IPG Beats Expectations in First Quarter, Reports Strong Growth in U.S.

U.S. Organic Revenue Rises 8.3%

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Interpublic CEO Michael Roth.
Interpublic CEO Michael Roth. Credit: IPG

Interpublic Group of Cos.' revenue increased ­­­­­­3.9% to $1.74 billion in the first quarter of 2016 compared to the same period last year, the agency company giant said Friday. Organic revenue excluding one-time factors such as acquisitions and external forces such as currency fluctuation rose 6.7%.

Operating income was $20.9 million, compared with operating income of $7.8 million a year ago. Operating margin was 1.2% for the quarter, compared to 0.5% a year earlier. Net income was $5.4 million during the first quarter, compared to a net loss of $1.8 million for the period last year.

The company slightly beat expectations of $1.71 billion in revenue, according to Yahoo Finance. IPG also surpassed JP Morgan's estimate of 4.5% organic revenue growth for the quarter.

The marketing services giant has a portfolio including agency groups McCann Worldgroup, FCB, IPG Mediabrands and Weber Shandwick.

"Our growth continues to reflect contributions from nearly all of our major agencies, led in Q1 by McCann, R/GA, Huge, FCB, Mediabrands and Weber Shandwick," IPG CEO Michael Roth said on a conference call to discuss the results. "Our digital offerings continued their strong growth. This includes the range of embedded digital capabilities within our integrated agency networks, as well as our stand-alone digital specialists."

Mr. Roth added that IPG acheived 12% organic revenue growth across its top 20 clients by providing them with integrated services across multiple disciplines, such as PR, experiential marketing and media. This growth, he said, "represents the strength of the opportunities within our existing clients."

U.S. organic revenue growth was "notably strong" at 8.3%, "where we continued to see outstanding contributions across a very broad range of agencies, disciplines and client sectors," the company said.

International organic growth was 4.3%, with all regions contributing, especially Latin America with 11.6% organic growth.

Almost every agency and discipline got a shout-out on the earnings call. PR agencies Weber Shandwick and Golin "consistently take market share," said Mr. Roth, adding that "Revive Health will build on Weber's outstanding healthcare practice and Brooklyn Brothers will take Golin's digital content production to a new level of creativity."

Mr. Roth added that the company has had a strong pipeline of new business. "There continue to be a significant number of media pitches and consolidations, though not quite at the same, historically high level as last year. Elsewhere in the group, our major integrated agencies are seeing solid activity, as are our marketing services agencies," he said.

On the personnel front, the company said it has made "a long-term commitment to improvement as it relates to diversity and inclusion," including inter-agency Diversity & Inclusion Business Resource Groups. Women hold nearly 55% of IPG's management positions, with 20% being held by people of color, according to the company, which added that it believes these are "industry-leading results."

Looking to the rest of 2016, Mr. Roth said the company is "well-positioned to deliver on the high-end our full-year target of organic revenue growth of 3% to 4%."

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