Earnings call transcript Q2 2023

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Operator

Good morning and welcome to the Interpublic Group Second Quarter 2023 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

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

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

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

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

while for financial and measures. the to believe certain it Philippe Krakowsky. We will our measures to greater review also pleasure for of At performance. over that We is refer turn GAAP measures, a my transparency not to substitute data in allow provide point, this non-GAAP that, operational these useful supplemental things

Philippe Krakowsky

Thank you Jerry, good morning.

expenses will I Starting X.X% with organic then view our the and with begin call usual change updates be our top As level agencies I will additional details, at on to quarter, provide revenue conclude X.X%. Q&A. a decrease of of against growth with Ellen a high will revenue, organic before the by followed last the year’s quarter billable was of of our second

decrease points. was For the basis first of six XX months organic our year the

the drivers for our as that in sector. relations number of healthcare disciplines well experiential the have over grow Concurrently on continue in such During We same our since namely significantly to been discussed business with of a you Those in media solid saw offerings. the as of continue offerings weigh our beginning revenue performance quarter. the and and to the growth second identified we we have success key of that quarter years, saw public the factors we on puts second us areas the in takes year. and

continued a called with and on has challenging reduced the we've quarter and reductions through Consistent Those the impacted from to spend our items telecom cutting. second we in tech it grow ability out during clients in cost first sector moves significantly as period that for the to significant included see quarter, the half. previously, the

Our also digital underperform specialist agencies to the in quarter. continued

those transformation As of to those slower is continues good forward modestly we've consistent proving growth challenges continued due some move uncertainty. the to anticipated, seen as the than Restoring tech previously, macro well sector and largely brands offerings discussed wins in there as we've to recently. however, heightened

highlighting sector our on worth was and Taken in the the strength six together, it's due our and the approximately the the of second grew offerings months the eight specialists healthcare quarter six second to sector, X.X%. telecom sectors client Along and growth media impact with year-to-date. our our of during digital that quarter

market win continue also We of in to largest new far opportunities so this account the year. some

wins including encompasses together a financial well span media autos experiential and especially and public in integrated the new services, food very set creative, industries These relations, data. Our range bring client business that disciplines, and strong beverage. global diverse of solutions marketing full of momentum as pharma, as

as world a most to marketers. underscore such, As they the play sophisticated world's demanding we and critical the partner

norm expanded to has in Partner. given our from having Affairs Medical yet Public industry. their Relations are been example, our relationship important lead Creative with to of our the Pfizer, Global and named an have the cite transition onboarding ramp we're between wins that To new proud periods significantly recently announcement Most revenue and the

of magnitude be in results. expect evident in stream impact their come the wins on our in to year, these greater the As second-half we

automotive in quarter, and public second the strong industrials other and growth followed by diversified financial beverage, of and healthcare, sector Looking in at our goods, in client sector consumer sectors were and services clients. we food growth by led

significant decreased and Our modestly the tech sector and strong against retail outlier. very as multiyear comparable was telecom performance discussed

decreased called the predominantly due agency specific U.S. quarter sector X.X in the organically challenges that out. to and the Regionally, we've

Our basis organically region. decreased markets by mixed with international performance slightly XX by points

we our terms performance the quarter, X.X% growth and In by challenged in offerings of solutions segments, organically our at in Engagement digital Media segment agencies. the media -- Data segment offset decreased good where the saw

more organically. agencies our Creatively on is in weighing Led of telecom impacting place and a consumer several segment tech somewhat climate of Our Solutions that's a more advertising X.X% and and is where This integrated performance. traditional spending advertising decreased cautious segment

and communications XX.X% at The and disciplines. X.X% increases solutions ago. we growth by quarter a specialized on both the segment, of year relations highlighted experiential public was our organically grew Within experiential top

as Turning margin the favorable deliverable continues management margin our flexible the demonstrate as be to model, expenses the in and well teams as our business results. operating tools we quarter, strength discipline a have the and to talent that

Second quarter XXXX is which ahead quarter our pre second was pandemic adjusted margin of EBITA XX.X%, margin.

year expected, growth. headcount additions pace QX As margin our than had when lower lagged was robust ago our a to multiyear of

lower managing are model, our clear than which a expense effectively flexible is in incentive performance and each labor, for operating SG&A We was year compensation, based temporary our notably ago.

as a taken in We'll delivery of of year. to Occupancy year portfolio. as our continued the real offering. on strong where quarter address to Expense benefit areas well both in we course services very business transformation by X.X% margin those half and as the estate of integrate is severance ago as from of further the decreased performance over for accelerate to forward. media the continue was actions actions going lagging elevated we see decreased headcount the our benefit of expense Total first the business from

for sure of We audits the share Federal out $X.XX as and amortization make both Diluted and earnings years. to quarter previous and income related reported other adjusted to includes benefits of tax the our adjusted resolution EPS, call in per items. intangible per routine share $X.XX reported $X.XX want to as that was as the

During million million. six X.X shares repurchased That million repurchases shares, quarter, $XXX million we the returning to our for shareholders. months using brings to X.X $XX activity the

Turning to having resume update range X% to and our usual with to the organic completed of positioned in the just outlook of our the X.X% midyear course revenue our second-half. the over full solid operators, growth year we're year’s for

year strong the same year our As which we net which target new X% the to to Nonetheless, our we will are discipline, and expect move we increase of full growth in from to businesses several time, our expectations larger ahead, we remain QX six business committed benefit reflect that be strengthen. margin. months modestly believe of meaningful given margin first also operating is heightened increasingly the what we year an underlying will represents revisiting with organic of XXXX uncertainty, our for our macro to At X%. the relative full XX.X%, growth

as drivers of is areas been disappointed multiple year-to-date, business continue new during the performance, portfolio. addressing in we with mentioned organic which I've our offerings growth the of in And relevance in exceptional. half of the while the we're business invest to certain We'll also will performance continue year. urgency evident strategic The has in QX revenue the back

detailed more going I'm for to things of a hand Now results. review Ellen to over

Ellen Johnson

Thank you, Philippe.

presentation, slides from accompany or of to net decrease billable the X.X%. remarks our webcast. with quarter track decreased the presentation X% on ago a Slide expenses with before an Beginning a of our second highlights revenue As reminder, that the year will revenue my organic X

was net X.X% the organic points international and in markets. was Our in decrease revenue U.S. XX our basis

points. year, decrease Over the basis the was XX revenue first organic six our months of

before small EBITA adjusted XXX.X quarter Second was a margin adjustment restructuring million and XX.X%. was

to settlement per first our It's to million previous as certain the the important non-operating $X.XX The reported intangibles, quarter in on adjusted. Our audits. adjustment losses of actions, adjustments and tax share non-strategic the million benefit half impacts and year. and related small diluted the during $X.XX of tax X.X earnings of income acquired of $X.XX sales of to the normal was the We restructuring of note Federal X.X repurchased after businesses. exclude per includes that share the as small amortization shares the shares course the our EPS

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

interest point higher the in to prefunding prevailing with a our XX-year the of to ago, and our and rates XXXX just upcoming our issuance both interest June would million due were market elevated XXX out year that compared I interest maturity expense Here of income April note.

to detail Turning more on second quarter in Slide the revenue X.

change billion. exchange in being nearly Our Euro. to a markets currency negative all basis net X% Net the dollar stronger the added rates quarter XX the revenue impact against was the was notable exception acquisitions with in of XXXX, the QX with in points. X.XX international Compared

revenue X.X%. of decrease was billable Our expenses organic before

points. basis the months, six was XX our decrease organic For

look slide the statistics. of bottom The is a at

businesses decreased the Our agencies, media Media, has at offset more was as organically. specialist noted. performance by digital than Engagement Good growth and Data, X.X% of Philippe segment Solutions our our

our advertising integrated tech relatively Creatively felt organic was Health growth and revenue across by and more in growth decreased the flat telecom Led Solution traditional agencies. organically the X.X%. be we second-half. public in solution believe exponential with to strong and what segments, At a quarter and due disciplines. will was campaigns specialized macroeconomic and environment segment clients somewhat Lower our IPG various a the broadly from slower of ahead timing relations communication across Our sector the was of exponential X.X%

year. region. by net the quarter our X.X% Slide relations X.X% quarter, specialists growth offerings. Moving revenue on which organically organic and year our our year International outweighed We were XX% In was of decrease before top creative, was public UK decreased net X.X% and growth telecom net X.X% a public and tech growth our growth the points basis our led of grew based U.S. by by expenses markets across broad Decreases growth of exponential revenue a revenues ago. digital growth were on and X and offerings. media, XX relations, exponential at in organically billable ago. at and last XX% against in in media, the X.X% to organic against The

organically and the market. due were China In ago. in in than organically by mainly Japan revenue a national loss a in a X.X% client to X.X% in decreases with markets. and the of year in decreased and X.X% compared ago. compared Increases quarter result India X.X% year with decreased Europe more a spend client an AsiaPac lower offset a other we Germany Concurrently decreases Lower of increase was growth

in continuing strong grew organic increases in LatAm XXXX markets. which national a the is of of on top X.X% top East, in Africa, on other and group, markets all our across we notably with our In Middle was nearly growth Our East. XX% ago X.X% year QX of with the Middle growth X.X% Canada,

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

points from which intangibles operating year with and acquired of our amortization restructuring X%. exclude of result decreased XX.X%. ago net basis compared of a decrease the revenue Our The margin expenses, billable XX net the EBITA adjustments reported was adjusted expenses,

growth ago is expected well As our worth our organic at from lags pandemic margin hiring decreased was second lower at year the pre and when margin is of as strong XXXX. that X.X% It quarter quarter was very and comparable well. however a above XX.X% severance noting our

As tax, and XX.X% you total to Underneath expense which delivered related payroll, net our XX.X% ago. revenue XX.X% a expense with as compared results, on that revenue on compared ago. was a of benefits salaries of our see base and we can for this net slide, ratio year a year was of XX.X% percentage

outlook X.X% ago. based is XX points a from in comparison consistent compensation decreased was to somewhat the X.X% levels incentive year. net elevated for net percent year Severance revenue, basis a in revenue revised which as performance Our with expense typical only our of X.X% to from

the in business, the the more actions traditional second well lagging, areas is to our Our to high media as where of vertical. quarter, business transformation as performing recalibrate reflect in accelerate performance steps

severance move We increasingly we see benefits through year. forward these the margin expect the that of we to will as actions

revenue the was XX.X% which these revenue labor net is of on was expense with ratios on Slide and compared X.X% our QX role with a when Each Also appendix revenue, net compared in was of its QX All growth compared XXXX. Temporary primarily Underneath is reflects direct expense and the occupancy, new XX. in X.X% of business leverage with net which other XX.X% X.X% year flexible office slows. slide, other with that which a revenue, for improvement in direct of X.X% office net we with higher and XXXX, ago. compared was XX% other to expense our expense QX continue as expense XXXX, consistent of revenue, in variable expense. X.X%

Our net was SG&A basis expense XX revenue. of points

performance. better and from results to On with begins to transparency This EPS. results our right adjusted and provide of diluted hand Slide reported through detail side our steps on to left order a X, picture adjusted and we EBITA reported adjustments comparable our second left on presented quarter in the

the X.X restructuring column to expenses non-strategic Our second of low a X.X shown of expense XX.X was million. few the of in loss in amortization The million due adjustment we The operating four, acquired in column for was businesses. million. intangibles disposition as a had the credit of small, other expenses a

you share $X.XX our share. each this note diluted diluted Federal impact to XXXX tax the of of benefit quarter per XXXX in is that $X.XX provision can reported to is important for settlement tax the adjusted see years $X.XX to through which after XX.X of non-cash. per At the U.S. a our the of of related tax includes which bridges That diluted million primarily slide, EPS income audits foot is per adjustment, as at earnings share. It the

permitted a really to large We item impacts it are out is but why you it technically it, that is called we for which we for make not want sure to you. discrete comparability, adjust

Slide operations our includes turn same the for of use to cash X the was depicts in Slide On million. XXX due before $X.XX benefits provisions. similar cash million. to per capital $X.XX tax XXX.X six flow earnings quarter. million, the was per was share Operating X was in Adjusted which flow we This for diluted in period. the used Cash months. also capital share working working XX.X adjustments

highly the operating capital quarter volatile payments receivables timing could XXX short-term XX.X in maturing within components. was a portion CAPEX the capital seasonal, year-end. and the We payables magnitude As cash quarter used million. In working be by The quarter in affect a reminder, securities, of changes million. our is which that means single of significantly collections our flow can in the treasury results. and working issuance investing and our of of invested our we proceeds activities, the before note any

was of XXX.X paid reflect XXX.X in Net activities financing million share financing proceeds million. in dividends XXX.X debt repurchases. XX.X Our and returned issuance million. from We million cash

decrease Our million. in XX.X quarter net cash is for the

Slide XX added be maturities ended debt. depicts equivalents. of cash X.XX of to in before portion of our the as sheet. marketable quarter which million balance current the to and held I with XXX billion our We outstanding the We year-end. short-term mentioned is is maturity, XX securities Slide

includes end see As pre-funds debt maturity you which this X.X XXX million the XX-year total was XXX on new can million are note, schedule, in quarter at XXXX. billion, that April

is our Thereafter, next maturity not until XXXX.

to financial efforts with sheet that In express I balance like that, commercially. it summary, well continues on the discipline my our the gratitude people back Slide as and of and XX, means would of liquidity for we our positioned as and well I'll strong remain financially to turn Philippe. strength both our

Philippe Krakowsky

has that compelling said, marketers expectations help performance relevant to Thanks, market we That the long-term of is organic year, led new revenue as Ellen. for date of Clearly, the continue strong in business momentum consistent XXXX. Since brands, grow deliver offerings with successfully this the track even and share, tailwinds half in start record. and in their more be provide consistently positive back with this so IPG year this business the way and our year, not move to we our should into and enhance outcomes.

This work with and Account FCB won for competitive marking GEICO, awarded first team, Media which Intuit followed Media the in was in McCann largest competitive Brands, Brands communications review. June QX integrated during most And rewarded win of Also for Skoda India [ph] the Pfizer Myers global the earlier, Air U.S. AOR mentioned AOR. of creative marketing Along of Bristol IPG sports Squibb. win the plant the Octagon. creative selected the named Worldgroup the to Media was U.S. awarded Constellation an also appointed foods, to headline marketing the its as was AOR responsibilities one and quarter the of upfield, based Media quarter Global year. global QuickBooks and for UM leader initiative As conclusion the reviews highly

won a real well as particularly Effie at estate including only Where IPG remarkable help longtime U.S. insights in as MasterCard McCann festival’s accolades Lions to of the Lions, At Poland. festival’s campaign, the strong including and the for tool top agencies many quarter, effective Festival new our showing Prix. spending also client as the honor, success one company category Grand lives five four Lions, Titanium top holding it's being employment digital where the During most that nine their had aggregates work including the to during of awards. and refugees named Worldgroup had received make numerous Settle Ukrainian honors, data, Titanium a Cannes

created excellence African Health's Year, also network Lions reflects of for people, for over year, XX Other project earning and including From fifth space. network named brands language Cannes year consecutive done American healthcare this the ADLaM in [Indiscernible] Grand alphabet. region. the consistent work significant of the of prestigious two title performance important include festival seven that by previously North million spoken of year, leading which honors had both West McCann the of which written our XX an outstanding popular area digitized Microsoft its Agency the Prix. the demonstrates healthcare a which IPG continued The no as agency the in Healthcare the by FCB,

to use on for new role Looking media ahead and begin that have ideas. impact we're brands creativity. creative advent quickly tools strategists our with scale AI that for as work the catalyst seeing industry which of canvases already will data and in artificial clear Technology generate provides people and to our performance businesses, a intelligence to plays for can a an and

to brands stands essential will to the reason great win and to tool every in have of access stand remain competitor kinds these for that out that will creative Given ideas marketplace. same

Microsoft, the a quarter, tools partnership messages including announced clients quantum right at helping strategy services, IPG identify the engage This tailored high benefits AI leading quantum Adobe, with During that many cloud more with audiences our software and time have developer deliver problems. right partnerships, with and media we Salesforce, we such the agencies, computing partnership intensive The established partners. new that in Amazon, drawn deployment we're of leading innovators, as solve build we value Together, a combines a matrix from clients. setting. data data complex clients, one Nvidia is of all to Google, and proprietary

subject On with our to the launch during of with continue finding quarter commerce the streams retail, we of which IPG’s Commerce cross partnering revenue key commerce providers. offering important channel are in collaboration new strengthen a to Labs, reach marketers for creative

maximize aggregates the the augment investment to allow space, pain audience decisions. can axiom just point informed measurement is to data cross this will have within sales datasets brands are retail This planning, is networks, week one and This dedicated media power and standard solution in we growing business make across our a as and and retail automatically spend and using performing our of media platform clients our unified seen channels. manage proprietary the growing for advertising solve clients activation. which lack also allocate solution know will fastest You that important best an retail can earlier is media This It to this via of a profitability. offering existing identifies unit. retail AI, optimize which launched helps media performance Brands we which network data brands. networks

we growth the performance, in MD&A segment strong to our offerings media saw Turning Group. within

for just assets the UM period, Initiative mentioned the business network named by number three-year one was new over campaigns and [indiscernible] past earlier, continued agency of ranked assignments, those win to media global year. I was client major the As

in win the business, at Moving to last progress U.S, saw we AOR in significant TurboTax RGA new specialists with including Intuit announced just week. our a digital

North goods Our Huge’s transformation platforms Sport America. powered a also business sporting and creative automotive to company selected and quarter to during brands, its the GA in secure work. was product AI inform online engine launched as retailer offering from the consulting proprietary services just new drive Huge driven digital for size largest business growth, Mexico's assignments Innova and to helped largest commerce deployed

Acxiom the and their win the The which telecom their clients quarter the in These data the and first During of data the sectors. company party networks largest cloud and Acxiom’s renew customer of renewals to U.S. new of management one of announced a offerings, customer in customer premier value improve acquisition, of platform dealerships. services, groups with financial many insurance, across highlight to intelligence include retention, and its brand’s to the also continued auto implement wins growth.

named won The agency the advertising number for XXXX fourth FCB aid the driven was the best the effective integrated One effective MullenLowe AI one McEnroe Outstanding and McCann McCann globally. and network two global number Index Global the Ultra. also And the Show. U.S. agency Michelob segment number BXB MRM FCB the at Campaign One named McEnroe time the and network named in as XXXX the was year, Europe versus Europe, network ranked lead of Innovation our Awards. for by The sports year FCB the of named most solutions ANA’s The creative most Effie in Effie agency Emmy agency York large Worldgroup, the the network in was New Club. and creative At work world one for for Digital a Effectiveness

most Turning balanced PR particularly network Golin saw Weber well. segment in in strong awarded Shandwick continued to the healthcare by agency growth Specialized sector, Group, and Communications solid and the income. with with we showed proven the QX, Experiential growth the performing Solutions

Women's Strong the Our driven technology continued growth sponsorships to Budweiser experiential finance, of the food live XXXX solid the FIFA clients and Cup, beverage agencies in retail, momentum and Cup. integration company negotiate at well by as of global as work posted as also Cisco the for as assets sectors, World sponsorship New activations. the Octagon Highlights and included at at Unilever in Zealand World into was for performance. activation with the well

expectation remaining results. view Looking our committed year's to X% notably year while our in XX.X%, and balance drivers growth new of we outlook of with coupled very mentioned last client business our full benefits existing margin ahead, for ahead the of growth media in XXXX. strong our which to base, our is also earlier, key as for organic We with of target X% year in revising as to are tailwinds the year healthcare the

our architecture standing on design our open from solutions in collaboration foundational across we and continues by agencies integrate to deliver through long model, be segments will core for we based This the a technology be clients. data services infrastructure, approach factor Another in which to our offerings.

that's culture Another business. of and a been work remain in to ongoing a commitment in hallmark [ph] our D&I is ESG our vital talent

demonstrated Our consolidate quarter. an flexible margins lever but of for those times to is important model we've only also cost not gains as improving growth, in this

In by additional ongoing our as consistent has commitment for returns dividend execution liquidity. value IPG’s program. capital balance include growth creation, and Ellen to strong out and our the sheet underscored share been called areas repurchase on

floor you support on we your that, questions. with those of partners as as open for our always, the call our this people, thank well and and to let's As

Operator

[Operator Instructions]. you. Thank

first question Stanley. Morgan Our with Swinburne is from Ben

You may ahead. go

Benjamin Swinburne

what much know I Thanks. Philippe, I than from it how that just going am so sort idiosyncratic to and of help be talk was the not the to at idio be but about a try what like theme kind then are about think of this but could a doing just the Good heard you curious companies are morning. agencies your feels what you obviously, doing, in that well? curious, but it around for the at try think their that X year IPG’s is organic pullback about office are broader a we bit how with asking as you more project about through you in just opportunity work, company you. a of logical broader would specific, where it's while about specialty of seem to see part this think us it's versus of of client focus this a bit or certain to it's time talk is much sector structural? little you that about it technology certainly or some growing would our it'd areas all is occurring, you clients AI like Thank growth, could or clients technology obviously IPG, because to if little And over investment tech is as IPG, of sort media, risk helpful if to two I maybe and impacting

Philippe Krakowsky

Sure.

On sector question, Ben, is I be that obviously under lot to the the first a seen mean, what it how stress. to to I of speak level thoughtful. we have given want can client, But going specific is we a without of the

about long call still XX, a the If it, companies, run seen growth driver and large we've going although us. feeling group see you a think us net being about return And What going think for it is down obviously that a probably to industry for to of stress I revenue that right. it's right. it sector given in think that's an small is strong turn, quarter, relatively talking about in is to that I the was XX% able to we're it, the ago of year this don't we're that be to

or backed or employee the that are would of We're VC kind in as to out, obviously, talking definitely we're seen relatively their over make in mode, areas agencies have those that large the the resizing say of we small decisions activities long them. and some in etc. a about in we've to smaller clients I digital not group definitely. cuts, businesses, companies, curtailing seen costs talking traditional our indexed two around cutting of important they tail companies. are are it think pointed about based more as having of And And, And turnaround we've for the business. project then I base,

the ad would we for something maybe that So more areas uncertain in is the dovetail with which that we've turnaround sort you us, are that others. than the of feeling slightly which does seen, think a business there also more agencies or broader trend consumer macro, the of think I is whether it's certain

our really portfolio And the of in are are. being yet the not of strong impacted. the engines other parts performers So growth

part So helps tech, the hopefully that on question. of the

very In question, very, of it's AI, terms right. a broad

number And across the AI group so, actually right. we're and of a been ways for in operationalizing some have time,

AI, of heavy the data, business. and predictive in So precision parts

media media, that's the brands, been of So whether model part performance something for Acxiom, time. that's some that's

instances we're a seeing lot bots reviews chat their information in I the be use put to creative an and can AI so inform it, scale own support the feed a production in that set that you're can a creating and into think with at then content product information has, you're informed or platform starting with which to so commerce some that of use using that seeing as by campaign. and user client it which personalization to of is recommendations, you're which training

Lion tail that in very work for lot company funny, a actually work at for with a really goods of of Cannes a a branding we to It's of we long vendors won piece were them. Latin large baked with did that to of lot a a very interesting generate important America,

side content be applications leaning of is think scale when experts working going with partnerships addressing for creation. in see to talking and now time, that you're what I'm space. that we're and about, some how of and side the the we this, I the is And in we on the content are we've creation strategic see us some of how are AI been you'll do programs now what into on things, kinds going the and to definitely what with

kind that I of a how going think about we're I are we thinking how incorporate market with them about into we do clients. to where noted of everything number

the so our advanced, spoke essence, production data, machine again do do, what I it media, also the to infrastructure work prepared in around So what when we piece we capabilities, that's which and informed of more comes in media. that's the to learning performance predictive remarks

tool have. to the So of that more think more be folks in, it of and into sort baking sets it incorporating I we're going our

creativity you thing can to clients. plus the same that you And and mentioned there combination everybody earlier I is then be important the the human I think to last unlock the still out would will our AI if point tools, that, has I

that have as AI's and do that place sets they think first proprietary strong as data that see if with training we them growth. proprietary solve Acxiom asset models that data are and promising. working we clients to focused can so other their and specific unique is around quite I I it marketing party and have area that that will, think very another data, create you a The are and are That's problems to we business

Benjamin Swinburne

you. Thank

Philippe Krakowsky

you. Thank Sure.

Operator

Thank you.

is Our with next J.P. from Karnovsky David Morgan. question

may You ahead. go

David Karnovsky

on your I Philippe, thanks. wanted Alright, response. up prior follow to just

just walk it were you uncertainty, so invested, I I the think flexibility, your traditional staying mentality impact we're prior, maybe marketers a bit shifts? broadly from seemed macro you're agencies. think Can through what's like changed exactly, been there to wondering, you noted but has clients, hearing more what stressing some

Philippe Krakowsky

takes said I have I mean, you for if what kind down with we've top, as of beginning almost say, not the the from the you and kind year. and literally of try puts it shared of we since from I'd changed go the strip to

The macro. are sense, we is got in don't differences And and tech modestly news. uncertain pressure on I more new telco is clearly abating. this think as you've So that not said, there

leading in others. more as is to some I our that So impacting clients, of And said, that's, Ben. delays than businesses

uncertainty macro seeing smaller of tail I think the long small is some thing in other the around clients, cuts. that our cost about we're the

degree So having something to that’s that, is a having an to again, adding there's is which up impact.

at factors to led a I point not the in rate the But that revenue out at are the on this point would revising really is change on revenue looking guidance. where contingent the this I outlook year so and recovery our of that in point at two think for And the us are year those those factors. we

we're important. And as So it's points some us of about out, organic growth. saying X.X were things not which, we pointed percentage cumulatively for cost delayed us,

you're way, that other client the losses called Going seeing we the out.

year net a position. So we new came into with negative business the

something and actually headwind in the By that have that shown share up a for quarter was that with we that you neutralized. April, second and that both first has So was we the us.

Now into a we've turned tailwind. strong it

where still things therefore for again, meaningful at then I us dramatically the the in where it are as still to happen two to when the outlier the as We looking this and delays. is it's but isn't good impacting sectors but turnaround in said, incremental, in marginal, are category long-term. us us, a two it's to I client be telco mode are they called, be tech wise. they comes we've it extent helping like has it's not for us. that meaningfully And it's category different big for We think conversations, happened, So it'll got there to are areas be client that represented agencies something causing

David Karnovsky

work. area specific of might something tailwind kind how in an prior two digital this that's and the is put transformation or you're that benefited Okay, the for we have and that that from of disproportionately this Wondering if is should done term, do context acceleration? pause transformation over tech a can then week maybe then the it do pandemic long an of you your in years business peers agencies outsize be the seeing, the noted couple

Philippe Krakowsky

has Maybe and everybody is think that that our line presence probably peers something so one meaningfully there learn from. something sight to larger of of I will it a their

the to we business show from quite in work it's that at a that media degree. greater Commerce build we're heard that part that like up data And we new of with we higher that with mode looking part clients in clearly opportunity or space problems. offering us our part set up interesting have still order we're a still performance, business getting looks that are where our place really that of and when active. You solving about is some tech conversations are end and

see of probably we So less that.

RafterOne, how it more a we enhancing as shoppable. work got to addressable talked, really creative Commerce the we've there's we're more Commerce think about do around those lead all thinking to we more commerce I go, are make Labs and actually, approach we've a take

we little probably a earlier has of week they're terms say that this what but, I marginally, seeing. So heard I'd what think in more breadth it to

David Karnovsky

Thank you.

Philippe Krakowsky

Thank worries. you. No

Operator

may is next Macquarie, from Tim And our ahead. Nollen with you go question

Tim Nollen

Great, that Acxiom assume there. media is would so and common just very taking putting also wonder does the is which Philippe, I weak. I creative [ph] the I said even are help if with wonder could clients promises much week, your But question. while work but a not thanks is strong, creative? successes something why your for and help lot with you on everything my data explain this of money you media, in

Philippe Krakowsky

I something that that you mean, think that for at necessarily all speak hours. that's is think trajectory, about sort I least, that can I'm sure trajectory, if new. the not of industry I

able in growth number been performance. been So engine lean in and of years. a the what very there big us number accretive result, with strong built of nature of and we're of clients, a a to years has as for margin a growth and wise we've And do us, what of there, terms over for it's to

something I and to I data So of a accountable. that's think what continuation that's approach just very that you when is precise do with audience can think a trend, very it goes led

of in what used to do. outcomes, problems business brought you for maybe than we are be broader impacting that are to able a You to be solving set are

as feels macro scale uncertainty, And a that, that something also that you there think volatility be the regardless may continue but given it's as probably I it, just if level. given whatever of marketer. of to the do again the at

Tim Nollen

operating it's salaries line, strong come top line. well, great up however, I [ph], which pretty sales and is points. going a Could wonder to color that's if despite level off basis on couple thanks. why us as a in was The supplement that see income Okay, softer to so if much that from XXX Thanks. here? the a could give you almost bit I more rose

Ellen Johnson

as would strong mean, as to margin flexible the cost I performance structure, our and working Overall, question. very the for should. I mentioned, point you Thanks it Sure.

saw flex down as based labor You well comp. incentive performance temporary as significantly,

in leverage You a we reiterated for mentioned half. different also not prepared severance quarter in the half, saw the our margin benefits and see the we in to across Overall, in you only the expectations those I the as remarks should expect second year, elevated, see, the first categories. as

Tim Nollen

Great.

Thanks. Okay.

Philippe Krakowsky

you. Thank

Operator

you. Thank

question Steven Cahall next Our is Wells from Fargo. with

You may go ahead.

Steven Cahall

more tech you and bit tech saying pick up first pretty with If you're that's on maybe but this and just think rates. Maybe telecom tech like sounds picking those telecom help Could different I'm little softness. telecom, what growth back bit of and kind you. correctly, a sectors between of up long-term differentiate us Thank a maybe I incorrect. it's

think industry think little and X.X% in those to back did talk the mine about clarity up where were some sequentially, verticals to a is Tim's QX. question you spending in about you worse think U.S. differentiation to love for maybe So a about vertical since as it between that? discipline just industry trying understand media, your tend growth a correct so global maybe the canary X% media on going. think in bit just coal of on about And kind to really down pick I this get ad this we a as QX, then I about on your down two about Often phenomenon is also basis,

seeing greater of think in and activity? media a talk about that the bit just Thank So you slowdown in you do you're little you. any broader could client trends portends

Philippe Krakowsky

Sure.

think in it case business that again, I revenue globally. -- But of about would sectors telco for client former we set is. and have that Yes, the not there you around that is. understanding when is to pretty all apply domestically. U.S. thirds read think to confidentiality being our two talk the a on business be it On also mix would outlier have significant about a Yeah, a it And your more tech comments? it is client’s it what is than

you see thereof So had we're or that it. on drag disproportionate mean, U.S. definitely growth on the performance lack us. seeing I

So yes, more tech, domestically. something we're and very feeling yes, much

securing And, digital be. to you're was called terms continue given seeing what to and has assignments strong created, would have media year-to-date us, was impact I question, deceleration. specialists as is read entities very is component leading I in the we've of been those we The that there like what of they you of have. for the segment don't but the because that do, new digital will think On as out, second as -- performance

think that last extrapolate I So I don't would piece.

Steven Cahall

Thank Great. you.

Philippe Krakowsky

you. Thank

Operator

Thank you.

Our next MoffettNathanson. Nathanson Michael question from is with

go may You ahead.

Michael Nathanson

Ellen. for more bit little beat Thanks. the focus a horse Two again. for one tech let's weakness on To dead Philippe,

then the you following not are any the that that question my bit, on business, Thanks. how so did the it you've hood, pristine, you when of rates, guys will walk size due be paying hood, you raised did this under that to could another debt I to on were last media we when Ellen, sheet you year, just latest would those last balance you guys domestic your And buying when principal is thinking in large I'm shoes debt normalize, think just start came do is spend our it quarter? Second the update see do question now quarter, one guess the at waited the soon debt kind you showing done, you sure thinking? disadvantage put when versus that companies that structural business, surprised of that peers tech whether me ease? but yourself their think raising a off of If under is the go high, in normalization the so, next of debate a the not have from rate through that

Philippe Krakowsky

Alright. I Ellen let start. will

Ellen Johnson

Sure.

So we we as do time to interest from time, have hedge rates.

value that. So or you're seeing at we treasury we on largely the what is the face but previously had component the hedged, coupon debt that issued that of

we we're that take had, we then it the the the invest, decision. are better. from the we And good about a had the at looked rates actually was rates talked where table, off paying are to So and securities interest perspective, when it to as it at economic opportunity that looked and in opportunity

Philippe Krakowsky

Michael. answers, Two

don't outlook tech. said, not our on the on said, contingent on call And and is this in that also we as point can as turn impact, an I having space, we I of at of I also was two in revenue that that seeing as kind you that recovery agencies mode. on the So digital our rate are turnaround change said that know we're in

or owners, clearly that sit something given they're to we then sit clients meaningfully not often, Where It's projects they're we not whose as who and active more at necessarily are marketers, they often folks with cautious you letting engage not not And those clients. are here. get can talked might yet So, we that budget all. are somewhere those as actioned marketers, go that that that XX% with cutting other of we're in exempt about nobody to going of AI. talked pretty They everything is to year taking, they're part two, cost undergird ecosystem to programmatically. But the significant of happens the part continue economy. think the ad in to be all another up again, about, being or things enable we and media the going bought they're

clearly it So, turn, than going us thought. is something protracted sense they're that just there's is it no won't through more any that of

come some On I here. connect your media question, Michael it'll will about last or time I the thought thought either because point and it some at you'd asked up

to be media performer continues very and us has strong strong for performer a for a been So, us.

effectiveness. deliver and as the to that value and we demonstrated data, clients, is making objective precision, and the powering if it with about therefore by mind, is we've do asking marketing that our that, But value at it further something can offerings. to how missing, a even there missing, are question it And, works out better? severance, reengineer is, at align that. we're we is there can well. dimension and Ellen looking looking So you're we processes So can And work model or my integrate way done we've greater to the called

meet as it And that, of clearly needs. which what's offering efficiency, call we a value something got if that to is swinging as needs on clients evolving or what be pendulum is do many is means to the changing that. want we possible. positioned or to to at So looking is us to to other most for We're focus ways Because clients KPIs, be is might those we'll meet might important efficiency. evolve on be whose our

analytical focus this issue, your the we So understand. that space on happens in

them. our a this solving For are, And for cash regardless we least at hope up we in pretty math then is and guys the is ways that thinking definitely their I needs, I and space in If growth we profit for matter show us, I flow. value do, going looking the competitors can we're it's were that directionally we are that partner doing that will think of being helpful of you businesses thing operating thoughtful. in but way are to it that the the still definition most client are that great be the at

Michael Nathanson

Thank that. you for

Philippe Krakowsky

No, no worries.

Operator

with from Thank you. And our last Julien question comes Barclays. Roch

may You ahead. go

Julien Roch

term question, Good Ellen. morning morning question. Jerry. morning And short one good term Yes. Philippe. One Good long

line the be X% in done being to X% X% the after need terms guidance second X%. of to in topline the reach X% of first you half short-term and in of your the bottom to the On reach and organic, half at

question? lapping wins Of break three you you term point simple forgot, this to the budget issues longer and if of between can of on percentage creative in make short and then numbers, To R/GA it AI, -- I And else that's margin, account So X put a have spend which till you question. will X improvement cost be they is reinvest. But that believe XXX anything terms creative XX is a course, XX of media or advertisers given only media AI that was keep you XX%? which I revenue margin case because kind goes kind will negative to neutral in in of its your would actually X% media in XX to thanks the tech to so XX. invest XX

Philippe Krakowsky

order, probably them is the a because in latter dissertation. doctoral I'll take

put you are as right. we said, it, turnaround I the as expecting longer So, no

on not So digital pushed. specialty clearly, given tech factor uncertainty either is our the outlook agencies, greater recovery as telco it significant the does this now and in stands in timeline and

back new digital point year will mid-year, to your of, telco tech receive and of that now X.X so XXXX going plus, impact a to had for into So lays X.X in in around X negative and the to is business most it's not doing terms and given the it The us the strong half, the not for first year. been us coming position likely out that from how the beyond it becomes we be positive. will turned impacted has now with net half, is drag

strength had, first the at and in So then if half, of healthcare. the we look you media half, and second

look have all from it all stream net the the wins on business from assumed growth underlying business comes plus at you at bring that a roughly new second if new not we stronger So two half, and performance but XX% at our And those is entities. one go. significant XX% those of up, large

essentially that of end the is a we year, benefit us until is rate pointed of all assumed it'll XXXX. that close to have have those out full in clearly in why We which run for effect the for not

So there's full a in the very but not run significant that rate number, year. we're until run late forecasting rate full

I healthcare, our on campaigns. and media I view think side, say seasonality. And the mix work And on and talked on about then would then timing business Ellen and media reflects,

that looks So for X seeing hopefully back what the you we how that understand helps are half X.X like. to

and going be creating be the more is content creation that because see what's thought, going you're replace of it the merits I to creative to content. it do possible, you're AI can side On I the I that more application a then in volume days isn't getting going think case you the question, the which is think of And lot ecosystems it when that content lot things. said, as is the you of of given created, know, and it's necessarily sort conversation. a begin supplementing to of much of on to it be much complex other, that of early one

as applied the already learning in such bring them by clients, then informed to data this other the of thing that as we've with machine businesses to opportunity nature where are AI, And media, and you're seen that in able that evolves. the the we've is solutions

in things. And to different so brought you're do

that on client some of of you upskill So and are can more take strategic value. higher them business have young talent you areas it or can that problems and that digital are focus strategic,

clear what you that know as don't out I you as it there. So be will as laid know,

for figuring been But think, efficiency address. don't it be at there. the out being But of that future, you it's instead we're we've for or I the a compensated relative direct, concern what have be the issue thinking that very important, all at will sort of you out the an piece all I for important. foreseeable means this we're now. of right least put to new least an here to will sitting answer along ways instance,

Julien Roch

opening the you Okay, for thank overrunning good. very Thank you and bell.

Philippe Krakowsky

appreciate you get those them. look you updating No, on forward to in We October questions. We Thank important the are it. time. for progress to and we'll

Operator

will conference. was that this question. any Philippe And thoughts. it final last turn And to our today’s I back concludes for

may at You disconnect this time.

The Interpublic Group of Companies, Inc. (IPG) 21 Jun 232023 Q2 Earnings call transcript