Revenue falls short of expectations amid reduced activity in tech & telecom space: IPG CEO

Interpublic has announced the third quarter and first nine months of 2023 results.

The company’s total revenue, including billable expenses, was $2.68 billion, compared to $2.64 billion in the third quarter of 2022. The revenue before billable expenses (net revenue) stood at $2.31 billion, an increase of 0.6%, with an organic decrease of 0.4%.

Philippe Krakowsky, CEO of IPG, said, “During the third quarter, revenue performance did not measure up to expectations, yet we continued to demonstrate disciplined management of the business and to see positive contributions to growth from our media offerings, the health care sector, sports and experiential marketing, and public relations.”

The advertising network reported that its net income was $245.7 million in Q3. Adjusted EBITA before restructuring charges was $397.2 million. The margin of adjusted EBITA before restructuring charges was 17.2% on revenue before billable expenses. The diluted earnings per share were $0.63 as reported and $0.70 as adjusted.

Stating the factors that continued to weigh on the company’s growth, Krakowsky said, “We have seen a decrease in client activity in the tech and telecom client sector that has been evident across our industry, and the performance of certain of our digital specialists. Another factor impacting results is increased concern among marketers related to macroeconomic conditions, which led to the delay of projects and sales cycles, as well as slower-than-anticipated onboarding of some new businesses.”

Total revenue, which includes billable expenses, was $7.87 billion, compared to $7.94 billion in the first nine months of 2022. Revenue before billable expenses ("net revenue") was $6.81 billion, a decrease of 1.2% from the first nine months of 2022. The organic decrease of net revenue was 0.8% from the first nine months of 2022, compared to an organic increase of 8.2% during the first nine months of 2022.

In the first nine months of 2023, operating income was $875.8 million compared to $936.6 million in 2022. Adjusted EBITA before restructuring charges was $938.2 million, compared to $999.9 million for the same period in 2022. The first nine months of 2023 margin of adjusted EBITA before restructuring charges was 13.8% on revenue before billable expenses.

The first nine months of 2023 net income available to IPG common stockholders was $635.2 million, resulting in earnings of $1.65 per basic share and $1.64 per diluted share compared to earnings of $1.63 per basic and $1.62 per diluted share for the same period in 2022. Adjusted earnings were $1.81 per diluted share, including a benefit of $0.17 per diluted share related to the tax audit settlement. Adjusted earnings per diluted share was $1.73 a year ago. First, nine months of 2023 adjusted earnings exclude after-tax amortisation of acquired intangibles of $50.4 million, after-tax restructuring credit of $0.4 million and an after-tax loss of $16.4 million on the sales of businesses.

Krakowsky also shared that the company has anticipated an organic growth of 1% in the fourth quarter. “Concurrently, we remain fully on track to deliver our margin goal for the year of 16.7%, which is unchanged, and represents margin expansion relative to 2022,” he added.

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