Arthur Sadoun, Chairman and CEO of Publicis Groupe, statement:
“ Our third quarter shows the two faces of our transformation, which have never been so extreme.
On the one side, the cost of our transition is hurting short-term organic growth with a negative Q3 below our internal expectations. This is leading us to take a very cautious approach and reset our guidance for revenue this year, now expected around -2.5%.
On the other, our transformation is starting to show concrete results. We are posting a 17.3% growth in our reported revenue, shifting the revenue profile of the Groupe towards future-facing expertise. We can confirm a 17.3% operating margin and a 5% headline EPS growth for 2019 thanks to solid financials. We continue to have a strong new business momentum, demonstrating the attractiveness of our go to market.
We have clearly identified the challenges affecting our industry, and we haven’t lost a second in addressing them. We are disrupting our traditional operations with data and technology thanks to the acquisition of Sapient and Epsilon to deliver personalization at scale. We have streamlined and simplified our organization to seamlessly connect creativity, media, data and technology. Now we are focused on executing our strategy, and there are already concrete signs that make us confident for the future.
First and foremost, in a data-led digital world, an increasing number of clients have seen in our model the solution for their transformation. In Q3, we continued to win major accounts such as Novartis, Mondelez, British Telecom, and LVMH. The combination of our data and tech capabilities has played a critical role in this, especially in the U.S., where we were able to bring together our leadership position in media with Epsilon’s unmatched deterministic, behavioral and transactional data, powered by AI.
Second, we are shifting the Groupe’s revenue profile, thanks to the integration of Epsilon which is enhancing reported growth to double digits while considerably improving our data offering. At the same time, our game- changers that represent 14% of our revenue are growing organically by 21% YTD. With the inclusion of Epsilon they represent 27% of our revenue in Q3.
Finally, this improvement in our activity mix, the increased efficiency of our organization thanks to our country-led model and our ongoing cost savings plan gives us a high level of predictability on our margin, which we are confident of maintaining at an industry-high level.
We have taken the tough but necessary decisions needed to tackle the industry challenges we are facing head- on. We are without a doubt at the hardest part yet of our journey and as is the case with any major structural change, things always get worse before they get better.
We could have chosen the easy route and taken advantage of the status quo to find small pockets of immediate growth. Instead we are accepting this painful situation in the short-term, to be better prepared for the future. With the support of the Supervisory Board, we decided to stand at the forefront of change to better help our clients transform in the long run, by bringing them creative and media combined with data, technology and AI. It is how they will win tomorrow, and how we will capture a good share of the growth that today is mainly going to the digital platforms.
Now, more than ever, we are committed to deliver consistent growth and strong financials by focusing on the execution of our plan”.
