Publicis raises full-year forecast, pays bonus after strong third quarter

Publicis Groupe raised its full-year revenue growth forecast after posting strong organic growth for the third consecutive quarter of 2022, even amid an uncertain economic climate. The holding company also announced it will hand out an employee bonus to around half its workforce on the back of its buoyant results and to counter the effects of inflation.

Publicis' net revenue soared 23.5% to 3,237 million euros in the third quarter. Organic revenue—which strips out the impact of acquisitions, divestitures and currency fluctuations—jumped 10.3%, exceeding analyst expectations for growth of about 5.1%.

Publicis now expects organic revenue to rise 8.5% this year, higher than the already increased 6%-7% 2022 revenue growth forecast it issued in July.

In November, the company will pay a bonus of one week’s salary to all employees with more than one year's tenure who have no variable remuneration, meaning those whose pay is not already bonus-related or on commission. This represents around half its employees, more than 45,000 people, Arthur Sadoun, Publicis CEO and chairman, said in an interview. Overall, salaries will increase by an average of 7% across Publicis, which is the world's third-largest agency company based on 2021 revenue.

"We thought it was the right thing to do given inflation," Sadoun said. "Some of our people will have difficulties during the holiday season.”

Publicis is not the only agency offering more money to employees right now. Last week, Stagwell's Gale announced a monthly inflation stipend for employees earnings less than $150,000 annually. Gale's U.S.-based employees will receive $600 under its new plan.

'One-third bigger'

Publicis' figures were boosted by strong performances from its Sapient and Epsilon businesses, which grew by 18.1% and 13.9%, respectively. Those two businesses now represent a third of its revenue, said Sadoun. “We are seeing exponential growth because there is exponential demand from them,” he said. “It is a dynamic that we’re seeing in both of our biggest regions, the U.S. and Europe.”

Sadoun stressed that Publicis' growth is also outstripping pre-pandemic levels. Organic revenue rose by 16% compared to the third quarter of 2019.

"What matters is the performance over three years," he said. "We are one-third bigger than we were on 1st Jan 2020. Our market cap is 40% bigger.”

The company has been boosted by global new business wins throughout the year. In the third quarter, those included Mondelēz's $500 million media business and creative duties for banking group Standard Chartered.

Regional growth led by U.S. and Europe

Overall, the company had proved itself to be "immune" to crises in the wider world, Sadoun said, although it remains mindful of the ongoing impact of issues such as the Russia-Ukraine war, inflation and supply chain shortages.  

"So far we are not seeing a material impact of the crisis on our revenue," he said. "It’s important to acknowledge the fact that every one of our clients is facing many challenges, whether it be inflation, supply shortage, the war in Ukraine. We should expect some of them to see some cuts in marketing budgets. But we will believe that they will continue to invest in their marketing and business transformation whatever the circumstances. They can’t afford not to transform if they want to win a world that will be increasingly dominated by the platforms."

In the U.S., Publicis' organic revenue rose 11.1%. Its U.S. media business saw double-digit growth. Creative was also healthy, Sadoun stressed, driven by more production and content creation. “We are seeing more assets built around each campaign to really be 360-degree, and that is a huge trend."

Publicis' organic revenue also rose 11.1% in Europe, boosted by an "outstanding" performance by Sapient in the U.K. "Clients who had been under-investing are coming back to invest," said Sadoun, although he would not comment on any individual client relationships.

Organic revenue increased by 4.1% in Asia Pacific and by 5.9% in China, despite the ongoing issue with lockdowns there.

Sadoun also noted that Publicis' talent attrition rate slowed "pretty significantly" during the past quarter and it is facing fewer issues in attracting and retaining talent. "Thousands" of employees, he said, are taking up its "Work Your World" offer for employees to work from another country for six weeks a year.

"It has been a big success for very different profiles," he noted. "People are using it very differently, from people who want to go back to home countries to spend time with their parents, to those who are exploring the opportunity to work in new countries. And when they come back to the office, they are excited because they want to see people. It shows how flexible we can be when it’s necessary."

Publicis is the first major agency holding company to report third-quarter results.