Publicis red lantern of CAC 40, victim of Snap’s warning – 24/05/2022 at 15:41


The publicis headquarters in Paris (photo credit: / L. Grassin)

(AOF) – Biggest drop in the CAC40, Publicis (-3.89% to € 52.32) was warned by Snap, the parent company of the Snapchat messaging service. Its business model is in fact based on advertising. “Since we released our targets on April 21, 2022, the macroeconomic environment has deteriorated further and faster than expected. As a result, we believe it likely that Q2 2022 revenues and Adjusted EBITDA will be below the lower end of our orientation range. “

In the current quarter, revenues are expected to grow 20% to 25% and Adjusted EBITDA between $ 0 and $ 50 million.

“Although many investors were aware of the slowdown in the digital advertising market, the magnitude of the slowdown is surprising, as updated forecasts imply that revenue growth could slow to grow year-over-year. 10% or worse in May / June. , ”notes Snap’s Jefferies. He adds that Snap’s ad revenue growth increased 30% through the end of April.

“Mathematically, that means Snap’s revenue growth in the last 10 weeks of the quarter will be 15% or less; that’s a very rapid deterioration,” Bernstein adds.

“Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and labor market disruptions, platform policy changes, the impact of the war in Ukraine. , etc., “Snap CEO Evan Spiegel explained in a note to his employees.

AOF – FIND OUT MORE

Key points

– Number 3 in the world in marketing, communication and digital business transformation, created in 1926;

– Revenues of € 10.5 billion divided between 4 “Solutions Hubs”: Publicis Communications (creative networks), Publicis Media, Publicis Sapient (digital and consulting) and Publicis Health;

– Strong position in the Americas (63% of revenues), ahead of Europe (24%) and Asia-Pacific (10%);

– Business model divided into 4 strengths: customized solutions through data, creativity, large-scale targeting for proprietary digital media and channels;

– Open capital (Elisabeth Badinter holds 6.74% of the capital and 12.36% of the voting rights), Maurice Lévy is chairman of the 12-member supervisory board, Elisabeth Badinter vice chairman and Arthur Sadoun chairman of the board of directors;

– Healthy balance sheet, with a net debt of € 1.5 billion and a free cash flow of € 1.2 billion.

Challenges

– Waiting for a new strategic plan after the implementation of “Sprint for the future”;

– Innovation strategy focused on: consumer behavior analysis: mathematical and statistical solutions for media planning, digital data management within MarketForward, organization of the annual Viva Technology forum, offering customers of technology platforms … / reorganization of the work of the Marcel artificial intelligence platform;

– Environmental strategy “Consume less and better”: the 2030 targets exceeded compared to 2009 for the use of renewable energy (33.5%) and energy efficiency (1.95 Mwh per employee) and on the way to carbon energy intensity (3.78) / CSR Smart Data open platform;

– Strengthening the digital transformation offer for customers through acquisitions of companies integrated into Sapiens or Epsilon and expected to reach around 500 million euros by 2022;

– Continued high budget earnings and strong demand for proprietary data and digital media.

Challenges

– Sensitivity of sales and results to the parity of the euro (15% of revenues) against the dollar (52%) and sterling (10%);

– Impact of the Russia-Ukraine war: marginal, with the transfer of control of local authorities to their managers and logistical assistance to 300 Ukrainian employees;

– 2022 target, confirmed after a dynamic start of the year, of an increase in turnover from 4 to 5%, operating margin of 17.5% and free cash flow of € 1.4 billion;

– Dividend 2021 of 2.4 euros, or 45% of the distribution rate, expected between 45 and 50% in 2022.

Advertising: offensive in “retail media”

This segment of the advertising market consists, for e-merchants, in the monetization of their online advertising space and data of their customers. It enjoys strong growth. Havas and Publicis have accelerated their positioning in this area in recent months. So Havas launched “Ad to Basket”, an entity dedicated to “retail media”. As for Publicis, it took over CitrusAd, an Australian adtech focused on “retail media” and based mainly in the United States, for over 100 million dollars. This allows Publicis to hone its knowledge of retail sites, which lends credibility to its experience with its customers. Finally, Criteo, the French group focused on online advertising launched in 2005, also started consolidating the segment by taking over a British company for 380 million dollars.

Leave a Comment