IPG reports 12% fall in net profit for Q1 but organic revenue up 1.3%

Interpublic Group’s total revenue (including billable expenses) fell by 1 per cent to $2.5bn in the first three months of 2024 compared with Q1 of 2023.

Reporting its first-quarter results, IPG said net revenue (excluding billable expenses) was up 0.3 per cent to $2.2bn during the period, an organic increase of 1.3 per cent.

Philippe Krakowsky, IPG’s chief executive, said the results marked a “solid start to the year” and were in line with 2024 targets.

The group, which owns agencies including McCann, MullenLowe, FCB and IPG Mediabrands, recorded a year-on-year net income (or net profit) fall of 12 per cent to $110.4m, down from $126.0m in the same period last year.

Organic growth by discipline

IPG’s creative agencies performed the strongest in terms of organic growth during the quarter. Integrated advertising and creativity-led solutions – spanning McCann Worldgroup, IPG MullenLowe Group, FCB and IPG Health – grew net revenue by 3.2 per cent to $881.4m.

Media, data and engagement solutions – which houses IPG Mediabrands, Acxiom and specialist agencies including MRM, R/GA and Huge – saw net revenue down 0.5 per cent to $961.3m.

Lastly, net revenue for specialised communications and experiential solutions – including PR agencies Weber Shandwick and Golin – was up 1.5 per cent organically to $340.2m.

Krakowsky noted that IPG’s “data and tech-driven media offerings, healthcare marketing and PR capabilities continued to perform strongly, driving our growth”.

He added that “marketer sentiment has begun to improve relative to the back half of last year, and the new-business pipeline is more active”.

Meanwhile, operating income for the group was down to $184.2m in Q1 from $188.3m in 2023, while adjusted EBITA before restructuring costs was $205.5m, compared with $210.8m in Q1 2023.

Regional breakdown

By region, the UK grew organic net revenue by a marginal 0.2 per cent to $170.2m; continental Europe put in the strongest performance with 8.9 per cent growth; the US was up 2.1 per cent (to $1.47bn); Latin America was up 3 per cent; APAC fell 8.1 per cent; and all other markets declined 6.5 per cent.

Forecast for 2024

Looking ahead, Krakowsky noted that now that IPG’s “smallest seasonal quarter” was complete, “we continue to expect to achieve full-year organic growth of 1-2 per cent, although a recent decision by a significant ongoing client will adversely impact the balance of this year and likely make achieving the top end of that target more challenging”.

He continued: “With growth in that range, we continue to expect to deliver adjusted EBITA margin of 16.6% for the full year. The strength of our balance sheet positions us well to deliver on our long-standing commitment to capital returns and also augment our offerings and asset mix with M&A, with a particular focus on further broadening our commerce and digital transformation capabilities.”

Krakowsky also reiterated IPG’s commitment to investment in AI, including the integration of generative AI into “the core of our marketing capabilities”.

The results come after IPG reported a slight fall in revenue for 2023 due to decreased spend from tech clients and struggles with its digital agencies. However, while organic revenue declined 0.1 per cent for the year, and fell short of forecasts of 2-4 per cent organic growth, margins met expectations.