I And conversations clients manifesting the issues of clients. the the lot think in not sector-specific -- I a seeing taking or with are a we're and lot full sort of what being is in we're a headlines either reductions As -- there, tech committing that of year.

still have the some see runoff level and we're place of industry think we And the took And most So I food then a said, open-ended. was impacted we very heavily, late said, consolidation large will the in as impact, I perhaps duration as we that there saw impact. the we'll company -- it but something QX at 'XX. is holding seeing beverage us that think for that what on is

So are these macro identified you whether in definitely, digital of which a are challenged, in of and first for deltas, as items. impact and definitely becomes their cycle they the some addressing we've us, where it's items the for that client agencies the are half, the of transformation going bit we terms revenue more it's to then

-- it's So we've gotten stronger very half definitely how is back a where that to and for much guidance. us,

Operator

from with is Steve Wells Fargo. question next The Cahall

Steven Cahall

first. little Maybe up just that a bit on follow to theme

of us sounds idea for probably is it's modestly can business you like XXXX? the new an So what It negative. Philippe, give impact net

sure together. And this in kind to So growth of part care how from health rate which question, mix? is to want of of some components a perspective such love XXXX piecing set include I'm big revenue up that's that does I'd all just make the a since

Huge, of And will it year. and real like R/GA agencies drags Historically, this been they've some superstar IPG. be those for kind sounds

it area I still going So of portfolio the how the kind And an of investment? digitally agencies? forward? in Is journey you how fit think of do guess, kind about they do native of these

Philippe Krakowsky

I at business, largely which up QX It's of showed us a uncertain of think provider project-based premium solid for in you're think providers. Look, Again, I a business. those, but was a growth. They're would is they projects macro Sure. very right. premium both level project-based -- strong. definitely that were bit say were Experiential digital in a see the overall -- growth, projects very not at PR line maybe levels you QX with the the I'd segment high-end was those below agencies at weak.

edge. they so at we ourselves to point, that the to years, your X of where leading current But kind with agencies reconfigure I in that's are, X to need them. think And every I reinvent the find think that environment, because these and

of tech PS, than exposed also businesses. to many they're more probably our

seen lower into the of has towards first clear that'll and So growth and in the value Huge here. of pretty is, market going attrition quarter be And proposition what there. client we've end the probably their line new sight

they've of clearly out, whether focus or the the we've open because that on. the strength data of something stack it's that been So tying whether you we overall that built call more into is also to it's kind them architecture need

is be So a to measure that addressed. something that is it And independence to be success. may of need long-term going

And degree, new the And new PR. and, creative traditional the of probably what's new said, health We a the specific. media the within more don't the question ad business some business of and agencies as see much. on, then to project very become some lot again, I going has business, then the we now in around big of parts pitches business on then in see

modest the the say headwind. piece this said exactly I'd of And you question I'm with there one that So point? a then going we're forgetting as into year was at

And then health.

put That's trailing high with that's And health now, into these for the as the quarter. 'XX. expectation the consistent we see very I consistent for and have did together. very, go in they as said, what probably scale strong having at single with them we performance, year, assets doing think digit we we that

Steven Cahall

use Great. follow-up for capital just in a a was Working And maybe Ellen. 'XX. short big then

it the to in line be be timing draw can of a strange was then in back I 'XX? to benefit expect a know probably to the it favorable year I think 'XX. the in sand, but we should

Ellen Johnson

out, carefully big we a that over pointed difference. think get your is the you have time we've as capital It go capital. makes or of around I spent working on past years, XXst volatile. and when paid working is Xst, manage. flow you print a of we've And something and lot balance sheet right, X Whether the in and So a cash back if generated lot you discipline $X.X billion the

aberration. But going get will normalize. one would forward, I year, you any So right. expect In can an you're it

Operator

Nathanson next with Our Michael from is MoffettNathanson. question

Michael Nathanson

I the you RafterOne since to acquisition. it's deal about want ask the Acxiom. believe I biggest

If multiples and of you a go right? we acquisitions company, do skillsets can we've beginning So more you bit back probably through it, not the the of talk or this it's the to one the is more the like not like necessity about the like deals of history seen, it's of but maybe biggest whether that. take the beginning, little tuck-in and

the And en, investments FX your acquisitions volatility, then and impact from this any for the year? what's FX given to year thinking on for ahead and revenue

Philippe Krakowsky

strong definitely our right? very Salesforce I is it to observation, as to -- very of space very apt is really obviously, in a a right? more right? I asset can that's speak why, lot So mean, them means a RafterOne and it's very a specific growing mind, what think our that clients. So fast, I and Look, more about to platform

$X Salesforce multiple, to ascendant. then $X the there's into provider. they're or for So go implementation, there's And a major a the that service a dollars that

of a was that's preemptive from there's we to necessarily large that, a -- implementation, group a those I I strong -- And that internal bringing presence so that because to were we've the are and said mean, were But time a RafterOne us, work, around tech very bigger I we're Salesforce moment as thinking in actually fair think building where this we the at in asset. -- as that's company created think of think them. by XXX ownership expertise. capability, XXX XXX know I don't our sit, economy And I they company that that bigger Adobe. we're started was their BXC and direct-to-consumer experts, got which and or working a kinds trade accurate with both BXB X service kind Salesforce partner, very a on know owners platform the you of would part bit is But so their into certifications, it that services was we that engagements, years. this last what So is

technology to us doing they of want agency-like. were quite areas what got more then these of and tuck-ins, creativity measure and sort sort and I think of emerging expertise, power marketing on much you've some of think to do, which some of that So you used were we then mind, channel is they an of and buying focus some where brings small, our what they a And hybrid against as concentrate expertise. to piece

So I do think, this. us will means What tuck-in I more fewer, have scale-wise, be, like think bigger. you probably gotten they'll see and will

Ellen Johnson

negative X% And was on 'XX with on margin. we a than regards It impact what actually basis FX, was typically see. revenue points to larger growth XX and

pretty the if are matched. historically, well look expenses, most part, revenue our For you

impact today, the are forward, impact a going minimis so expecting on de margin. we're based what on rates And a flat on and revenue

Michael Nathanson

that you drag remember difference. about up? this guys asking Ellen, was about question wasn't previously, from much I on can answered that follow when I your started think margin it Why [indiscernible] year? margin. I you you

So what year margin this didn't the on happened happen in that past?

Ellen Johnson

type look It very the do. our businesses, of impact was and vast in the currency more moved by not the going But long right? that markets, and for an of largest impact probably happened we revenue impact of than matched was the do all very in expect you time, -- what that we've they seen at we If markets forward. majority 'XX, more at currency are expenses a currency, historically

Operator

with Tim Nollen is from question next Our Macquarie.

Tim Nollen

comments my make And XXXX? upside XX than know, to you please. comment scope a of staff. we basis margin. revenue could maybe all in to other of Is this sounds heard managing maybe of there's offset expect be reducing to an could don't hiring your would these I you like that on lots I staff. versus terms staff year? [indiscernible] might guys boon I'm on wondering expectations in still and that, be or about lot about the right, could any what levels Could It If of math estate equates inflation just I a savings growth. in in cost-related from points kind staffing couple million your the ask at is growth a of your cost available talent the maybe cost net-net questions, $XX layoffs companies. rather of you of real And that now

Ellen Johnson

always I'll start Maybe Sure. with revenue growth. first. question your lags hiring We second -- always

and we in will so hire forecasting -- when Conversely, actions. contractions, have for we we disciplined year growth, take underneath a are responsibly fashion. where we And next growth

I As more your bit $XX aggressive far real on estate, that over points. than noted think million math as the we call And will happen year. XX little the on is the a basis X the

we've that good and put our You sublease real we learnings we've we're there. couple some look need taken very order in, properties the last really estate of centralized years process benefit. it the way that way become over the efficient. But in a been we realize applied really it's out about to full taken in We manage then have had the in more to I another the here, able and numbers portfolio. feel to a the mentioned, optimistic really very optimize to and Like we've

Operator

from is Bazinet question Jason with next Our Citi.

Jason Bazinet

of a quick in question the macro. I had terms

call is color risk reviews? I but love of out as as there that as account have. like higher I'd relates would you profile terms it's the in any doesn't macro seem it have just either lower active anything In uncertainty, of thought, would you terms to that It been or

Philippe Krakowsky

the the deal that clients, will And -- there 'XX to have with was that time. for building new fair been that going more is we was assuming back there because floodgates there be open. all everybody all to kind to that just but period waited a of your one, existing think way The right, were there question opportunity a been an likely be. word I pandemic. a the was for sort great That's interesting of we've Understandable going backlog services and doing growing of some of fewer, of

obviously some come moment, days and more But media these to mean, care. know. then As health reality. tend our I the murmurs kind we'll I of in But to all folks the than extent it's the the the the on at said, data right in reviews scale -- center a case. to will leader that growth agencies, hard But the that's ground here that begin up all saying that are steam. of pick at have I our believe it at ton they in now, says don't

Operator

now And Philippe it final will last for any our question. to that back was thoughts. turn I

Philippe Krakowsky

to we'll Thank keep year. interest. work as to We've you, Sue. again. Thank forward looking you a of the you all for got We're the the lot time do, and Thanks and we posted go.

Operator

participating. conclude you all conference. Thank Thank you. today's for that And does

time. You may disconnect this at

The Interpublic Group of Companies, Inc. (IPG) 9 Feb 232022 Q4 Earnings call transcript