WPP posts consecutive drop in revenue in Q3 results
WPP has seen a further drop in revenue in its 2023 third quarter results, posting revenue of £3.508 billion (A$6.728 billion) in the three months to September 30.
This was a reported fall of 1.8% year-on-year (YoY) on the £3.6 billion (A$6.9 billion) reported in Q3 2022 , while like-for-like (LFL) growth was up 2.3%.
The drop follows on from a disappointing slump in Q2, after what looked to be a strong start to the year in Q1. The advertising holding company pointed to the “continuation of second quarter trends”, including a decline in spending from technology clients in North America and China as contributing to the decline.
“Our top-line performance in Q3 was below our expectations and continued to be impacted by the cautious spending trends we saw in Q2, particularly across technology clients with more impact from this felt in GroupM over the summer than the first half,” said Mark Read, global chief executive officer of WPP.
The results drop just more than a week after the global advertising holding company sent waves through the industry with the announcement of a merger between creative brands VMLY&R and Wunderman Thomspon, set to come together under the revived agency brand, VML.
Commenting on the merger, Read said: “In a world being rapidly reshaped, we need to continue to evolve our offer to clients and simplify our business. I am excited by the creation of the world’s largest creative agency, VML, and the continued evolution of GroupM. Both these developments will strengthen our offer to clients, simplify the integration of our services and maximise the returns on our ongoing investments in AI and technology.”
Growth in the APAC market was offset a drop in revenue for WPP’s media planning and buying arm, GroupM, in the Northern Hemisphere. This was attributed to a decline in spend from technology clients and client losses in the United States, which saw a LFL fall of 4.1% in Q3. At the same time, the United Kingdom had slow growth of 1.1% LFL, the same result as Western Continental Europe, with a decline of 3.8% LFL in Germany.
The group updated its operating margin guidance to around 14.8-15.0% for the full year, down from 15%. LFL revenue was also re-evaluated to 0.5-1.0%, down from 1.5-3.0%.
As of 27 October 2023, WPP has a market cap of £7.36 billion (A$14.12 billion).
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