WPP (WPP) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 like-for-like revenue less pass-through costs grew 0.5%, reversing a prior decline, with growth led by GroupM, new business wins (Amazon, Unilever, Henkel), and strength in North America and Western Europe, but ongoing pressure in China.

• Strategic focus on fewer, stronger brands, AI adoption, and operational simplification is driving competitiveness and efficiency, with WPP Open usage up 107% since January.

• Top 10 clients grew 7% in Q3, offsetting the loss of a major healthcare client.

• Strategic restructuring actions at Burson, GroupM, and VML are progressing, with no major restructuring planned at AKQA.

• Recent new business wins will primarily impact 2025 results.

Financial highlights

• Q3 2024 reported revenue less pass-through costs declined 2.6% (FX headwind 2.9%), but like-for-like growth was 0.5%; GroupM grew 4.8% LFL, creative agencies declined 3.1%.

• North America and Western Europe posted positive growth, while Asia Pacific, especially China (-21.3%), remained weak.

• Client sectors with strongest growth included CPG (+7.6%), travel & leisure (+10.8%), and automotive (+5.8%); technology stabilized at 1.3% growth.

• Adjusted net debt at September end was £0.3bn lower year-over-year, reflecting lower M&A spend; adjusted net debt at £3.6bn.

• Q3 net new billings: $1.5bn; YTD: $3.2bn.

Outlook and guidance

• Full-year 2024 guidance reiterated: like-for-like net sales/revenue less pass-through costs growth of -1% to flat, with 20-40bps margin improvement at constant currency.

• Q4 expected to be volatile due to macroeconomic and geopolitical uncertainty, with new business wins impacting 2025.

• FX expected to be a 3.2 percentage point headwind to reported net sales for the year.

• Headline net finance cost around £295m, effective tax rate around 28%, capex around £260m, and cash restructuring costs around £285m.

• Medium-term targets: 3%+ LFL growth, 16-17% operating margin, 85%+ cash flow conversion.