IPG shares rise on full-year and fourth-quarter revenue hikes
Shares of Interpublic Group of Cos. rose around 4 percent on Wednesday morning after the holding company reported an organic revenue increase of 2.9 percent for the fourth quarter and 3.3 percent for the full year.
The company reported $2.43 billion in net revenue for the fourth quarter, which is 0.8 percent higher than the $2.41 billion it reported for the same period of 2018 and better than analysts' estimates of $2.42 billion in revenue. Fourth-quarter adjusted earnings of 88 cents a share also beat analysts' expectations of 83 cents a share.
For the full year, IPG reported $8.63 billion in net revenue—up 7.4 percent from the $8.03 billion in net revenue last year—and adjusted earnings of $1.93 a share.
Organic revenue, according to IPG, rose 2.1 percent in the U.S. and 4.1 percent in international markets in the fourth quarter. For the full year, IPG reported that organic revenue grew 1.9 percent in the U.S. and 5.5 percent internationally.
"Our results for the year further demonstrate the strength of our client-centric integrated offerings and the quality of our people," IPG Chairman-CEO Michael Roth said on an earnings call. "We are proud of our consistent level of achievement amid significant change in our industry and the dynamic environment in which we are all operating."
Roth noted on the call that the 3.3 percent organic growth in 2019 "again places us at the forefront of our industry." He forecast a 3 percent organic growth for 2020.
Roth said on the call that growth was fueled particularly by media, data and tech. Top revenue-generating clients were in the healthcare, tech and telecom, retail, financial services, and food and beverage sectors. He added that the company's focus in 2020 will be on putting "first-, second- and third-party data to work," which remains a "challenge."
"As we have noted on prior calls, understanding data and its power is absolutely essential, and has been a priority for us over many years, well before we acquired Acxiom," Roth said.
Jay Pattisall, principal analyst at Forrester, says IPG's investments in Acxiom (which it bought for $2.3 billion in 2018) and creation of marketing tech company Kinesso this year "appear to be key ingredients in Mediabrands’ new business success, with Mediahub, UM and Initiative each adding significant new wins.
"Like most of its competitors, IPG has focused its audience-activation capability on its media business," Pattisall says. "Moving forward, it will be important for IPG to articulate the timeline for Acxiom and Kinesso integration with the IPG creative agencies. And, like its competitors, IPG will need to demonstrate how Acxiom's data management and proprietary data will continue to provide clients the same level audience activation and personalization at scale given the growing privacy, regulatory and changing digital media environment."
Roth also commented on the coronavirus outbreak, conveying "our deepest support and commitment to the people of China."
"Naturally, we are focused on the well-being and safety of our own people, as we have about 2,500 employees in China, and thousands more partners, clients and suppliers," he said. "Most of our people in China are working from home and are subject to travel restrictions. We have technology in place that makes it easier for our people to work remotely. We are closely monitoring the situation and will take every necessary precaution to safeguard our people."
IPG had some key wins in 2019: UM retained the GoPro account and added Armor All; Initiative won the media account of oil giant Valvoline; MullenLowe picked up global responsibilities on Bayer, and TaxAct and Avis Budget Group in the U.S.; Mediahub and MullenLowe won media and creative duties, respectfully, for Hawaiian Airlines; and Mediahub also added Pinterest to its client roster.