Publicis Groupe S.A. (PUB.PA) Q3 FY2025 Earnings Call Transcript & Summary

Good morning. This is the conference operator. Welcome, and thank you for joining the Publicis Groupe Third Quarter 2025 Revenue Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Arthur Sadoun, Chairman and CEO of Publicis Groupe. Please go ahead, sir.

Thank you, Sharis. [Foreign Language] and welcome to Publicis Groupe Q3 2025 Revenue Call. I am Arthur Sadoun, and I'm here in Paris with our CFO, Loris Nold. Jean-Michel Bonamy is also here and will be available to take your questions offline after this session. I will begin by sharing the highlights of our Q3 performance and the outlook for the rest of the year. Loris will then get you into the detail of our numbers before I take you through how AI is making us win today and why it will be a strong driver of our growth tomorrow. As usual, Loris and I will take all of your questions after the presentation. But before we start, please take the time to read the disclaimer, which is an important legal matter. Okay. Let's begin with the 3 key highlights from our Q3 performance. First, we delivered another very strong quarter with net organic growth of plus 5.7% in Q3, building on a strong H1 at plus 5.4%. Second, we are raising our full year net organic revenue growth guidance to a range of 5% to 5.5%, up from our initial 4% to 5% on the strength of ongoing client demand, particularly for AI-enabled product. Third, we are already having good visibility going into 2026, thanks to a record first half performance in new business and a continued strong momentum over the summer. Let's dive into the detail of these highlights, starting with organic. At plus 5.7% in Q3, our performance was even stronger than the plus 5.4% achieved in H1, confirming our ability to maintain our growth momentum. Once again, this quarter, our results were driven by scope expansion with our clients, sustained strong new business momentum and a competitive landscape that is increasingly favorable to us. Looking at our business practices, Connected Media representing circa 60% of our total net revenue was once again very strong, posting high single-digit growth this quarter, driven by Publicis Media scale across geographies and channels and powered by Epsilon data. Intelligent Creativity, generating circa 25% of net revenue recorded mid-single-digit growth, unlike market trends, which are negative. This performance was supported by significant growth in production and creative wins. Lastly, technology with Publicis Sapient representing 15% of our net revenue stayed in positive territory despite the IT consulting market remaining soft as recently reported by the leader of the industry. Although clients are yet to embark in their large-scale AI transformation programs, we are seeing growing engagement on AI consulting projects for them to build their own agentic network. When it comes to our results by geography, all of our key regions performed well. The U.S., representing 59% of our net revenue in Q3, achieved outstanding organic growth at plus 7.1% this quarter, accelerating versus H1, where all of our practices have been contributing. Europe reported plus 2.8% organic growth against a particularly high comparable in Q3 2024 that included revenue from the Paris Olympics. Asia Pac was again very strong at plus 6.5%, with China up 6.1% in Q3, driven by market share gains. Turning to our second highlight, our guidance upgrade. In July, on the back of an exceptional first half in new business wins, we had already increased our guidance to close to 5%. Today, we are raising it further to a range of 5% to 5.5%. As you may recall from Q2, we had included some potential contingencies into our raised outlook. However, in Q3, none of them materialized. In fact, we did not see any slowdown. Marketing budgets remain firm with no material cuts taking place. Actually, we saw further acceleration in client demand when it comes to AI-powered products and services, particularly in 3 areas: First, in connecting media, which is booming at high single-digit growth, thanks to our ability to connect paid media with commerce and influencer through AI. Second, in our AI production platform, which is growing double digits on the strength of demand for personalized content. Third, in building agentic networks for clients who can no longer afford to a fragmented agent strategy and need to break down the silo within their own organization. This is why Publicis Sapient is positive again this quarter. This gave us the confidence to raise our forecast. Looking at our improved guidance in a bit more detail. The lower end at plus 5% is rock solid. It implies delivering in H2 the same underlying high growth rate as in H1 after adjusting for the 70 basis point tougher comparable. The upper end at plus 5.5% will demonstrate an underlying acceleration versus H1, including a very strong Q4 despite the high comparable. Clearly, the 5.5% is what we are aiming for. Achieving this net organic growth in 2025 on the top of a 5-year CAGR above 5% and widening the gap with our holding company peers come down to one main reason, our early and sustained focus on implementing our AI strategy at the heart of our unique capabilities in data and technologies. This has translated into material market share gain and stronger client relationship. I will come back to this in more detail later, but if there is one thing I would like you to take away from this morning call is that we are winning today, thanks to AI. Moving on to our third highlight. We are already in a favorable position of working towards next year, thanks to our unparalleled net new business momentum we have had this year. As such, we expect to outperform again in 2026 for the seventh consecutive year. This confidence is built on our unique positioning, which has enabled our record new business performance in the first half and again in Q3, as shown by the latest JPMorgan data on billings. In the first 9 months of 2025, net new billings reached $6 billion, close to what we achieved for the full year in 2024. These wins will now create a solid foundation for our growth as we head into 2026. And while you may be getting used to our performance, after 6 years of delivering above-market growth, we plan to outperform again in 2026, building on a multiyear high comparable exceeding 5%, while our main peers will benefit from their very easy comparable of 2025. I will now hand over to Loris for a deep dive into our numbers. I will then come back to explain why we are uniquely positioned to continue to win, thanks to AI in this rapidly changing environment.

Thank you, Arthur, and good morning, everyone. Let me go into the details of our Q3 net revenue. In Q3 2025, net revenue was EUR 3.529 billion, up 3.1% on a reported basis. This includes a net negative impact of currency of 520 basis points, mostly due to the decrease of the USD and pound sterling versus euro. A contribution from acquisitions net of disposals of 260 basis points, mainly reflecting the revenue of Mars and Influential in 2024, and ATOMIC 212, BR Media and Lotame in 2025. Finally, plus 5.7% organic growth, which comes on top of plus 5.8% organic growth in Q3 2024. Let's move to the next slide, which shows our Q3 net revenue by region. North America accelerated in Q3, up 3.6%, including plus 7.1% organic growth. There was a negative impact of the USD versus euro, mitigating the contribution of acquisitions. Europe posted plus 2.2% reported growth, including plus 2.8% inorganic growth. There was also a negative impact of the pound sterling versus euro. Asia Pacific posted plus 6.5% organic growth, fueled by Greater China at plus 6.1%. The reported growth was plus 2.9%, impacted negatively by exchange rates. Middle East and Africa also faced a high comparable and was down minus 3% in organic terms. Latin America continued to perform very well with plus 9.6% organic growth. Let's get into more details for each region, starting with North America. In the U.S., the group's largest geography, which represents circa 60% of our net revenues. We delivered a strong plus 7.1% organic growth. Connected Media accelerated to grow high single digits and Intelligent Creativity was up mid-single digits. Publicis Sapient posted a low single-digit organic growth with continued wait-and-see attitude from clients. Let's turn to the performance in Europe on the next slide. Europe recorded plus 2.8% organic growth in Q3. The U.K., which represents 9% of group net revenues, was up 10.7%. Connected Media and Intelligent Creativity combined were up double digits, driven by strong new business wins and scope expansion, while Publicis Sapient grew high single digits, thanks to positive phasing on some large clients. France, which represents 5% of group net revenue was materially impacted by the comparable of the Paris Olympics last year. In addition, Publicis Sapient continues to be affected by some CapEx delays. As a result, France declined 8.6% organically. Germany, which represents 3% of our net revenue, posted a 5.3% organic decline, excluding Publicis Sapient, organic growth was positive at low single digits. Lastly, our operations in Central and Eastern Europe continued to grow very strongly, posting a plus 9.5% organic growth, fueled by global new business wins. Turning to the next slide for our performance in the rest of the world. Asia Pacific, which represents 9% of group net revenues, delivered plus 6.5% organic growth, driven by Connected Media activities that were up double digits. Greater China remained very strong, delivering plus 6.1% organic growth in Q3 as we continue winning market shares. Middle East and Africa posted a 3% organic decline as it faced a very tough comparable on Publicis Sapient. Latin America posted plus 9.6% organic growth, thanks to the strong performance in Argentina, Mexico and Chile, all growing double digits. Growth in Argentina partly benefited from inflation. On the next slide, you will find the group's performance by client industry for Q3. 9 sectors out of 10 posted positive growth. And as we indicated before, we are seeing a well-balanced growth among sectors this year. The financial sector was up double digit, accelerating versus 2024, thanks to new business wins. Food and beverage was up 19%, thanks to new business wins and scope expansions. Health care remained strong at plus 8%, in line with expectation and thanks to scope expansions with a number of existing clients. The TMT sector was up 5% against a tough comparable of plus 9% last year. Moving to my last slide, net financial debt. Average net debt for the last 12 months is EUR 957 million, up EUR 551 million versus at the end of September 2024. This reflects the impact of acquisitions completed since Q3 2024. Net debt at the end of September was EUR 1.6 billion, up EUR 2.4 billion in the first 9 months of the year. The increase is due to the usual change in working capital outflow as well as the impact of acquisitions and lower USD on our cash balance, all partly offset by free cash flow generation. Acquisitions, including earn-outs, amounted to EUR 916 million in the first 9 months of 2025. This concludes my financial presentation, and I now give the floor back to you, Arthur.

Thank you, Loris. Since the emergence of GenAI 3 years ago, a lot has been said about its impact on our industry. When it comes to Publicis, let's be clear, today, we are winning, thanks to AI. This is visible in our industry outperformance in Q3 and in our guidance upgrade. It is mainly due to our EUR 12 billion investment in data, technology and AI over the last decade. We acquired Epsilon, but also Retargetly and Lotame to lead in identity resolution, which is absolutely necessary to truly deliver impact with AI. Today, only we are enabling our client to directly engage with 91% of adults connected to the Internet globally. We have uniquely connected this identity backbone to our existing media capability while massively expanding into high-growth media channel such as retail media with CitrusAd and Profitero, commerce with Mars United Commerce and influencer marketing with Influential and Captiv8 to maximize our clients' investments. Finally, we expanded our technology and engineering offering with Sapient and also targeted acquisition like Practia, Corra or Spinnaker to help our clients modernize their tech infrastructure and drive their broader digital transformation. While investing in new capabilities, we have also built an AI-powered native platform, actually several AI native platform for both our people and our clients. We started in 2018 with the launch of Marcel, designed to connect talent and foster collaboration across the group. Two years ago, we introduced CoreAI, which has powered every single pitch we have won this year. More recently, we developed Leona, our end-to-end production platform for data-led content creation, personalization and measurement at scale. And on the Sapient side, we created Bodhi, an enterprise-grade agentic AI system and Slingshot, a platform that automates and simplifies software development and coding. In total, we have dedicated EUR 1 billion in OpEx over the past 7 years on these AI platforms. These efforts have completely transformed our model and revenue mix, embedding AI into every part of our business. Today, 80% of Connected Media, which represents 60% of our revenue is powered by AI. For Intelligent Creativity, which represents 25% of our revenue, 1/3 come from our fully AI-enabled production platform that is growing double digits. Within Sapient, AI is at the core of everything we do, positioning us for renewed growth as soon as client CapEx spending resumes. This AI-powered revenue mix fits perfectly with our client needs and allow us to lose less and win more. Our clients are growing and staying with us longer. Retention among our top 100 clients has remained above 98% for the past 5 years, while average revenue with our top 200 clients has grown by nearly 50% over the same period. At the same time, we are gaining significant market share by consistently topping new business ranking for the past 6 years as reported by JPMorgan. As a result, we have extracted ourselves from the pack and established a category of one, as demonstrated by our performance when compared to both our direct peers, but also the IT consultancies. In the first half of the year, at constant currency, our 3-year net revenue CAGR reached 7.3% versus negative growth for holding company competitors and just 3.3% for the average of the other IT consulting groups. And the more demand for AI grows, the wider the gap with competition becomes. It was 430 basis points versus our 3 main holding company peers in 2024. It is expected to exceed 600 basis points this year. Looking ahead, our head start in AI gives us a unique opportunity to accelerate even further. First, it will make us even more indispensable as a key transformation partner to our clients. They are currently facing a marketing landscape that is more fragmented and complex than ever, where tech giants are spending billions on new AI technologies and infrastructure, multiplying the number of platform and channels and making it harder to reach and engage with audiences. As a result, none of our top clients allocate more than 4% of their total marketing spend to a single platform. In fact, across our top 20 clients, the average spend on their largest platform is just 2%. In this context, our role as a trusted neutral partner able to deliver consistent cross-platform messages, optimize their budget and maximize return on investment with full transparency has never been more important. It allows us to carve out a white space for ourselves by serving as the connective tissue for our clients' technology, data and agent, creating the AI-powered marketing solution that they really need to win in the future. AI is also a way for us to continue to increase our addressable market. By using AI to integrate new capabilities into our data and tech backbone, we are developing new source of growth. A clear example is our influencer business, which is materially accretive to our growth. By using AI to connect Epsilon data with Captiv8 technology and Influential Creator Network, we have built the world's largest and most powerful influencer media platform, enabling our clients to deliver the same reach that they can get to the Super Bowl for only a fraction of the cost. Another example is what we are doing in sports. With the acquisition of Adopt and more recently, Bespoke, Publicis Sports is innovating in the category by leveraging, thanks to AI, the scale of our Connected Media operation and Epsilon identity to uniquely enable clients to plan, execute and measure across every channel from sponsorship to paid media to social. Last but not least, we are building the next generation of AI-empowered health and medical communication, integrating CoreAI with capabilities like p-value acquired this summer to deliver enhanced scientific storytelling and faster speed to market, thanks to intelligent content generation, targeted audience segmentation and data-driven audience engagement. AI is not only accelerating our current and future growth, it will also help us generate further operating leverage. In addition to investing in our proprietary AI native platform, we are looking at every opportunity to automate labor-intensive task, thanks to AI. This includes implementing agentic solution at the core of our operations. In fact, we have started with our back-office processes. Combining our unique platform organization, our shared services backbone and the deployment of agents, we will bring greater elasticity to our cost base. Although it is early days, we are confident that this agentic solution will help us generate margin improvement beyond 2025, while allowing us to invest, including in training and upskilling of our talent to be AI fluent. Well, today, while many are asking how AI will impact our industry, we have already embedded it into all of our operations, making our revenue mix AI-enabled and perfectly adapted to our client needs. This is the main reason why we are not only outperforming our peers and the IT consultancies, but we are also increasing the gap in Q3 with a very strong quarter. Looking ahead, as we don't anticipate any slowdown in our client marketing investments, we are now in a position to raise our 2025 growth guidance. At the same time, our continued new business momentum means we are looking ahead to 2026 with clarity and confidence. I would like to thank our clients for their trust and our team for their hard work and dedication. Thank you all for listening. And now with Loris, we are ready to take all of your questions.

[Operator Instructions] The first question comes from Laura Metayer of Morgan Stanley.

Three questions from me, please. The first one is on working capital. I've heard that Publicis may be using their working cap by offering attractive payment terms for customers to win new businesses. Could you please share your view on this? And also, what do you expect change in working capital to be for 2025? Second question on the creative business, which is growing very strongly. Can you help us understand what is the key value add of Publicis in this business? And can you talk about the production platform that you mentioned? What does it do that the video and image generation tools cannot offer? And lastly, you mentioned implementation of AI tools internally will help expand margins beyond 2025. How confident are you that clients will not ask you to share some of your savings with them?

Thank you, Laura. Actually, for Q3, there is a lot of questions for Loris already. So that's a good thing. If you don't mind, I'm going to take it in another order. I'm going to start with the creative business, then I'll say a word on new business, then I'll pass on to Loris for the working cap, and we'll finish on the AI tools, like this, hopefully, we cover everything. So let's start with the creative business. We are very satisfied with our performance. I mean mid-single digit in a capability that is mainly declining for our peers is a great news. I think there is a couple of points that are important for you to take out of that. First, our creative business only represents 25% of our mix. In the presentation, we insisted a lot about our revenue mix because it's very favorable to growth, as you have seen. But although it represents only 25%, it is actually growing. And there is 2 reasons why it is growing. First, when you take the 25%, you have 8% of those 25% that are AI production platform. This is growing double digits, where we are basically making the demonstration that you can grow with content production, thanks to AI in a company like our. Why? It's pretty simple is that, honestly, today, everyone can deliver cheaper, faster and better content. Laura, you can do it in your basement with basically ChatGPT, if you want. So it's pretty easy. What make it very difficult is to make this content, what we call intelligent meaning connected to the data and allowing you for every piece of content that you push to a client to know if it's working or not basically. And this is where we're winning is that not only we deliver better, faster and cheaper content on an AI platform, but we are able to connect it to our data to make it work harder in terms of business outcome for our clients. So part of the 25% are the 8% in production, growing double digits. The rest is what we call storytelling. And the truth is this is an area where we are growing, honestly, because today, we are winning market share. We are basically winning pitches. And by winning pitches, we are also increasing our pie here versus competition. But what I think is very reassuring for any investor here is that 1/3 of our creative business is already 100% AI empowered and for the rest is winning market share and getting transformed. I'll say a word about the pitch activity, and thank you so much for asking the question on the working cap because this is something that we are hearing from some [Technical Difficulty].

I heard you until you said, you're hearing from and then...

Yes. We have a connection issue. Maybe I'll try another mic. Give me a second, I'm going to try another mic. Do you hear me better now?

Yes, we can hear you.

Do you hear me well?

Yes.

Okay. So I've got a problem because I'm hearing myself too. So we're going to try something. Give me a second. Maybe we can cut the sound here. You would see what we are doing in the room. We are playing with the mic and trying to fix that live. Okay, I think it's good now. You hear me well?

Yes.

No, you don't hear me anymore.

Yes, sir. We hear you loud and clear.

Great. So I'm going to assume you're hearing me. And if you don't raise your hand whatever you want because I have asked in the room that we don't use our mobile during the call. So we're not going to be -- we're good. We can start -- we can go again. Yes. Okay. Great. So Laura, I don't know exactly where I stopped on the pitch question, so I'm going to take it from the beginning. What I was saying is we're going to give you all the detail about the working cap and how we are winning today. And as I was saying, I'm very happy you asked the question because we have heard from some investors that actually some very disparate player in our industry was claiming against that. So I think it's good we can answer that. But what I was saying is that, as you would recall, we had an historically high H1 when it comes to new business. And what we said in Q2 is it's still too early to know exactly what would be the momentum for the second part of the year. I would say that the good news is we had material wins when it comes to Q3. And basically, this is one of the reasons, if not the main reason why we're now feeling confident and with more clarity when it comes to 2026. But I would say that what is really remarkable about the win we are having at the moment is that we are starting to win new business without a pitch process, meaning we are able to convince clients. And by the way, if you look, this is public information, as you know, we don't give any name anymore on new business, but this is public information. We have been able to convince very big brands with material accounts to move to Publicis without a pitch for a very single reason, which is AI allow us to differentiate even more and leverage our capabilities in a unique way which means that when clients come to a moment to choosing a partner, they are arbitrating between the world that can truly help them with material business impact today, thanks to AI and the one that maybe when they would be able to do it. And as they need the result immediately, we have seen a couple of pitch that have been stopped and the business going to us. But to answer your question, I want to be straightforward before I give to Loris. We continue to win pitches for a while now, but we are keeping a very disciplined approach and staying away from the pitches that are only one surprise. And you have seen a couple of examples in the last quarter. And to be even more straightforward, the best proof that we are not buying market share is that we have been #1 in new business basically for the last 6 years while increasing our financial ratios in the same time. I invite you to look at our track record since 2020 roughly #1 in new business almost every year, if not every year, and increasing all of our financial KPIs, starting with the margin. And by the way, before I give to Loris, this is something that you can't say about our competitors. If you look at our competitors, particularly last year, they had a very good track record in new business that is not translated into the number today. But maybe we can be more specific about the working cap and then we can go to the last question. So we have 1 mic for 2 now. So I've got to share the mic, give me a second. I'm giving it back to Loris.

Laura, hopefully, you can hear me well. So let's be very clear. Just like we are never winning on price, we are not winning on payment terms. Of course, pitches are, by nature, very competitive, including on payment terms, but we always look at this in a very measured manner. Now when it comes to working capital, as we said at the beginning of the year, we should be around neutrality for the full year. We are very disciplined on managing it, including both vendor and client terms. In fact, in Q3, even though we don't provide cash flow information, we saw a meaningful improvement in our working capital. And as we said before, given the high seasonality of our working capital, the sensitivity at the end of the period cutoffs and the overall magnitude of the daily flows, our focus is much more on average net debt. And just to remind you, we are aiming to close to EUR 1.1 million in average net debt in 2025. The increase of roughly EUR 100 million versus our previous guidance results from further depreciation of the USD versus euro, which, as you know, is impacting our cash balance.

And by the way, Laura, I think the kind of comments you're having on the background when it comes to new business is not helping our industry and is undermining the intelligence of our clients. If you really believe that big clients that are investing a lot of money with our partner will take a decision on a pitch on pricing you're wrong. It's mainly the case that they choose on the strategic partner. Let me be clear, with aggressive pricing strategy that will all have, but at the end of the day, you never win a big pitch except for a couple of clients that, again, we don't pitch on price, you win on strategy, you win on capabilities, you win on talent, and then you qualify on prices for sure. Yes.

The next call is from Nicolas Langlet of BNP Paribas Exane.

So I've got 3, please. First, on GenAI. So you have mentioned the increased demand for GenAI services and products. Can you tell us a bit more about the type of services clients are particularly interested in? And do you think those services are a net addition to your traditional services or they are mostly replacing them? Secondly, on Sapient, Sapient the trend was a bit better than expected. Are you seeing sign of recovery? Or you think it's still too soon to say? And third, on M&A. I think you said you are now above EUR 900 million spend year-to-date. Do you expect any additional deals by the end of the year? And then looking ahead, do you plan to maintain that EUR 800 million to EUR 900 million M&A envelope for bolt-on in '26?

Nicolas, I realized with the problem of microphone, we did not answer the third question of Laura about AI tools for efficiency. So we'll come back on that after we answer Nicolas, with you, Loris. Yes. Okay. So I'll start with the GenAI question, which is a great one. Yes, I mean, there is 2-thing you need to take out of that call, I guess, is first, we haven't seen any slowdown in client demand in general, no cuts. And more importantly, we are definitely seeing a boom when it comes to AI empowered products and services. I think what is interesting coming back to your question, Nicolas, is that after our client has spent a lot of time trying agents with different partners, different hyperscalers and trying to see what was the proof of concept that could work, they realized that by doing small things on parallel topics were not having any impact and any business impact directly. I don't know if you have seen the MIT studies that shows that basically 95% of the pitch are actually failing. I think the reason why things are changing now is that after a couple of years, again, experimenting AI, clients are realizing that they need to put AI at the core of what they do and that they need to do it in a way that can deliver today material business impact. And this is what we are doing with them. And this is why, by the way, we see such a boom, particularly in Connected Media and particularly in the U.S. where our model is the most advanced. If I take a couple of quick examples to tell you the kind of things that we are doing today that are, again, increasing our growth pretty significantly and again, creating a gap that is even major with our competitors, I will give you 3. When you look first at Connected Media, one area where we are growing and more importantly, make our clients grow is our ability, thanks to AI, to connect paid media with commerce and influencer. To give you a concrete example, we are able today to spot someone to make sure that we advertise on the right influencer and leading directly to commerce to a new retailer website. I don't want to give any number here. But as you can imagine, this is the kind of thing that we could not do before because, again, you need AI to connect those capabilities. Never forget that AI is only data talking to data, okay? And our ability to truly understand people better than anyone else with Epsilon to link it to the biggest influencer network and then link it to sales directly is the kind of thing where AI is immediately leveraging capabilities that will drive business outcome. A second area where we talk very fast is on production. I mean, as I said, AI allow everyone to deliver cheaper, better and faster content. The question is how AI allow you to measure performance of this content and make sure that you can correct or eliminate or accelerate depending on the business outcome. Again, for this, you need the data, which we have with Epsilon, and you need the AI to connect it to the capabilities. Last, and this will deserve more time and maybe to give me an opportunity to jump on to the Sapient question is agents. What we have experienced with the agents in the last year is clients trying to put agents almost everywhere and trying to see how it could work in a very fragmented way. And what they realized now is that they need to connect all of these agents. And again, here, thanks to Sapient, we have a fantastic solution, which is really an agentic network called Bodhi that allow us to truly help our clients transform and bring all of those agents together powered by data. And then when it comes to marketing, adding our capabilities. But when it's, for example, about making sure that we move from a legacy IT system to modern IT system, doing it for 50% to 30% less than some of our competitors. This, again, hopefully, I'm clear and putting you a bit in the kitchen, but our concrete, tangible example of expertise that we have and only we have that we can put at the service of our clients and deliver immediate business outcome. I'm going to pass on to Loris to say a word about M&A, and then I will come back to Sapient.

So as you said, Nicolas, we have reached the targeted envelope that we set for ourselves of EUR 900 million for the year, including earnouts, by the way. And we don't expect anything material until the end of the year. Now when it comes to 2026, it's too early to give you some guidance on the M&A envelope. But what I can tell you is that the pipeline remains very active and that we will continue to double down on our bolt-on strategy, focusing on a very specific capabilities, be it in identity resolution, data management, new media channels of production and specifically the technology associated with it and business transformation. But we want to remain also very cautious, and we will continue maintaining a very strict financial discipline when it comes to acquisitions going into 2026.

By the way, just to finish on that, and we went fast into the presentation, but what is starting to be very powerful with our M&A strategy is that not only it fits exactly with what our clients want, but by connecting new expertise to our data and technology, we are truly opening new addressable market for us, which is very encouraging because on one side, we are gaining market share on our direct competitors. On the other, we are opening new addressable markets. Influencer is a great example of that is by building the biggest and the most accurate influencer media network, we are able to generate new kind of revenue that we didn't have in the future. We're going to do exactly the same thing with sports as we believe that, again, adding our capabilities to our data, we're going to make sport addressable, which is not today. And finally, there is a lot to do in the health sector at the moment. As you know, things are changing in terms of regulation. So every time we do a bolt-on acquisition, we think about, is this right for our clients? Is this fitting with our existing expertise? Is it opening a new market for us and increasing our addressable market, and this is definitely the case. If I come back to Sapient. I mean honestly, there is a paradox at the moment in the so-called system integrator industry that Publicis Sapient belongs to. On the one hand, if you look at the last 2 years, I would say almost the last 3 years, the macroeconomic challenges have forced client to pause on their CapEx spend. You know that very well, and you see it as an evidence, will it be in all the result of the IT consultants. But on the other hand, and this is why we are starting to see the beginning of this momentum at Sapient is that the very same clients, the ones that have post the CapEx know that they will need to accelerate in their agentic AI transformation, exactly for the reason I gave you before, which is, okay, it's great to do some experiments. But at one point, you need to have a cohesive strategy, and you need to go big on that. And so -- for the time being, this has mostly materialized into an increasing demand on AI consulting projects. So again, it's really by consulting project that today Sapient is returning in positive territory, not to CapEx, but to this opportunity with many, many clients to show them the way for them to understand the road map. Looking ahead, and this is important, we want to remain cautious as we don't know how long this macro induced to wait-and-see attitude will last. But to be very clear, when clients resume spending in CapEx and they will, we think that Sapient is very well positioned to take actually a disproportionate share of these opportunities, and this for 2 reasons. First of all, they really have built over time, leading enterprise grade agentic AI solution and platform. We talked about it a bit in our presentation with Bodhi and Slingshot. And second, and I think this is a very important point for you guys. Its revenue mix is 100% on business transformation, where clients will focus their investments. They have no particular activity on outsourcing that will be totally replaced with agents. So again, we have to be cautious because it's early days, and it's great to see the momentum we're having with strategic projects, no doubt that client will need people like Sapient to make sure that they have an AI strategy that truly deliver business outcome. And we are very confident that the day they will resume on CapEx, we will see an acceleration. Do you want to take Laura's question?

Yes. The question on efficiency generated and then maybe to take a bit of a step back, we continue to generate operating leverage through 4 key sources. The first one is what you know our platform organization, our country model and obviously, our cost discipline, but also importantly, through productivity improvement, thanks to automation, including with agentic AI solution. But it's definitely early days and far too early to quantify the extent of those savings, that we will be able to generate. But just to give you maybe a bit more color. First, we have been automating a number of, I would say, labor-intensive back-office task, Arthur said, thanks to agentic AI solution. And second, we are also looking where we can progressively deploy agents with 2 objectives in mind, work faster and be more productive. But keep in mind also that more than 50% of our AI investments go into upskilling and retooling our talent that helps them move away from manual task and focus on high-value services where we will continue to need them actually the most.

Well, thank you. And Laura, I hope we answered your last question now.

So the next question is from Adrien de Saint Hilaire of Bank of America.

So the first one, can you talk about the tailwind that you expect from all those new business gains in '26 versus what you had in '25? I think '25 is a bit more than 200 basis points. Secondly, I noticed that your 2 largest markets, U.S. and U.K. are growing 7% and 11%. And I think you said that these markets are indeed where your strategy is the most advanced. So do you think these markets are good leading indicators for maybe the rest of the group? And then finally, on this operating margin points on the unlock. So far, you've raised your organic growth twice in 2025 and yet the margin guidance has been unchanged. I know '25 is an investment year, but are you signaling that we should see stronger operating leverage in future years through that comment?

Thank you very much. I mean I'll start with the new business. Basically, tailwind this year has been 200 basis points plus, and we expect to be roughly the same for next year. And I think what is very interesting in those numbers is not that much the 200 basis points, but actually the 300 basis points of clients that we are retaining and growing. I think there were a couple of numbers in the presentation that were very important, 98% of retention rate over the last 5 years, growing our clients over this period by 50%. This, I think, is what, again, should give you confidence about the fact that our AI model is now working at full speed because we are creating a stickiness and an ability to grow with our clients, which is for us the most important thing. And it comes to your second point about U.S. and U.K. I mean, they are definitely the most advanced in terms of capabilities. I don't know if we can say that they are a leading indicator because, of course, it's too early to see how the rest will develop. What I can tell you for sure is that in the U.K. and the U.S., we are definitely making the demonstration of the upside we can create in terms of growth. Never forget that the 5-ish that we're going to deliver this year is in a very challenging context. I mean, let's be clear, it's not more challenging than it was a couple of quarters ago, but it's still very challenging with a couple of engines that are not fire up at all cylinders. So what you should take out of that, I guess, is that in difficult time, we were able to deliver 5%, thanks to our model. And in good time, hopefully, we can deliver more. I think a good benchmark of that was actually 2022 not 2021 because 2021, the comparable were so easy from 2020 that it was difficult to say. But in 2022, a year where we stabilized again as an economy and where the trends were good, we were able to deliver double digits. So I'm not assuming that we're going to deliver double digit tomorrow. What I can tell you is that U.K. and the U.S. are definitely showing the way. By the way, I will put China into the same bag. And I think the Chinese model is very interesting, particularly when you compare to competition. And for sure, we have a couple of source of growth that make us very confident. Number one, as we said, is this revenue mix that is actually over-indexed on growing segments and, of course, accelerating. The second is new business where we see opportunity to gain share. The third is what I talk about addressable market and our ability to make some acquisitions that make us win tomorrow. And last but not least, all of this in a competitive landscape that is reducing massively, I would say, by 25% at least and already anticipated by our clients. I will let you say a word on the margin.

Yes. Just a few points on that. I mean you will remember that in H1, we delivered 17.4% operating margin, which was 560 basis points above the peer group when you take into account restructuring charges as we do. We continue to guide towards a slight improvement. And this despite an acceleration of our investment when it come, as I said earlier, to AI upskilling. We're continuing to accelerate on talent upgrades, new business ramp-up, obviously, and the largest bonus pool of the industry this year again. So again, we are investing significantly behind the business, but will deliver continuing margin improvement.

If I can build on this question, as we said, we have the vast majority of our business that is AI empowered today. We are growing and delivering a very strong margin at the same time, outperforming our peers even more every quarter at the moment. But you need to know that AI has a cost. And by the way, this is one of the big reasons our clients today are being cautious on spending is that you can make all the plan you want. If you really want to implement AI, it has a big cost in terms of CapEx and also in terms of OpEx. And the investment that Publicis is doing today to make sure that we continue to lead the way there and we start to make sure that we find some operating leverage also in our capabilities and in our operation has a cost. And the fact that we are able to mitigate and cancel this cost and continue to improve margin despite those investments is a big thing. Same thing on talent. I mean we are overinvesting on talent. Loris said it. I think we are the only one that is paying the bonus as we do today. We are continuing to hire to increase, and we are making sure that we are, of course, more efficient every day, that we find solutions, sends to agents to continue to find some leverage, and we will. But I think that what you should take out of that, Adrien, is that while we are making significant investment in AI and in talent and by the way, in [ process ] training business, we are at the moment, we are still able to give an improvement on our margin.

The next question is from Julien Roch of Barclays.

Three questions. The first one is on Sapient. It went from slight growth in Q2 to positive in Q3. Can we get the actual organic growth rate in both quarter because slight growth versus positive seems the same to me. Number two, creative went from mid-single digit in Q2 to low single. Any reasons for that? And then lastly, on production, how much of the 8% is 100% AI, i.e., you produced ads with AI internally as opposed to use a physical production company, either internal or external? Because I would think it's not 100%.

Thank you. I mean I'll start with the last one and then I pass on to Loris. I mean almost 100% of what we produce are produced with AI. What the market doesn't get is that most of what was produced more traditionally was produced by third parties so far. So this is also a reason why you are seeing some growth is now we're able to start producing in-house some AI things that before were produced outside. It's particularly true, for example, for automotive. But I will let Loris answer 1 and 2.

Just on the Sapient numbers question, Julien, you remember that in H1, we posted minus 2%. In Q3, we're at plus 1%, fairly balanced between U.S. and international. And when we are looking at H2, we are expecting an improvement versus H1. That's on Sapient. On the question of creative, there's a couple of reasons. I mean, first, it's both mid-single digit. And so there's no great differences from one quarter to another. And second, there is a higher comparable when it comes to Q3, obviously, 2024 compared to this year.

The next question is from Jérôme Bodin of ODDO.

A few questions for me. So to start, I do have a question on AI. So you -- of course, you will not learn anything with me, but AI is definitely the #1 reason for the low valuation of the industry at the moment. And it seems to me that one of the reasons is that the mapping of AI is a bit unclear. Nobody really knows where the main competition will come from. We all know that there is a strong competitive pressure to come. But from where it's a bit unclear, which lead to recurring fears and a bit of fantasy. So my question is, can you name according to you, this competition? I'm not asking for a corporate name, but more a type of player. Is it start-ups, big tech, midsized agencies, internalization according to you? So that's my first question. The second one is for Loris on the dollar. If the decline of the dollar become more structural, could you change your hedging strategy, both on the P&L and the balance sheet. So could you be a bit more active on that front? And lastly, Arthur, you said that you have won more businesses with no pitches. Do you see it as more structural? If that's the case, could it have a material impact on the margin?

Thank you very much. I'm going to take 1 and 3 and leave you 2, if you don't mind. Yes, I mean, if your assumption is that AI is leading to low valuation for our industry, I can tell you, and hopefully, we made the demonstration today that AI is the reason why we are growing faster and actually increasing the gap with competition. And it goes into your second question about the competition. I think that again, it's a journey we started more than 10 years ago under the vision of Maurice, which is to say, if we want to win in the future, we need technology and data. And at the time, as you would remember, it was very, very challenged. But the truth is the reason why we are winning today and the reason why we believe we are a category of one is that we made the investment in data and technology that allow us to leverage AI and create a massive competitive advantage at the moment, and let's come back to your question, where clients are arbitrating because I guess one of the things that the market is not understanding is all of those hyperscalers, all of those platforms are essential partner to our clients, but none of them play more than 4% of their mix. And so what client need at the moment is partner that can truly help them connect all of those capabilities for the sake of more efficiencies in media for the sake of brand value that stays strong, for the sake of transparent measurement and they're going to need this kind of connective tissue partner that can do that. And the reason why, again, we are growing so much at the moment is that the more complex, and the more tech the network -- the landscape is, the more opportunity it should present for us. So what is our competition tomorrow? It is the one that will be able, as we do to connect all of these ecosystem being trusted by our clients and have the capabilities to leverage every of those platform in the best way. Honestly, I can't tell you 1 player today that is having, at the same time, the capabilities, the model, the people and the trust of the client to do it. And this is why, by the way, we are pretty confident for next year because we see this trend increasing. Now this leads to your question about no pitch. Hopefully, it's a trend. I'm not sure. Let's be clear. I think that some client knows exactly what they want, and so we can come to an agreement pretty fast. Other still wants to see what happened on the market, which is again, totally comprehensible. But I think the shift in mindset says a lot. And the shift we have operated to Publicis to truly move from a communication group to truly be at the heart of our client transformation being able to build this tech infrastructure that they all need to leverage AI, thanks to Sapient, putting at the core of their model, the best identity of the industry to make sure that they know their client and their prospect better than anyone else. Creating this agent network layer on the top of that to activate media, to deliver personalized content and to measure is a place where, today, we have a unique position. But I will say, and I'll stop there before I pass to Loris, there is something that, I guess, Jérôme should never forget is that on the top of that, we have the trust of our clients. And in a world that is getting increasingly complex, when you have the capabilities, the model and the people and the trust, you can grow significantly, actually more than our peers and more than the IT consulting and continue to outperform the market as we are expecting for next year.

So on the question on the USD or the FX, just to start with our guidance for the year. We're looking at a EUR 500 million impact. That's based on the exchange rate of $1.17 to $1.18 , I mean it's moved a little bit in the last few days, as you know. Keep in mind that our largest operation by far, is in U.S. and also that it's partly mitigated by the fact that our costs, they are obviously in USD. And so it's a bit of a natural hedge between the revenue and cost and the assets and debt. But given the size of our operations in the U.S., that would not have a big impact or would have a big cost obviously going beyond that.

All right. It seems that there is no more question, right, yes? So maybe I'll do a quick wrap-up. I mean the first thing that I hope you are taking out of our presentation is we don't see any slowdown in our client spend, which is, of course, a good news. And that's the opposite, and we discussed a lot about that. So thank you for your question. We see a booming demand for AI-led capabilities. And it's now it's serious. It's about delivering business outcome. And in our case, it creates 3 big opportunities that have materialized this quarter and will continue to materialize. One is in Connected Media, thanks to our ability to connect paid media with commerce, influencer through AI. We talked about that. The second is definitely an AI-led production platform, due to the increasing demand of our clients for personalization. And I think this is a very important point for you guys because you can see a lot of people offering this kind of service. The question is, is it connected to the data in order to make sure that it delivered business outcome. And last but not least, and it translated into Sapient number, agentic network that can help our clients basically desiloed their organization. We don't want to talk about the promise of AI. We wanted to show you today that AI is real as Publicis today, and it is the reason why we are growing now. If I have to sum up, it does it for a very simple reason is that it allows us to differentiate while clients are arbitrating between partners that can help them in this very complex world and the one that can't. And the best proof of that are definitely our number. Of course, our Q3 number. But even more importantly, the gap we are creating in Q3 versus our competition. Last year, it was 350 basis points when you look at our main 3 competitors. This year, it's 700 basis points. So we are increasing the gap because we are increasing the differentiation. We are able to raise the guidance because now we are confident that this demand will continue. And again, we're starting to gain clarity and confidence for next year. And we feel that we're going to be able, again, to outperform our industry for the 7th year in a row despite tougher comparable every time particularly versus peers that might have lower numbers. I'm going to thank you very much. I know that Jean-Michel is here to take all of your questions offline now and see you very soon. [Foreign Language]

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.