Interpublic Group of Cos. held its third-quarter earnings call with analysts this morning, which also served as a coming-out party of sorts for Philippe Krakowsky, who will take over as chief executive officer early next year.
Below are six takeaways from the call, led by the current CEO Michael Roth.
Net revenue is down, but still a bit of an upside surprise
The holding company's net revenue tumbled 3.7% for the quarter, due to the pandemic and the "global economic contraction, though perhaps not to the extent anticipated," said Roth. "While that says the pandemic is still with us, it is notably improved from the second quarter." Roth added that new business is "modestly stronger than it was earlier this year," but "visibility is still challenged as we head into our most important quarter."
Healthcare was the hero
As might be expected, IPG's events business was "hardest hit" by the pandemic, Roth said, while its healthcare business, was quite robust. Roth said healthcare accounts for more than a quarter of the holding company's portfolio and it "continues to hold up" and "continues to take market share." As for client categories, Roth said retail was also strong. Autos and transportation lagged, yet "were less challenged" than in the second quarter, he said.
The holidays could be critical
Calling the fourth quarter "seasonally important," Roth cautioned that it may be an uneven comparison with last year, when "we had a strong fourth quarter with organic growth in excess of 5%, as adjusted for headwinds." Said Roth: "All of us continue to face a range of unknowns related to the pandemic and its impact on the global economy. This will weigh on the significant volume of project assignments that are the norm for our holiday season." He added that clients are having difficulty making decisions on holiday spending as a result. "It is very likely that any improving growth we do see across our industry may not be linear by quarter; this is just to acknowledge economic reality."