WPP Q1 2025 TU Earnings Report

WPP EPS Results

• Actual EPS: N/A
• Consensus EPS: $3.59
• Beat/Miss: N/A
• One Year Ago EPS: N/A

WPP Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $2.51 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

WPP Announcement Details

• Quarter: Q1 2025 TU
• Date: 4/25/2025
• Time: Before Market Opens
• Conference Call Date: Friday, April 25, 2025
• Conference Call Time: 4:30AM ET

WPP (NYSE:WPP), a creative transformation company, provides communications, experience, commerce, and technology services in North America, the United Kingdom, Western Continental Europe, the Asia Pacific, Latin America, Africa, the Middle East, and Central and Eastern Europe. The company operates through three segments: Global Integrated Agencies, Public Relations, and Specialist Agencies. It offers marketing strategy, creative ideation, production, commerce, influencer marketing, social media management, and technology implementation services; media strategy, planning, buying and activation, commerce media, data analytics, and consulting services; and media management, public affairs, reputation, risk and crisis management, social media management, and strategic advisory services. The company also provides brand consulting, brand identity, product and service design, and corporate and brand publication services. WPP plc was founded in 1985 and is based in London, the United Kingdom.

WPP Q1 2025 TU Earnings Call Transcript

Key Takeaways

• Net sales fell 2.7% like-for-like in Q1, matching expectations, and management plans to tackle underperformance, including acquiring Infosum to boost data capabilities.
• Despite tariff uncertainty and a challenging macro backdrop, the full-year guidance of flat to –2% like-for-like growth remains unchanged, underpinned by cost discipline and ongoing investment in WPP Open, AI and data.
• GroupM’s growth slowed in Q1—especially in Europe—driving further simplification and integration toward a client-centric operating model, with full P&L benefits expected in 2026.
• Performance was mixed by specialty and sector: strong rebound at production arm Hogarth, technology and healthcare showed improvement, and the top 25 clients grew 2.5% in Q1.
• Financial position is solid, with adjusted net debt at £3.7 billion (leverage within the 1.5–1.75× target), nearly £3 billion of liquidity, and investment-grade ratings, allowing margin guidance to remain flat excluding FX.

Presentation

[Mark Read, CEO at WPP]

and good morning, everybody. Welcome to our first quarter trading update, and thank you for joining us. I'm joined on today's call by Joanne Wilson, our CFO and Tom Simbelhurst, our Head of Investor Relationships. Before we get started, please have a look at the cautionary statement, which you can see on Slide two and look at that carefully. So turning to the overview on Page three, I'll quickly summarize where we are for the year.

[Mark Read, CEO at WPP]

Jo Anne will take us through the financial performance. We'll review the strategic progress and then tackle the Q and A. So on the overview on Page four. Firstly, in terms of the first quarter twenty twenty five performance. When we met in February, we talked about the challenging macro environment, well as how the timing of our new business would impact the shape of growth

[Mark Read, CEO at WPP]

And as you know, we had a challenging fourth quarter. And so we were cautious giving our guidance for the year as well as being aware of some of the tariff issues and discussions that have been taking place. We did highlight those in our release. And I'd say that our performance in Q1, we saw sales net sales down 2.7% is consistent with what we're saying at that time and therefore very much in line with our own expectations. And at the same time, I don't want give the impression that we're happy with these results.

[Mark Read, CEO at WPP]

We're not it's not where we want to be, and we have concrete plans to address the areas of competitive underperformance, including some steps like the acquisition of Infosum that we have taken this quarter. The first quarter did include some encouraging signs that overperformance in The U. S. Improved from Q4, albeit benefiting from a slightly soft comp. I'm also encouraged by the improved new business momentum at VML and Versum following the heavy integration work last year, and it was good to see Hogarth return to strong growth after challenging fourth quarter.

[Mark Read, CEO at WPP]

Against this, GroupM's growth stepped down in Q1, in particular in Europe due to the impact of the softer medium environment. And while The U. S. Business for GroupM saw growth in low mid single digits, still below what we would consider to be our competitive performance. And we'll come later to talk about GroupM in more detail.

[Mark Read, CEO at WPP]

The second point is this is a more challenging macro environment with tariff uncertainty. While WFE is not directly impacted by tariffs, it will undoubtedly impact many of our clients and where and how they prioritize their margin investments in advertising and promote and promotion. At this point, we haven't seen any significant change in spending patterns from our own clients and our full year guidance remains within the range we set at the beginning of the year, we did anticipate broad macro uncertainty. We are very vigilant on the outlook and very disciplined on how we are managing the cost base. So in the immediate short term, we need to manage and protect the P and L, but longer term, what is important is that we continue to invest and make strategic progress, particularly with WPP Open, and that's what will underpin our competitive performance and growth longer term.

[Mark Read, CEO at WPP]

And then finally, in terms of strategic progress, in February, we talked about three specific actions, drive further adoption of WPP Open, we're seeing good growth in that, strengthen the group end proposition and get group end back to growth into the acquisition in for some and importantly, win more new business. I do think there's some encouraging signs of progress on all of these three fronts. So I'll take you through details of those in a moment. But before I do, I'll hand you over to Joanne to take the details of the first quarter performance.

[Joanne Wilson, CFO at WPP]

Thank you, Mark, and good morning, everyone. So let me take you through some more detail on our first quarter twenty twenty five performance starting on Slide six. Like for like revenue less pass through costs fell 2.7% in the quarter, which was broadly in line with our expectations. Consistent with messaging and our full year results, the drivers of like for like performance were a continuation of the challenging macro environment seen in the fourth quarter, coupled with the sequencing of historical client losses, a continued challenging environment to China and the mildly dilutive effect of the FGS disposal on like for like growth. The move in reported revenues amplified the full run rate effect of the FGS global disposal, which represented a drive on reported sales of 3.3 as well as the headwind from FX moves, in particular the strong comp versus the euro in Q1.

[Joanne Wilson, CFO at WPP]

Overall, revenue less pass through costs were down 7.6% in the quarter. Moving on to slide seven and looking at performance and profit models. Global integrated agencies saw a like for like decline of 2.8% in the quarter. Within this, group end was down 0.9%, which reflected growth in The U. S, offset by the impact of prior year client losses and performance in The UK and a more challenging media environment across Europe.

[Joanne Wilson, CFO at WPP]

GroupM saw good growth in India, which only partially offset continued weakness in China. Like for like for our other global integrated creative agencies fell 4.4% in the first quarter and compared to the decline of 6.5% in the fourth quarter of twenty twenty four. Within this, we continue to see an impact from continued weakness in project based work weighing on AKQA's performance, a tougher comp at Ogilvy and further impacts from a challenging environment in China. Against this, we saw a return to high single digit growth within our production business, Hobart, driven by strong trends across CPG, tech and also a new business. The reacceleration of growth here is particularly encouraging given the more challenging performance in Q4 twenty twenty four.

[Joanne Wilson, CFO at WPP]

Turning to public relations. Like for like declined by 6.6% in the first quarter, While overall performance has not much changed from the fourth quarter, reflecting more challenging environment for client discretionary spend, in particular in Europe, we are encouraged by improved momentum on new business in North America. Finally, Specialist Agency saw like for like revenue less plastic costs grew 1.2 in the quarter, with particularly strong growth from CMI Media Group, our specialist health care and media agency, and moderating declines at Landor and Design Bridge and Partners. Turning to performance by region on Slide eight. North America declined by 0.1% in the first quarter, lapping a mid single digit decline in 2024.

[Joanne Wilson, CFO at WPP]

The automotive, TME and financial services sectors grew as well as technology client spend, which continued the recovery seen in the second half of twenty twenty four, while CPG client spend saw mild declines. Group M, the amount of silver bar gold grew in the first quarter in North America, but were offset by declines at Uzbebe and AKQA. The United Kingdom declined by 5.5% in the first quarter of twenty twenty five, impacted by its higher weighting towards project based work and the impact of client losses at UBEN. By client sector, growth in tech, automotive and financial services was offset by pressure in CPG and PPE. Western Continental Europe saw an overall like for like decline of 4.5% versus a challenging comp from 2024.

[Joanne Wilson, CFO at WPP]

The region was weak across the board and a result of pressure primarily on our project based PR businesses and the effects of more challenging media environment for Group BAM. The rest of world declined 3.8% in the first quarter, largely driven by persistent pressures in China, which declined 17.4% in the quarter on the back of continued macroeconomic pressures and client assignment losses. We expect performance to continue to be challenging in China in the first half of twenty twenty five with some improvement later in the year. Against this, we saw a strong performance in India, which was up 5.5% driven by growth in. Central And Eastern Europe also saw a robust performance of 2% in the first quarter.

[Joanne Wilson, CFO at WPP]

Slide nine shows Q1 performance across our client sectors. This reflects growth across our designated clients, which represent 82% of our net sales. Despite the tough high single digit comp from Q1 twenty twenty four, CPG showed a stable performance during the quarter with growth of 0.3%, reflecting pressure in The U. S. And The UK, offset by growth in the rest of the world.

[Joanne Wilson, CFO at WPP]

The Technology client sector showed further sequential improvement, with growth increasing to 4.5% in Q1 from 2.5% in Q4 twenty twenty four, with growth relatively balanced across the world. Healthcare started to stabilize with flat growth in the quarter, so it's 23 client losses start to roll off. Automotive and Financial Services performed well with growth of 52.6%, respectively. We saw a weaker performance in telecoms, which is impacted by client losses, while retail sector client spend declined by 2.9% compared to a high single digit decline in 2024. The performance of our top clients continues to be robust with our top 25 clients growing 2.5% in the first quarter.

[Joanne Wilson, CFO at WPP]

And moving on to Slide 10, which shows the movement in net debt to the March, with adjusted net debt of GBP3.7 billion, down year on year, but up from year end, reflecting our typical cash cycle. Average adjusted net debt better captures the normal pattern of working capital moves across the year, and this is slightly down through the first quarter at GBP 3,400,000,000.0 and should improve as the impact of the FGS global disposal annualizes. The average adjusted net debt to headline EBITDA ratio is expected to be within our 1.5 to 1.75 times target range in 2025. The weighted average maturity of our GBP 3,800,000,000.0 of top bond debt is seven years, and this is an average coupon of 3.6%. Meanwhile, our total available liquidity across the group stood at GBP 2,900,000,000.0 at the 03/31/2025, including a $2,500,000,000 revolving credit facility, which matures in February 2030.

[Joanne Wilson, CFO at WPP]

It is important to note that neither our bond debt nor our RCF of any covenants. And in March, Moody's reaffirmed our Baa2 rating with a stable outlook, coupled with our BBB rating from SMB, our credit is comfortably investment grade. And finally turning to Slide 11, which shows our guidance for the full year. At the beginning of the year, we set our guidance based on a like for like range of flat to minus 2%. This reflected a degree of caution in light of what then appeared to be an uncertain macro environment as well as our expectations of the impact of net new business during the year.

[Joanne Wilson, CFO at WPP]

Since then, the macro environment has remained uncertain and is likely to be so for a large part of 2025. For now, we remain confident this is reflected in our like for like range for the year. We do think that heightened uncertainty on the macro outlook has potential to further impact second quarter performance. This coupled with the sequencing of client wins and losses through the year means we don't anticipate a material change in trajectory in the second quarter compared to the first. We continue to expect like for like performance to improve in the second half as more recent wins really ramp up.

[Joanne Wilson, CFO at WPP]

Overall, we expect to hold headline operating margin broadly flat excluding the impact of FX with the benefit of annualized and structural cost savings and continued disciplined cost management offsetting incremental investment in WPT Open, AI and data. We expect GroupM to continue simplifying its structure to accelerate the move to a more client centric operating model. The impact will be largely P and L neutral over the course of 2025. However, the timing of associated costs will weigh in the H1 margins, which will also be impacted by the phasing of revenue growth. Looking beyond revenue and headline operating profit, we made no major changes to our guidance.

[Joanne Wilson, CFO at WPP]

On cash flow, we continue to expect a reduction in our cash restructuring costs to GBP 110,000,000 versus GBP $275,000,000 in 2024 and adjusted operating cash flow before working capital of around £1,400,000,000 The one change I would note is that we now expect the impact of FX moves to be closer to a drag of 2% for the full year versus the brand's flat at the time of prelims, reflecting a stronger pound relative to the dollar. At current rates, we estimate this is having a circa 20 basis points impact on margin, given the relative weighting of our North American business. So thank you, and I will now hand you back to Mark.

[Mark Read, CEO at WPP]

Thanks very much, Jo Anne. So turning to our strategic progress on Page 12 and then Page 13. Before we dive into that, I think we do need to deal with the broader market environment. I think it's fair to say that it is challenging. We're absolutely seeing much greater economic uncertainty impacting business and consumer confidence.

[Mark Read, CEO at WPP]

So our prelims in February, we made the point that the macro environment will be challenged. We've seen that in Q4. And I think it's fair to say that since then, this uncertainty has increased. The decision by the U. S.

[Mark Read, CEO at WPP]

Administration to initiate tariffs has created much greater uncertainty for all of our clients, whether or not they are directly or indirectly impacted. And historically, in uncertain environments, not necessarily hugely favorable for investment of any kind, whether it be longer term capital projects or investment in brand building or short term investment in activation. But in the time I've been doing this call, we have had COVID, the Ukraine war, inflation, and now tariffs. There's nothing we're not used to dealing with. And clients, I think, well have learned how to prioritize their spending.

[Mark Read, CEO at WPP]

They see it to some extent as a cost in the short term and an investment in the long term. And when they do cut, we should have the confidence to know that they will come back into the market. The impact of tariffs is also going to have an asymmetric impact both in The U. S. Versus the rest of the world and also by industry.

[Mark Read, CEO at WPP]

If you take our top 25 clients, five or so are most directly impacted by the tariffs on the cost of their product. Of the rest, around half have a more minor impact and the other half have limited direct impact, but may be affected by the broader economic impact in The U. S. And the rest of the world. So the pattern does vary by clients.

[Mark Read, CEO at WPP]

And so what's the response we're seeing from our clients? I think as we said in February, we'd already seen a more cautious outlook from clients from q four onwards. We've not yet seen any major step down in spending patterns from this. At the same time, we do have to be vigilant and agile. There's no doubt that there's a range of economic and political outcomes over the next, you know, day, month, quarter that could cause clients to take a different view on spending.

[Mark Read, CEO at WPP]

And while that creates an uncertain environment for WPP, I do think it's important to note that our absolute and relative exposures are somewhat different from peers. We've long seen much long seen our geographic exposures a key strategic advantage with a planned global agency group of 60% of our business outside The US. And while The U. S. Is an incredibly important market for us and always will be, geographic diversity does have its value.

[Mark Read, CEO at WPP]

Likewise, WPT's balance of exposure by client industry is one of our key strengths and what inevitably disruption to some of our clients, strong positions in particular within CPG and technology should be supportive of our growth. I think you saw some of that in the comments over the last twenty four to thirty six hours from some of the major CPG companies. And thirdly, that's the nature of our clients In the first quarter, it's important that we're spending by our top 10 clients up 4.6 and by our top 25 clients up 2.5%. So continued investment by major clients in marketing has continued into the first quarter despite the impact on specific markets and sectors.

[Mark Read, CEO at WPP]

And the final point that I would make is in regards to short term uncertainty created by the macro environment, our clients focus on and interest in the impact of AI is undiminished. Indeed, if anything, based on my conversation with clients, the level of interest and focus has increased as clients consider how AI and automation can be used to deliver marketing effectiveness and efficiency both in the short and medium term. But on this point, I think the current macro uncertainty is actually acting as a catalyst for some advertisers to revisit how they approach marketing to deal with cost pressures. I think we feel more strongly than ever that WPP via WPP Open has an enormous opportunity to help clients to drive ROI on their marketing spend as well as save money through deliver greater efficiency, to reduce the number of suppliers and reduce costs, but also to embrace a new way of working with more strategic partnerships. And clients are looking at marketing partnerships much more like technology partnerships with more of the rigor and discipline perhaps the IT departments bring on supply selection.

[Mark Read, CEO at WPP]

And against this background, industry moving from four players to three players is undoubtedly beneficial to us. And with that, we're being very proactive, as you imagine, taking our integrated AI proposition to clients. So looking forward, let's cover priorities of 2025 on slide 14. We met in February. We highlighted three priorities in which we were laser focused in organization.

[Mark Read, CEO at WPP]

First, input the importance of driving takeout at WPP open within our organization and embedding it in our daily work second, to support Brian Lesser and his team in reaccelerating growth with MUPEM and third, to deliver and improve our new business success rate. Starting with WPP Open, we continue to see strong progress in take up. The number of 48,000 users represents about 60% of our client facing people using WPP Open last month, up from about 40% at the end of the years. It's important for a number of reasons. First, from a practical perspective, our people are using the platform and delivering greater efficacy and efficiency and understanding how they can do that.

[Mark Read, CEO at WPP]

There are around 80,000 client facing people within WPP, and it's our strategic objective that all of them are using this to deliver daily better work certainly by the end of the year. Secondly, our conversion in new business pitches does move up by around 10% when we put WPP at the heart of our offering, which we're doing in every pitch, not just because it increases the chance of success, because it unlocks potential to explore more innovative commercial models, allowing us and clients to share in the value we create and deal with some of the pricing pressures that sometimes we're seeing in the market. And I hope we'll see continued progress on this metric as the year goes on. Turning to Group M. I mentioned that the premiums in the lion's share of the growth gap between us and our leading peers is attributable to the gap in performance of our media business, in particular, in The U.

[Mark Read, CEO at WPP]

S. As Brian outlined in February, we see some encouraging signs of progress from the strategy we launched in January 2024 to simplify and integrate the group I'm offering, but it is important that we redouble our efforts, but there also have been some challenges. Brian talked about five key priorities he's pursuing around data and technology, people and talent, innovation, collaboration, and the organization. And we're making good progress on each of these areas. But I'd summarize the overall progress of Business Response.

[Mark Read, CEO at WPP]

First, we have to make sure our go to market is simple and integrated as it possibly can be. Further simplifying group end, only try to create a cost efficiency, but makes it a simpler and easier business to our clients to do business with. And that's what we mean by moving to a more client centric model, taking out silos and barriers and cost within the organization to focus all of our resources on client success. Secondly, essentially, not only do we catch up, but leapfrog the competitive set in terms of how we use AI, data, and technology to drive business outcomes. And I'll talk about Infosum in a moment, but that's a significant step forward in that area.

[Mark Read, CEO at WPP]

And then lastly, in terms of new business, it is lumpy, but I do think we're making progress. The loss of the Coca Cola North American media business in the quarter was difficult, but we do have a very detailed debrief from the client and a good understanding of our strengths and challenges. We're making good progress towards renewing our broader agreement with that client. Meanwhile, in the first quarter, there are some important tangible signs of success, whether it be the winner of media mandate for EA, Goddrich consumer products in India, the global consumer shopping market for Heineken and many, many other new business pitches which are less public but work through the system, expansion of scope from our existing clients, which you do see in the results of our top 10 and top 25 clients. And an important common thread across all of this is WPP open.

[Mark Read, CEO at WPP]

We are putting that at the heart of what we're doing. So before we wrap up, turning on page 15 to info sum and why we believe it is an important step forward. As you know, data is central to delivering the best execution for our media clients, but actually more broadly across the work that we do with clients. And this transaction transforms the breadth and scale of data intelligence of WPP's clients in a way that we think leapfrog traditional identity based solutions. Think of it as improving our access to more data and unlocking the power of AI on that data, connecting that data to more premium and quality inventory, and doing so using privacy compliant technology.

[Mark Read, CEO at WPP]

So how does it do that? Well, Infosum allows WPP's clients to maximize the value of their own first party data with privacy enhancing connections to data providers and media partners across the marketing ecosystem and that's something that WPP can strengthen. In this context, it's important that it's not easy to have the world leading cloud based technology, but it's an established player with an extensive global data network. That includes hundreds of billions of data signals across multiple dimensions of data for media platforms including Channel four, DIRECTV, ITV, Netflix, News Corp, Samsung ads, as well as major retailers around the world and identity and data parts including Experian, TransUnion, Surcana, Denata, and NC Solutions. All of that data we're able to better integrate into our media planning and media activation and results measurement.

[Mark Read, CEO at WPP]

So even before joining WPP and having the strength of our relationships to broaden that dataset, it's a real world leader in data collaboration. But the power of the transactional, it means in the context of WPP Open and GroupM more broadly. And by integrating Infosum's capability within WPP Open, our clients are able to unlock the full potential of their customer data enriched through AI in strong quality media environments that's not always available to people using legacy first party data systems. And using federated learning techniques, clients able to build, trade, and deploy custom AI models that can use that in a privacy compliant way. They can generate insights and audiences to create precise predictive models to optimize campaigns and deliver measurable improvement in real time.

[Mark Read, CEO at WPP]

So the conversation we have with clients has very positive. Dozens of conversations over the last few weeks and the feedback, very positive. And then we're confident the deal alongside our board of simplification efforts will drive a step change in performance, particularly in competitive reviews. And it happens to be as well a business that Brian knows well, so the integration, I think, is proceeding extremely well. So to wrap up on Page 16, I think in summary, there's three key points that we wanted to make in this presentation.

[Mark Read, CEO at WPP]

In the first, that our first quarter performance, while weaker than we would like, is in line with our expectations, and we remain confident on achieving our full year guidance. At the same time, there's some important developments in the first quarter that encourage our belief that we're on the right track, whether it be the strong performance of our top clients or the improvement in new business momentum at VML and Versa. Secondly, while the macro environment is uncertain, we view the diversified nature of our business, both by geography and by client as a key strength. It's an important hedge in the short term and will be a significant opportunity longer term. As earlier I said, in February, there's three priority 2025 staying at the forefront of AI, fixing group m and winning more new business, and we are making progress on each of those.

[Mark Read, CEO at WPP]

So I'm sure you all have questions, and we're ready to take them. So operator, maybe hand back to you, and Joanne and I will take people's questions. Thank you.

[Operator]

Of course, no Our first question comes from Nicholas Longwe from BNP Paribas. Your line is now open. Please go ahead.

[Nicolas Langlet, Equity Analyst at BNP Paribas]

Lars and Anton. I've got three questions, please. First of all, on Group M, so you referred in the press release to acceleration of the simplification at Group M. So does that mean you expect increased cost efficiencies compared to the previous plan? And when do you expect to see the full benefits of the initiatives at Group M?

[Nicolas Langlet, Equity Analyst at BNP Paribas]

Are we talking end of twenty five or more '26? Secondly, on net new business, what was the impact in Q1? And what phasing should we assume for the next three quarters? You said in the past you expect a neutral impact for the full year. Is it still the case?

[Nicolas Langlet, Equity Analyst at BNP Paribas]

And finally, on margin, it seems there is a lot of headwind in H1 and then better trend for H2. So what sort of margin decline should we assume for H1? Thank you very much.

[Mark Read, CEO at WPP]

Okay. Well, I think I'll let Jo Anne take the questions from a financial perspective. Just one comment on Group M. I think we are expecting strategic progress from today as a result of the actions that we've taken both last year, also this year with Infosum. So that's ongoing.

[Mark Read, CEO at WPP]

I think Joanne can talk to you about how you think about that from a financial question. And I think your first and third questions are largely related to each other. But Joanne?

[Joanne Wilson, CFO at WPP]

Yes. Thanks, Nicholas. So on his end, Brian set up his priorities in February, and he and the team are executing against those. And that will build on some of the simplification work that we did last year to simplify both how we operate driving more client centric operating model and simplify our go to market. And there will be cost efficiencies as a result of that.

[Joanne Wilson, CFO at WPP]

But I think more importantly, it sets group up group M up to deliver market and above market growth over time. In terms of the impact on the P and L, we do expect to see an impact on the first half margin from that. For the full year, we expect it to be broadly neutral in 2025. And so most of the benefits will be in 2026 just from a pure P and L perspective. In terms of the net new business impacting Q1, it was slightly down year on year, and that reflects some of the loss and new business activity.

[Joanne Wilson, CFO at WPP]

In terms of the next three quarters, I would just reiterate what I said in February, where we said that we expect in the first half net new business to be a drive, just reflecting those historical client losses that we saw in 2024 and really seeing the full impact of those in H1. In H2, we'll benefit more from the ramp up of recent new business wins, which will help offset some of those losses. So a drag in H1 and a better performance in H2 from net new business. And then in terms of margin, there's two factors as you really think about margins through this year. In H1, we talked about group and the impact of that, but also our performance.

[Joanne Wilson, CFO at WPP]

We've talked about it improving through the year. And therefore, that H1 top line performance will have an impact on our operating leverage and on margin. So those are really two factors to think about in H1, but I think it's important to reiterate that we are delivering or we expect to deliver a flat margin for the year excluding FX. And that really is driven by the full year benefit of the structural cost actions that we took last year, continue to be very disciplined around our discretionary spend and delivering back office efficiencies, which is also enabling us to invest in open AI and data.

[Operator]

Our next question comes from Simon Baker from Bernstein. Your line is now open. Please go ahead.

[Simon Baker, Senior Media Analyst at Bernstein]

Yes, good morning and thank you for taking the questions. So three quick questions, please. Firstly, you mentioned the economic uncertainty has increased. I just wondered at a high level what your thoughts are in terms of the way that the ad market behaves versus say the last major downturn in 02/2009? I mean, clearly social media is a lot more, digital is a lot more, marketing funnels etcetera.

[Simon Baker, Senior Media Analyst at Bernstein]

So the question really is today is it faster or slower to wind up and wind down in terms of marketing campaigns? And similarly, is it sort of sticky or less sticky today, please? And second question is, any early thoughts in terms of the third quarter versus fourth quarter phasing, specifically in terms of the way that the China and net new business and improving tech spend factors all sort of interrelate whether the third quarter is sort of broadly the same as the fourth quarter or whether you'd say anything in terms of the bias there? And finally, one for Jo Anne please. In terms of the Kantar Group tax reference base value, have you made any comments on that?

[Simon Baker, Senior Media Analyst at Bernstein]

Can you give any indication on the tax reference value, please? Thank you.

[Mark Read, CEO at WPP]

Okay. Well, I'll take the first question perhaps. And as I think I've been around for most of that time. And Johann can take a second. Look, I think you referenced 02/2009 as the last major downturn.

[Mark Read, CEO at WPP]

I think there was COVID in between. And then I think a couple of years ago, actually exactly the same point of the year we had what happened in Ukraine, maybe that's before the prelims. Look, I think that I don't know that we sit today looking at 2025 as we would have looked at 02/2009. I guess there's a very broad range of outcomes where we are today. And at the most severe, it could be, but I don't think that, that is what people expect to happen.

[Mark Read, CEO at WPP]

I mean the major banks have a range of probabilities on a U. S. Recession rather than certainty. I do think that clients have learned from COVID and Ukraine that I said in the statement that the marketing is a cost in the short term and an investment in the long term. And there's no doubt that faced by pressures, they balance it out.

[Mark Read, CEO at WPP]

I think you saw the results from Unilever, Nestle, P and G yesterday, and you can see it in our top clients that are continuing to prioritize sort of ongoing marketing investments and the pressure. I think as we identified in Q4 is more around the discretionary areas of spend. And but we have to see what happens with tariffs. I don't think things will be faster or slower than February. Maybe they'll be a little bit faster because people had commitments, maybe because people couldn't spend.

[Mark Read, CEO at WPP]

I could argue it will be faster because people have commitments before and they can change their screens. I could argue that clients are more willing to wait and see because they can pull things more quickly if they need to. So you can make the argument one way or the other. I think it's really until we get greater clarity on what's actually going to happen with tariffs, I don't think people feel we have clarity now. We're not yet going to see a major pullback in spending until we have to one, clarity on tariffs or two, clarity on the direction of the economy.

[Mark Read, CEO at WPP]

And so I spoke to a number of clients over the last few days ahead of this call. I think to date, we haven't seen any major step down beyond what I think for us was already a relatively cautious outlook for the year. So I hope that gives you some sort of color on what we're seeing. Joanne?

[Joanne Wilson, CFO at WPP]

Yes. We don't guide by quarter, but just as you think about by H2, obviously, Q3 is a tougher comp Q4 was down 2.3%. You specifically mentioned China, its balance comes between Q3 and Q4. And we'll see the impacts of net new business and that ramp up as I've talked about as we go through the year.

[Joanne Wilson, CFO at WPP]

So overall, I think at this point, it's probably fair to assume that it will be fairly balanced between Q3 and Q4. And then on the counter tax reference, we're making good progress in counter. I think we need to see what happens with the remaining business. There will be some tax, but I don't think it will be significant just based on the structure of that business.

[Simon Baker, Senior Media Analyst at Bernstein]

Brilliant. Thank you.

[Operator]

Thank you. Our next question comes from Adrian de Saint Hilaire from Bank of America. Your line is now open. Please go ahead.

[Adrien de Saint Hilaire, Director at Bank of America]

Thank you. Good morning, everyone. So a few questions or points, if that's okay. So I think that the link between the advertising market and the economy is pretty clear. But maybe what's less clear to me is the link between ad spending and the agency's organic sales growth.

[Adrien de Saint Hilaire, Director at Bank of America]

So could you just elaborate a bit in terms of how your fee structure has evolved? How much of your revenue is tied to actual media dollar spending? Or how much is based on retainers? Secondly, I think, Joanne, you highlighted that you assume that new business contribution would be a positive contribution in H2. But since you provided that guidance, Coke was lost.

[Adrien de Saint Hilaire, Director at Bank of America]

I think there were some headlines about PayPal the other day. Mars is under review and I think you're defending that account. So what sort of elements do you have to be sure that H2 is going to be positive indeed for net new business? And then thirdly, if I look at your performance by sector, automotive was really quite strong in Q1. Do you think there was maybe some pull forward there in terms of spending ahead of tariffs or anything that you would call out because that seems a bit counterintuitive?

[Adrien de Saint Hilaire, Director at Bank of America]

Thank you.

[Mark Read, CEO at WPP]

Yes. Look, think on I mean, on your last question, just to tackle that directly, I don't think there was any of pull forward. I think that we've had some good new business success and expanded our assignments for some of our automotive clients. And they are they have been spending. I think it's fair to say it's one of the sectors that could be most affected, but that may not be the pattern that goes through the year.

[Mark Read, CEO at WPP]

But to date, again, even in that sector, we haven't seen any specific pullbacks. The outlook is too uncertain. I think on your first question around the relationship, the ad market and the economy on spend, basically ad spend and organic service, I mean, ultimately, they're clearly related. I mean, clients' investments with us are linked to their overall ad spending, whether our fee arrangements are linked to business success or or billings or indeed retainers, clients have the ability to vary those up or down, you know, at their discretion. And so I think that if clients pull back at spending in a major way, that would clearly have an impact on our fees, whether or not we have a retainer.

[Mark Read, CEO at WPP]

I don't no retainer, sadly, is forever. At the same time, as I said, we haven't yet seen that degree of pullback from clients, although we have been maybe more cautious, some of our peers from the beginning of the year perhaps as we reported a few weeks later and perhaps because we saw some of the impact on discretionary spend in Q4 that perhaps others didn't see for the year overall. So I think that's the way to think about it. Do have to talk about the new business phasing?

[Joanne Wilson, CFO at WPP]

Yes. So just in terms of the country change too, I think I'd say a few things on this, Adrian. So first of all, we have talked about that ramp up of new wins from H2 last year, which we'll see a fuller impact from that in H2 than we have done in H1, which will help offset some of those historical client losses. Second thing I'd say you talked about Coke and PayPal, but we've also seen new business wins in the first quarter. So Electronic Arts, Heineken, obviously, that we shared in the release.

[Joanne Wilson, CFO at WPP]

Linked to that, I'd the pipeline is healthy, so broadly at the same level as last year. And we've seen good momentum on VML and Bursin as they have come through a lot of the merger activity that they were focused on last year. So we expect to continue to improve that new business performance as we go through the balance of the year. And I think the final thing just to say is we talk a lot about new clients and new client wins and losses, but there are other factors. So we talked about growth with our existing clients, top 25 growing at 2.5%.

[Joanne Wilson, CFO at WPP]

There's plenty of headroom with our existing clients. We're seeing our existing clients move more towards integrated opportunities. And so we see an opportunity to continue to grow with those existing clients. I think we need to think about that as well as new business wins as we look at second half.

[Adrien de Saint Hilaire, Director at Bank of America]

Very clear.

[Operator]

Thank you. Our next question comes from Steve Lichtie from Deutsche NamUs. Your line is now open. Please go ahead.

[Steve Liechti, Media Analyst at Numis Securities Ltd]

Yes. Good morning. I've just got two left actually. One is on Group M in

[Steve Liechti, Media Analyst at Numis Securities Ltd]

the first quarter. Can you just

[Steve Liechti, Media Analyst at Numis Securities Ltd]

explain your comments on Europe a little bit more? Just I guess that minus 900,000.0 took me a bit by surprise. And what's the danger that European pressure continues through into further quarters? So just more color and clarity there. And then the second question is your comments on healthcare like for like being relatively more stable.

[Steve Liechti, Media Analyst at Numis Securities Ltd]

I don't know if I got it wrong, but I thought Pfizer was still a drag into the first quarter and a bit into the maybe the second quarter as well. So just help me there in terms of that better performance than I expected.

[Mark Read, CEO at WPP]

Yes. So on Healthcare, I think Pfizer was a drag in Q1. I think it stops I mean, it's amazing decision was made in May 2023, was still a drag in Q1. So I think it stops from Q2 onwards. But we have had some success with other health care clients.

[Mark Read, CEO at WPP]

And so I think that's provided a better balance on health care. Do want to talk about group end in Europe?

[Joanne Wilson, CFO at WPP]

Yes. In Europe, I think you look at Western companies in Europe rather than UK, where The UK was really impacted by some of the client losses. We we have a tougher comp, but in media specifically, we saw some weakness in the in the environment, particularly in Germany and France. And that weighed on, I guess, the scale of clients that we have in media, and we have a weaker comp in Q2. So we'll have to see how that plays through in the second quarter.

[Joanne Wilson, CFO at WPP]

But it was really that tier where we just saw softness, which is more macro related than anything else, Steve.

[Steve Liechti, Media Analyst at Numis Securities Ltd]

Great. Thanks.

[Operator]

Thank you. Our next question comes from Lisa Yang from Goldman Sachs. Your line is open. Please go ahead.

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Hi, good morning. I have a few questions, please. So firstly, just on the cost, I mean, mentioned the cost flexibility that will help you mitigate the macro uncertainty. Can you maybe talk about the actions you're taking currently? And what are the main sort of levers you have?

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Is the top line which you did the trade further? Maybe you can maybe quantify the size of your freelancers, how much discretion you spend, the size of bonuses? I think that could that be helpful. That's the first question. Secondly, just in terms of the actions taken at GoopPen since the start of 2024, you mentioned you've seen some encouraging signs.

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Maybe can you give us a bit more detail in terms of how that has fit through in terms of either client retention or expansion of scope or net new business wins? Why accelerating simplification today or now or this year? And how much more simplification is there to come in other years or you think this is the last leg? And that would helpful just to understand like how that could basically help the group can return to growth. And just the first question, just on the level of new business.

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Do you expect to see any sort of slowdown in the overall lab marketing pitch given the level of certainty? Or do you expect to see maybe a pickup going forward? And how do

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

you

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

think how do you assess potential risk versus opportunity for WC for the rest of the year? Thank you.

[Mark Read, CEO at WPP]

Okay. Well, I'll tackle the Group M and your business question. And look, I think on Group M, as you know, as I referenced Pfizer, decision made in May 2023 is still weighing on our results in the first quarter of twenty twenty five. So the impact on the business is very long term. And I think Fruitvale didn't perform as we had want in Q1, but some of that is a result of decisions made some time ago.

[Mark Read, CEO at WPP]

If you look at it if you look at the sort of the big new business wins in group m last year, you know, we did retain and expand our Unilever relationship. We did win J and J in North America, and we did win Amazon outside The United States. And those are three of the world's 10 biggest advertisers. So we are not without our success in new business, and we did retain EA in q one, again, competitively. And we won that business against, you know, some of the toughest competition in the industry.

[Mark Read, CEO at WPP]

Now it's true that we didn't retain Volvo after a pitch. And while we're renewing the overall Coca Cola relationship, we won't be working with them in North America. So it is balanced, but I do think that we are seeing more competitive success in new business, but we can beat the best when we're at our best on the best day. And the Infosum transaction has is going to strengthen significantly our data proposition, and we're seeing that with clients. So I think greater clarity on that is perhaps the thing that we have been missing a little bit.

[Mark Read, CEO at WPP]

And one of the reasons we brought Brian back was to strengthen the growth in Proprietary Media, which would drive both financial success and a little bit greater financial flexibility. So I think we know what we need to do in our media business, and I think we can start to see some of the impacts of that, though we're not seeing it necessarily in the quarter by quarter numbers. On net new business, look, I think that the pipeline might be a little bit smaller than last year. As ever, there are some things would risk in some areas of upside. I do think that clients I think major clients are starting to look at and review bigger, more integrated assignments.

[Mark Read, CEO at WPP]

Many of those things know, I think we tend to overfocus perhaps on some of the big media reviews because with the billing numbers, they look much bigger than they are and then more public. But and and, you know, I can assure you, we we take part in in I mean, more more than I would like to imagine. I think we've done six or 7,000 new business pitches this year. You know, very few of them hit hit the headlines. So, you know, there's a daily there's a a daily cadence of new business opportunity.

[Mark Read, CEO at WPP]

And I do think we're seeing some bigger consolidation from clients, things that are not necessarily in the headlines or things people don't necessarily know about that, you know, support what we're doing. And, again, within that, I think we're seeing the advances and our ability to demonstrate what we have operating today in WPP over here, not a Figma not a mock up on Figma, but an actual operational tool as being very compelling to clients who take the time to really dive into what we're doing. Jo Anne?

[Joanne Wilson, CFO at WPP]

Yes. So Lisa, thanks for the question. So on I think in 2024, we demonstrated an ability when the top line is softer to really manage up through the P and L, and we step the margin forward in 2024. As we look at this year, we will benefit from the annualization of the structural cost actions that we took last year. But in addition, we continue to take action on headcount where we see that softer top line.

[Joanne Wilson, CFO at WPP]

We have a flexible cost base, and and I think we've demonstrated, as I said, that we that that we we do that well. You specifically, you asked about freelancers. Freelancers make up about, you know, high single digit proportion of our staff costs, and we manage things tightly. We've seen improvements in that as we as we've gone through the last twelve, eighteen months. And the other bucket to look at and that we've talked about before is the back office efficiencies.

[Joanne Wilson, CFO at WPP]

You're encouraged by the progress that we've made in those. We've seen back office costs coming down, and there's an opportunity to do more of that, and we're focused on that. And that's partly enabling us to make the right investment in our business over the medium term, and we call that investment in open AI and data. And finally, just I'd say on discretionary spend, we are very disciplined. I think we've all learned how to be disciplined as we went through COVID on discretionary spend, and we carry that into the business.

[Joanne Wilson, CFO at WPP]

And we have a number of levers around discretionary spend that we can pull as we go through a tougher external environment.

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

That's clear. Thank you.

[Operator]

Thank you. Our next question comes from Adam Berlin from UBS. Your line is now open. Please go ahead.

[Adam Berlin, Executive Director at UBS Group]

Yes. Hi, good morning. I've still got three questions, if that's okay. My first question is when

[Adam Berlin, Executive Director at UBS Group]

you look across now you're the

[Adam Berlin, Executive Director at UBS Group]

fourth of the large agencies to report, the growth across all agencies on average was about 0.5%, which was the lowest quarter we've had since I think first quarter of twenty twenty one. Do you have any theory on why the sector was so weak in this quarter? I know there's been a lot of business changing hands, but really appreciate any thoughts you have on that and why it should get improved in the rest of the year? That's the first question. Second question is another quarter where AKQA continued to be very weak and was depressed with growth in creative agencies.

[Adam Berlin, Executive Director at UBS Group]

Is this should we be thinking this like an RGA huge situation that we saw at IPG? Like do you is this an asset that you may need to dispose off to kind of improve the growth? Or are there some reasons that you can explain about why things should improve and it's different from what we saw within those assets in IPG? And then the third question I had was, you what you're saying about Q2 is similar, so let's say, say, minus 2.7% again. H2 would need to be positive to get to the midpoint of the range.

[Adam Berlin, Executive Director at UBS Group]

And I'm just trying to understand, is that realistic? Should we be thinking more of the bottom end of the range? Or is the change in new business wins very material in H2 and therefore that allows you to have a positive second half even as the macro potentially toughens?

[Mark Read, CEO at WPP]

Yes. I think on your last question, I think you can look at sort of change in new business quarter by quarter balancing the balance of the year, but I'll let Joanne tackle that. I think on your first question, so why is it 0.5% and why is it the weaker weakest quarter since Q3? Think that's the economy. I mean, you only have to look at what's going on.

[Mark Read, CEO at WPP]

And we saw some of it in Q4 maybe ahead of our peers weighing on discretionary spend and maybe smaller companies. We are seeing, as you've seen in our numbers, strong spend from our biggest clients. Maybe we're gaining some share with our biggest clients, but also I think that big companies are continuing to invest behind ongoing marketing. But things are a little bit tougher around sort of digital technology areas, more discretionary spend. I think that links to your second question.

[Mark Read, CEO at WPP]

And there have been management changes to AKQA. But actually, although we haven't yet seen the results, AKQA had a very good first quarter in terms of new business wins. And we are looking at performance of that unit improving over the year. I don't think we want to do what IPG did with RGA and huge unit. Frankly, our job and the reason we get paid is to fix the businesses that we have in our portfolio.

[Mark Read, CEO at WPP]

I think that AKQA is a very strong business. JR has built an amazingly strong agency with a very strong brand. They get amazing access to new business opportunities and talent. And read through from RJ and Yuj, I'd say, is the economic outlook on that sector has been tough. But within that, I think that we have a really strong asset, and our job is to put the right management in place and get the business growing, and that's what we're very focused on, not just disposing of it.

[Mark Read, CEO at WPP]

We're not ready to surrender yet. Mean, Joanne, do you have the guidance and expectations for the first half?

[Joanne Wilson, CFO at WPP]

Yes. Our guidance for the full year, which we're reiterating today, is really based on our new and net new business impacts. We've talked about the sequencing of that and client spending plans as they are today. And as new business ramps up, we'll see a benefit in the second half. And we also talked about existing our largest clients, the growth of the largest clients.

[Joanne Wilson, CFO at WPP]

We were very thoughtful when we set our guidance for the full year. We talked about at the time, we started to see talk of tariffs, and we were we exited 2024 a little bit softer than what we were expecting. And so we built a range of outcomes into that guidance for the full year. It's too early to know the guidance or reiterating it today. I think we'll have to see how events, recent events play through in the balance of the year before we look at nor are the guidance.

[Operator]

Our

[Operator]

next question comes from Laura Matteo from Morgan Stanley. Your line is now open. Please go ahead.

[Laura Metayer, Analyst at Morgan Stanley]

Hi, Mark. Hi, Joanne. Two questions from me, please. The first one is on Infosum. Do you mind talking a little bit about the competitive environment?

[Laura Metayer, Analyst at Morgan Stanley]

Who do you consider is the closest competitor to Infosum? And how quickly do you think you can integrate it to WPP and Group specifically? And how like when do you expect to see benefits from it? And then the second question is more on the visibility that you have into revenues. I think we you've talked about this, so it's more of a follow-up question.

[Laura Metayer, Analyst at Morgan Stanley]

Is there a proportion of the revenues that are in '25 that is guaranteed today where you have full visibility? Or do you mean that all of the revenues could basically be impacted by the macro environment? Thank you.

[Mark Read, CEO at WPP]

So on Infosum, I think that actually, their two biggest competitors both been bought by cloud providers to integrate into their cloud data platform. So I think it shows the attraction of the sector. There's not necessarily stand alone businesses out there that do something similar. You know, it takes a different approach to the application of data from classic first party data system. You know, the classic sort of CRM based system is, you know, you you see a cookie or you see a phone number or you see an email address, and you try to use those identifiers to link one data set to another, and the Infosum takes a more AI driven, you know, federated learning is a technical term approach to combining those data center those data sets.

[Mark Read, CEO at WPP]

I think it's both more privacy compliant, but also more more nuanced. And because of that, it enables us to take that data into more premium media environments. You know, some of the social platforms don't let sort of traditional systems integrate into them. So it gives us a broader range of media environments for our clients, which is important. In terms of the integration, I mean, given the relationships within the business and the CEO has taken on a role with GroupM, I think it's pretty seamless.

[Mark Read, CEO at WPP]

It's as fast as it takes to integrate Infosum into a client, which I believe, you know, can be done, you know, in in a matter of, you know, days, days, and weeks. So, you know, they're already working with, you know, existing clients. They work with Coca Cola in Europe already and many of our media partners. So I think it's really sort of integrated from day one, and it will only get stronger as time as we bring more data sets and more media owners into the ecosystem. Jo Anne, do you want take that?

[Joanne Wilson, CFO at WPP]

Yes, of course. Thanks, Laura. So in terms of visibility, look, the vast majority of our clients are large global clients, and we have multiyear contracts with them. So to that extent, there is a good level of visibility into their spending plans for the year. But of course, when the macro environment changes, those spending plans can cut and we've seen that in past tougher macro environments.

[Joanne Wilson, CFO at WPP]

But as we said, our guidance for the full year reflects that because we saw some of that in Q4. We also talked about project based spend, so that really impacts some of our smaller agencies and agencies like AKQA who tend to do more digital work. And that is more discretionary spend for clients, which it is there's more flexibility for clients to either delay those projects or cut those projects, so not something that we've seen in the last twelve months or so. But obviously, good visibility into the next quarter and also in terms of the net new business that we have secured already on the pipeline and

[Joanne Wilson, CFO at WPP]

that visibility improves obviously through the year.

[Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs]

Thank you.

[Operator]

Thank you. Our next question comes from Julian Rock from Barclays. Your line is now open. Please go ahead.

[Julien Roch, Managing Director at Barclays]

Yes. Good morning, Marc. Good morning, Joanne. Three questions, please. Revisiting full year new business, now that you have more clarity, is that fair to say that newbies was about minus 2% last year and should be about 0% this year based on what has been done so far and excluding future wins and losses?

[Julien Roch, Managing Director at Barclays]

Second question is how bad does organic needs to be before you cannot be around flat margin? Is it minus 3%, minus 4%, minus 5%? And then on kind of macro and rate reading guidance, now it's pretty obvious to everybody that you are a macro sensitive business, right? And IPG yesterday was very clear that their guidance reiteration was based on current performance and clients not changing behavior. But if macro is weakening, it could change guidance.

[Julien Roch, Managing Director at Barclays]

Now what about you? I mean, normally, the answer is pretty obvious, but you said many times during that call that you had put in some conservatism in your full year guidance because you've already seen that, that macro was weakening. So kind of what kind of conservatism and anticipation of macro weaknesses in the full year guidance is kind of my question. Yes.

[Mark Read, CEO at WPP]

Look, I think

[Mark Read, CEO at WPP]

I mean, think to some extent, all those three things are related. I think we said new business was a headwind last year, and it will not make a positive contribution this year. And the more negative contribution is at the beginning of the year. We'll have to see how things go throughout the year. I think that sort of tackles the first part.

[Mark Read, CEO at WPP]

I think the second question is we've given the guidance as it stands, and so those things hang together. And then in terms of changing the guidance, you know, I think you're trying to get

[Mark Read, CEO at WPP]

me to say something I don't want

[Mark Read, CEO at WPP]

to get, which is I think we're gonna make it. We did build some caution. I think it's very difficult to be scientific about the level of caution we built in. But having seen where we were in Q4 and having seen where we started the year with pressure on discretionary spend, leaving that level of pressure to continue for the rest of the year, the basis on which we gave the guidance. And it's not we're not anticipating within that a massive recovery in the second half of the year to make our guidance.

[Mark Read, CEO at WPP]

And I think it's very I don't think you can push us to say what would cause us to change it at this point. But we can only see the world as we say it as we see things today. We don't see the need to change the guidance. But obviously, there's a range of outcomes. We are, as you put, macro sensitive where it would need to change.

[Mark Read, CEO at WPP]

I think the range back to the tariffs is both positive and negative indeed. So I think like many companies were saying that we are where we are at the moment, and that does bake in because of when we reported and are experiencing q four into q one, a somewhat more sensitive macro environment, which is why we're holding our guidance as at today's date, if that helps you understand our thinking, I think.

[Joanne Wilson, CFO at WPP]

I mean, and just on the second question on how bad does it need to get for margins to actually impact it. I mean, I just oh, sorry. Oh, Julia, did you wanna say something else?

[Julien Roch, Managing Director at Barclays]

No. No. Go ahead.

[Joanne Wilson, CFO at WPP]

Yeah. So if I just step back and look at, the industry as a whole, but okay. If we just step back and look at the industry as a whole, maybe during COVID and maybe February, the peak to trough was eight percent and the margin impact was around 150 to 200 basis points. But the more important thing is the margin bounces back because of that flexible cost base that exists in our industry. I mean for us, we've guided zero to minus two We said we'll hold margins flat at the bottom end.

[Joanne Wilson, CFO at WPP]

Obviously, that requires more action around that flexible cost base given the negative operating leverage. But beyond my decision, don't really want go there because that's not really our guidance. And if we were in that situation, we'd have to look at what other actions made sense for us to take on the P and L. It's important for us as well as being disciplined around our cost base, making sure that we're investing for the medium term and making sure that we're continuing to reallocate investment into open AI and data. So very important for us as we go through this year and think about both the near term and the medium term priorities.

[Operator]

Thank you. We currently have no further questions. So I'll hand back to Mark for closing remarks.

[Mark Read, CEO at WPP]

Thanks very much, everybody. I think we've discussed the main points on the call, particularly related to the economic environment. I think there's no doubt that it is challenging. But overall, I think we're making good progress strategically, and we'll see the benefits of that. So we look forward to updating you on the current over the coming months.

[Mark Read, CEO at WPP]

Thanks very much, and we look forward to seeing you soon.

[Operator]

This concludes today's call. Thank you for joining us. You may now disconnect your lines.

Participants

Executives

• Mark Read, CEO
• Joanne Wilson, CFO

Analysts

• Nicolas Langlet, Equity Analyst at BNP Paribas
• Simon Baker, Senior Media Analyst at Bernstein
• Adrien de Saint Hilaire, Director at Bank of America
• Steve Liechti, Media Analyst at Numis Securities Ltd
• Lisa Yang, MD, Head of European Media & Internet Equity Research at Goldman Sachs
• Adam Berlin, Executive Director at UBS Group
• Laura Metayer, Analyst at Morgan Stanley
• Julien Roch, Managing Director at Barclays