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 in North America, Western Continental Europe, and India, but ongoing pressure in China.

• GroupM delivered strong sequential growth, while integrated creative agencies declined; technology sector client spending stabilized.

• Major client wins included Amazon, Unilever, Henkel, Honor, Starbucks, and expanded assignments, with new business momentum expected to impact 2025.

• Strategic focus on fewer, stronger brands, AI adoption, and operational efficiency is driving competitiveness and profitability; WPP Open usage more than doubled.

• 2024 guidance reiterated: like-for-like revenue less pass-through costs growth of -1% to 0%, and headline operating margin improvement of 20-40bps at constant currency.

Financial highlights

• Q3 revenue less pass-through costs: £2.8bn (-2.6% reported, +0.5% LFL); FX headwinds of 2.9-3.2 percentage points.

• GroupM grew 4.8% like-for-like in Q3, while creative agencies declined 3.1%.

• North America grew 1.7%, Western Continental Europe 2.2%, but China declined 21.3%.

• Sectors with strongest growth: CPG (+7.6%), travel & leisure (+10.8%), automotive (+5.8%); technology stabilized at 1.3%.

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

Outlook and guidance

• 2024 guidance maintained: like-for-like revenue less pass-through costs growth of -1% to 0%, and headline operating margin improvement of 20-40bps 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 and 20 basis points to margin for the year.

• Margin improvement driven by cost discipline and structural initiatives, with £125m net savings fully realized in 2025.

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