British Communication & Advertising Company WPP Cuts FY23 Outlook Again On Cautious Spending Trends

WPP PLC (NYSE:WPP) disclosed a Q3 trading update, with a revenue decline of 1.8% Y/Y on a reported basis and an increase of 2.3% on a like-for-like (LFL) basis. 

The company's performance in Q3 continued to be impacted by the cautious spending trends seen in Q2, mainly across technology clients. 

Revenue less pass-through costs was down 0.6% Y/Y LFL due to declines in North America (continued weakness from technology clients) and China.

GroupM rose +1.6% Y/Y in Q3 with low-single-digit growth in the U.S. and U.K.

The company won net new business worth $1.4 billion in Q3.

The company launched VML and further integrated GroupM with common products and a single technology platform in Q3. 

Both moves are expected to drive revenues and deliver net annualized cost savings of at least £100 million in FY25 with a part-year benefit in FY24.

FY23 Outlook: WPP lowered the outlook for LFL revenue less pass-through costs growth to 0.5%-1.0% (from 1.5%-3.0% earlier) and now expects headline operating margin (excluding FX impact) of 14.8-15.0% (vs. around 15.0% prior).

The company plans to provide an update on its strategic roadmap over the next three to five years on Capital Markets Day in January 2024.

Price Action: WPP shares are trading lower by 1.47% at $40.97 premarket on the last check Thursday.