Dentsu reported a net organic revenue growth increase of 0.2% for the first quarter, an improvement compared to Q1 2024 when the firm reported a 3.7 organic decline. The slight overall gain in the quarter was due to a relatively strong performance in the firm’s home market of Japan.  

 Total net revenue in the first quarter was down 0.6% to 287 billion Japanese yen (about $2 billion). The organic figure excludes M&A and currency impact. Results were in line with the company’s expectations.  

The company cited the ongoing macroeconomic turmoil as a factor in the group’s stunted growth. The decline in total net revenue was due in part to inclusion of the Russia business which was sold in July 2024.  

But strict cost controls led to an underlying operating profit gain of 13.7% for the period. 

The company’s Americas region posted a 5.1% organic revenue decline, which the company acknowledged was below expectations. The firm’s consumer experience management practice continued to face “challenging business conditions,” resulting in a double-digit decline. Media remained “relatively stable, with a marginal decline in organic growth rate.” 

Japan was up 5.5%, driven by gains in digital advertising, business transformation and sports and entertainment. 

EMEA was down 0.9% and APAC was down 4.6%.  

The company said it was standing by guidance provided earlier in the year about its full-year performance, including organic growth of about 1% with a decline in operating profit margin to 12% “mainly due to upfront investments to restore competitiveness.”   

That said, the company added that it is currently difficult to assess how growing macro concerns like the U.S. tariff increases will affect its business performance throughout the rest of the year.  

On an earnings call earlier this week Dentsu CEO Hiroshi Igarashi was quizzed about the “slow start” that the firm’s international business got off to in Q1. The firm had earlier said it hoped those markets would return to growth this year. He replied that the performance of the firm’s CXM business “will be a key question as to whether or not we're going to have a positive growth in our International business on a full-year basis.” 

He added that the company is fully focused on turning the practice around and has made executive changes and identified a number of areas within the operation that need to be fixed. “However, we believe that the overall bottoming-out will happen sometime in H2 of this year. The accuracy of our analysis is improving, but we still need more time for improvement in this area.” 

Giulio Malegori, Global Chief Operating Officer & Chairman & Acting CEO, Dentsu Americas, added that “the project and the scope remain focused on the three main capability areas at Merkle, so CX and commerce, data analytics and CRM and loyalty with a particular focus on content supply chain, commerce and on the analytics side.”