Interpublic beats profit, revenue estimates as client spending rises

Friday, 15 February 2019 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Interpublic Group beat Wall Street estimates for quarterly earnings and revenue on Wednesday, as the US advertising company benefited from higher client spending worldwide.

Interpublic, home to Madison Avenue icon McCann, has been spending billions to acquire data-mining firms to compete better with the targeted advertising models of Facebook and Alphabet Inc.’s Google, two companies that dominate online advertising. Organic revenue a closely-watched industry measure that removes the effect of foreign exchange rate swings and income from acquisitions rose 7.1% in the Oct-Dec quarter. Analysts polled by FactSet had, on average, forecast a 3.7% increase.

Shares of the New York-based company were up nearly 5% at $22.66 in morning trading.

The company’s organic revenue growth easily outperformed rivals Omnicom Group Inc. and Publicis Groupe SA. Omnicom posted a quarterly organic revenue growth of 3.2% on Tuesday, while Publicis posted a 0.3% fall in organic revenue last week. Top-performing client sectors were consumer goods, health care, retail and auto, Chief Executive Officer Michael Roth said on a post earnings call with analysts.

Interpublic’s US organic revenue grew 6.3%, largely above the FactSet estimates of 2.8%. International was up 8%, while analysts were expecting a 3.7% rise. “While there is shared concern around macro issues, which include the aging economic expansion, political turmoil, international trade and interest rates, the backdrop appears sound as we entered the New Year,” Roth said.

Interpublic said it is targeting 2019 organic growth of 2% to 3%.

“2019 organic net revenue guide appears to be very conservative given the size of the 4Q18 beat,” analysts from Evercore ISI wrote in a note.