Q1 2024 The Interpublic Group of Companies Inc Earnings Call

Operator: Good morning, and welcome to the Interpublic Group first quarter 2024 conference call. All parties are in a listen only mode until the question and answer portion. At that time, if you would like to ask a question, you may press star one. 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. Sir, you may begin.

Good morning.

And welcome to the Interpublic Group first quarter 2024 conference call. All parties are in a listen only mode until the question and answer portion at that time, if you would like to ask a question you May Press Star. One. This conference is being recorded if you have any objections you may disconnect.

At this time I would now like to introduce Mr. Jerry <unk> Senior Vice President of Investor Relations, Sir you may begin.

Jerome J. Leshne: Good morning. Thank you for joining us.

Jerry: Good morning, Thank you for joining us. This morning, we are joined by our CEO Felipe Krakowski and by Alan Johnson, Our CFO.

Jerome J. Leshne: This morning we are joined by our CEO, Philippe Krakowski, and by Ellen Johnson, our CFO. We have posted our earnings release and our slide presentation on our website, interpublic.com. We will begin with prepared remarks to be followed by Q&A. We plan to conclude before the market opens at 9.30 a.m. Eastern Time.

Speaker Change: We have posted our earnings release, and our slide presentation on our website Interpublic Dot com.

Jerry: We will begin with prepared remarks to be followed by Q&A. We plan to conclude before market open at 930, a M eastern time.

Jerome J. Leshne: During this call, we will refer to forward-looking statements about our company. These are subject to the uncertainties and the cautionary statements that are included in our earnings release and the slide presentation. These are further detailed in our 10-Q and other filings with the SEC. We will also refer to certain non-GAAP measures. We believe that these measures provide useful, supplemental data that, while not a substitute for gap measures, allow for greater transparency in the review of our financial and operational performance. At this point, it is my pleasure to turn things over to Philippe Krakowsky.

Jerry: During this call we will refer to forward looking statements about our company.

Jerry: These are subject to the uncertainties and the cautionary statement that are included in our earnings release and the slide presentation.

Jerry: These are further detailed in our 10-Q and other filings with the SEC.

Jerry: We will also refer to certain non-GAAP measures.

Jerry: We believe that these measures 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.

Jerry: At this point it is my pleasure to turn things over to Felipe quick housekeeping.

Philippe Krakowsky: Thank you, Gary. As usual, I'll begin our call with a high-level overview of our performance in the quarter, and Ellen will then provide additional details. I'll conclude with some highlights at our agencies and key strategic updates, to be followed by your Q&A. This morning, we are reporting a solid start to 2024, with Q1 performance fully consistent with the targets for growth and margin that we shared earlier this year. The organic growth of our revenue before billable expenses came in at 1.3%.

Philippe Krakowsky: Thank you Gerry.

Philippe Krakowsky: As usual I'll begin our call with a high level view of our performance in the quarter.

Philippe Krakowsky: Allan will then provide additional details.

Philippe Krakowsky: I'll conclude with some highlights at our agencies in key strategic updates.

Speaker Change: He'll be followed by your Q&A.

Allan: This morning, we are reporting a solid start to 'twenty 'twenty four.

Allan: With Q1 performance fully consistent with the targets for growth and margin that we shared earlier this year.

Allan: The organic growth of our revenue before billable expenses came in at one 3%.

Philippe Krakowsky: Regionally, we were paced by strong growth in Europe, followed by growth in LATAM and the U.S. In keeping with our long-term record, we continue to see very strong growth at IPG Media Brands in Q1. FCB's offering of Creativity Informed by Data Insights and Precision, as well as IPG Health, also marked strong quarters of growth, and our public relations discipline, specifically GOLIN, which posted double-digit organic growth, was a highlight of the first quarter.

Regionally, we were paced by strong growth in Europe.

Allan: Followed by growth in Latam in the U S.

Allan: In keeping with our long term record we continue to see very strong growth at IPG media brands in Q1.

Allan: Fcb's offering of creativity informed by data insights and precision.

Allan: As well as IPG health also marked a strong quarters of growth.

Allan: And our public relations disciplines, specifically, Golan, which posted double digit organic growth was.

Allan: It was a highlight of the first quarter.

Philippe Krakowsky: From the standpoint of clients... We again had growth in six of eight client sectors worldwide, led by double-digit increases among our health care and food and beverage clients, followed by solid increases across the consumer goods and retail sectors, as well as our other sectors of the Public Sector and Diversified Industry. We also continue to see trends within our portfolio that have been a drag on our growth and that we've identified during recent quarters. These are the underperformance of our digital specialty agencies and our tech and telecom clients. As we've indicated previously,

Allan: From the standpoint of clients.

Allan: We again had growth in six of eight client sectors worldwide.

Allan: By double digit increases among our health care and food and beverage clients.

Allan: Followed by solid increases across the consumer goods and retail sectors.

Allan: As well as our other sector or public sector and diversified industrials.

Allan: We also continued to see trends within our portfolio that had been a drag on our growth and that we've identified during recent quarters.

Allan: Those are the underperformance of our digital specialty agencies, and our tech and telecom client sector.

Allan: As we've indicated previously had.

Philippe Krakowsky: Heading into 2024, most of the weight from the tech and telecom sector will be due to the loss of a large AOR assignment with a telco client late last year. Outside of that item, same client decreases in the sector have largely stabilized. Turning to Expenses and Margin, the quarter demonstrates that our teams continue to operate with a high degree of focus, as we keep investing in the growth areas of the business.

Allan: Heading into 2020 for most of the weight from the tech and telecom sector will be due to the loss of a large <unk> assignment with a telco client late last year.

Allan: Outside of that item same client decreases in the sector have largely stabilized.

Allan: Turning to expenses and margin.

Allan: The quarter demonstrates that our teams continue to operate with a high degree of focus.

Allan: Because we keep investing in the growth areas of the business.

Philippe Krakowsky: Our adjusted EBITDA margin was 9.4%, which is in line with expectations for our smallest seasonal quarter. That margin result is despite an elevated expense for severance in Q1. Those actions should benefit our expenses for the balance of the year. It's worth noting that we had 110 basis points of operating leverage in the first quarter on our expense for base payroll benefits and tax from a year ago. Our diluted earnings per share in the quarter was $0.29 as reported and $0.36 as adjusted for acquired intangibles amortization and the impact of net business disposition. During the quarter, we repurchased 1.9 million shares, returning $62 million.

Allan: Alright, adjusted EBITA margin was nine 4%.

Allan: Which is in line with expectations for our smallest seasonal quarter.

Allan: That margin result is despite elevated expense for severance in Q1.

Allan: Those actions should benefit our expenses for the balance of the year.

Allan: It's worth noting that we had 110 basis points of operating leverage in the first quarter on our expense for base payroll benefits and tax from a year ago.

Allan: Our diluted earnings per share in the quarter was 29 as reported and 36 cents as adjusted for acquired intangibles amortization and the impact of net business dispositions.

During the quarter, we repurchased one 9 million shares returning $62 million.

Philippe Krakowsky: You'll recall that in February, our board authorized another $320 million share repurchase program and increased our common share dividend by 6%. In terms of our outlook, we continue to expect to achieve full-year organic growth of one to two percent. However, a recent decision by an important ongoing client will adversely impact the balance of this year and likely make achieving the top end of our target more challenging.

Allan: You'll recall that in February our board authorized another $320 million share repurchase program.

Allan: And increased our common share dividend by 6%.

Allan: In terms of our outlook, we continue to expect to achieve full year organic growth of 1% to 2%.

Allan: A recent decision by an important ongoing client will adversely impact the balance of this year and likely make achieving the top end of our target more challenging.

Philippe Krakowsky: Within that range of growth, we continue to expect to deliver an adjusted EBITDA margin of 16.6% for the four years. As we look ahead, we anticipate that the strongest and most consistent growth areas of our business, which is our data and tech-driven media offerings. Specialist Healthcare Marketing Expertise. PR and Experiential Marketing Capabilities are positioned to continue their strong performance over the long term. Additionally, these higher-value offerings, which include opportunities for outcome-based performance compensation, combined with our proven operational discipline, will result in sustained long-term margin. As we move ahead, we'll continue to enhance our existing offerings, providing holistic solutions that help marketers successfully deal with a media and marketing environment that's increasingly complex and dynamic.

Allan: Within that range of growth, we continue to expect to deliver adjusted EBITDA margin of 16, 6% for.

Allan: For the full year.

Allan: As we look ahead.

Allan: We anticipate that the strongest and most consistent growth areas of our business.

Allan: Such as our data and tech driven media offerings.

Allan: Most health care marketing expertise.

Allan: We are an experiential marketing capabilities are positioned to continue their strong performance over the long term.

Allan: <unk> these higher value offerings, which include opportunities for outcome based performance compensation.

Allan: Combined with our proven operational discipline will result in sustained long term margin improvement.

As we move ahead, we'll continue to enhance our existing offerings, providing holistic solutions that help marketers.

Allan: Excessively deal with our media and marketing environment, that's increasingly complex and dynamic.

Philippe Krakowsky: This entails further embedding precision and performance into our media offering, as well as integrating the most contemporary technologies, such as generative AI, at the core of our marketing services capability. I'll come back with more detail on the evolution of our offerings after Ellen has had a chance to walk you through a more detailed view of our offerings.

Allan: This entails further embedding precision and performance into our media offering as well as integrating the most contemporary technologies such as generative AI at the core of our marketing services capabilities.

Allan: I'll come back with more detail on the evolution of our offerings. After Alan has had a chance to.

Alan Johnson: Walk you through a more detailed view of our results.

Ellen Tobi Johnson: I hope that everyone is well. As a reminder, my remarks will relate to the presentation slides that accompany our webinar. Beginning with the highlights in slide two of the presentation, our first quarter revenue before billable expenses, or net revenue, increased 30 basis points from a year ago, with an organic increase of 1.3%. Our organic net revenue increase was 2.1% in the U.S., which was partially offset by an organic decrease in our international markets of 50 basis points.

Alan Johnson: Thank you Felipe.

Speaker Change: I hope that everyone is well.

Alan Johnson: A reminder, my remarks will track the presentation slides that accompany our webcast.

Alan Johnson: Beginning with the highlights on slide two of the presentation, our first quarter revenue for billable expenses or net revenue increased 30 basis points from a year ago.

Alan Johnson: With an organic increase of one 3%.

Alan Johnson: Our organic net revenue increased two.

Alan Johnson: 2.1% in the U S.

Alan Johnson: Which was partially offset by an organic decrease in our international markets are 50 basis points.

Ellen Tobi Johnson: First quarter adjusted EBIT TA before a small restructuring adjustment was $205.5 million, and the margin was 9.4%. Diluted earnings per share was 29 cents as reported and 36 cents as adjusted. The adjustments exclude the after-tax impacts of the amortization of required intangibles and non-operating losses on the sales of certain small, non-strategic businesses. We repurchased 1.9 million shares during the quarter for $62 million.

Alan Johnson: First quarter adjusted EBIT Ta before a small restructuring adjustment was $205 5 million and margin with nine 4%.

Diluted earnings per share with 29 cents as reported and 36% as adjusted.

The adjustments exclude the after tax impact of the amortization of acquired intangibles.

Alan Johnson: Non operating losses on the sales of certain small non strategic businesses.

Alan Johnson: We repurchased one 9 million shares during the quarter for $62 million.

Ellen Tobi Johnson: Turning to slide three, you'll see our P&L for the quarter. I'll cover revenue and operating expenses in detail in the slides that follow. Turning to first quarter revenue in more detail on slide four, our net revenue in the quarter was $2.18 billion. Comparing to Q1-23, the impact of the change in exchange rates with a positive 10 basis points.

Alan Johnson: Turning to slide three you'll see our P&L for the quarter.

Alan Johnson: I'll cover revenue and operating expenses in detail in the slides that follow.

Alan Johnson: Turning to our first quarter revenue in more detail on slide four.

Alan Johnson: Our net revenue in the quarter with 2.18 billion.

Alan Johnson: Compared to Q1 'twenty three the impacts of the change in exchange rates was positive 10 basis points.

Ellen Tobi Johnson: The impact of nexus positions over the past 12 months was negative 1.1%. Our organic increase in net revenue was $27.8 million, or 1.3%. At the bottom of this slide, we break out our segment revenue. Our media, data, and engagement solutions segment decreased 50 basis points organically.

Alan Johnson: The impact of net dispositions over the past 12 months was negative one 1%.

Alan Johnson: Our organic increase of net revenue was $27 8 million a one 3%.

Alan Johnson: At the bottom of this slide we break out our segment revenue.

Alan Johnson: Our immediate data engagement solutions segment.

Alan Johnson: Greece 50 basis points organically.

Ellen Tobi Johnson: Very strong growth in our immediate businesses was offset by decreases elsewhere in the cycle. As we've noted previously, a digital specialist agency's performance is challenged, and the results weigh significantly on the overall segment growth. And our integrated advertising and creativity-led solutions segment, organic growth in the quarter was 3.2%. We have very strong growth at FCB and IPG Health.

Alan Johnson: Strong growth in our media businesses was offset by decreases elsewhere in the segment.

Alan Johnson: As we've noted previously our digital specialist agencies performance with Charles and the results with significantly on the overall segment growth.

Alan Johnson: At our integrated advertising and creativity led solutions segment.

Alan Johnson: Gallon growth in the quarter was three 2%.

Alan Johnson: Very strong growth at FCB and IPC House.

Ellen Tobi Johnson: That was partially offset by decreases at Certain Bar, a Creativity-Led Integrated Agency, including the loss in the technology and telecom sector that Philippe mentioned previously. In our Specialized Communications and Experiential Solutions segment, organic growth was 1.5%. The segment was paced by double-digit percentage growth at Golan in public relations, while Jack Morton decreased from a year ago. Moving on to slide five, organic net revenue growth by region. In the U.S., which comprised 68% of our revenue before billable expenses in the quarter, organic growth was 2.1%.

Alan Johnson: That was partially offset by decreases that certain bar creativity led integrated agencies.

Alan Johnson: Including the loss in the technology and telecom sector, that's already mentioned previously.

Alan Johnson: And our specialized communications and exponential solutions segment organic growth was one 5%.

The segment was paced by double digit percentage growth in colon and public relations well, Jack Morton decreased from a year ago.

Alan Johnson: Moving onto slide five organic net revenue growth by region.

Alan Johnson: In the U S. It's comprised 68% of our revenue people billable expenses in the quarter.

Alan Johnson: Organic growth was two 1%.

Ellen Tobi Johnson: We were led by very strong growth in health care and food and beverage, reflecting significant new business wins. However, that growth was partially offset by decreases in our specialty digital offerings and by a loss in the technology and telecom sector. International market with 32% of net revenues in the quarter and decreased 50 basis points organically with mixed performance by region. UK with 8% of net revenue in the quarter, and Group 20 Basis Points Organics. We have had very strong growth at McCann, FCB, and Golan.

Alan Johnson: We were led by very strong growth in healthcare and food and beverage, reflecting significant new business wins.

Alan Johnson: That growth was partially offset by decreases at our specialty digital offerings and by a loss in the technology and telecom sector.

Alan Johnson: International market with 32% of net revenues in the quarter and decreased 50 basis points organically with mixed performance by region.

Alan Johnson: The U K with 8% of net revenue in the quarter.

Alan Johnson: And grew 20 basis points organically.

We had very strong growth at Mccann FCB and Golan.

Ellen Tobi Johnson: Those gains were largely offset in the quarter by decreases in the healthcare sector and in the event space. Consumable Europe generated 8% of net revenue in the quarter and increased 8.9% organically. We saw strong performance with double-digit growth in markets that include Spain, the Netherlands, and Italy, and modest growth in France and Germany.

Alan Johnson: Those gains were largely offset in the quarter by decreases in the health care sector and in the embedded space.

Alan Johnson: Continental Europe was 8% of net revenue in the quarter.

Alan Johnson: And increased eight 9% organically.

Alan Johnson: We saw strong performance with double digit growth in markets that include Spain, the Netherlands, and Italy, and modest growth in France and Germany.

Ellen Tobi Johnson: AsiaPAC, which was 7% of net revenue in the quarter, decreased 8.1% organically. Most national markets decreased from a year ago due to reductions in spend from existing clients in the region, although organic growth in India was the exception.

Alan Johnson: Asia Pac, which was 7% of net revenue in the quarter.

Alan Johnson: Decreased eight 1% organically.

Alan Johnson: Most astro market's decrease from a year ago due to reductions in spend from existing clients in the region.

Alan Johnson: Gavin it growth in India was the exception.

Ellen Tobi Johnson: Last time, with 4% of net revenue and organic growth of 3% in the quarter, we were led by growth at IBG Media Brands, which was somewhat offset by softness at our other offerings. Our other markets group, which is Canada, the Middle East, and Africa, had 5% of net revenue in the quarter. The group decreased 6.5% organically, which comes on top of a 9% increase last year and a 20% increase the year before. Revenue decreased in several national markets in the Middle East, including Israel and Canada.

Alan Johnson: Latam for 4% of net revenue.

Alan Johnson: Organic growth was 3% in the quarter.

Alan Johnson: We were led by growth of IPG media brands, which was somewhat offset by softness at our other offering.

Alan Johnson: Our other markets group.

Alan Johnson: Is Canada, the middle East in Africa, with 5% of net revenue in the quarter.

Alan Johnson: The group decreased six 5% organically, which comes on top of the 9% increase last year and a 20% increase the year before.

Alan Johnson: Revenue decreased in several national markets in the Middle East.

Alan Johnson: Israel and Canada.

Ellen Tobi Johnson: Moving on to slide six, and operating expenses in the quarter. Our net operating expenses, which exclude billable expenses, the amortization of acquired intangibles, and the small restructuring adjustment, increased only 50 basis points from a year ago, which includes notably higher severance expense. The result was our first quarter margin of 9.4%. As you can see on this slide, our ratio of total salaries and related expenses as a percentage of net revenue was 72.1%, compared with 72.5% a year ago.

Alan Johnson: Moving on to slide six and operating expenses in the quarter.

Alan Johnson: Our net operating expenses, which is.

Alan Johnson: Glued billable expenses, the amortization of acquired intangibles and the small restructuring adjustment increased only 50 basis points from a year ago.

Alan Johnson: Includes notably higher severance expense.

Alan Johnson: The result was our first quarter margin of nine 4%.

Alan Johnson: As you can see on this slide our ratio of total salaries.

Alan Johnson: <unk> expense as a percentage of net revenue was 72, 1% compared with 72, 5% a year ago.

Ellen Tobi Johnson: Again, all of these ratios are against our smallest quarterly net revenue base of the year. Underneath that SRS result, we drove leverage on our expense for both payroll, benefits, and tax, which decreased 110 basis points as a percentage of net revenue. Additionally, our average headcount in the quarter decreased 2.1% from the first quarter of last year.

Alan Johnson: Again, all of these ratios are against our smallest quarterly net revenue base of the year.

Alan Johnson: And you meet that Srs results.

Alan Johnson: Drove leverage on our expense for base payroll benefits and tax.

Alan Johnson: A decrease of 110 basis points as a percentage of net revenue.

Alan Johnson: Our average head count in the quarter decreased two 1% from the first quarter of last year.

Ellen Tobi Johnson: Our expense for performance-based incentive compensation increased slightly from a year ago, to 2.6% from 2.5% of net revenue. Severance expense was 2.2% of net revenue, an increase of 70 basis points from the first quarter a year ago. We expect to see the benefits of these actions on margins as we move forward through the year.

Alan Johnson: Our expense for performance based incentive compensation increased slightly from a year ago.

Alan Johnson: Two 6% from two 5% of net revenue.

Alan Johnson: Severance expense was two 2% of net revenue.

Alan Johnson: An increase of 70 basis points from the first quarter a year ago we.

Alan Johnson: We expect to see the benefits of these actions on margins as we move forward through the year.

Ellen Tobi Johnson: Our expense for temporary labor was 3.3% of net revenue, compared with 3.4% in Q1'23. Also on the slide, our office and other direct expense ratio was 14.8% in the quarter, compared with 15.2% a year ago. However, underneath that, our expense ratio on occupancy was flat against last year at 4.4%.

Alan Johnson: Our expense for temporary labor was three 3% of net revenue compared with three 4% in Q1 'twenty three.

Alan Johnson: Also on this slide our office and other direct expense ratio was 14, 8% in the quarter.

Alan Johnson: Compared with 15, 2% a year ago.

Alan Johnson: Underneath that our expense ratio on occupancy was flat against last year at four 4%.

Ellen Tobi Johnson: Through disciplined cost management, we continue to lever our expense for all other office and other direct, which was 10.4% of net revenue, compared with 10.8% a year ago. Our SG&A expense was 1.7% of net revenues, compared to 60 basis points of net revenue a year ago. This change reflects the higher level of strategic investments in both senior enterprise leadership and information technology.

Alan Johnson: Through disciplined cost management, we continue to lever our expense for all other office and other direct which was 10, 4% of net revenue compared with 10, 8% a year ago.

Alan Johnson: Our SG&A expense was one 7% of net revenues compared with the 60 basis points of net revenue a year ago.

Alan Johnson: The change reflects the higher level strategic investments in both senior enterprise leadership in information technology.

Ellen Tobi Johnson: On slide 7, we present detail on adjustments to our reported first quarter results in order to provide better transparency and a picture of comparable performance, which begins on the left-hand side with our reported results and steps through to adjusted EBITDA and our adjusted diluted EPS. Our expense for the amortization of acquired intangibles, in the second column, was $20.7 million. The restructuring charges were $0.6 million, which represents adjustments in the quarter related to previous actions.

Alan Johnson: On slide seven we present detail on adjustments to reported first quarter results.

Alan Johnson: In order to provide better transparency and a picture of comparable performance.

Alan Johnson: This begins on the left hand side with our reported results.

Alan Johnson: And steps through to adjusted EBITDA and our adjusted diluted EPS.

Alan Johnson: Our expense for the amortization of acquired intangibles and the second column with $27 million.

Alan Johnson: The restructuring charges were <unk> 6 million.

Alan Johnson: It presents adjustments in the quarter related to previous actions.

Ellen Tobi Johnson: Below operating expenses in column four, we had a pre-tax loss in the quarter of $6.8 million in other expenses due to the disposition of a few small non-strategic businesses. At the foot of the slide, we present the after-tax impact per diluted share of each of these adjustments, which bridges our diluted EPS as reported at $0.29 to adjusted earnings of $0.36 per diluted share.

Alan Johnson: Below operating expenses in column four we had a pre tax loss in the quarter of $6 8 million in other expenses due to the disposition of a few small non strategic businesses.

Alan Johnson: At the foot of this slide we present the after tax impact per diluted share of each of these adjustments, which bridges our diluted EPS as reported at 29 cents to adjusted earnings of 36 cents per diluted share.

Ellen Tobi Johnson: On slide eight, we turn to our cash flow in the quarter. Cash used in operations was $157.4 million compared with $547.6 million a year ago. As a reminder, our operating cash flow is highly seasonal; we typically generate significant cash from working capital in the fourth quarter and use cash in the first quarter. During this year's first quarter, our working capital use was $340.3 million, which is near the low end of the range for first quarter uses over a period of at least the past 15 years.

Alan Johnson: On slide eight we turn to our cash flow in the quarter.

Alan Johnson: Cash used in operations was $157 4 million compared with $547 6 million a year ago.

Alan Johnson: As a reminder, our operating cash flow is highly seasonal.

Alan Johnson: We typically generate significant cash from working capital in the fourth quarter and use cash in the first quarter.

Alan Johnson: During this year's first quarter working capital use was $340 3 million.

Alan Johnson: Which is near the low end of the range. The first quarter uses over a period of at least the past 15 years.

Ellen Tobi Johnson: It's worth noting the cash generated from operations before working capital gains was $182.9 million in the quarter. In our investing activities, we used $50 million in the quarter, mainly for CAPA. Our financing activities in the quarter were $227.1 million, primarily for our common stock dividend and share repurchase. Our net decrease in cash for the quarter was $454.5 million. Slide nine is the current portion of our balance. We ended the quarter with $1.93 billion in cash and equipment.

Alan Johnson: It's worth noting the cash generated from operations before working capital changes was $182 9 million in the quarter.

Alan Johnson: And our investing activities, we used $50 million in the quarter mainly for Capex.

Alan Johnson: Our financing activities in the quarter, we used $227 1 million.

Alan Johnson: Primarily for our common stock dividend and share repurchases.

Alan Johnson: Our net decrease in cash for the quarter with $454 5 million.

Alan Johnson: Slide nine is the current portion of our balance sheet.

Alan Johnson: We ended the quarter with $1 93 billion of cash and equivalents.

Ellen Tobi Johnson: Slide 10 depicts the maturities of our outstanding debt as of March 31. As you can see on the schedule, total debt at quarter end was $3.2 billion. It's worth noting that earlier this month, the $250 million maturity depicted in the first column was repaid from cash. With that, our next maturity is not until 2028. In summary, on slide 11, our teams are focused on executing at a high level. I would like to express our pride in and gratitude for the efforts of our people. The strength of our balance sheet and liquidity means that we remain well positioned, both financially and commercially. And with that, I'll turn it back to Philippe.

Alan Johnson: Slide 10 depicts the maturities of our outstanding debt as of March 31.

Alan Johnson: As you can see on the schedule of those debt at quarter end was $3 2 billion.

Alan Johnson: It's worth noting earlier this month with 250 million maturity the PEC.

Alan Johnson: In the first column.

Alan Johnson: He paid from cash.

Alan Johnson: With that our next maturity not until 2028.

Alan Johnson: In summary on slide 11.

Alan Johnson: Our teams are focused on executing at a high level.

Speaker Change: I would like to express our pride in and gratitude for the efforts of our people.

Speaker Change: The strength of our balance sheet, our liquidity means that we remain well positioned both financially and commercially.

Speaker Change: And with that I'll turn it back to Felipe.

Philippe Krakowsky: Thanks Alan.

Philippe Krakowsky: As mentioned, the results we're reporting today are in line with our forecast coming into the year. We continue to see strength in our media offerings in health care and marketing services and at those agencies that are leading in the adoption of Audience-Led Capabilities Enabled by Our Data. Broadly speaking, marketer sentiment has begun to improve relative to most of last year, and the New Business Pipeline is more. We've also entered the year with strong levels of industry recognition, on the prestigious At AHA list, as well as the Fast Companies list of the most innovative companies, both of which were announced during the first quarter. IPG was better represented than any other holding company group.

Philippe Krakowsky: As mentioned the results. We're reporting today are in line with our forecast coming into the year.

We continue to see strength that our media offerings in health care and marketing services.

Philippe Krakowsky: And if those agencies that are leading in the adoption.

Philippe Krakowsky: Of audience led capabilities enabled by our data spine.

Philippe Krakowsky: Broadly speaking marketers' sentiment has begun to improve relative to most of last year.

Philippe Krakowsky: And the new business pipeline is more active.

Philippe Krakowsky: We've also entered the year with strong levels of industry recognition.

Philippe Krakowsky: On the prestigious AD age a list as well as fast company's list of most innovative companies both of which were announced during the first quarter.

Philippe Krakowsky: <unk> was better represented than any other holding company group.

Philippe Krakowsky: We're continuing to live through a period of significant technological disruption, and we find that innovation has never been more important. Organizations in every industry and across every geographical region are looking to reinvent themselves in order to adapt to and thrive in this highly competitive environment, and Interpublic remains a trusted partner at the heart of the transformation journeys of many of the world's most ambitious businesses. Of course, that's an ambition that we also share.

Philippe Krakowsky: We're continuing to live through a period of significant technological disruption.

Philippe Krakowsky: Finding that innovation has never been more important.

Philippe Krakowsky: Organizations in every industry and across every geographical region, we're looking to reinvent themselves in order to adapt to and thrive in this highly competitive environment and.

Philippe Krakowsky: And interpublic remains a trusted partner at the heart of the transformation journeys of many of the world's most ambitious businesses.

Philippe Krakowsky: Of course, that's an ambition that we also share.

Philippe Krakowsky: And in recent years, that has meant developing a strong technology and data foundation, with centralized resources and strategic capabilities such as audience definition, identity resolution, commerce, and production. Over the course of 2023, we added senior functional leaders at the corporate IPG level, to ensure that we're connecting more of the portfolio to these horizontal capabilities, in order to make precision and performance a part of all of our services. We spoke to the fact that in our media, data, and CRM practices, quite a number of years have been essential to the predictive modeling and analytics work that has led to our long-term success in Q1.

Philippe Krakowsky: And in recent years that has been developing a strong technology and data Foundation.

With centralized resources and strategic capabilities.

Philippe Krakowsky: As audience definition identity resolution.

Philippe Krakowsky: Commerce and production.

Philippe Krakowsky: Over the course of 2023, we added senior functional leaders at the corporate IPG level to ensure that we're connecting more of the portfolio to these horizontal capabilities.

Philippe Krakowsky: In order to make precision and performance are part of all of our services.

Philippe Krakowsky: Last quarter, we spoke to the fact that in our media data and CRM practices machine learning has for.

Philippe Krakowsky: Quite a number of years been essential to the predictive modeling and analytics work.

Philippe Krakowsky: Led to our long term success.

Philippe Krakowsky: During Q1.

Philippe Krakowsky: We announced a global partnership with Adobe that will see us become the first company to integrate their GenStudio product, which unites all facets of the content supply chain through the use of generative AI, into our marketing technology. This will allow us to accelerate the adoption of AI in our creative and content business, from Ideation through Production and Activation. These emerging technologies provide new canvases for us to work with in engaging consumers at every touchpoint in their brand journey.

Philippe Krakowsky: We announced the global partnership with Adobe that will see us become the first company to integrate their gen studio product.

Philippe Krakowsky: Which unites all facets of the content supply chain through the use of generative AI into our marketing technology platform.

Philippe Krakowsky: This will allow us to accelerate the adoption of AI in our creative and content businesses.

Philippe Krakowsky: Ideation through production and activation.

Philippe Krakowsky: These emerging technologies provide new canvases for us to work with and engaging consumers at every touch point in their brand journey.

Philippe Krakowsky: And we're therefore empowering our teams with AI tools that strategists and creative people can use to quickly scale insights and ideas. At the enterprise level, all of this is underpinned by a unified operating model, what we call IPG marketing.

Philippe Krakowsky: And we're therefore empowering our teams with AI tools that strategists and creative people can use to quickly scale insights and ideas.

Philippe Krakowsky: At the enterprise level all of this is underpinned by a unified operating system, what we call the IPG marketing engine.

Philippe Krakowsky: This bill is on segmentation and insights fueled by our Axiom data and identity products, and Seamlessly Connect Media Strategies and Targeting, including the predictive modeling that I called out earlier of what we call high-value audiences, connect that all the way through to creative concepts and methods for Every Market. And we can then move all the way through to activation, the production and dissemination of campaigns, whether on marketing technology platforms or in media investment across all formats and channels. Our engine can then analyze attribution.

Philippe Krakowsky: This builds on segmentation and insight fueled by our axiom data and identity products and seamlessly connects media strategies and targeting.

Philippe Krakowsky: Including the predictive modeling that I called out earlier or what we call high value audiences.

Philippe Krakowsky: Connect that all the way through to creative concepts and messaging, where every marketing discipline.

Philippe Krakowsky: And we can then move all the way through to activation the production and dissemination of campaigns, whether on marketing technology platforms or in media investment across all formats and channels.

Philippe Krakowsky: Our engine can then analyze attribution.

Philippe Krakowsky: Optimize next best decisions and assess the effectiveness of campaigns. And this end-to-end solution positions us to help our clients better engage with, convert, and retain customers through the entire marketing funnel. As you have heard from us in the past, we're also using AI as part of our ongoing internal transformation effort to improve structure and processes across the company. Now, with that as a high-level strategic overview, I guess I'll turn to just a few specific highlights from the quarter.

Philippe Krakowsky: Optimizing next best decisions and assess the effectiveness of campaigns.

Philippe Krakowsky: And N solution positions us to help our clients better engage with convert and retain customers through the entire marketing funnel.

Philippe Krakowsky: As you heard from us in the past, we're also using AI as a part of our ongoing internal transformation efforts.

Philippe Krakowsky: To improve structure and processes across the company.

Speaker Change: Now with that as a high level view strategically I guess I'll turn to just a few specific highlights from the quarter.

Philippe Krakowsky: Within media data and engagement solutions, we saw very strong growth, as we've mentioned, as well as industry recognition for our media and data operations. IPG Media Brands continues to expand and integrate our unified retail media solution, which is delivering cross-retailer audience identification, planning, and optimization that spans a range of retailer platforms and marketing. We're doing this for clients now in much of the media brands portfolio and in conjunction with leading partners across the retail ecosystem, from media networks to aggregators.

Speaker Change: Within media data and engagement.

Speaker Change: <unk>, we saw very strong growth as we've mentioned as well as industry recognition for our media and data operations.

Speaker Change: IPG media brands continues to expand and integrate our unified retail media solution, which.

Speaker Change: Which is delivering cross retailer audience identification planning and optimization.

Speaker Change: It spans a range of retailer platforms and marketing tactics.

Speaker Change: We're doing this for clients now and much of the media brands portfolio and in conjunction with leading partners across the retail ecosystem for media networks to Aggregators.

Philippe Krakowsky: In other news relating to our partnership with Amazon, we became the first company to integrate Amazon Ads APIs into our proprietary media platform. And our updated reach maps now include prime video ads, so our planning teams can view historical data for prime video ads alongside those of other e-partners and digital media inventory.

Speaker Change: In other news relating to our partnership with Amazon, We became the first company.

Speaker Change: To integrate Amazon ads API into our proprietary media platform.

Speaker Change: And our updated reach maps now include Prime video ads. So our planning teams can view historical data for Prime video ads alongside those of other.

Speaker Change: <unk> partners and digital media inventory.

Philippe Krakowsky: In Q1, we also rolled out an Amazon Marketing Cloud Suite of analytic solutions that was developed by our platforms and intelligence teams in Connecticut. Our media operations continue to receive the industry's highest honors on the Ad Age A-list. As I mentioned, IPG Media Brands was named U.S. Network of the Year and U.M. was named Media Agency of the Year. In a world in which audience segmentation and insights are key to delivering performance for our clients, and one in which AI will play an increasingly important role.

Speaker Change: In Q1, we also rolled out an Amazon marketing cloud suite of analytic solutions that was developed by our platforms and intelligence teams at <unk>.

Speaker Change: Our media operations continued to receive the industry's highest honors.

Speaker Change: The.

Speaker Change: Tablet add excuse me on AD Age's, a list as I mentioned IPG media brands was named network of the year and U M was named media agency of the year.

Speaker Change: In a world in which audience segmentation and insights are key to delivering performance for our clients.

Speaker Change: And one in which AI will play an increasingly important role.

Philippe Krakowsky: Access to Proprietary Data at Scale will be essential to success. Axiom continues to have the industry's top performing audience data to engage with consumers at an individual level without the need for proxy. Axiom's tech stack and marketing engine optimized performance using this data spine, which is anchored by a deep understanding of two and a half billion real people. The attributes per Axiom ID are a third greater than those available with any other industry data set, and we can match them to significantly more global device IDs than our closest competitors.

Speaker Change: Access to proprietary data at scale will.

Speaker Change: It will be essential to success.

Speaker Change: Axiom continues to have the industry's top performing audience data to engage with consumers on an individual level without the need for proxies.

Speaker Change: Our tech stack and marketing engine optimized performance using this data spine, which is anchored by a deep understanding of two and a half billion real people.

Speaker Change: The attributes per axiom I D.

Speaker Change: A third greater than those available with any other industry dataset.

Speaker Change: And we can match them to significantly more global device Ids than our closest competitor.

Philippe Krakowsky: We're also able to connect our people data to abundant consumer transactions and to refresh that at rates equivalent to those of anyone in the sector. Our clients benefit from the trust earned through decades of experience in scaled first-party data management. Since Axiom teams work inside of large enterprises, consulting on and writing the software that architects first, second, and third-party data for use both in ad tech and marketing.

Speaker Change: We're also able to connect our people data to abundant consumer transaction data and to refresh that at rates equivalent to those of anyone in the sector.

Speaker Change: Our clients benefit from the trust earned through decades of experience and scaled first party data management since axiom teams work inside of large enterprises consulting on in writing the software that architects first second and third party data.

Speaker Change: For us both in AD Tech and Martech.

Philippe Krakowsky: Turning to our Integrated Advertising and Creativity-led Solutions segment, as we've mentioned FCB and IPG Health's sector performance, the leadership team at FCB has focused on bringing both media planning and production closer to its traditional creative work, with planners at FCB using Axiom data and tools as the foundations for how they interact with both clients and ultimately consumers. This strategy results in creative ideas that are grounded in audience segments and insights and lead to creative work that drives in-market results.

Speaker Change: Turning to our integrated advertising and creativity led solutions segment as we've mentioned FCB in IPG health led sector performance.

Speaker Change: The leadership team at FCB is focused on bringing both media planning and production closer to its traditional creative work.

Speaker Change: With planners at FCB, you using axiom data and tools as the foundations for how they interact with both clients and ultimately consumers.

Speaker Change: This strategy results in creative ideas that are grounded in audience segments and insights.

Speaker Change: And lead to creative work.

Speaker Change: Drive in market results.

Philippe Krakowsky: During the quarter, FCB won Global Network of the Year at the One Show, an important creative competition, and FCB New York was also named Global Agency of the Year and North American Agency of the Year, as part of OneShot.

Speaker Change: During the quarter FCB when global network of the year at the one show an important creative competition.

Speaker Change: And FCB New York was also named Global agency of the year in North America and agency of the year.

Speaker Change:

Speaker Change: As part of the windshield.

Philippe Krakowsky: IPG Health continues to make strong contributions to our performance. And notably, the company launched a suite of data tools in Europe that enable highly targeted and personalized data-driven marketing to healthcare professionals, which is a first for this region and particularly important given the regulatory environment there. The agency was named Healthcare Network of the Year on the At-Age A-List for the second consecutive year. Deutsch L.A. and the Martin Agency.

Speaker Change: IPG health continued to make strong contributions to our performance.

Speaker Change: And notably the company launched a suite of data tools in Europe and.

Speaker Change: Naval highly targeted and personalized data driven marketing to healthcare professionals, which is a first for this region and particularly important given the regulatory environment there.

Speaker Change: The agency was named healthcare network of the year on the AD age a list for the second consecutive year.

Speaker Change: Deutsche L a and the Martin agency.

Philippe Krakowsky: We're cited among Fast Company's most innovative companies and consistently partner with our media and marketing services companies as part of integrated client delivery teams, and McCann was also featured on the Fast Company list. During the quarter, the agency won AOR responsibilities for PWC, and McCann's Production and Content Studios are increasingly doing global work for major clients like Reckitt Bank, Keezer, and Ikea, within our Specialized Communications and Experiential Weber Shanwick had a solid start to the year, driven by the firm's corporate and public affairs capabilities, as well as its wellness practice.

Speaker Change: We're excited among fast company's most innovative companies and consistently partner with our media and marketing services companies as part of integrated client delivery teams and.

Speaker Change: And Mccann was also featured on the fast company list.

Speaker Change: During the quarter the agency won AOR responsibilities for Pwc and.

Speaker Change: Mccann's production and content studios are increasingly doing global works for.

Speaker Change: For major clients like Reckitt, Benckiser and Ikea.

Speaker Change: Within our specialized communications and experiential solutions segment.

Weber Shandwick had a solid start to the year drill.

Speaker Change: Driven by the firm's corporate and public affairs capabilities as well as its wellens practice.

Philippe Krakowsky: And the agency led a pan-IPG and IPG-DEXTRA health AOR win for Boehringer Ingelheim's mental health franchise, including everything from thought leadership to data and regulatory communications. Weber was named to AdAge's A-list and Fast Company's most innovative company list, making it a leader in its field. As I mentioned, Golan saw very strong growth in the quarter, was named PR Week's U.S. Agency of the Year, and recently introduced an interesting AI-enabled platform that helps its clients detect and combat threats from bots, malicious actors, and disinformation, including disinformation generated by AI.

Speaker Change: And the agency letter.

Speaker Change: Pan IPG in IPG Dextra health.

Speaker Change: Our win.

Speaker Change: For Beringer Ingelheim as mental health franchise and that includes everything from thought leadership to data and regulatory communications work.

Speaker Change: Wherever it was named to AD Age's, a list and fast company's most innovative company list, making it a leader in its field.

Speaker Change: As I mentioned <unk> saw very strong growth in the quarter was named PR week's U S agency of the year.

Speaker Change: And recently introduced an interesting AI enabled platform that helps its clients detect and combat threats from box malicious actors and disinformation.

Speaker Change: Including this information generated by AI.

Philippe Krakowsky: In the experiential marketing space, Momentum created an AI-powered art experience in New York for the launch of the new Coca-Cola Spiced Beverage, and continues to build on the AI patents we've mentioned previously to deliver improved efficiency in event logistics for its clients. Across IPG, we've long been clear that our commitment to ESG is a key priority, and it's core to our culture. During the first quarter, we published our ninth annual ESG report, which combines various reporting frameworks into one comprehensive disclosure and represents our third year in which we've engaged external experts to provide assurances on ESG metrics.

Speaker Change: And the experiential marketing space momentum created an AI powered part experienced in New York for the launch of the new Coca Cola Spice to beverage and <unk>.

Speaker Change: Continued to build on the AI patents, we've mentioned two previously to deliver improved efficiency and event logistics for its clients.

Speaker Change: Across IPG, we've long been clear that our commitment to ESG is a key priority and it's core to our culture.

Speaker Change: During the first quarter, we published our ninth annual ESG report.

Which combines various reporting frameworks into one comprehensive disclosure.

Speaker Change: And represents our third year.

Speaker Change: And which we've engaged external experts to provide assurances on ESG metrics.

Philippe Krakowsky: We were also recently listed on the CDP Supplier Engagement Leaderboard in recognition of the work we do to engage suppliers on climate. Looking forward, as mentioned earlier, it bears noting that the tenor of our conversations with clients has been more positive since the start of the year, compared to the last three quarters of 2023. We continue to expect to achieve full year organic growth of one to two percent. However, as mentioned earlier, a recent decision by a significant ongoing client will likely make achieving the top end of that target more challenging.

We were also recently listed on the CDP supplier engagement leader Board in recognition of the work, we do to engage suppliers on climate change.

Speaker Change: Looking forward as I mentioned earlier, it bears, noting that the tenor of our conversations with clients has been more positive since the start of the year compared to the last three quarters of 2023.

Speaker Change: We continue to expect to achieve full year organic growth of 1% to 2%.

Speaker Change: So as mentioned earlier, a recent decision by a significant ongoing client.

Speaker Change: We will likely make achieving the top end of that target more challenging.

Philippe Krakowsky: And within that range of growth, we continue to expect that we'll deliver an adjusted EBITDA margin of 16.5% for the full year. As you know, over time, we've consistently demonstrated that we can expand margins with growth, and a number of the areas of strength which consistently perform very well, call them out today, media, healthcare, experiential, and PR are accretive to our overall profitability as well. Our flexible cost model is an important lever for improving margins, and that

Speaker Change: And within that range of growth.

Speaker Change: We continue to expect that will deliver adjusted EBITDA margin of 16, 6% for the full year.

Speaker Change: As you know over time.

Speaker Change: We've consistently demonstrated that we can expand margins with growth.

Speaker Change: And a number of the areas of strength, which consistently performed very well.

Speaker Change: Called them out today in media healthcare experiential and PR.

Speaker Change: Our accretive.

To our overall profitability as well.

Speaker Change: Our flexible cost model is an important lever for improving margins.

Speaker Change: And that.

Speaker Change: For some of the new offerings that we have that are more precise and accountable. We will further enhance that opportunity as they lead to more performance driven compensation models.

Philippe Krakowsky: Some of the new offerings that we have that are more precise and accountable will further enhance that opportunity as they lead to more performance-driven compensation. Another important area for value creation is our strong balance sheet, which will allow us to stay committed to capital returns, as was evident in our recent dividend increase and our continued share repurchase, while also positioning us to augment our offerings and our asset mix through M&A with a particular focus on further broadening our commerce and scaled digital transformation capabilities.

Speaker Change: Another important area for value creation is our strong balance sheet.

We will allow us to stay committed to capital returns as was evidenced in our recent dividend increase and our continued share repurchases, while also positioning us to augment our offerings and our asset mix with M&A with a particular focus on further broadening our commerce and scaled digital transformation.

Speaker Change: Capabilities.

Philippe Krakowsky: Across the company, our teams remain highly focused on delivering by continuing to provide these higher-order business solutions to clients, which helps, in turn, them to succeed in this digital economy. So thanks again to our partners, to our people for their continued commitment and support, as well as those of you on this call for your time. And with that, let's open the floor to questions.

Speaker Change: Across the company our teams remain highly focused on delivering by continuing to provide these higher order business solutions to clients.

Speaker Change: Which helped turn.

Speaker Change: Them to succeed in this digital economy.

Speaker Change: So thanks again to our partners to our people for their continued commitment and support as well as those of you on this call for your time.

Speaker Change: And with that let's open the floor to questions.

Operator: Thank you. To ask a question, please press star 1, unmute your phone, and record your name clearly. If you need to withdraw your question, press star 2. Again, to ask a question, please press star 1. One moment for the first question. Our first question comes from Adrien De St. Hilaire with Bank of America. You may go ahead.

Speaker Change: Thank you to ask a question. Please press star one on mute your phone and record your name clearly if you'd need to withdraw your question Press Star two again to ask a question. Please press star one one moment for the first question.

Speaker Change: Our first question comes from Adrienne Dale do you Saint Hilaire with Bank of America. You May go ahead.

Adrien de Saint Hilaire: Thank you very much, Philippe, Ellen, and Jerry, for the comprehensive presentation. I've got a few questions, if you don't mind.

Speaker Change: Thank you very much Felipe and then Jerry for the comprehensive presentation I've got a few questions. If you don't mind.

Philippe Krakowsky: Philippe, I think in your intro you said that tech has largely stabilized. Could you see that segment growing in Q2 and later this year, or is it too early at this moment to talk about growth for that space? Secondly, Philippe, you talked about a more active new business pipeline. There are a couple of big accounts which are under review right now, like Amazon, for example. Can you just tell us how much of your revenue you are actually defending, or do you expect to defend this year? And then, more for housekeeping, but what was the drag from RGN Huge on your organic growth this quarter, and how much should we expect going forward? It's a lot of questions, sorry.

Felipe putting in your intro you said that tech has largely stabilized could you see that segment growing in Q2 and later on this year or is it too early at this moment to talk about growth for that space.

Speaker Change: Secondly, you talked about.

Speaker Change: More active new business pipeline.

Speaker Change: There are a couple of big accounts, which are under review right now like Amazon. For example, can you just tell us how much of your revenue you were actually defending or do you expect to happen. This year and then a third one more of a housekeeping, but what was the drag from ogn huge on your organic growth this quarter and how much should we expect going forwards.

Speaker Change: Sorry, Matt.

Philippe Krakowsky: I don't know that I can help you with the middle question, just because, as you know, we don't really speak to the particulars or things that are proprietary relative to our clients. And, you know, there is one large... [inaudible] theoretically a beneficiary where we're not defending. But I really can't speak to that. On the other one, I'm happy to unpack that for you, and I'll probably do it all in one go.

Speaker Change: No. Please.

Matt: No that I can help you with the middle question, just because as you know, we don't really speak to the particulars or things that are proprietary relative to our clients and yeah. There there is one large.

Speaker Change: Review ongoing that you called out which is very important to us, but they are clearly others, where we are.

Speaker Change: Theoretically a beneficiary where were not defending but I really can't speak to that on the other one I'm happy to unpack that for you and I'll probably do it all at one go.

Philippe Krakowsky: So I would say, if you look at the digital specialist agencies... through 23, the drag on a quarter-to-quarter basis to IPG overall was about a point and a half at any given point in time, and that continues to be the case. So we're seeing about a one and a half percent drag from them in Q1. Tech and telco as a client sector over the course of 23 was probably in the two to two and a half percent range, and again it varied quarter to quarter, and that has come down to about one and a half percent in Q1 of this year.

Speaker Change: So I would say.

Speaker Change: If you look at the digital specialist agencies.

Speaker Change: Through 'twenty three the drag on a quarter to quarter basis to IPG overall was.

Speaker Change: About a point and a half.

Speaker Change: At any given point in time and that continues to be the case. So we're seeing about a one 5% drag from them in Q1.

Speaker Change: Tech and telco as a client sector over the course of 'twenty three was probably in the two to two and a half per cent range and again it.

Speaker Change: Varied quarter to quarter.

Speaker Change: And that has come down to about one 5% in Q1 of this year.

Philippe Krakowsky: Significant, say, somewhere between 60% and 70% of that 1.5% is due to the one AOR loss that we called out. So we're clearly seeing progress, as it were, or at least, you know, less damaging to our results. If you sort of.

Speaker Change: And.

Speaker Change: Significant say somewhere between 60 and 70% of that one 5% is due to the one.

Speaker Change: The loss that we called out.

Speaker Change: We're currently seeing.

Speaker Change:

Speaker Change: Progress as it were or at least.

Speaker Change: Less damaging to our result and.

Philippe Krakowsky: Take a cross-section, we've always said that the tech and telco space has been a function of large names, not small, medium-sized clients, not, you know, kind of the leading edge of digital. It was not, you know, crypto, et cetera. So if you look at the bellwether tech and telco clients, the big names, in Q1, those were just a hair below flat. So that's why we say stabilization. Now, to my mind, that doesn't say that we can tell you that we're seeing them come back to growth definitively, you know, at a moment in time in Q2 or in Q3, but clearly, that's progress.

If you sort of.

Speaker Change: Take a cross section, we've always said that the tech and telco space has been a function of large names not small medium sized clients not.

Speaker Change: You know kind of the leading edge of digital it was not a you know crypto et cetera. So if you look at the bellwether Tech and telco clients the big names.

Speaker Change: In Q1, those were just a hair below flat. So that's why we say stabilization now it's in my mind that doesn't say that we can tell you that we're seeing them.

Speaker Change: Come back to growth definitively you know at a moment in time in Q2 or in Q3, but they clearly that's progress and so if I take both of those.

Philippe Krakowsky: And so if I take both of those... X client overlap because the digital agencies do over-index into that client sector, so in Q1, it was just shy of 30 basis points to our growth number, but the tenor of that is sort of, you know, when you get to the granularity of that, you're definitely seeing some movement. And then I guess the last reminder I would add is that, you know, our four-year guidance doesn't factor in a return to growth for either of those agencies or the client sector in order for us to achieve the targets. So if TAC improves faster, that would clearly be something that we hadn't baked in, and that would be a net positive.

Speaker Change: Ex client overlap because the digital agencies to over index into that client sector that in Q1. It was just shy of 30 basis points to our growth number but the the tenor of that are sort of the and when you get to the granularity of that you're definitely seeing some movement.

Speaker Change: I guess the last reminder, I would add is just that.

Speaker Change: Our full year guidance doesn't factor in a return to growth for either of those agencies or the client sector in order for us to achieve the targets. So if tech improves faster that would clearly be something that we hadn't baked in and that would be a net positive.

Speaker Change:

David Karnovsky: Thank you. Our next question is from David Karnovsky with J.P. Morgan. You may go ahead. Hey, thanks.

Speaker Change: Thank you. Our next question is from David Karnofsky with J P. Morgan you May go ahead.

Philippe Krakowsky: Hey, Philippe. I know you're generally hesitant to talk about any clients on these calls, but you did call out the impact of a significant client decision on 24 organic growth. So I wanted to see if you could unpack a bit more what happened in this particular instance, given it's not very common to see large accounts shift over short periods. And then it would seem there's an extended off-boarding period here.

David Karnofsky: Thank you Felipe I know Youre generally hesitant to talk about any clients on these calls, but you did call out the impact of a significant client decision to 'twenty four organic growth. So I wanted to see if you could unpack a bit more what happened in this particular instance, given its got very common to see large accounts shift over short periods.

David Karnofsky: And then it would seem there is an extended off boarding period here I don't know if you were to Ellen can frame.

Philippe Krakowsky: I don't know if you and Ellen can frame how to think about the organic impact of 2024 versus what might show up in the next year. And then, just separately, you had fairly direct commentary in the release on the potential for M&A. Can you speak a bit about both commerce and digital transformation? Why are these areas where acquisitions are potentially attractive and how does that fit with the broader portfolio?

How to think about the organic impact to 2024 versus what might show up in the out year and then just separately you had fairly direct commentary in the release on the potential for M&A.

David Karnofsky: Can you speak a bit to both commerce and digital transformation why are these areas.

David Karnofsky: Where acquisitions are potentially attractive and how does that fit with our broader portfolio.

David Karnofsky: On the large client.

Philippe Krakowsky: On the large client, there's You know, we don't speak for our clients. We don't disclose proprietary information, and that's obviously as it should be. So I'm not sure there's much we can add to the news that's out there already. But I think what I would point out to you is it's a significant and important ongoing relationship.

David Karnofsky: There's.

David Karnofsky: We don't speak for our clients, we don't disclose proprietary information and that's obviously as it should be so I'm not sure. There's much we can add to the news that's out there already I think what I would point out to you is it's a significant and important ongoing relationship with us. So this is a client with whom.

Philippe Krakowsky: So this is a client with whom, you know, we continue to do medical communications work and public relations work globally. It was a sizable consolidation last year. We were obviously very proud of the talent that helped us win the creative assignment.

David Karnofsky: We continue to do medical communications, where public relations work globally.

David Karnofsky: It was a sizable consolidation.

David Karnofsky: Last year, we were obviously very proud of the talented helped us win the creative assignment.

Philippe Krakowsky: And the client, as we, you know, understand it, and as I said, it's what's in the public domain, they've chosen to evolve their marketing model. They're looking to rapidly drive change within their organization. So that's a decision that we understand. And in terms of trying to dimensionalize that for you or, you know, the magnitude of that shift. I mean, I think it's fair to say our best estimate is baked into the remarks that we've shared with you in terms of expectations for the full year organic. So barring this news...

David Karnofsky: And the client as we you know.

David Karnofsky: Standard and as I said, it's what's in the public domain and they've chosen to evolve their marketing model.

David Karnofsky: Theyre looking to rapidly drive change within their organization. So that's a decision that we understand.

And in terms of trying to.

Dimensionalize that for you or you know the magnitude of that shift I mean, I think it's fair to say our best estimate is baked into the remarks that we shared with you in terms of expectations for the full year organic.

David Karnofsky: So barring this news I think we'd be very comfortable at the upper end of our targeted growth range.

Philippe Krakowsky: I think we'd be very comfortable at the upper end of our target growth. Now we're telling you it will be challenging, but we're still in the one to 2% band. And, you know, we're going to be very thoughtful about supporting the client through a transitional period. So I think that you'll see some of that impact or deceleration in the back half of the year for us, and then some in the early part of 2025. But I can't really unpack it for you more than that, and then on M&A.

David Karnofsky: Now we are telling you we think that will be challenging, but we're still in the 1% to 2% band.

David Karnofsky: And we're gonna be very thoughtful about supporting the client through a transitional period.

David Karnofsky: I think that you'll see.

Speaker Change: Yeah some of that impact.

Speaker Change: Or deceleration.

Speaker Change: In the back half of the year for Us and then some.

In the early part of 'twenty, five, but I can't really unpack it for you more than that.

Speaker Change:

Speaker Change: And then.

On M&A.

Philippe Krakowsky: [inaudible] You know, I guess I'd say that where we've got Strength in Commerce, some of our CRM agencies, we've got Strength in Commerce at Media Brands, where we're using Axiom Data, empowering the Unified Retail Media Solution. We're seeing that grow well, as I called out, and we're seeing adoption across a number of clients. But incremental scale, in commerce, in the digital transformation area, I think in digital services, you know, an observation, I guess, would be that, you know, Deep engineering capabilities and scale are growing in importance in those areas.

Speaker Change:

Speaker Change: You know I guess I would say that where we've.

Speaker Change: You know we've got strength in commerce some of our CRM agencies, we've got strength in commerce.

Speaker Change: Media brands, where we're using axiom data.

Speaker Change: And powering the the unified retail media solution, we're seeing that grow well and as I called out were seeing adoption across a number of clients.

Speaker Change: But <unk>.

Speaker Change: Incremental scale in commerce in the digital transformation area I think in digital services.

Speaker Change: And observation I guess would be that.

Speaker Change: Deep engineering capabilities and scale are growing in importance in those areas and so when I talk about our asset mix.

Philippe Krakowsky: And so when I talk about our asset mix, you know, you've seen where our strong assets that are very future-forward have meaningfully benefited the group as a whole. So that's a place where we see the opportunity to both Get Bigger and Be Bigger, and it's where there's demand from the clients.

Speaker Change: You know you've seen where our strong assets that are very future forward have.

Speaker Change: Meaning if we benefited the group as a whole so that's a place where we see the opportunity to both get.

Speaker Change: Get bigger be bigger and it's where there's demand on the client side.

Steven Lee Cahall: And thank you. Our next question comes from Steven Cahall with Wells Fargo.

Speaker Change: Thank you.

Speaker Change: Thank you. Thank you.

Speaker Change: And thank you. Our next question comes from Steven Cahall with Wells Fargo. You May go ahead.

Steven Lee Cahall: Thanks, So Felipe you talked about strong long term performance expectations that data and tech and health care and experiential. So I was wondering first if you could just talk about how health care is performing year to date in line with that comment I think data and experiential.

Philippe Krakowsky: Thanks. So, Philippe, you talked about strong long-term performance expectations in data and tech and healthcare and experiential. So I was wondering, first, if you could just talk about how healthcare is performing year-to-date in line with that comment. I think data and experiential were both kind of flat organically in the first quarter. So should we also think that those will probably accelerate as you move through the year? And that's part of what gives you that confidence in the organic guide, despite some of that creative work moving off.

Steven Lee Cahall: We're both kind of flat organically in the first quarter. So should we also think that those will probably accelerate as you move through the year and that's part of what gives you that confidence in the organic guide despite some of that creative work moving off.

Philippe Krakowsky: And then, Ellen, could you just talk about your expectations for working capital in 2024? In the last couple of years, working capital has been a pretty big drag, so I'm wondering if you have any guidance or expectations for that and for free cash flow to start to improve in 2024. Thank you.

Steven Lee Cahall: And then Alan could you just talk to your expectations for working capital in 2020 for the last couple of years networking capital has been a pretty big drag. So I'm wondering if you have any guidance or expectations for that and for free cash flow to start to improve in 2024. Thank you.

Steven Lee Cahall: Sure.

Philippe Krakowsky: Sure. So on health care, I'd say IPG Health. You know, in all likelihood, the largest in the space, recognized as a leader in the space. To your point, accretive to our overall results for some time. Very, very broad penetration.

Alan Johnson: So on health care, I'd say IPG health.

Alan Johnson: You know in all likelihood largest in the space recognized as a leader in this space.

Alan Johnson: To your point accretive to our overall results for some time and.

Alan Johnson: Very very broad penetration, we work with pretty much every major pharmaceutical company in the world There is opportunity there because we.

Philippe Krakowsky: We work with pretty much every major pharmaceutical company in the world. There's opportunity there because we've got a range of agencies inside of that group. And as long as you are servicing the client without any sort of direct competition at the drug or therapeutic area level, there's continued opportunity there. And then we also have media competence embedded there, data, and analytics, which we're obviously, you know, looking to connect more closely to those horizontal enterprise-wide capability layers that we've been putting in place. So that represents an opportunity.

Alan Johnson: We've got a range of agencies inside of that group and as long as you are servicing the client in a.

Alan Johnson: Without any sort of direct competition at the drug or therapeutic area level. There's there's continued opportunity there.

Alan Johnson: And then we also have media competence embedded their data and analytics.

Alan Johnson: We're obviously looking to connect more closely to those horizontal enterprise wide capability layers that we've been putting in place so that represents opportunity.

Philippe Krakowsky: So I think that, you know, health performed well and, you know, we continue to see that as something. We also have healthcare inside of PR, we have it inside of our media operations as well, large, you know, healthcare clients. I'm not sure I'm tracking to your question around data and experiential because, you know, they sit in different segments. As we've always said, Axiom data and capabilities are very closely embedded in very strong media performance because it informs the product and the way that we deliver in that space.

Alan Johnson: So I think that you know health performed well and we.

Alan Johnson: We continue to see that as something we went out we also have health care inside of PR, we have it inside of our media.

Alan Johnson: Operations as well large health care clients I'm not sure I'm tracking to your question around data and experiential flat because.

Alan Johnson:

Alan Johnson: We sort of where they sit in different segments. As we've always said the axiom data and capabilities are very closely embedded to the very strong media performance because it informs the product and the way that we deliver in that in that space and then on the sort of.

Philippe Krakowsky: And then on the sort of experiential side, which is in the smallest of our segment and specialized, we did talk about the fact that we've got a couple of those brands performing well and one of them that did not have a strong quarter. But I'm not sure that I can get to where you see that as flat or how that is going to inform our view. I think we still see those all as areas that are, as secularly, as it were, stronger and should continue to be accretive to our growth.

Alan Johnson: Sort of experiential side, which is in the smallest of our segment and specialized you know we did talk about the fact that we've got a couple of those brands performing well and one of them, which.

Alan Johnson: It did not.

Alan Johnson: I have a strong quarter, but I'm not sure that I can get to where you see that as flat or how that is going to inform our view I think we still see those all of those areas that are.

Alan Johnson: No.

Alan Johnson: Secular way as it were.

Alan Johnson: Stronger and should continue to to be accretive to our growth.

Philippe Krakowsky: Yeah, the question was kind of do you expect those to accelerate a bit this year, assuming that creativity is probably going to decelerate a bit? Unknown Speaker

Alan Johnson: Yes. The question was kind of do you expect those to accelerate a bit this year, assuming the creative is probably going to decelerate.

Philippe Krakowsky: I mean, look, they have been, and as we said, we see them continuing to, and we see PR performing well as well.

Alan Johnson: I mean look they have been and as we said we see them continuing to we see we see P are performing well as well.

Philippe Krakowsky: and working capital. Yeah, as far as

Alan Johnson: Great.

Alan Johnson: And our working capital yeah as far as working capital.

Ellen Tobi Johnson: Yeah, as far as working capital goes, it's an area of focus for us. It always is. We're very consistent in our approach, very disciplined, starting from when we take on new clients to how we manage payables. But, as I talk about very frequently, it's volatile. Whether you get paid on the 31st or you get paid on the 1st, it creates volatility but doesn't really impact the underlying result. That said, if you look at our use for the first quarter, as I mentioned in my remarks, it's probably the lowest in about 15 years, so I do expect this year to be a much more normalized result.

Alan Johnson: It's an area of focus for us. It always is a cause we're very consistent to our approach very disciplined starting from when we take on new clients to how we manage payables as.

As I talk about very frequently its volatile whether you get paid on the 31st do you get paid on the first day creates volatility, but doesn't really impact. The underlying result that said if you look at our use for the first quarter as I mentioned in my remarks, it's probably the lowest in about 15 years. So I do expect this year to be a much.

Alan Johnson: More normalized rates out.

Ellen Tobi Johnson: Thank you. Thanks, Steve.

Speaker Change: Thank you.

Speaker Change: Steve.

Craig Anthony Huber: Thank you. Our next question comes from Craig Huber with Huber Research Partners. Please go ahead.

Speaker Change: Thank you. Our next question comes from Craig Huber with Huber Research Partners you May go ahead.

Philippe Krakowsky: Hi, good morning. Can you talk a little bit about your updated thoughts on AI and the opportunity on your side for more efficiencies, but also enhancement of products and services you guys put out there? And, on the same token, do you feel that there might be an added competitive threat out there for third parties entering the space and perhaps hurting you?

Speaker Change: Great.

Craig Huber: Hi, there good morning, two questions. If I could can you talk a little bit of.

Updated thoughts on AI and the opportunity on your side for more efficiencies, but also enhanced products and services you guys put out there.

Craig Huber: And I guess on the same token do you feel that it might be an added competitive threat out there from third parties.

Craig Huber: Entering this space, perhaps hurting you. That's my first question and then my second question is just give us a little bit more meat on the bones about what happened in Asia here. It was obviously a tough quarter as its been for the last five course, a little bit more going on there. Thank you.

Philippe Krakowsky: That's my first question. And then my second question is just give us a little bit more meat on the bones about what happened in Asia here. It was obviously a tough quarter, as it has been for the last five quarters. A little bit more about what's going on there. Thank you.

Philippe Krakowsky: I guess maybe we'll do the latter first because it's relatively straightforward. You see the size it represents relative to our overall. So, in absolute terms, in a small quarter, you're not talking about a huge dollar amount. And it was just small. There was no one event that took place.

Speaker Change: Well I guess, maybe it will do the the latter first because it's relatively straightforward Oh, you you see the size of it.

Speaker Change: Presents relative to our overall sorry in absolute terms in a small quarter, you're not talking about a huge dollar amount and.

Speaker Change: And.

It was just small you know theres no. One event that took place there was a lot of smaller cuts with a broad range of clients across the region and the exception being India, where we have significant scale and a lot of very strong age.

Philippe Krakowsky: It was a lot of smaller cuts with a broad range of clients across the region and the exception being India, where we have significant scale and a lot of very strong agency brands and capabilities. I mean, I'm not sure, Ellen, if there's anything else in Asia that... No, I think you've covered it with 7% revenue. And then the AI question is obviously a very broad one. And on our last call, and even in the prepared remarks, we talked a bit about the extent to which it has been part of our business for some time in places where you have more data and more precision, the ability to do addressable work, a lot of modeling being done to identify not only audiences but business opportunities.

Speaker Change: <unk> agency brands and capabilities I mean, I'm not sure Alan if there's anything else on Asia that no I think you've covered it with 7%.

Speaker Change: Revenue.

Speaker Change: And then the AI questions, obviously very broad one and you know on a lot.

On our last call and even in the prepared remarks, we talked a bit about the extent to which it has been part of our business for some time in the places where you have.

Speaker Change:

Speaker Change: More data are more precision the ability to do addressable work a lot of a lot of modeling doing you know being done to identify not only audiences the business opportunity. So it's it's really baked into what we do at <unk>.

Philippe Krakowsky: So it's really baked into what we do in our media business, what we've been doing, obviously, at Axiom for a long time, and then for some of our larger clients, where we do integrated solutions that use the breadth of IPG and our engine. I think the thing that is clearly evolving, and maybe it's just an opportunity to talk a little bit about... You know, kind of what we announced with Adobe is, you know, how and to what extent do you want the benefit of what?

Speaker Change: Our media business, where we've been doing.

Speaker Change: Obviously at axiom for a long time, and then for some of our larger clients, where we do integrated solutions that use the breath of <unk>.

Speaker Change: IPG and our engine.

Speaker Change: I think the thing that is clearly evolving.

Speaker Change: And maybe it's just an opportunity to talk a little bit about.

Speaker Change: You know kind of what we announced with Adobe is you know how and to what extent do you want the benefit of what.

Philippe Krakowsky: The Creative Parts of the Business and Ideation bring to the party because clients' brands are so valuable and the way in which they leverage that IP is so important, and yet, any part of what we do, if it's not connected to a larger whole, and if it's not increasingly quantifiable, risks being less valuable over time.

Speaker Change: The creative parts of the business in aviation brings to the party because.

Speaker Change: Clients brands are so valuable and the way in which they leverage that IP is so important and yet.

Speaker Change: Any part of what we do if it's not connected to a larger hall and if it's not increasingly quantifiable.

Speaker Change: Risks being less valuable over time.

Philippe Krakowsky: And so, you know, for us, the connectivity that GenStudio gives us, you know, I was sort of talking about that content supply chain technology, so it integrates GenAI in a way where literally any piece of content we produce for a client, how it's created, where we store it, how teams share it, and it gets passed back and forth, approved, and iterated often with the use of AI, all of that happens in And then we connect that to what we're doing with Axiom and Kineso and what we've been doing with data.

Speaker Change: And so you know for us the connectivity that that Gen studio gives us.

Speaker Change: No I was sort of talking about that content supply chain technologies. So it integrates journey.

Speaker Change: Way, where literally any piece of content, we produce for a client.

Speaker Change: How it's created where we store it how teams share it and it gets gets passed back and forth approved iterate it often with the use of AI all of that happens in one place.

Speaker Change: And then we connect that into what we're doing with axiom and can Esso and what we've been doing with data. So then when you target.

Philippe Krakowsky: So then when you tag it, when you push it out to the segments that you've identified, we have the ability to link up all that information, and then we can really understand the kind of creative effectiveness in a way that we haven't before, right? For example, how often was the asset used?

Speaker Change: When you push it out to the segments that you've identified.

Speaker Change: We have the ability to link up all that information and then we can really understand kind of creative effectiveness in a way that we haven't before right. How often is the asset used how do consumers react to it or interact with it.

Philippe Krakowsky: or interact with it. So clearly, AI is going to give us this incremental layer in the solutions that we build for clients. And so more of our creative agencies, the experiential and PR agencies are leaning in. And so what you're trying to do is demonstrate that you can connect the data layer to content, and then iterate and optimize that content, and then connect it all the way through to an event to commerce.

Speaker Change: So clearly a I was going to give us this incremental layer in these solutions that we build for clients and so for more of our creative agencies for.

Speaker Change: The experiential and PR agencies are leaning in and so what you are trying to do is demonstrate that you can connect the data layer to content and then.

Speaker Change: Iterate and optimize that content and then connected all the way through to to a an event to commerce.

Philippe Krakowsky: I think, as with any tech, there is... lots of focus. We've talked about how we're beyond the point of where we're experimenting with it. We're actually implementing it pretty broadly across the board with lots of clients and also bringing them up to speed on how it gets used. But, you know, we're clearly looking at things that could be disruptive. And yet, as an industry, we've fared pretty well in the past when there have been, you know, disruptive technologies that have come along going back, you know, 15 years ago to the advent of platforms.

Speaker Change:

Speaker Change: As with any tax there is.

Speaker Change: Lots of focus we've talked about how we're beyond the point, where we're experimenting with it we're actually implementing it pretty broadly across the board with lots of clients and also bringing them up to speed on how it gets used.

Speaker Change: But we're clearly looking at things that could be disruptive and yet as an industry, we fared pretty well in the past when there have been no.

Speaker Change: Disruptive technologies that have come along going back 15 years ago to the advent of the platforms.

Jason Boisvert Bazinet: Thank you. Thank you. Our next question comes from Jason Bazinet with Citi. You may go ahead.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Jason Bazinet with Citi. You May go ahead.

Philippe Krakowsky: I just had a quick question. Thank you.

Jason Boisvert Bazinet: I just had a quick one.

How's it going I just had a quick question on M&A.

Philippe Krakowsky: I mean, look, I think we've always been very disciplined in the way that we approach this, and I think that, notwithstanding the fact that obviously the you need something which is strategically going to, as I said, Enhanced capabilities would be complementary to what we do in the areas where we're seeing more demand from clients. But we're always going to be disciplined in keeping some of the parameters you laid out in mind.

Jason Boisvert Bazinet: Since you called it out in your prepared remarks.

Jason Boisvert Bazinet: Other than the strategic fit are there any sort of financial guidelines that are important to you. If you do do M&A.

Jason Boisvert Bazinet: Additive to organic growth or helpful to margins or.

Jason Boisvert Bazinet: Accretive to adjusted earnings.

Speaker Change: I mean look I think we've always been very disciplined in the way that we approach this and I think that notwithstanding the fact that obviously, the you need something which strategically is going to.

Speaker Change: As I said.

Speaker Change: Enhanced capabilities or be complementary to what we do in the areas, where we're seeing more demand from clients.

Philippe Krakowsky: And even the one time when we did something very, very significant for us, and we've had competitors who are kind of much more consistently in the market for deals at that scale, and I don't think that's what we're talking about here. You saw us be very thoughtful about and disciplined in terms of delivering and in terms of how we incorporated that into the group. So I don't know that I can give you a specific guideline. But it's also not going to impact, as I said, our commitment to capital return.

Speaker Change: But we're always going to be disciplined in keeping some of the parameters you laid out in mind and even the one time when we when we did something very very significant for us and we've had competitors who are kind of much more consistently than market for deals of that scale and that's I don't think that's what we're talking about here.

Speaker Change: You saw us be very thoughtful about.

Speaker Change: And disciplined in terms of delivering and in terms of sort of how we.

Speaker Change: Incorporated that into the group. So I don't know that I can give you a specific guideline. It's also not going to impact as I said, our commitment to capital return.

Tim Nollen: Thank you. Our next question comes from Tim Nollen with Macquarie. Please go ahead.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Tim Nolan with Macquarie You May go ahead.

Philippe Krakowsky: Thanks very much. I actually have an industry question and am curious how it ties into your work specifically, Philippe. I'm wondering about Google's decision to delay the deprecation of the Chrome cookie, which they announced last night. Just wondering in general, like, what kind of work are you doing with brand advertiser clients to prepare for the deprecation of the cookie? And how, if at all, does this delay affect your business?

Timothy Wilson Nollen: Thanks, very much I have actually three questions and curious how it ties into your work specifically U sleep I'm wondering about google's decision to delay the deprecation.

Timothy Wilson Nollen: Deprecation of the Chrome Cookie, which they announced last night I was just wondering in general like what kind of work are you doing with brand advertiser clients to prepare for deprecation of cookie and how if at all does this delay affect your business.

Philippe Krakowsky: Well, look, I think... To your point, it's not news in that this is something that was announced and that has now been delayed. A number of times, I think marketers have been thinking about and asking for advice on how it is that we're going to continue to get the benefits of a certain kind of data. And again, I think people have become much more sophisticated over time in understanding that there are also limitations to proxy data, or many clients have been much more focused on Leveraging their own first-party data and creating their own identity graph and having, I'd say, more control over their own destiny or more autonomy when it comes to operating in this world where you've got all sorts of disparate data sources and obviously the kinds of changes that were announced yesterday.

Timothy Wilson Nollen: Well look I think.

Timothy Wilson Nollen: To your point, it's not news in that this is something that was announced and that has now been delayed.

Timothy Wilson Nollen: A number of times.

Timothy Wilson Nollen: I think marketers have been thinking about and asking for advice on how it is that we're going to continue to get.

Timothy Wilson Nollen: The benefits of a certain kind of of data and again I think people have become much more sophisticated over time and understanding that there are also limitations to proxy data or.

Timothy Wilson Nollen: Many clients have been.

Timothy Wilson Nollen: Much more focused on.

Timothy Wilson Nollen: Yeah.

Timothy Wilson Nollen: Leveraging their own first party data and.

Timothy Wilson Nollen: Creating their own identity graph, and having I would say more control over their own destiny or more autonomy. When it comes to operating in this world where you've got.

Timothy Wilson Nollen: All sorts of disparate data sources, and obviously the kinds of changes that were announced yesterday. So given the strength of our data capabilities, we've been ready for this for some time.

Philippe Krakowsky: So given the strength of our data capabilities, we've been ready for this for some time. We think it probably represents an incremental opportunity. And then it hasn't really changed conversations with marketers because we've been thinking through how it is that you use cohorts, how it is that you find, as I said, ways to leverage your own first-party data or do data sharing, and create and create sort of second-party data pools with any number of partners. So I don't see it as a particularly dramatic, you know, development. I don't think our people do either.

Timothy Wilson Nollen: We think it probably represents incremental opportunity and then it hasnt really changed conversations with marketers because we've been.

Timothy Wilson Nollen: Thinking through how it is that you use cohorts how it is that you find as I said ways to leverage.

Timothy Wilson Nollen: Your own first party data or do or do data sharing create and create.

Timothy Wilson Nollen: Second party data pool with any number of partners.

Timothy Wilson Nollen: So I don't see it as a particularly dramatic.

Timothy Wilson Nollen:

Timothy Wilson Nollen: Development I don't think our people do.

Timothy Wilson Nollen: Okay.

Speaker Change: Okay. Thanks.

Speaker Change: <unk>.

Speaker Change: Thank you. Our next question comes from Kamran Mcveigh with Morgan Stanley You May go ahead Sir.

Speaker Change: Right.

Cameron Alan McVeigh: Hey, guys just a couple of quick ones.

Cameron Alan McVeigh: Curious if you could quantify the very strong growth in media that you saw this quarter and then secondly, the increase in SG&A due to some senior enterprise leadership investment in I T.

Philippe Krakowsky: Thanks. Thank you. Thank you. Our next question comes from Cameron McVeigh with Morgan Stanley. You may go ahead.

Cameron Alan McVeigh: Just maybe any more color on that and if we should expect increased investment over the year. Thanks.

Cameron Alan McVeigh: Seeing as I can't help you on the first one, because, as you know, it's not really a... Ellen can unpack the latter for you in detail. Sure.

Speaker Change: It seems I can't help you on the first one because as you know it's not really a Alan can unpack the latter for you in detail sure good morning.

Ellen Tobi Johnson: Sure. Good morning.

Ellen Tobi Johnson: SG&A will be higher going forward as we are making strategic investments, as Philippe mentioned in his remarks, in senior enterprise talent and technology. That should lead to both increased growth and efficiency going forward. These were all considered, as you mentioned, in the guidance that was given. Q1 was slightly higher due to discrete items, but in general, that ratio should be higher this year. And given

Alan Johnson: SG&A will be higher going forward as we are making strategic investments as clay mentioned in his remarks, and senior enterprise talent and technology.

Alan Johnson: Should lead to both increase growth and efficiency going forward.

Alan Johnson: These were all considered I had mentioned in the guidance that we've given Q1 was slightly higher due to certain discrete items, but in general that ratio should be higher this year.

Philippe Krakowsky: And given the nature of the work that we do, you know, there's definitely an increased need for, you know, we've always talked about integration of services and open architecture. But now, you know, as we're saying, you're talking about the need to centralize some of these horizontal capabilities at scale, you know, a data layer, a production and Gen-AI driven content layer. Clearly, what Kineso does for us in terms of activating that data into the media ecosystem.

Alan Johnson: And given given the nature of the work that we do.

Alan Johnson: You know theres definitely.

Alan Johnson: An increased need for we've always talked about integration of services and open architecture, but now you know as were saying youre talking about the need to <unk>.

Alan Johnson: Centralized some of these horizontal capabilities at scale.

Alan Johnson: A data layer, a production and Jenny I sure driven content layer.

Alan Johnson:

Alan Johnson: Clearly what <unk> does for us in terms of activating that data into the media ecosystem and so you know it does just shift where the focus is and the fact that you need folks at the center, who can operate things at that at that scale and get the agencies.

Philippe Krakowsky: And so, you know, it does just shift where the focus is and the fact that you need folks at the center who can operate things at that scale and get the agencies, you know, plugged into that. So it's just going to be shifts inside of our model. To Ellen's point, it's factored into our thinking.

Alan Johnson: Plugged into that so it's just going to be shipped inside of our model to Alan's point. It's in it's it's it's factored into our thinking.

Philippe Krakowsky: And that was our last question. I'll now turn it back to Philippe for any final thoughts. Thank you.

Alan Johnson: Thank you and that was our last question and I'll now turn it back to Felipe for any final thoughts.

Philippe Krakowsky: Thank you, Sue. Thank you all for your time. Obviously, some progress, but work in progress, so we look forward to reporting back again next quarter.

Alan Johnson: Sue.

Philippe Krakowsky: Thank you all for the time, obviously, some progress but work in progress. So we look forward to reporting back again next quarter.

Operator: Thank you. And that concludes today's conference. You may disconnect at this time.

Speaker Change: Thank you and that concludes today's conference you may disconnect at this time.