Interpublic Announces First Quarter 2024 Results
- Total revenue for first quarter 2024 was $2.50 billion.
- Net revenue saw a 0.3% increase to $2.18 billion from the previous year.
- Operating income was $184.2 million, and adjusted EBITA was $205.5 million with a 9.4% margin.
- Net income stood at $110.4 million.
- IPG's CEO highlighted growth in data-driven media offerings and partnerships like the one with Adobe.
- Despite a client's decision affecting the outlook, IPG aims for 1-2% organic growth for the year.
- IPG targets an adjusted EBITA margin of 16.6% for the full year.
- The balance sheet remains strong, allowing for capital returns and M&A activity.
- None.
Insights
The subtle uptick of 0.3% in net revenue juxtaposed with the year-over-year organic increase of 1.3% calls for a nuanced interpretation. In particular, the organic growth rate, which excludes the effects of currency fluctuations, acquisitions and disposals, suggests a modest but positive trajectory in the core business operations. However, the net income decline to
In relation to the share repurchase program, the purchase of 1.9 million shares at an average price of
One cannot overlook the CEO's remarks on the integration of Generative AI and a partnership with Adobe, which could be pivotal for long-term growth. Such strategic initiatives, aimed at enhancing marketing services, could revamp the current business model and are vital to consider when assessing the company's future prospects.
When we dissect the company's sector-specific performance, areas like data and tech-driven media, healthcare marketing and PR stand out as growth engines. This aligns with broader industry trends where digitization and precise data analytics are becoming increasingly critical for marketing success. For investors, this signals that the company is investing in areas with scalable potential, which may buoy its competitive position over time.
The CEO's reference to an adverse impact from a significant client's decision underscores the inherent risks associated with client concentration. For stakeholders, this serves as a reminder of the importance of client diversification to mitigate revenue volatility.
The projection of a full-year organic growth of
The strategic emphasis on Unified Retail Media services and Generative AI technologies presents a compelling narrative of innovation and adaptability. This pivot towards cutting-edge solutions is important as the marketing landscape becomes more reliant on technology to drive personalized consumer experiences and efficient content production. The company's alignment with tech giants like Adobe also showcases the potential for collaborative synergy and enhanced service capabilities, which can be a harbinger of growth, especially in the digital transformation domain.
However, investors should also consider the costs and time required for such integrations to bear fruit. While promising, the maturity curve of new technologies like Generative AI can be unpredictable and may require persistent investment before contributing significantly to the bottom line.
New York, NY, April 24, 2024 (GLOBE NEWSWIRE) --
- Total revenue, including billable expenses, was
$2.50 billion - Revenue before billable expenses (“net revenue”) was
$2.18 billion , an increase of0.3% from a year ago, with organic increase of1.3% - Net income was
$110.4 million as reported - Adjusted EBITA before restructuring charges was
$205.5 million with9.4% margin on net revenue, in seasonally small first quarter - Diluted EPS was
$0.29 as reported and was$0.36 as adjusted
Philippe Krakowsky, CEO of IPG:
“The first quarter results we are reporting today represent a solid start to the year, and are consistent with our 2024 targets. Our data and tech driven media offerings, healthcare marketing, and PR capabilities continued to perform strongly, driving our growth. Marketer sentiment has begun to improve relative to the back half of last year, and the new business pipeline is more active.
“We continue to enhance our offerings, further embedding precision and performance into our integrated, full-funnel media solutions, including our suite of Unified Retail Media services, which deliver cross-platform planning and optimization for a range of clients. We are also progressing in the integration of technologies such as Generative AI into the core of our marketing services capabilities, notably through our recently-announced partnership with Adobe, which speeds content ideation, creation, production and activation. By deploying proprietary best-in-class Acxiom data and identity products into our enterprise-wide marketing engine, we can create a more accurate picture of consumers and deeper connections with brands, all in the service of helping marketers drive growth and achieve business outcomes.
“At this point, with our smallest seasonal quarter complete, we continue to expect to achieve full-year organic growth of 1
Summary
Revenue
- First quarter 2024: Total revenue, which includes billable expenses, was
$2.50 billion , compared$2.52 billion in the first quarter of 2023. - Revenue before billable expenses ("net revenue") was
$2.18 billion , an increase of0.3% from the first quarter of 2023. - The organic increase of net revenue was
1.3% from the first quarter of 2023.
Operating Results
- In the first quarter of 2024, operating income was
$184.2 million compared to$188.3 million in 2023. Adjusted EBITA before restructuring charges was$205.5 million compared to$210.8 million for the same period in 2023. First quarter 2024 margin of adjusted EBITA before restructuring charges was9.4% on revenue before billable expenses. - Refer to reconciliations in the appendix within this press release for further detail.
Net Results
- In the first quarter of 2024, the income tax provision was
$47.3 million on income before income taxes of$160.6 million . - First quarter 2024 net income available to IPG common stockholders was
$110.4 million , resulting in earnings of$0.29 per basic and diluted share compared to earnings of$0.33 per basic and diluted share for the same period in 2023. Adjusted earnings were$0.36 per diluted share compared to adjusted earnings per diluted share of$0.38 a year ago. First quarter 2024 adjusted earnings excludes after-tax amortization of acquired intangibles of$16.5 million , after-tax restructuring charges of$0.5 million and an after-tax loss of$7.9 million on the sales of businesses. - Refer to reconciliations in the appendix within this press release for further detail.
Operating Results
Revenue
Revenue before billable expenses of
Operating Expenses
In the first quarter of 2024, total operating expenses, excluding billable expenses, increased
In the first quarter of 2024, staff cost ratio, which is total salaries and related expenses as a percentage of revenue before billable expenses, decreased to
In the first quarter of 2024, office and other direct expenses as a percentage of revenue before billable expenses decreased to
Selling, general and administrative ("SG&A") expenses were
Depreciation and amortization expense decreased by
Non-Operating Results and Tax
Net interest expense decreased by
Other expense, net was
The income tax provision in the first quarter of 2024 was
Balance Sheet
At March 31, 2024, cash and cash equivalents totaled
Share Repurchase Program
During the first three months of 2024, the Company repurchased 1.9 million shares of its common stock at an aggregate cost of
Common Stock Dividend
During the first quarter of 2024, the Company declared and paid a common stock cash dividend of
For further information regarding the Company's financial results as well as certain non-GAAP measures including organic revenue before billable expenses change, adjusted EBITA, adjusted EBITA before restructuring charges and adjusted earnings per diluted share, and the reconciliations thereof, please refer to the appendix within this press release and our Investor Presentation filed on Form 8-K herewith and available on our website, www.interpublic.com.
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About Interpublic
Interpublic (NYSE: IPG) (www.interpublic.com) is a values-based, data-fueled, and creatively-driven provider of marketing solutions. Home to some of the world’s best-known and most innovative communications specialists, IPG global brands include Acxiom, Craft, FCB, FutureBrand, Golin, Huge, Initiative, IPG Health, IPG Mediabrands, Jack Morton, KINESSO, MAGNA, McCann, Mediahub, Momentum, MRM, MullenLowe Global, Octagon, R/GA, UM, Weber Shandwick and more. IPG is an S&P 500 company with total revenue of
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Contact Information
Tom Cunningham
(Press)
(212) 704-1326
Jerry Leshne
(Analysts, Investors)
(212) 704-1439
Cautionary Statement
This release contains forward-looking statements. Statements in this report that are not historical facts, including statements regarding guidance, goals, intentions, and expectations as to future plans, trends, events, or future results of operations or financial position, constitute forward-looking statements. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results and outcomes to differ materially from those reflected in the forward-looking statements, and are subject to change based on a number of factors, including those outlined under item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission ("SEC"). Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
- the effects of a challenging economy on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition;
- our ability to attract new clients and retain existing clients;
- our ability to retain and attract key employees;
- risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in interest rates, inflation rates and currency exchange rates;
- the economic or business impact of military or political conflict in key markets;
- the impacts on our business of any pandemics, epidemics, disease outbreaks or other public health crises;
- risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a challenging economy;
- potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
- developments from changes in the regulatory and legal environment for advertising and marketing services companies around the world, including laws and regulations related to data protection and consumer privacy; and
- the impact on our operations of general or directed cybersecurity events.
Investors should carefully consider the foregoing factors and the other risks and uncertainties that may affect our business, including those outlined in more detail under Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and our quarterly reports on Form 10-Q and our other SEC filings. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update or revise publicly any of them in light of new information, future events, or otherwise.
APPENDIX
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS FIRST QUARTER REPORT 2024 AND 2023 (Amounts in Millions except Per Share Data) (UNAUDITED) | ||||||
| Three Months Ended March 31, | ||||||
| 2024 | 2023 | Fav. (Unfav.) % Variance | ||||
| Revenue: | ||||||
| Revenue before Billable Expenses | | | 0.3 % | |||
| Billable Expenses | 313.0 | 344.1 | (9.0) % | |||
| Total Revenue | 2,495.9 | 2,521.0 | (1.0) % | |||
| Operating Expenses: | ||||||
| Salaries and Related Expenses | 1,572.8 | 1,577.3 | 0.3 % | |||
| Office and Other Direct Expenses | 322.1 | 330.3 | 2.5 % | |||
| Billable Expenses | 313.0 | 344.1 | 9.0 % | |||
| Cost of Services | 2,207.9 | 2,251.7 | 1.9 % | |||
| Selling, General and Administrative Expenses | 38.0 | 12.9 | >(100)% | |||
| Depreciation and Amortization | 65.2 | 66.5 | 2.0 % | |||
| Restructuring Charges | 0.6 | 1.6 | 62.5 % | |||
| Total Operating Expenses | 2,311.7 | 2,332.7 | 0.9 % | |||
| Operating Income | 184.2 | 188.3 | (2.2) % | |||
| Expenses and Other Income: | ||||||
| Interest Expense | (62.8) | (49.7) | ||||
| Interest Income | 48.7 | 34.1 | ||||
| Other Expense, Net | (9.5) | (6.7) | ||||
| Total (Expenses) and Other Income | (23.6) | (22.3) | ||||
| Income Before Income Taxes | 160.6 | 166.0 | ||||
| Provision for Income Taxes | 47.3 | 33.8 | ||||
| Income of Consolidated Companies | 113.3 | 132.2 | ||||
| Equity in Net Income (Loss) of Unconsolidated Affiliates | 0.3 | (0.1) | ||||
| Net Income | 113.6 | 132.1 | ||||
| Net Income Attributable to Non-controlling Interests | (3.2) | (6.1) | ||||
| Net Income Available to IPG Common Stockholders | | | ||||
| Earnings Per Share Available to IPG Common Stockholders: | ||||||
| Basic | | | ||||
| Diluted | | | ||||
| Weighted-Average Number of Common Shares Outstanding: | ||||||
| Basic | 378.4 | 385.8 | ||||
| Diluted | 380.6 | 387.4 | ||||
| Dividends Declared Per Common Share | | | ||||
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||
| Three Months Ended March 31, 2024 | |||||||||
| As Reported | Amortization of Acquired Intangibles | Restructuring Charges | Net Losses on Sales of Businesses1 | Adjusted Results (Non-GAAP) | |||||
| Operating Income and Adjusted EBITA before Restructuring Charges2 | | | | | |||||
| Total (Expenses) and Other Income3 | (23.6) | | (16.8) | ||||||
| Income Before Income Taxes | 160.6 | (20.7) | (0.6) | (6.8) | 188.7 | ||||
| Provision for Income Taxes | 47.3 | 4.2 | 0.1 | (1.1) | 50.5 | ||||
| Equity in Net Income of Unconsolidated Affiliates | 0.3 | 0.3 | |||||||
| Net Income Attributable to Non-controlling Interests | (3.2) | (3.2) | |||||||
| Net Income Available to IPG Common Stockholders | | | | | | ||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 378.4 | 378.4 | |||||||
| Dilutive effect of stock options and restricted shares | 2.2 | 2.2 | |||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 380.6 | 380.6 | |||||||
| Earnings per Share Available to IPG Common Stockholders4: | |||||||||
| Basic | | | | | | ||||
| Diluted | | | | | | ||||
| 1 Primarily relates to losses on complete dispositions of businesses and the classification of certain assets as held for sale. | |||||||||
| 2 Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page A3 in the appendix. | |||||||||
| 3 Consists of non-operating expenses including interest expense, interest income and other expense, net. | |||||||||
| 4 Earnings per share amounts are calculated on an unrounded basis but rounded for purposes of presentation. | |||||||||
| Note: Management believes the resulting comparisons provide useful supplemental data that, while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance. | |||||||||
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions) (UNAUDITED) | |||
| Three Months Ended March 31, | |||
| 2024 | 2023 | ||
| Revenue Before Billable Expenses | | | |
| Non-GAAP Reconciliation: | |||
| Net Income Available to IPG Common Stockholders | | | |
| Add Back: | |||
| Provision for Income Taxes | 47.3 | 33.8 | |
| Subtract: | |||
| Total (Expenses) and Other Income | (23.6) | (22.3) | |
| Equity in Net Income (Loss) of Unconsolidated Affiliates | 0.3 | (0.1) | |
| Net Income Attributable to Non-controlling Interests | (3.2) | (6.1) | |
| Operating Income | 184.2 | 188.3 | |
| Add Back: | |||
| Amortization of Acquired Intangibles | 20.7 | 20.9 | |
| Adjusted EBITA | | | |
| Adjusted EBITA Margin on Revenue before Billable Expenses % | 9.4 % | 9.6 % | |
| Restructuring Charges | 0.6 | 1.6 | |
| Adjusted EBITA before Restructuring Charges | | | |
| Adjusted EBITA before Restructuring Charges Margin on Revenue before Billable Expenses % | 9.4 % | 9.7 % | |
| Note: Management believes the resulting comparisons provide useful supplemental data that, while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance. | |||
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||
| Three Months Ended March 31, 2023 | |||||||||
| As Reported | Amortization of Acquired Intangibles | Restructuring Charges | Net Losses on Sales of Businesses1 | Adjusted Results (Non-GAAP) | |||||
| Operating Income and Adjusted EBITA before Restructuring Charges2 | | | | | |||||
| Total (Expenses) and Other Income3 | (22.3) | | (18.1) | ||||||
| Income Before Income Taxes | 166.0 | (20.9) | (1.6) | (4.2) | 192.7 | ||||
| Provision for Income Taxes | 33.8 | 4.2 | 0.3 | 1.3 | 39.6 | ||||
| Equity in Net Loss of Unconsolidated Affiliates | (0.1) | (0.1) | |||||||
| Net Income Attributable to Non-controlling Interests | (6.1) | (6.1) | |||||||
| Net Income Available to IPG Common Stockholders | | | | | | ||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 385.8 | 385.8 | |||||||
| Dilutive effect of stock options and restricted shares | 1.6 | 1.6 | |||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 387.4 | 387.4 | |||||||
| Earnings per Share Available to IPG Common Stockholders4: | |||||||||
| Basic | | | | | | ||||
| Diluted | | | | | | ||||
| 1 Primarily relates to losses on complete dispositions of businesses and the classification of certain assets as held for sale. | |||||||||
| 2 Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page A3 in the appendix. | |||||||||
| 3 Consists of non-operating expenses including interest expense, interest income and other expense, net. | |||||||||
| 4 Earnings per share amounts are calculated on an unrounded basis but rounded for purposes of presentation. | |||||||||
| Note: Management believes the resulting comparisons provide useful supplemental data that, while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance. | |||||||||
FAQ
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