Lina Ghayor

Lina Ghayor of BNP Paribas inquired about the business momentum for Publicis Sapient amid a cautious environment, the macroeconomic assumptions behind the H2 organic growth guidance, and the revenue contribution from the production business.

Answer

Chairman & CEO Arthur Sadoun explained the full-year guidance upgrade to ~5% is based on a strong H1 and a "rock solid" H2 forecast of ~3%, which already accounts for potential advertising cuts and project delays. He noted Publicis Sapient's +5.5% Q2 growth was solid against a tough +19% comparable, and that structural demand for digital business transformation remains high. CFO Michel-Alain Proch added that the production business represents about 20% of Creative revenues and is growing double-digits, helping to offset softness in classic advertising.

Lina Ghayor of BNP Paribas inquired about the drivers of Publicis Sapient's performance, particularly its 8% growth in the U.S. versus other regions. She also asked for the rationale behind the updated 4-5% full-year organic growth guidance and the expected economic impact of generative AI on pricing and client appetite.

Answer

Arthur Sadoun, Chairman & CEO, explained that the full-year guidance reflects a strong Q1 and solid Q2 outlook, balanced against macroeconomic challenges and tougher H2 comparables. He noted Publicis Sapient's 8% U.S. growth was impressive on top of a 17.5% performance in 2022. Regarding AI, he positioned it as a major opportunity, stating that any potential reduction in cost per ad would be offset by the increased volume needed for personalization at scale, a trend that leverages Publicis' unique data and tech capabilities.

Lina Ghayor asked about the 2023 client budget environment, the key drivers of the organic growth guidance, and the underlying assumptions for the margin guidance, including wage inflation and offshoring.

Answer

Chairman & CEO Arthur Sadoun explained that while some traditional marketing budgets are seeing cuts, clients continue to invest in their business transformation, supporting the 3% to 5% growth guidance. He noted the 3% target is realistic, while 5% is ambitious. CFO Michel-Alain Proch detailed the margin guidance, stating personnel costs will remain stable as a percentage of revenue, with wage inflation absorbed by efficiencies from the company's platform model, while other operating expenses will see a slight increase.

Lina Kim Ghayor of BNP Paribas asked about tangible signs of a macroeconomic slowdown impacting H2, the resilience of Publicis Sapient in such an environment, and the company's capital allocation plans beyond 2022.

Answer

CFO Michel-Alain Proch detailed the 2022 capital allocation strategy, which includes a €608 million cash dividend, up to €600 million for M&A, and using the remaining cash for deleveraging, stating it was too early to comment on post-2022 plans. Chairman and CEO Arthur Sadoun added that no clients are currently cutting spend and the upgraded H2 guidance reflects both confidence and caution. He emphasized Publicis Sapient's strength, noting its repositioning and forecasting 15% growth for the year.