Publicis Groupe : Inside Information / News release on accounts, results

Full Year 2022 Results

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Double-digit organic growth for the 2nd year in a row Confident for 2023

February 2, 2023

• 2022 reported net revenue up +20%
• Full year 2022 organic growth at +10.1% after strong end to the year with Q4 at +9.4%
• Epsilon and Publicis Sapient at +12% and +19% organic respectively in 2022
• Operating margin rate at 18.0% with bonus pool at record high, headline EPS at €6.35 up +26% and Free Cash Flow at €1.7bn1
• N°1 in new business league tables in 2022 for the fourth time in five years
• 2023 organic growth expected at +3% to +5% with operating margin rate between 17.5% and 18%
• 2022 proposed dividend at €2.90 per share, fully paid in cash

FY 2022 Results

(€m)

FY 2022

2022 vs 2021

Net revenue

12,572

+20%

Organic growth

+10.1%

EBITDA

2,801

+21%

Operating margin

2,266

+23%

Operating margin rate

18.0%

+50bps

Headline diluted EPS (euro)

6.35

+26%

Free Cash Flow

1,6971

+19%

Q4 2022 Revenue

Net revenue

3,462

Reported growth

+18.0%

Organic growth

+9.4%

1 Free Cash Flow (FCF) before change in Working Capital requirement.

Reported 2022 FCF at €1,807M before an additional €110M cash tax payment made in January 2023 relating to 2022. This payment reflects the impact of the new application of the U.S. Tax Cuts and Jobs Act (TCJA) on the capitalization of R&D expenses, confirmed late December 2022.

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Arthur Sadoun, Chairman and CEO of Publicis Groupe:

"2022 was another record year for the Groupe with reported net revenue up +20%.

For the second year in a row, we delivered double-digit organic growth and record-high financials, with Q4 well ahead of expectations.

Today, the profound transformation we have been through means our business is firing on all cylinders, allowing us to outperform the market once again on every KPI.

Thanks to our data and technology capabilities, which now represent a third of our revenue, we have been able to continue to capture the shift in our clients' spend towards first party data management, commerce and business transformation. This can be seen in Epsilon and Publicis Sapient's annual numbers, with organic growth of +12% and +19% respectively. That dynamic has also boosted our creative and media business, and is reflected in all of our regions, with the U.S. at +10%, APAC at +6.5% and Europe at +12.3% for the year.

Our go-to-market, positioning Publicis as a key partner in our clients' transformation, means we have won more than our share of new business opportunities, and topped the rankings for the fourth time in the past five years.

Last but not least, our unique platform organization, with our global delivery centres, our shared services and our country model, powered by Marcel, allowed us to deliver best in class financial ratios while maintaining record- high bonuses and rewarding everyone in our group. Our operating margin rate came in at 18.0%, free cash flow at 1.7 billion euros, while our headline EPS grew by 26%, allowing us to propose a dividend of 2.90 euros per share.

This same revenue mix, go-to-market, and platform organization make us confident for the year ahead, despite the continued macroeconomic challenges. In 2023, we expect to sustain the momentum we have built since the pandemic, delivering 3 to 5% organic growth, in line with our 3-year CAGR, while maintaining an industry-leading operating margin between 17.5% and 18%.

None of this would be possible without the trust of our clients and the outstanding efforts of our people, who I'd like to deeply and sincerely thank for everything we have achieved together so far."

**

*

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Publicis Groupe's Supervisory Board met on February 1, 2023, under the chairmanship of Maurice Lévy, to examine the 2022 annual accounts presented by Arthur Sadoun, CEO and Chairman of the Management Board.

KEY FIGURES

EUR million, except per-share data and percentages	FY 2022	FY 2021	2022
vs 2021
Data from the Income Statement and Cash flow
Statement
Net revenue	12,572	10,487	+19.9%
Pass-through revenue	1,624	1,251	+29.8%
Revenue	14,196	11,738	+20.9%
EBITDA	2,801	2,317	+20.9%
% of Net revenue	22.3%	22.1%	+20bps
Operating margin	2,266	1,840	+23.1%
% of Net revenue	18.0%	17.5%	+50bps
Operating income	1,767	1,434	+23.2%
Net income attributable to the Groupe	1,222	1,027	+19.0%
Earnings Per Share (EPS)	4.87	4.13	+17.9%
Headline diluted EPS1	6.35	5,02	+26.3%
Dividend per share2	2.90	2.40	+20.8%
Free Cash Flow before change in working capital requirements	1,6973	1,427	+18.9%

Data from the Balance Sheet	Dec. 31, 2022	Dec. 31, 2021
Total assets	35,898	32,846
Groupe share of Shareholders' equity	9,635	8,588
Net debt (net cash)	(634)	76

1. Net income attributable to the Groupe, after elimination of impairment charges, real estate consolidation charge, amortization of intangibles arising on acquisitions, the main capital gains (or losses) on disposals, change in the fair value of financial assets, the revaluation of earn-out costs, divided by the average number of shares on a diluted basis
2. To be proposed to the shareholders at the AGM of May 31, 2023
3. See note 1 on page 1

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NET REVENUE IN FY 2022

Publicis Groupe's net revenue for the full year 2022 was 12,572 million euros, up 19.9% compared to 10,487 million euros in 2021. Exchange rate variations over the period had a positive impact of 864 million euros and acquisitions (net of disposals) had a positive impact of 77 million euros.

Organic growth was +10.1% in FY 2022 compared to 2021. Compared to 2019, this implied organic growth of +13%, accelerating in H2 at +15% after +11% in H1.

With organic growth at double-digit again in 2022, the Groupe continued to show its ability to capture the structural shifts in the industry towards first-party data management, digital media, commerce, and business transformation. This is visible through the rise in organic growth at Epsilon and Publicis Sapient globally, up +12.0% and +18.5% respectively, both again very accretive to the Groupe performance. It was also visible through the performance of the Groupe's Media and Creative operations, which organically grew double-digit and mid-single digit respectively.

Breakdown of FY 2022 net revenue by sector

Based on 3,620 clients representing 92% of the Groupe's net revenue.

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Breakdown of FY 2022 net revenue by region

EUR	Net revenue	Reported	Organic
million	FY 2022	FY 2021	growth	growth
North America	7,869	6,368	+23.6%	+9.9%
Europe	2,879	2,534	+13.6%	+12.3%
Asia Pacific	1,176	1,038	+13.3%	+6.5%
Middle East & Africa	359	304	+18.1%	+7.5%
Latin America	289	243	+18.9%	+10.4%
Total	12,572	10,487	+19.9%	+10.1%

In North America, net revenue was up +23.6% on a reported basis in 2022, including a significant positive impact of the US dollar to Euro exchange rate. On an organic basis, the region grew by +9.9%. The U.S. were also up +9.9% organically, a performance similar to the previous year. Epsilon saw its net revenue increase by +12.2% on the year, with particularly strong performance in Digital Media. Publicis Sapient was up +17.5% on an organic basis, capturing strong demand in digital business transformation, after a +20% increase in 2021. Creative activities were up mid-single digit and Media double-digit on the year.

Net revenue in Europe grew +13.6% on a reported basis and +12.3% on an organic basis, including +22.3% in the United Kingdom, +8.5%1 in France and +4.3% in Germany. Central and Eastern Europe grew by +10.3% organically despite the activity in Ukraine being virtually stopped. Excluding the impact of specific outdoor media activities and the Drugstore, organic growth was +12.8% in Europe.

Asia Pacific saw its net revenue grow +13.3% on a reported basis and +6.5% on an organic basis. China organic growth accelerated throughout the year and recorded +6.6% in 2022, supported by new business and despite the lockdowns.

The Middle East and Africa region was up +18.1% on a reported basis and +7.5% organically.

In Latin America, reported growth was at +18.9% while organic growth was at +10.4%.

1 Excluding Outdoor Media activities & the Drugstore

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