Interpublic Group reported a nearly 6% gain in net revenue for the first quarter to $1.77 billion, with organic revenue growth of 3.6%. Organic growth (which strips out the impact of M&A and currency fluctuations) included a robust growth spurt of 4.3% in the U.S. and 2.6% internationally.
By comparison, Publicis Groupe posted 1.6% first-quarter growth globally and 2.8% in the U.S., and Omnicom reported 2.4% global growth but a small decline (0.1%) in the U.S. WPP is scheduled to report next week.
IPG CEO Michael Roth told analysts and investors during an earnings call this morning: “As you know, Q1 is seasonally small for us, and there remains macro uncertainty to contend with as we move forward through the year. But we are confident that performance to date and the current tone of business has us on track to deliver on the growth and income targets we have outlined for the full year.”
For the year IPG has indicated it currently expects to deliver organic revenue growth in the range of 2% to 3%. And for now, the company is expecting to deliver at the "high end" of that estimate, Roth stated.
The company posted a net loss attributable to IPG shareholders of $14.1 million. The firm indicated that the first quarter is its smallest quarter on the revenue side, but costs are spread evenly throughout the year. Thus, a first-quarter net loss for the firm is not unusual.
The company said it restated its first-quarter 2017 results so they would be aligned with the new accounting standard (known as ASC 606) that began in 2018. According to a note issued by Morgan Stanley “the primary impact of ADC 606 is to significantly increase the ‘pass-through’ revenue recognized each quarter by IPG” Pass-through revenue, Morgan Stanley noted, is “essentially no-margin revenue that is reported as a result of IPG executing on behalf of clients.” Recognizing pass-through revenue is designed to provide a clearer picture of the company’s performance.
Despite the macro uncertainties, Roth said that with the company’s strong organic growth for the first quarter -- particularly in the U.S. -- “we believe we are seeing evidence of marketers returning to growth mode, which would clearly be a positive for us, as well as for our sector."
Roth noted that the U.S. performance "came from a very broad range of our clients, as well as cross-section of our agencies."