Publicis Groupe SA

PAR:PUB

Thank you, Judith, Bonjour, and welcome to Publicis Group First Half 2026 Earnings Call. I am Arthur Sadoun, and I'm here in Paris with our CFO, Loris Nold. Jean-Michel Bonamy is also here and will be available to take all of your questions offline after this call. I will start this presentation by sharing the main highlights of our Q2 and H1 performance showing an acceleration on all fronts. Loris will then walk you through the full details of our numbers. And I will come back with our outlook and the reason for our confidence in raising our guidance and sustaining our strong momentum in H2 and beyond. As usual, we will take all of your questions together after the presentation. But before we start, please take the time to read the disclaimer, which is an important legal matter.

Let's dive into the presentation with actually 4 key highlights. In a nutshell, in the first half of the year, we have been accelerating on all fronts. First, on net organic growth with Q2 at plus 4.8% despite a tougher comparable and a still challenging macro environment. Second, on new business with a very strong first half of the year, which allow us to raise our guidance. Third, on our financial KPIs, starting with our headline margin increasing to 17.5%, while investing further on our talent in AI and in ramping up our new business wins. Fourth, on our differentiation and addressable market expansion through strategic acquisitions, leveraging the strength of our balance sheet. Let's start with the detail of our top line performance.

In Q2, we once again reaffirmed our ability to deliver even in challenging macroeconomic conditions. Organic growth came in at plus 4.8% on a net revenue basis. As expected, this represents a sequential acceleration versus our Q1 at plus 4.5% and despite a 100 basis points higher comparable base in an increasingly uncertain geopolitical context. This acceleration was driven by our marketing transformation activities, representing 87% of our net revenue, where we continue to capture a disproportionate share of our client demand for AI-powered services and products. They grew at plus 6.5% organically in Q2 compared to plus 5.6% in Q1, ahead of our 6-year CAGR at plus 5.3%.

This contributed to further widening the gap with our peers to 610 basis points in Q2 according to consensus. In detail, Connected Media, representing 62% of our net revenue, delivered a very strong performance again this quarter at high single-digit growth, accelerating versus Q1. This performance was driven by double-digit growth in Europe and high single-digit growth in the U.S. It reflects our continued ability to accelerate market share gains, thanks to our scaled AI-powered media offering. Intelligent Creativity, which is 25% of net revenue, posted solid low single-digit growth in line with the expected long-term growth profile of these segments.

The only part of our business that was seriously impacted by the macroeconomic uncertainty and particularly the Middle East conflict is technology, as experienced by other IT consulting firms, including the market leader. We continue to see delays in large transformation programs, of course, in the Gulf, but with a direct effect on many other geographies and companies. This led to mid-single-digit decline in Publicis Sapient representing 13% of group net revenue. I will make just 2 remarks on Sapient performance. First, comparing Q2 with Q1, I would highlight that Sapient faced a significantly tougher comp in Q2 of 600 basis points versus Q1. And therefore, we saw a sequential stabilization in terms of net revenue. Second, our ability to accelerate in Q2 and raise our guidance at group level despite those macroeconomic challenges makes our performance and resilience even more remarkable.

Turning to our geographies. We had another strong demonstration of the consistency and resilience of our country model globally. In particular, our 2 largest regions totaling 86% of our net revenue, both grew organically at 5% or above. The U.S. was up 5.5%, accelerating versus Q1, driven by high single-digit growth in Connected Media with major wins from last year ramping up. Europe delivered a very strong plus 5% growth, broad-based across markets, accelerating strongly versus Q1 despite a much higher comp of close to 200 basis points. Asia Pac recorded a plus 2.6% growth with strong performance in Greater China at plus 7.5%, while we experienced localized softness in Southeast Asia. LatAm continued its excellent trajectory at plus 11%.

EMEA was down minus 8.3% as expected, directly impacted by geopolitical tension in the region. Moving to our second highlights. Our very strong new business performance in the last month's sales make us confident in delivering the same momentum in H2 and in H1. In the last 18 months, we have seen a dramatic reduction of the competitive landscape due particularly to consolidation. After a very strong finish to 2025, we have had a couple of very sizable wins in the first half of the year with a real material financial impact that will start to progressively ramp up through the back end of the year, but also some local wins with more immediate impact on our numbers. That makes us very confident in raising our guidance range from 4% to 5% to 4.5% to 5%.

Third, we accelerated on all our financial KPIs. We improved our H1 headline operating margin again this year to 17.5%. We were able to unlock 50 basis points of margin improvement as we continue to extract operating leverage, allowing us to reinvest more than 30 basis points in our new business, AI plan and our talent pool upgrade and deliver the remaining 17 basis points in margin increase. Headline EPS came at EUR 3.52 in H1 2026, up 5.7% at constant currency. And headline free cash flow reached EUR 957 million in H1, up 20.8% at constant currency. Getting to our fourth and final highlight. In H1, we are accelerating on our differentiation with 2 important strategic acquisitions. We finalized the acquisition of 160over90 in sports marketing in Q2.

By putting Epsilon data at this core and connecting it to our end-to-end media ecosystem, we will be uniquely positioned to make sports the fastest-growing media segment of our industry, addressable and measurable at scale. And we announced the acquisition of LiveRamp in May, which, once closed, will enable us to enter a totally new addressable market, data co-creation. With LiveRamp, as part of our strong interconnected ecosystem of Publicis Sapient, Epsilon and Marcel, we will go even further and faster in delivering agentic transformation for our clients safely and transparently in their own environment. Thanks to their successful integration into our Power of One model and their ability to open up new addressable markets, our bolt-on acquisitions of the last 2 years have delivered close to 20% annual organic growth on a stand-alone basis, EPS growth acceleration at group level and a strong contribution to our new business wins.

Our ability to continue expanding our capabilities and addressable market has been made possible, thanks to the strength of our balance sheet. Actually, there is one last highlight for H1. After the Cannes Lions named Publicis Conseil Agency of the Year for the past 2 years and their clients AXA as Brand of the Year in 2025, the Festival has now recognized LePub Milan as its 2026 Agency of the year. It's an incredible accomplishment that is only made better by the fact that Heineken, our global client since 2014, has been named Creative Brand of the Year. This latest achievement from LePub Milan is everything we love at Publicis, breakthrough work for iconic brands that demonstrate the power of creative idea to transform our client businesses.

I will now hand over to Loris to take you through the Q2 and H1 financials in detail before I return with our outlook and strategic updates.

Thank you, Arthur, and good morning, everyone. Let me begin with the key highlights of our H1 2026 results. Revenue was EUR 8.734 billion, up 3% versus 2025 and up 5.3% on an organic basis. Net revenue was EUR 7.229 billion, up 1.1% versus 2025 and up 4.7% on an organic basis. Operating margin was EUR 1.261 billion, up 1.5% versus 2025 and up 7.4% at constant currency, while the operating margin rate reached 17.4%. When excluding the LiveRamp transaction costs, headline operating margin was EUR 1.268 billion, with a record headline operating margin rate of 17.5%, up 17 basis points versus 2025.

Headline net income was EUR 885 million, down 0.5% on a reported basis, but up 5.3% at constant currency. Last, free cash flow before change in working capital was EUR 950 million. When excluding the LiveRamp transaction costs, headline free cash flow was up 20.8% at constant currency. I will now get into the details of the P&L, free cash flow and balance sheet, starting with Q2 revenue and net revenue. Q2 2026 revenue was EUR 4.543 billion, up 4.2% on an organic basis. Net revenue was EUR 3.769 billion. Organic growth was plus 4.8%, which comes on top of plus 5.9% in Q2 2025. There was a negative impact of currency of 170 basis points due to the depreciation of the U.S. dollar, the pound sterling and several LatAm and APAC currencies versus the euro.

And acquisitions, net of disposals contributed a positive 110 basis points, reflecting the impact of our 2025 and 2026 acquisitions, namely Captiv8, P-value, Hepmil, AdgeAI and 160over90. When factoring in those items, net revenue was up 4.2% on a reported basis. Let's move to the next slide and our Q2 net revenue by region. North America was up 5.4% on an organic basis on top of plus 5.8% in Q2 2025. There was a negative impact of the U.S. dollar versus euro, partly offset by the contribution from acquisitions and reported revenue was up 4.4% in Q2. Europe delivered plus 5% in organic growth. There was a negative impact of the pound sterling versus euro, leading to reported growth of plus 4.2% for the region. Asia Pacific posted plus 2.6% organic growth.

There too, there was a negative impact of currency depreciation versus euro, offset by the contribution from acquisitions, leading to a reported growth of plus 2.8% in Q2. Latin America continued to perform very strongly and reported plus 11% organic growth. When adding the negative impact of currencies and the contribution of acquisitions, reported growth was at plus 13.5%. And finally, Middle East and Africa was impacted by the geopolitical situation, leading to an organic decline of minus 8.3%. Let's get into more details for each region, starting with North America. In the U.S., the group's largest geography, which represents 58% of our net revenues, organic growth was plus 5.5% after plus 5.3% in Q2 last year.

Connected Media was up high single digit and Intelligent Creativity was up mid-single digits, benefiting from new business wins and scope expansions. Technology was down mid-single digit in Q2. Let's now turn to the performance in Europe on the next slide. The U.K., which represents 9% of our net revenue, posted a plus 2.8% organic growth. When excluding technology, organic growth was plus 8.1%, driven by very strong growth in Connected Media. Technology was down as Publicis Sapient in U.K. is servicing some clients based in the Middle East. France, which represents 5% of our net revenue, was close to flat. Lastly, our operations in Central and Eastern Europe were up double digits, driven by strong growth in all segments with Poland, Romania and Czech Republic performing very well.

Turning to the next slide for our performance in the Rest of the World. Asia Pacific, which represents 9% of our net revenues was up 2.6% organically. China continues to be very solid at plus 7.5% organic growth in Q2, partly mitigated by a softer performance in Southeast Asia, largely due to the impact of the Middle East conflict. Latin America posted a plus 11% organic growth in Q2, driven by double-digit growth in Connected Media and Intelligent Creativity, in particular, in Brazil, Mexico and Colombia. As mentioned earlier, Middle East and Africa posted an 8.3% organic decline in Q2 with UAE and Lebanon being the most impacted countries as expected. In Q2, we estimated that the conflict in the Middle East had a negative impact of 30 basis points on our net organic growth.

For your reference, you'll find on the next slide our H1 2026 performance by region. As you can see, all regions posted a strong organic performance, leading to plus 4.7% in total for the group on top of plus 5.4% in H1 2025. Last, net revenue was up 1.1% on a reported basis. Moving to the next slide and our simplified P&L down to the operating margin. Personnel expenses, excluding restructuring charges, were down 0.6% year-on-year, generating 110 basis points in margin improvement. Restructuring charges increased by 21% due to the continued investment in talent upgrades with a 17 basis point impact on margin. Other operating expenses, excluding the LiveRamp acquisition costs, were up 7.1%, representing 70 basis points of incremental costs as a percentage of net revenue.

Depreciation was up 2.7%, mainly due to increased IT investments. Headline operating margin was EUR 1.268 billion, up 2.1% versus last year. At constant currency, the increase was plus 7.4%. Headline operating margin rate was 17.5%, up 17 basis points against the record level of 2025. When including the LiveRamp transaction costs, operating margin was EUR 1.261 billion. Moving to our next slide and our operating margin bridge. Our headline margin was up by 17 basis points, which includes: first, an improvement of 110 basis points of personnel costs, excluding restructuring charges, driven by 3 main factors: some scalability benefits on our 2025 recruitment, combined with some early impact from our densification initiatives on task optimization, some rebalancing between our people costs and G&A when it comes to our AI investments as we rolled out our AI productivity tools to our talent.

Some adjustments, including at Publicis Sapient and our continued cost management discipline, notably when it comes to recruitment in H1. And second, this improvement was mitigated by 2 factors: a 17 basis point increase in our restructuring charge as we continue to upgrade our talent pool and a 76 basis points increase in our other costs, reflecting in part higher spending on AI products and tools and some additional depreciation linked to our IT investments. Moving now to our headline income statement below operating margin and focusing on the main items. Headline net financial expenses were a charge of EUR 62 million versus EUR 44 million in 2025, mostly attributable to lower interest income for our U.S. dollar cash balance.

Headline net income tax was EUR 312 million with an effective tax rate of 25.9%. The increase versus 2025 is due to positive nonrecurring impact of some tax audits in 2025 and lower deductible LTIP expenses in 2026. Headline net income was EUR 885 million, down 0.5% versus 2025. Again, the increase was 5.3% at constant currency. Next slide, our headline EPS fully diluted grew by 5.7% at constant currency to reach EUR 3.52. On a reported basis, it grew at plus 0.3%. Moving to the next slide, free cash flow. Our free cash flow before change in working capital reached EUR 950 million, up 14.7% versus 2025 and up 19.9% at constant currency. Headline free cash flow before change in working capital was up 20.8% at constant currency. Increase in EBITDA of EUR 26 million contributed to the year-on-year growth. There was also a tailwind in tax paid, mostly resulting from nonrecurring payments in 2025 and some benefits following the change in tax regulation in the U.S. in H2 2025.

This was partly mitigated by higher financial interest charge resulting from lower cash balances in U.S. dollars. Moving to the next slide, use of cash. In H1 2026, change in working capital represented an outflow of EUR 2.089 billion, fully in line with our expectation and reflecting the usual seasonality. The year-on-year deterioration of EUR 344 million in H1 cash outflow is largely explained by the reversal of the EUR 234 million positive effect recorded at year-end 2025. Acquisitions, including paid earn-out amounted to EUR 672 million. It includes the upfront cash payments for AdgeAI and 160over90 and the payment of earn-outs related to influential. On share buybacks, we spent EUR 181 million in H1 2026 to cover our LTIP plans.

Other noncash items represented a positive EUR 235 million versus a negative EUR 274 million in H1 2025. There are 2 main reasons for the EUR 509 million swing. 2025 was impacted by currency translation deterioration with the depreciation of currencies versus the euro. Change in earn-outs improved by EUR 214 million versus H1 2025 as H1 2026 included the elimination of the earn-out debt related to influential. When you consider payment for acquisitions and new earn-outs, we invested EUR 517 million in H1 2026. Overall, net cash decreased by EUR 1.763 billion. Moving to my last slide, net financial debt. The average net debt on the last 12 months was EUR 1.131 billion, representing an increase of EUR 295 million compared to last year due to the acquisitions completed over the last 12 months.

We closed H1 2026 with a net debt of EUR 1.215 billion. And the financial leverage remained roughly stable at 1x as expected. This concludes my financial presentation, and I now give the floor back to you, Arthur.

Thank you, Loris. As you just saw, in Q2, we have been accelerating on all fronts, organic growth, new business, financial KPIs and the differentiation of our model. This makes us very confident in sustaining our strong momentum for the rest of the year and raising our guidance despite persistent macroeconomic uncertainties. We now expect an organic growth range of plus 4.5% to 5%, which represents an acceleration in H2 versus H1 when adjusted for the 40 basis point tougher comparable. We are confirming our guidance on an operating margin rate slightly above 18.2% in 2026, and we now expect our free cash flow to reach circa EUR 2.2 billion, up from circa EUR 2.1 billion previously.

There are actually 3 major reasons that make us confident in sustaining our momentum in this challenging time, both for the end of the year and as we enter 2027. First, we continue to win market shares, thanks to our differentiated model. To cut a long story short, not only are we winning more than our competition, but we are also losing less. As evidenced in our guidance upgrade, we have sustained our very strong new business track record in the first part of the year with several large wins, some that were made public and some that were not. As you know, we don't disclose our new business wins as we are not chasing for headlines.

But just to give you an idea, the 6 major wins of the last 6 months alone will secure close to 200 basis points of growth on a full year basis when they fully ramp up. But what I believe is more remarkable is that being at the heart of our client transformation allow us to have a very high retention rate of close to 100%. In fact, we haven't had any losses in the last 12 months that could materially impact in the next 12 months. Second reason for our confidence is that we are growing with our clients, thanks to AI. AI has, first and foremost, been a structural tailwind for us for several years now.

Since the rise of Gen AI 3 years ago, we have actually grown by circa 20%, allowing us to continue increasing the gap with our peers. Actually, over the last 3 years, we have grown 4x faster than our competition on average. AI allows us to connect our unmatched capabilities in data, media production and technology and link client investments to business outcomes. It has contributed significantly in accelerating the performance of our marketing activities, which represent 87% of our revenue. This was visible once again in Q2 when both capabilities grew organically by 6.5% versus 5.6% in Q1. Those of you who came to our presentation in Cannes heard directly from 2 of our largest clients that we won in the last year, how we are able, thanks to AI data and technology to transform their marketing model and deliver high growth at a lower cost in a unique way.

This is the main reason why we are growing our client base by 200 to 300 basis points every year. AI also continued to be a productivity boost with significant gains from automation and task optimization. Actually, since the launch of our AI platform Marcel in 2017, we have almost doubled our EBITDA and our margin has increased by 270 basis points over the last 8 years. Last but not least, the third reason for our confidence is our continued investment in talent and capabilities. Our strategy in the last 18 months has been the polar opposite of our competitors. Not only have we been acquiring new capabilities from commerce to influencer and now sports and data co-creation, but we have also been investing in talent by recruiting and retaining the best profiles, training everyone for this new world and reinventing how our team operates with AI tools.

This is highly valued by our clients who are looking for partners who can invest on their behalf in the capabilities they need to win and the people who can get them there. From that perspective, our strong financial structure is clearly a competitive advantage as it position us as a trusted partner of our clients all along their transformation journey. Our only focus will remain execution as we deleverage our balance sheet over the next 18 months. Well, as you have seen in H1, not only have we demonstrated once again the consistency and the reliability of our business performance, but we have actually accelerated on every front. This allows us to upgrade our organic growth guidance and improve every financial KPI for the rest of the year despite ongoing macroeconomic difficulties.

Our net new business, the growth we deliver with our clients, thanks to AI and our continued investment in our talent and capabilities make us confident in maintaining our momentum beyond 2026 and in reaffirming our '27 and '28 objectives of delivering at least 7% to 8% net revenue growth on average and 8% to 10% annual headline EPS growth at constant currencies. Let me finish by thanking our team for their incredible work and our clients for their trust. Thank you all for listening. And now with Loris, we'll take all of your questions.

Thank you, Adam. I'm going to take 1 and 2, and I guess I will leave you 3. Look, it's a bit early to talk about '27, I guess. What I can tell you is a couple of things is you have seen over the year, the strength of our media and creative business. By the way, not only in winning new business, but in increasing our revenue with existing clients and not losing big clients. So far, I'm touching wood because it could happen any time. But again, when we look at '27, it's definitely too early to give you an indication, but there is good sign of confidence. The first is the new business we have won recently allow us to do today to be very confident that we will deliver again 200 basis points next year.

The second, that for me, the most important one because it's the one that could keep me away from slipping is we haven't lost any big clients in the last 6 months that could have an impact at least for the beginning of next year. So that means that we are entering '27 with a good dynamic. And maybe the most important one, Adam, for next year and in general is we have a conjunction at Publicis of 2 incredibly strong factors that again makes us very confident for the future. And this is why we are reiterating our guidance for '27 and '28 is that on one side, you have seen a drastic reduction of the competitive landscape. I mean, 5 years ago, we had the double of player at global level that we have today. And let's be clear, it doesn't mean that the smaller players are not dangerous locally. But when it comes to big marquee company with huge spend, let's say, above EUR 800 million, the competitive landscape has been reduced from 4 to 3 players.

So that is helping us. And what is on the top of that is that not only the competitive landscape is reducing. But on the other hand, our addressable market is just increasing. This is why we have insisted on the 20% growth of our bolt-on acquisition. We are, thanks to our balance sheet and the strength of our balance sheet, investing in new sector that will allow us to grow. So again, don't expect any number from us, but expect already us outperforming the industry again in 2027. It's a bit early to say, but we feel confident about that when you look at new business and addressable market and entering into H1 2027 with a lot of confidence.

The Middle East question is a very big question. So the impact of the Middle East as a business is basically not really material because it's 3% of our revenue. Yes, it has been declining, but nothing significant that would change anything, a bit on the margin, by the way. And I think it's interesting to see that not only we are accelerating, but sustaining our momentum despite the kind of things that are having an impact. Now your question is more interesting on the fact that the Middle East is having or not an impact on the demand and the service. I think that, again, if I take a step back, you need to look at those challenging time that our clients are having a very different attitude when it comes to OpEx and CapEx investments.

So on the one hand, they know that if they cut their marketing spend, they will lose market share that actually will be very difficult to win back. They have experienced that many times, so they are very aware. And honestly, this is why despite the conflict in the Middle East, we continue to capture a disproportionate share of our client demand when it comes to AI-powered marketing services and product. I mean, again, it's 87% of our business, and it has been growing in Q2 by 6.5%. And we are seeing, thanks to that, every effort we have made, how we have implemented AI, allowing us to increase the gap by more than 600 basis points based on consensus with our peers.

Where there is a difficulty is that on the other hand, the lack of visibility that is due to these geopolitical events are actually now coming back on the top and it's true that it led all of our clients in the IT services to delay further their large discretionary expenditure that are more about CapEx in this case. And this wait-and-see attitude, obviously, has been very well drafted by the competitors of Sapient and particularly the leader. So I won't insist on that. But again, when you compare like-for-like, the kind of slowdown in CapEx investment is also our case with Sapient. Again, I'm going to insist a lot on that, and I'm sure there will be a question about Sapient later, but what is very important for us, and hopefully, you see this in our performance is that despite this challenging environment, will it be the Middle East, will it be what is happening in the IT sector, we are able to raise our guidance.

And actually, we are expecting an acceleration in H2 versus H1 on an underlying basis. And this is thanks to the strength of our overall model. I'm going to stop here. I'm sure there will be a question on Sapient, so I'll come back. But Loris, I will pass on you.

Sure. Adam, so when you're looking at AI run cost, I would make 3 or 4 comments. The first is those are typically for licenses and usage. And as such, they are very much a normal operating cost. The second is we have good visibility on real-time consumption, including at the user level, and we track them on a daily basis with limits and alerts that we put in place to monitor and control the usage. The third point is, as you saw from H1, there is definitely a rebalancing between people cost and tech cost, and we said that before, but we're expecting it to stabilize now. What we are observing, if anything, is that the productivity benefits that those tools can generate do offset the cost. and it's been clearly evidenced in our margin improvement. So if anything, it's been having a positive impact on our margin, and we anticipate this to continue.

Yes. We can't go into the detail of what we are doing there, but it's incredible to see how we are able not only to accelerate on our top line, but accelerate on our bottom line, all of this while investing massively into our future.

Yes. I'm going to go the other way around. I'm going to start by the third. To be clear, and this is a discussion we had is that we believe that we need to have the right balance between people and technology. I like -- and I know it's a bit provocative in the AI world, but I like to say that we are still a service business. We are a service business with the best capabilities of our industry and beyond in data technology and of course, AI. But the truth is the reason why we have been performing so well today is that we have the right balance between the best people of the industries and unique capabilities, all of this working through the Power of One. And by the way, if you look outside of the holding company world, even in the L&M world or in the tech world, the companies that are thriving today are the ones that have this good balance between service and product because, again, and maybe the question will come back later.

AI is very difficult to implement at an enterprise level. It's difficult to scale. It's very expensive. It doesn't deliver business outcome immediately. And so yes, you need the best capabilities, but you also need the right people to take the client by the end and bringing to this. And this is why, by the way, we continue to invest in our talent. And the least we can say that we also invest in our capabilities. Connected Media in the U.S. Now the truth is we are winning market share, and I'll come back to that on new business. Clients are spending more with us. I'm not even talking about new business because your question was more on our clients. The reason why we can go 200 to 300 basis points with our clients and actually, it's way more when you look at Connected Media is exactly for the reason I explained earlier about the addressable market.

When you take leadership in the Influential world. You see your revenue grow. You win in new business, but you see your revenue grow. When you invest heavily in agentic commerce, you see your revenue grow. Tomorrow, when we're going to invest or actually when we're going to scale sports and make it addressable and measurable, we're going to see our revenue grow, so we are continuing to nourish through new capabilities, our connected media system and of course, our clients, and we are growing from there basically. Now coming back to your question on new business, let me take a second on that and try to wrap up a lot of things that has been said because I know there have been a lot of questions in the recent weeks. And again, this morning, we already received a few.

I mean, first of all, and you would remember that, we had a very good finish of 2025, very high finish. And the truth is we also had a very strong first half of the year when it comes to overall new business basically and honestly, thanks to the differentiation of our model, but also because, as I said before, the competitive landscape has been dramatically reduced and some players have been a bit distracted recently. So what we wanted to give you, again, as in everything we are doing today is give you clarity, visibility, okay? And so we basically had 6 major wins, which are, to answer your question, new accounts. It's new clients. If it's an existing client, it goes into our client growth. If it's a new business, is that it's a new client.

And this has allowed us those new clients, those 6 new clients has allowed us to roughly deliver -- we will deliver, thanks to those wins, 200 basis points of contribution on a full year basis. I mean, we are talking here about EUR 300 million of net new revenue for the group. I think it's important to understand the magnitude of what you're talking to, okay? And to give you a bit more of color because I think it's important, this is on the ramp-up. But out of the 200 basis points, there will be only 50 basis points this year. This is why, by the way, we are upgrading our guidance because now we feel confident that with those 50 basis points, we can upgrade our guidance. And the other 150 is going to be for 2027, though the question I had before, which again makes us confident for next year.

Now I know it's a bit complicated, and I'm sorry because, as you know, we don't comment on new business wins. We don't give you names. We don't talk to the press. And because we don't talk to the trade press about what we win, there are some things that you can see and others that you can't -- and we have a big question about that, that has come many times, which is, okay, some of your competitors have been telling basically for the last 3 quarters through actually big headlines that they have done even better than us, okay? Let's be clear. If it's not only headlines, it should translate after what is 9 months into their numbers and their performance starting now. And honestly, this would be great for the industry because we need our peers to do well.

So if they are doing even better, great. But I think what is important for you to take out of that is what matters is not the press headline is how what we win translate into growth and margin. And I guess when you look at the last 7 years where we have been #1 in new business, we have made a good case out of that. And again, I'm sorry, we're not disclosing more than this. But for many reasons, we have decided to stop a couple of years ago. And as you can see in our performance, it has pretty helped us. So I'm going to stop there. I know I'm talking too much. So now I'm going to give a shorter answer because I'm very frustrated about the Tuesday game, so I'm trying to recover. Let's go to the game, the soccer. Next question.

Thank you very much. I'm going to start very quickly on the LiveRamp question. It won't be part of Sapient. It will be part of technology to be very clear because it's a tech company and it's a product company by a sense. Again, I will be very, very pleased to answer your question once we close, but there is very little I can say for the moment more than what I said during the call. So again, it's going to be in technology, but not part of Sapient. And by the way, as we are on that, we talked the day of the acquisition. Since then, honestly, the reaction from our clients has been extremely positive. And to come back to one point that has to do with tech, as you might have read here and there, our competition have raised an issue about neutrality.

And the truth is that for our clients, this is a nonevent, all of them. And the reason why it's a nonevent, which come back to your question, is that you need to understand that LiveRamp technology is neutral by design. LiveRamp is a technology. It is a platform of data collaboration. And so it will live within our technology. It will work particularly with Sapient to build agent for sure. But more than that, at the moment, it's very difficult for me to tell you. We need to go through the process. And then I promise we'll have a lot of time to answer all of your questions. On Microsoft, again, we don't talk about any particular client. So I won't be able to give you much more detail, although the relationship is very, very strong.

But maybe I use this opportunity, and then I'll pass on to you on the Middle East, and we will start by Sapient and I guess, and then go on to the guidance. To tell you a couple of things about Sapient that hopefully will start to answer your question. First, I will say, like the rest of the IT consulting industry that you know well, we are experiencing a slowdown that is only amplified by the Middle East crisis. We talked about that, okay? But I think what is very important there, and Loris mentioned it and I did is that actually, Sapient was facing a significantly tougher comp in Q2 versus Q1 of 600 basis points. So actually, those guys have managed to stabilize their net revenue sequentially which is when you look at all the headwinds in the industry is important to note.

Second, and that's definitely for your question. So far, I don't know about you, but it's not like we see the world getting any better soon. We saw a couple of news this morning and say how the market is going to react to that, but things so far are not going to get better. So to be clear, we are not including any major improvement in our guidance for H2 for Sapient. So actually, we expect it to be in line with the industry. But what is important here is that Sapient only represent 13% of our revenue. And I think this is something that we need to insist on. But when you look at their performance in isolation, actually, this is not reflecting the full value it creates for the group. Sometimes I'm asking myself, are we right to put Sapient apart because, again, it doesn't show what it brings to our group, okay?

In a couple of words, Sapient is actually supporting our top line of the marketing activities. The reason why we are growing so fast at 6.5% is not only thanks to our creative and media operation is because on what represent 87% of our revenue, we have Sapient technology. We have Sapient engineer, more than 20,000 people that can help us in production that has truly become a tech thing. I mean we are growing double digits in production. It's helping us on media that is growing close to double digits and it's definitely helping to win some pitches through the enterprise grade AI solution they've got, and that is making a real difference. And what you don't see is that it also contributes to our operating margin outperformance versus our peers as we can leverage all of their technology internally.

So maybe the thing I want to leave you with on Sapient is that, of course, they have part of their business that remains very exposed to the software IT spending that all of our peers -- all of their peers are experiencing. But the true value extends far beyond its own P&L. And so again, maybe in a couple of months, we will spend more time explaining you this because the reason why we are performing as we do as a group has also to do with how we use the Agentic and AI expertise of Sapient for what is 87% of our business that is growing 6.5% with a good margin, as you have seen in Q2.

And Jerome, a couple of points maybe on the Middle East. I mean, first, as we said before, the region represents less than 3% of our revenues. And as Arthur was talking about Sapient, where we see a larger impact from the region is on Publicis Sapient including, by the way, in the U.K. as it's a hub that manages a number of clients based in the Middle East. When you look at the overall impact in Q2 of the Middle East region, it's approximately 30 basis points on the top line, as I said earlier in my presentation. Now looking at the rest of the year, I mean, obviously, we can't predict when the conflict is going to be resolved, but we included in our upgraded guidance the fact that the situation more or less remains the same.

Again, the resilience of our model is maybe what we are the proudest of, being able to accelerate in H2 despite all the headwinds we've been just talking, hopefully, is reassuring. And you know the story is that if everything was doing well, imagine what we can deliver when we are delivering 4.8% on such a difficult quarter in terms of headwinds.

Thank you, Nicolas. So for those that just joined, again, I'm going to start with the guidance. So as you know, we are now expecting our net organic growth to reach roughly between 4.5% to 5%, which is an upgrade. And more importantly, this means that we're going to outperform by far our industry for the 7 years in a row. To come back to your question, I will make a couple of comments. First, again, we told you we want to give you visibility. I think it's important to see that we are expecting Q3 and Q4 to be within this new guidance, okay? So again, sustained momentum to come back to your question about what we have been doing. Second, and we have been insisting on that, but we see the same dynamic between H1 and H2 -- and actually, we see an acceleration when you look at the underlying basis that the comp is tougher.

And to come back to your point, honestly, what will make us able to reach the higher end of the guidance is that the macro condition needs to improve. They need to improve a bit. We see the lever to get there. Don't get me wrong. We are making sure that we are anticipating a world that doesn't change that much now. But if it were to improve for any reason, yes, we should be able to reach the higher end of our guidance. On pitch activity, I mean, it's busy. It's a busy time. And I think that there is some good news and less good news, I would say. The first good news is that clients every day understand more that with the rise of AI, they have to choose their partner, and we talked about that primarily on capabilities and talent.

And that's the reason why we're winning. And by the way, the pitch are shorter, they are more on capabilities and clients understand this need, so much so that in some cases, actually, we are not pitching anymore and winning without the pitch just about the client picking the tires. We have a couple of examples on that. Some of them, by the way, are not public. The second good news I already talked about it is that the competitive landscape is reducing. So this, of course, improved the chance of the leaders to win. And as we are one of them, it's improving our chance to win. I would say the only less good news is that the financial pressure of some of our other players in our industry has led to some pricing behavior sometimes that are not right.

The truth, and you know how we behave on that we are trying not to participate when we anticipate that the client is going to be really price driven, which we understand perfectly, but we are not interested by that. We have actually passed in H1 roughly 6 pitches around that because we thought it would be only price driven. But let's be clear, this is not the norm. And I want to insist on that, and that's something that actually is very encouraging is that clients now understand the value of what we bring. And although, of course, believe me, they ask for very competitive offer, most of them know that the outcome should be a win-win relationship. You really need to get that is that -- by the way, it's pretty funny because some -- many, by the way, were saying that AI will be a headwind for us.

Not only it is a tailwind when you look at our number, I talked about that, we grew by 20%. We doubled our EBITDA. But even more importantly, AI creates a more complex world. And it means that our clients more than ever need the right capabilities and the right people. And this helps us also in terms of new business. Do you want to take the last one?

Yes. Nicolas, on personnel costs, so it's a bit too early to guide on the full year when it comes to personnel costs, depending on the balance with reinvestment in H2 around talent upgrades and obviously, where we need to invest in new business win ramp-ups. But you should assume that personnel costs go down as a percentage of revenue this year. And as I said earlier, it's a combination of a few factors, and maybe it's worth repeating some of them. One, we had some scalability benefit in some of our recruitments of 2025, to which you need to add the early impact of the initiative we've launched when it comes to processes and task optimization through agentic AI. Definitely the rebalancing that I spoke about on people cost and G&A when it comes to AI investment as we rolled out those productivity tools. But that again should stabilize given the investments were already made. And then the adjustment that we see here and there, including at Publicis Sapient. So -- but again, what's important is that we confirm the slight improvement in our margin for the full year.

Thank you very much. I'm realizing that I'm talking too much and that the hour has already passed, so I'm going to make a short answer on that. You're raising, of course, very, very important question about how search -- new search particular GEO will raise. I would make just one comment that hopefully tell you how bullish and ambitious we are about what is happening is that 3 years from now, 50% of the content that we are producing today won't be for human, but for machine. we will continue to produce as much content for human, but we will have to produce double of content for machine. And that means that, again, talking about addressable market, if you have the data, if you have the technology, in this case, if you have the production backbone, you should be able to see some growth from the fact that not only we need to talk to human, but also to machine.

And this is what I put into the new addressable market. These are areas where we have a lot of opportunities because -- and I will close by that, because we have the capabilities because let's be clear, there is no way you're going to be able to talk to machine properly and transform that into sales if you don't have identity. Because at the end of the day, you need an anchor that will allow you to see a person. And sorry to be a bit technical. But when the LLMs go on to the web to look for something, there is no digital trace of a consumer. So if you don't have an identity to make sure that you can link your investment to business outcome, you're basically blind, and that's where we have a big advantage.

So on the topic of AI productivity gains, I think there's probably 3 things that are important to say. The first is, and Arthur said it earlier, it's early days. And so we need to remain very cautious I don't need to go back on all the recent studies, including the MIT that shows that, what, 95% of AI pilots turn no or negligible ROI, and it's largely due to what we said earlier, which is the complexity and the cost. More specifically, when it comes to us, I think it's safe to say that we have not lost a minute. And we've been executing what is largely a 2-step plan. The first, and I mentioned this earlier, we've been looking at certain tasks and manual processes, and we are aiming to cut volume of those tasks by an average of 25% and then scaling it across the operation, and that is well underway.

And the second point is, as it was mentioned earlier, through our partnership with Microsoft, we've essentially equipped and trained the vast majority of our 110,000 or so talent with AI productivity tools, and it's really helping them work faster, better and most importantly, focus on higher-value work. The third point that I would make is -- and probably the best KPI you can look at is that our AI plan is delivering a margin improvement. And so again, we generated 17 basis points of margin improvement in H1 after reinvesting what was around 30 basis points, again, of our efficiency gains into talent upgrades and overall -- our AI plan. So if you look at what's in front of us, I would say that this plan should allow us to sustain our margin improvement commitment while continuing to invest in transforming our talent pool.

So first of all, don't read too much into what we said. It's actually a very, very good new business track record for this year. We're going to reach 250 basis points this year. This is why we are upgrading our margin. So our guidance -- sorry, not our margin. And we feel very strong about the dynamics. Finishing H1 with 250 basis points of new business for 2026 and already feeling good for 2027 is the best position we can be in at the moment, obviously. So only good news on that front. Do you want to talk quickly about U.K. and France?

Yes. I mean, on the U.K., when you look at the overall performance, as I said earlier, excluding the tech business, we're at 8.1% in the quarter. So we continue delivering very strong performance, primarily driven by actually both Connected Media and Intelligent Creativity and a lot of new business and market share wins. Sapient is a little bit difficult to explain in U.K., as I said earlier, because it's partly a domestic business and partly international operations of Sapient. This is why I said there was an impact of the Middle East. And so it's servicing a number of markets from the U.K. base. And so if you look at the revenue that it generates, it's probably close to 30% of the total group revenue in the U.K., but not all of it is U.K. specific.

So it's hard to isolate the performance in the U.K. On France, it's the difference between the 4% and what I said in my earlier remarks, which is France was flat is the impact of the outdoor business, which is Media Transport. It's largely a phasing and a comparable effect and then the retail business, which is the drugstore, which is fairly small in our operations.

But Conor, thank you for raising the question because we talk a lot about the U.S., and you have seen how our media and creative operation are performing actually beyond 6% or 7%. But what is very encouraging is that we see the same kind of trend in our #2 country, which is the U.K., Loris just told you. I mean 4% for France when you extract this media activity shows you that it's a good performance in a market that is very difficult. And I will never insist enough on our Chinese performance. The 7.5% in a market that is declining for most of our peers. And as in many cases, the second market for many of our clients, sometimes the first market is a huge competitive advantage, and you should expect more good news from China in the coming weeks actually.

I don't think we are in a position to answer number two. I did not understand very well, but you were asking us to compare with peers, which we don't do. So this we can't answer. The 200 basis points that we are talking about is pure new business. As we said, let's say, we grow between 4% and 5%, okay? There is between 200% and 300% of this growth that comes from existing clients that we are growing. And this includes the fact that we don't lose any clients. And on the other hand, you have between, again, 250 to 200 million that comes from new business, which are new clients that we can add. And as I told you, it takes between 3 months to 9 months to ramp up the business.

And this is why the new 200 basis points that we won in H1 is slowly starting to ramp up in H2 and will accelerate in Q1 of 2027. On LiveRamp, I don't know if you were there when I raised the point, but actually, this neutrality thing is a nonevent for our clients to be very clear, for a single reason that I already laid out, which is LiveRamp technology is neutral by a sense. It's not like it's a problem for any one of them. Now I know it's a bit frustrating, but we can't say anymore anything further at this stage until we are closing the operation, which hopefully will be before the end of the year. Next question because we're very late.

We're going to take it the other way around. So Loris, you start with the first one, and then I'll go to the second one.

Yes. Just on production, it's doing really well. I mean in Q2, we are very high single digits in terms of organic growth. And the share of the -- of intelligent creativity is slightly above 25%, obviously, as it grew in the last year. It was double digit last year and the year before. So we remain in the same territory, give or take, 1 percentage point.

I love your second question, and I wish I had more time. We are not an IT consulting firm. We have nothing to do with IT consulting firm. The only thing that is in common with IT consulting firm is 13% of our revenue with Sapient. And as I said, as for the other IT consulting firm, Sapient is suffering from a slowdown that is coming from our clients just waiting and see in terms of CapEx spend. Now I don't want to give you any hope, but this is going to come back. I don't know when, but it's going to come back because if you think that those clients won't have to invest CapEx in their technology, in their data in order to transform, you're wrong, it will happen.

Now when, I don't know. And the good news for us is that it's only 13% of our business. But to come back on your question, when I'm saying that we are not an IT company is that the core of our business is marketing transformation. It's about media, creative, data and technology getting together to transform the marketing model of our clients. And the reason why we are growing so fast at the moment and distancing ourselves from our peers is that AI has totally revolutionized the way we do marketing. And because we have been investing in third-party data, in tech infrastructure with Sapient in this case and in the best media and creative capabilities, we are able to go to our clients and tell them, yes, the world is very complex. Yes, AI is difficult to scale.

Yes, you have a lot of pressure because you have to increase your bottom line and your top line together. But today, by putting identity at the core with Epsilon, by modernizing your mainframe with Epsilon, by activating this highly complex media ecosystem with our media activities from commerce to paid media, to influencer, to CRM and by producing content that will work for human and for machine, we are able to actually increase your sales and reduce your cost. And I think you were there in Cannes, we had 2 of the biggest CMO in the world that we won last year that came on stage in form of 350 clients and 100 of you guys and showed up what it means. So to be very clear, Sapient is a competitor of those IT consulting firms. It is suffering as they do at the moment, but what they bring within Publicis for us to really win in marketing transformation is what is making the difference and actually allowing us despite all the tailwinds to deliver 6.5% of growth on what is 87% of our business on a margin that is only improving.

So Julien, a few comments on remuneration models and what we are observing. The first is on the so-called full outcome-based model. I mean, it remains fairly limited, and we have not seen any significant evolution recently. The second, I think you asked the question some time before on SaaS also remains fairly marginal and at less than 1% of our group net revenue, and it's primarily sitting at Epsilon. The third part is, as you described, the overwhelming majority of our range from headcount base to time and materials, more specifically at Publicis Sapient. But all of them include some variable elements usually under the form of bonuses and [indiscernible]. And -- but that's for a limited portion of the total remuneration.

And if you look at this variable portion based on those predetermined KPI, they represent roughly 10% on average of our total remuneration for our existing contracts.

All right. A quick last one before we wrap up, I guess, because we are late.

I wouldn't qualify this as offshoring sort of benefits for the most part. I think we've driven offshoring quite a lot in the past few years already. I go back to what I said earlier, which is definitely a scalability benefit of the recruitment that we had in 2025. The AI productivity initiatives that are starting to scale up, and there's obviously investment attached to it. And that's where you see the rebalancing from personnel costs into tech cost and G&A increase. And then we've had some adjustment -- normal adjustment on the business, including at Publicis Sapient, given the top line performance that has been softer. So that's normal course of business, if you will. But we're definitely planning on a lower personnel cost number for the lending this year.

Yes. I wish [indiscernible] more question on that. So thank you, Christophe, because what we delivered on the margin and on the cash flow, by the way, is pretty exceptional because, of course, the headwinds we are seeing on a geopolitical level didn't help, but we are able to overperform also on that. Sorry, we have been a bit long. So just a few words in conclusion. Hopefully, you see that our H1 performance confirm what we have consistently demonstrated over the last several years and consistency matter. We are delivering faster growth than the industry. We are winning market share, which shows the strength of our model. And we are actually widening the gap with competition.

We are expanding margin. We talked briefly about that and generating strong cash flow while we continue to invest ahead of our peers in AI, data and people. And that's very important for us. We talked a lot about that in Q1, but our ability to continue to invest in people and in capabilities, thanks actually to our organization for people and to our balance sheet for capabilities make a big difference. It's a tough contest out there, and we are confident not only to raise our guidance for '26, but more importantly, we are confident in our abilities to sustain a superior growth rate and create value on the long term. That was your question about 2027. If I were to sum up, I would say that beyond a strong quarter, we are making the demonstration that AI is accelerating the competitive advantages that we have been building for nearly 10 years now.

I will actually say more because it started with Maurice's vision. So again, thank you for joining. I have to say it, but sorry for all the English and French football fan on the call. It has been a rough week. I love to go to bed early before the earnings, but I've been suffering with many of you. And I guess we will see you on the pitch on Saturday. Hopefully, you can have a bit of time with you and your family to rest in the coming months, but I'm sure we will meet soon. So merci beaucoup, and have a good day. Thank you very much.