Earnings Transcript for PUB.PA - Q4 Fiscal Year 2023

Arthur Sadoun: Bonjour and welcome to Publicis Groupe 2023 full year result call. I am Arthur Sadoun and I'm here in Paris with Michel-Alain Proch, our CFO; Anne-Gabrielle Heilbronner, our Secretary General. In the room today, you also have Jean-Michel Bonamy, who will be available to answer your question offline after the session. I will start this call by sharing the main highlights of 2023 which is another record year for the group. Michel-Alain will then take you through the details of our number. After that, I will conclude with the reason why we are confident in delivering another strong year in 2024. Finally, as always, we will take all of your questions together. But before we start, please take the time to read the disclaimer which is an important legal matter. Okay. Let's get into the presentation. In reality, there is just one single highlight to take out of last year. In a very challenging macroeconomic context for our clients and after 6 years of transformation, Publicis extracted itself from the pack in 2023. With 6.3% organic growth, not only are we outperforming our holding company peers by 500 basis points in net revenue, but we are also growing at double the rate of the main IT consulting firms. And what is true for organic growth is also true for our financial KPIs, be it margin or free cash flow. At the moment, where our clients need partner that truly help them transform in a challenging and ever-changing context, our unique model has made the difference and allowed us to significantly gain market share. Let me give you an overview of our numbers, starting with organic growth. We achieved plus 6.3% in 2023, after 2 years at double-digit, with a stronger-than-expected finish to the year at plus 5.7% in Q4. We already shared some of those numbers when we released our AI plan 2 weeks ago. But let me recap a few important points. Thanks to our unique go-to-market in media and our balanced revenue mix, we were able to deliver a strong and consistent performance above expectations. Media, 1/3 of our revenue grew double digits in 2023 for the third year in a row. This was led by both market share gains and organic growth at existing clients. And it actually accelerated in Q4 with a faster ramp-up of new business. Data and tech, another 1/3 posted a very solid year overall. Epsilon was up plus 10%, and Publicis Sapient up plus 3% organically on the top of plus 12% and plus 19%, respectively, in 2022. In Q4, we saw the same trends as in Q3. On the one hand, a very high demand for first-party data and marketing transformation, resulting in double-digit growth at Epsilon. On the other hand, as expected, delays in business transformation project, like all other IT consulting peers, leading to a slight decline in organic growth at Publicis Sapient. Finally, Creative had a very resilient full year growth at low-single digits on top of mid-single digit in 2022, supported by a solid performance in production. This was also the case in Q4 with fewer cuts than expected in classic advertising in a quarter of adjustments. Moving on to our organic growth by region. The U.S. had a remarkable performance with plus 5% organic growth for the full year, following plus 10% in both 2021 and 2022. With Q4 accelerating to plus 6.1% organic growth, the U.S. came ahead of expectations this quarter, fueled by media and data. Europe was at plus 10% organic growth for the full year, following double-digit growth in 2022. As anticipated, in Q4, the region posted mid-single digit growth against tough comparable in 2022. The U.K. was particularly resilient, with a modest decline in Q4 after posting 38% growth last year. Asia-Pac delivered plus 3% growth for the full year despite macroeconomic conditions. The region accelerated in Q4 to plus 4%, notably thanks to China that returned to growth as we anticipated. Let's now turn to our financial KPIs. Not only did we outperform on organic growth, but we also led the market on financial ratios again in 2023, with an operating margin at 18% and an adjusted free cash flow at €1.7 billion. The efficiency generated by our platform organization allowed us to deliver this performance while investing in our people with a record bonus pool of €540 million, including share-based incentives. Thanks to this efficiency, we have also been able to set up our investment in technology, notably with the first tranche of our AI investment plan for €25 million. This strong operational performance, combined with an improved return on cash, contributed to an adjusted free cash flow of €1.7 billion. This came in line with our guidance before Rosetta settlement that Michel-Alain will explain later. After paying €735 million of dividend, an increase of 21% versus the prior year, our average net debt came in at €432 million, also in line with expectation. To sum up, as a consequence of our performance, the group actually achieved new records in 2023. With a reported revenue close to €15 billion in 2023, up 35% versus '19, the group has firmly established itself as the second largest player in the industry for the second year in a row. Operating margin reached €2.363 billion after a 39% increase compared to '19. Finally, our headline EPS, which stands at €6.96 was also up 38% compared to '19. This allow us to propose a dividend of €3.40 per share, which is an increase of 17% versus last year and a new high for the group. Now, I will leave the floor to Michel-Alain, who will provide further details on our full year numbers. I will then come back to share our guidance and capital allocation for 2024.

Michel-Alain Proch: Thank you, Arthur. Good morning to all of you. I'm glad to share with you those very strong results from my last earnings call with the group. I'll begin with the evolution of the net revenue for the fourth quarter and full year of 2023. In 2023, the group posted a net revenue of €13.1 billion, up 4.2% on a reported basis. Full year organic growth came in at 6.3% on top of 2 consecutive years at double digits. It is ahead of our guidance last upgraded in October, reflecting a stronger finish to the year than anticipated, with Q4 at 5.7% organic. Looking at the fourth quarter specifically, net revenue was €3.540 billion, up 2.3% on a reported basis. This includes €189 million of organic contribution, net negative impact of ForEx for €139 million, largely driven by the USD to euro rates. And finally, the contribution of acquisition, net of disposal of €28 million. This includes the revenue of the acquisition closed in 2022, such as Yieldify, Retargetly, as well as our most recent acquisition of Practia and Corra for about €31 million. It was partly offset by some disposal representing €3 million. Let's move on to the next slide, which provides the dynamics of our Q4 organic and reported growth by region. North America posted a very solid 6% organic growth after 10% last year. As I mentioned, the impact of the ForEx was obviously negative, bringing the region reported growth at 1.2%. Europe recorded mid-single digit growth this quarter at 4.5% organically. This came on top of a very strong comparable of 13.2% in the prior year. Asia-Pac posted a 4% organic growth with China returning to positive territory. Middle East and Africa and Latin America continued to perform well with 9.7% and 13.9% organic growth, respectively. So let's begin with more detail on North America. The region posted 6% this quarter with the U.S. at 6.1% and Canada at 3.9%. In the U.S., the group's largest country, all activities continue to perform well. Media accelerated to double-digit growth on top of double-digit last year, fueled by strong underlying trends and new business won in the last 18 months, notably in the health care, food and beverage and retail sectors. Creative activities were resilient with a slight decline in the quarter despite the anticipated cuts in classic advertising. Production was very solid, particularly in food and beverage and automotive. Publicis Sapient was broadly stable organically on a high comparable basis of plus 15% last year. This was a solid performance in the context of delays in digital business transformation projects experienced by all comparable IT consulting firms. Epsilon reported another quarter of double-digit organic growth, fueled by digital Media and Data in particular. Let's turn to the performance in Europe on the next slide. As I mentioned earlier, Europe recorded plus 4.3% organic growth this quarter. In the U.K., organic growth was slightly negative at minus 4.2%, as anticipated after a standout performance of 38% in Q4 last year. Creative achieved a strong performance, particularly in the health care and retail sector. Media was broadly stable after a high double-digit growth last year. Finally, Publicis Sapient was negative after a record quarter last year as it annualized the ramp-up of major contracts in financial services and retail, as we mentioned in prior calls. France, which represents 6% of our net revenue, posted a 6.3% growth, excluding Outdoor Media activities & the Drugstore, which continues a very solid trend observed in the last quarters. The country saw Creative accelerate to mid-single digit, notably in the nonfood consumer product sector and Media broadly stable; and finally, double-digit growth at Publicis Sapient. Germany, which represents 3% of our net revenue, posted 5.3% organic growth with mid-single digit Media and sequential acceleration at Publicis Sapient, particularly in the manufacturing sector. Creative posted low-single digit growth over the quarter. Lastly, our operation in Central and Eastern Europe accelerated to 20.3%, largely led by Media, mostly thanks to global clients. The group posted double-digit growth in Poland, Romania, Czech Republic and Turkey. On the next slide, I will detail our performance in the rest of the world. In Asia-Pac, which represents 9% of group net revenue in Q4, we posted plus 4% organic growth. Importantly, China returned to positive territory as anticipated, with 1.4% in Q4 after minus 2.5% in Q3. As Media growth more than compensated cuts observed in classic advertising in what is a still uncertain macroeconomic context. Australia and New Zealand were slightly negative this quarter, reflecting a decline in Media in the nonfood consumer goods sector. On the contrary, Southeast Asia posted a double-digit organic growth this quarter with a robust quarter in India and a strong performance in Singapore, Thailand and Malaysia. In Middle East and Africa, we posted 9.7% organic growth. This included solid growth in Media and Creative activities, while Publicis Sapient continue to record double-digit performance. Latin America accelerated to 13.9% organic growth this quarter, equally led by Media and Creative. Of note, Mexico grew high single digit, Colombia double-digit and Brazil, low single digits. For your reference, you'll find on the next slide, the full year performance by region. All our regions grew on an organic basis this year again. North America was up 4.9% organically; Europe, 10.3%; APAC, 2.9%; Middle East and Africa, 12.4%; and finally, Latin America, 8.9%. On the next slide, you'll find the group performance by client industry for the full year. This is based on an analysis of our main clients, representing 91% of our net revenue, and it excludes Outdoor Media activities & the Drugstore. As you can see, our performance by client industry has been remarkably consistent quarter-after-quarter. In the full year, like on the first 9 months of the year, we saw all of our client industry record positive growth with the exception of TMT that was only marginally down and financial services stable on the period. Let me give you more color on the performance of other growing sectors. Food and beverage and health care, both recorded double-digit growth for the second year in a row. The retail sector posted 7% on top of a massive 24% growth in 2022, thanks to new business across different activities. Automotive continued to grow at mid-single digits in Q4 and in the full year. Moving now to our consolidated income statement. The group's revenue was close to €15 billion, up 4.3% versus last year. EBITDA was €2.845 billion, up 1.6% versus last year. Operating margin was at €2.363 billion, a margin rate of 18%, in line with the record level of last year. I will provide more details in the next slides. Headline group net income was €1.767 billion in 2023, an increase of 9.7% versus last year. Headline net financial expenses strongly improved to €20 million, reflecting a higher remuneration and cash position, while income taxes increased to €573 million. Amortization of intangibles were €199 million net of tax, while real estate restructuring charges reached €115 million with the continuation of the group real estate footprint optimization. Non-current items, net of tax were a negative €152 million in 2023. As mentioned previously, the group reached a multistate settlement agreement concerning the opioid-related work at Rosetta, a long shuttered advertising agency. Bringing close to almost 3 years of discussion, this exceptional charge had a net impact of $165 million or €152 million in 2023 P&L. For memory, 2022 non-current items included the disposal loss from the exit of our Russian operation for €87 million. Taking all this into account, the group net income was at €1.312 billion in the full year, up 7.4% versus 2022. Let's now turn to the following slide, which presents our simplified P&L down to the operating margin. As I already mentioned, our operating margin rate was stable compared to last year at a record high, 18% with €2.363 billion. I will detail the different components in the next page. Let's begin with the FX and perimeter effects, which were negative 20 basis points for the full year. So the comparable 2022 margin is 17.8%. Personnel costs were down 60 basis points in percentage of net revenue. This was primarily achieved, thanks to a dynamic management of group resources. In particular, we managed to contain organic net hirings at circa 3,700, which is about half the pace of organic growth of the group in 2023. We also added 1,800 new hires largely through our Practia and Corra acquisition, while strongly decreasing our freelancer costs as per the plan I shared with you last February. This is reflected in the bridge by the 110 basis points reduction in freelancer costs. This cost discipline allowed us to absorb wage inflation as well as variable remuneration that remain at record highs. Indeed, variable remuneration, including bonus and share-based incentive, stood at €540 million, only marginally down in euro compared to the level of 2022 that included an exceptional one-week bonus for about €50 million. When it comes to restructuring costs, the increase of 20 basis points reflects the localized adjustments that we've been making on the group organization to adapt it to the current macro environment. Please note that 2023 restructuring cost also up compared to 2022, represent less than 1% of net revenue. Now, let's turn to the non-personnel cost of the group. First, we have posted an increase of 80 basis points of other operating expenses as anticipated, reflecting the increase in travel and client-facing meetings, but also an increase in our IT spend and R&D projects. This is notably -- this notably includes a large portion of the first tranche of our AI investment plan for €25 million. Second, depreciation improved by 60 basis points, driven by the continued benefit from our actions to reduce our real estate footprint over the last few years as well as an increasing use of SaaS software that are directly expensed as I've just described. As a result of all this, our operating margin rate amounted to 18% in 2023, up 20 basis points compared to its comparable 2022 level, excluding FX and perimeter and stable versus 2022 reported. Let's move to our headline net financial expenses on the next slide, which improved by €106 million, beginning with the interest on net financial debt, which is a positive €78 million, improving by €95 million compared to 2022. This was largely due to a higher remuneration on cash balances at variable rates, while our gross debt is at fixed rates. This improvement was actually stronger than what we anticipated a year ago, reflecting the persistence of high Central Bank rates across the year. Interest on lease liabilities improved by €8 million to reach €79 million, reflecting the reduction of our real estate footprint. The other lines being non-significant, these results in €20 million headline net financial expenses versus €126 million last year. Now, income tax. Reported income taxes stood at €415 million. This slight decrease mostly reflects the impact of a lower effective tax rate compared to 2022, combined with the tax impact of the Rosetta settlement that more than offset the impact of the rise in profit before tax. To calculate the headline income taxes of €573 million, we are adding the noncash elements of our P&L, i.e., the tax effect on amortization of intangibles, on impairment and real estate consolidation, as well as the tax impact from the Rosetta settlement. Effective tax rate was 24.1%, down by 70 basis points compared to 2022, largely reflecting the onetime reversal of tax provisions following the conclusion of certain tax audits. Next slide, the headline earnings per share fully diluted was up 10% year-on-year to reach €6.96. This is an increase of 39% versus 2019. This strong growth reflects not only the improvement in our operating margin, but also the reduction of net financial charges and our effective tax rate that I just described. Finally, it's worth mentioning that the average number of shares on a diluted basis is stable versus December 2022 exactly as we committed. This materialized our decisions to prevent shareholders from dilution by, first, suppressing the scrip dividend as announced in February 2021 and seen that buying shares on the market to complement the managers' long-term incentive plans. Moving to the next slide, free cash flow. Let me go through this chart from the left to the right. Our reported free cash flow before change in working capital reached €1.547 billion. This includes the net cash out of €148 million from the Rosetta settlement, corresponding to the €152 million P&L charge that I've just described. Adjusted for this exceptional cash-out, 2023 free cash flow came in at €1.7 billion, fully in line with our guidance. It also includes €107 million TCJA transitional tax payment related to 2022 and paid in January 2023 that we already mentioned a year ago. When excluding those 2 items that are exceptional by nature, our free cash flow came in at €1.8 billion, which is an underlying increase of €102 million versus 2022. Next slide, use of cash. In 2023, change in working capital was a small €8 million outflow. This actually came in ahead of expectation, thanks to a better-than-expected performance at year-end combined with a strict control of overdue. Acquisition, including earn-out and net of disposal, amounted to €174 million. This amount is broadly similar to H1 and included the 3 acquisitions made for Publicis Sapient that I described in July, namely Practia, PS AI Labs and Corra as well as Yieldify for Epsilon. Let me add some color on this. As you know, we have not fully used our M&A envelope in 2023. The reason is that while we identified several bolt-on targets, a number of them did not meet our expectations of value creation for the group. But as Arthur will describe in the 2024 capital allocation priorities, this does not mean that we won't pursue all the bolt-on targets this year. On share buyback, we have €189 million net outflow following the completion of the repurchase of shares to cover LTI plans. Other noncash items represented a negative €165 million, largely coming from the change in earn-outs and buyouts, fair value of cross-currency swaps and the currency translation adjustment on the balance sheet due to the USD to euro ForEx. As planned, dividend was paid in July, resulting in a net cash-out of €735 million. Overall, as a result of those variations, we further reduced the group net debt by €275 million at the end of the year compared to December 2022. Moving to the following slide for the net financial debt. With the improvement of €275 million that I've just described, we closed 2023 with a net cash position of over €900 million. The average net debt on the last 12 months is €432 million, an improvement of about €250 million compared to last year, in line with our guidance of circa €400 million. Including leases, this represents a leverage of 1.0x EBITDA, an improvement versus the 1.2x in 2022. Before leaving the floor to Arthur, let me finish with a few words on our 2023 dividend. Together with the Board, we are pleased to propose a dividend per share of €3.40 at our next AGM in May. This would represent a payout of 49% at the top end of the group financial policy and is an increase of 17% versus 2022 or 42% over the last 2 years. Like last year, this dividend will be fully paid in cash. This concludes my financial presentation. And now, I give you back the floor, Arthur.

Arthur Sadoun: Thank you, Michel-Alain. As you have seen, in 2023, we have extracted ourselves from the pack. I would like now to focus on the question that many of you are rightly asking. Is that sustainable? Meaning, do we have the ability to continue to outperform our industry in the years to come? The answer is a clear yes. We have consistently been ahead for the last 4 years, and we are clearly committed to sustain this momentum in 2024 and deliver 4% to 5% organic growth. This actually means we should grow twice as fast as the industry average in net revenue. Let me now break that down with concrete facts. First, thanks to our revenue mix with 1/3 in data and technology and our differentiated go-to-market in Media, we have been outperforming our industry on organic growth for the last 4 years. Since 2019, we have grown plus 21% organically, about 800 basis points ahead of the industry average over the same period. This gap has only been increasing in 2023. The U.S., where our model is the most advanced, has grown plus 24% organically, while globally, Publicis Sapient deliver plus 29% and Epsilon plus 33%. Overall, the group has been growing twice as fast as peers over the period, with a CAGR of plus 4.7% since 2019. When it comes to new business, thanks to our go-to-market, we topped industry leagues year after years, including again in 2023, far ahead of competition, demonstrating and gaining market shares. We clearly built a track record of growth, but also on financial KPIs, consistently delivering the highest financial ratio over the years. This was again the case in 2023 with our margin 250 basis points above the industry average. At Publicis, our strong financials are supporting our growth, not the other way around. Thanks to our platform organization, we are able to generate efficiencies that allow us to invest a record level in our people today, far above competition and accelerate in technology, particularly on AI. As you know, we invested €8 billion in data and technology, driven by AI, with Sapient and Epsilon, plus another €1 billion over the last 3 years in bolt-on acquisitions such as CitrusAd or Profitero. In 2024, on the top of selective M&A, we will invest out of our P&L an additional €100 million in AI as part of the 3-year plan to train and upskill our people and shift the group organization to an intelligent system as we detailed in Jan. This OpEx investments will be fully balanced out by internal efficiency gains with a natural impact on margin this year. Second, we are confident that we have what it takes to continue our momentum in 2024 and sustain our 4-year CAGR despite very strong comparable and still a challenging macroeconomic environment. We anticipate outperforming the industry for the fifth year in a row, delivering 4% to 5% organic growth, with an operating margin at 18% and a free cash flow between €1.8 billion and €1.9 billion. At the lower end, we have a very solid 4% that we intend to achieve despite ongoing macroeconomic challenges, which affect classic marketing spend and delayed business transformation projects. What makes us very confident on the 4% is the strength of our marketing transformation offering, notably with first-party data at the core of our Media operation. Epsilon and Publicis Media together represent circa 50% of our revenue and are connected in a unique way to help our clients succeed. This will be strongly accretive to our growth again this year. Organic growth for the year could reach 5%, assuming an improvement in the global macroeconomic conditions in the second half of the year. Concretely, this will imply less cuts in classic advertising and a better performance at Publicis Sapient, should clients regain confidence and resume their CapEx spend on business transformation in the course of the year. When it comes to the start of the year, we anticipate to significantly outperform the industry with the Q1 organic growth within our full year guidance despite the high plus 7.1% comparable base last year and still a challenging macroenvironment. Finally, let me address our capital allocation for the year. Building on our record 2023 and our solid guidance for 2024, our capital allocation priorities allow us to increase our shareholder return, while continuing to invest in our growth. This year, we will spend close to €900 million in cash dividends, which is a 17% decrease over the previous year. It corresponds to a 49% payout ratio well above the industries. Additionally, we will launch a share repurchase plan of circa €200 million to cover remaining LTIPs, delivering on our commitment to stabilize the group share count. Finally, we anticipate investing between €700 million and €800 million in selective M&A. This will help accelerating our shift to an intelligent system. We will further expand our expertise, particularly outside of the U.S. in first-party data to nourish our core AI in technology and new media channels to reinforce personalization at scale and in Publicis Sapient engineering capabilities. We believe that our capital allocation is the best use of our cash as it allow us to maximize shareholder return, while continuing to invest in our transformation and our growth. Over the last 4 years, we have delivered a total shareholder return of 160%, which represents a CAGR of 27% that is twice as high as the second best performer in our industry. As you have seen, thanks to the very hard work of our team, material investment and the trust of our clients, 2023 will stay as the year where we extracted ourselves from the pack, both from our direct peers and from the main IT consulting firms. We have been clearly outperforming on organic growth while maintaining the best financial KPIs and investing in our people and technology. We are committed to sustaining our outperformance in 2024 with a very solid 4% to 5% organic growth. At the same time, we will continue to invest in our people and in building capabilities, particularly in AI that will take us into our second century. I would like to end this presentation by thanking our clients for their trusts and again, our people for their hard work. Thank you all for listening. And now with Michel-Alain, we are ready to take all of your questions.

Operator: [Operator Instructions] The first question is from Nicolas Langlet with BNP Paribas.

Nicolas Langlet: Congrats on the solid results. So 3 questions for me, please. First on Sapient. Would you say that the business has now reached the trough and we should expect a sequential improvement for that? And do you think the business could potentially return in more normative growth rate at the end of the year? Secondly, on Epsilon, trend was again very solid in H2. Are you looking to maintain that trend in first part of the year? Is there any specific driver you expect for '24 for Epsilon? And finally, on M&A, so you have increased the M&A outlook for '24. Is that increase related to a catch-up after a quiet H2? Or you've seen more opportunities on the market at the moment?

Arthur Sadoun: [Foreign Language] Nicolas, thank you. A lot to unpack here. I guess we'll start with Sapient, go to Epsilon and then we can conclude on the M&A because, by the way, it's the right track record is, because we made the Sapient acquisition and the Epsilon acquisition that we can now focus on bolt-on acquisition. On Sapient, a couple of important points there to come back on your question and how the momentum will come back. First, it's important to note that since we repositioned Sapient in 2019, Sapient has been a very strong growth driver for the group. We grew over the last 4 years by 29%. We are delivering 3% this year, which when you look at the comp of 2022 is actually a solid performance. In 2022, we were at plus 19% and you have seen that in the different areas. And when you know, and this has been said by all Sapient competitors in the IT consulting world, that our clients are definitely in a wait-and-see attitude, meaning it's not that we are losing accounts. It's not that we are not winning. It's just that they are waiting to spend in terms of CapEx in their business transformation for the macro to get better. You understand that the 3% and compared to Sapient peers is actually what we believe a very solid performance. Now when you look at 2024. First of all, we believe, and this is why we're hearing again from the leader of the market and other in the IT and consulting firm, that client will continue to be cautious on the spend. But despite this context, we believe that we have touched the low point in Q4, meaning that we believe that Q1 should be sequentially improving while remaining negative. And although it is too early to give you a full color as you asked for the full year, we definitely expect Sapient performance to turn positive in the course of the full year, I guess, with the other IT peers, but this is what we're going to see again in the coming months or quarter. Now that doesn't change anything to the confidence we have in Sapient and how strategic this asset is for us. And I'm not going to spend hours on that as you have asked 3 questions. But I mean, it's very important to understand that none of our clients will stop investing in their own transformation if they want to continue to grow. And so business transformation investments will come back when there is a bit more of confidence. If you look at what we presented 2 weeks ago on AI, hopefully, you got also our strategic is Sapient to bring together what our clients are asking now, which is marketing transformation with CMO and business transformation with CIO. And when you look at the unique position of Sapient there, again, we feel confident for the future. On Epsilon, look, it's a great story of acquisition and integration. You remember when we made the acquisition, we said the future is about personalization at scale. The future is about identity. At the time, we didn't know that third-party cookies will disappear, but this, of course, has accelerated the wish of our clients to have their own data and make sure that they can create a direct relationship with customers. I found it pretty funny, all the prediction about, is Google going to get rid of their third-party cookies faster sooner or later? Honestly, this is not the question anymore. Every of our clients have understand now that they can't be dependent on cookies anyway. And so we are with Epsilon after, I guess, 3 years of double-digit growth now with an asset that when connected to Publicis Media is performing way better than what we were expecting. You might remember at the time when we made the acquisition, we did it on the assumption and the multiple of the growth between 0 and 3, we are at double-digit growth. Maybe on M&A, Michel-Alain, you can say a word about 2023 and I'll add something about 2024.

Michel-Alain Proch: Yes, sure. Sure. So indeed, Nicolas, for 2023, we had an envelope between €500 million and €600 million. Pretty much at the end of the first semester, we closed about €200 million. And in the second part of the year, we looked at several targets in different areas, but none of them were actually meeting our performance and valuation criteria, as we have, as you know, a very strict financial discipline. So we didn't execute any of this bolt-on in the second semester.

Arthur Sadoun: Yes. We are very picky here. Again, what is interesting for us in the bolt-on is people and IP technologies. And we look for a reasonable size that we can again plug with an Epsilon or Sapient, sometimes with Publicis Media, also in production with Creative, but it has to be an add-on. I mean, I think, it's interesting to see that if you look over the last 3 years, we spent roughly €1 billion in bolt-on acquisition that has been growing 40%. And the things that we are looking at, and this is why we have been very picky last year is, not only it has to fit with our strategy, not only it has to show a potential for growth, but it has to be at the right price. And we are not ready to pay things that are too expensive at the moment. And this is why, again, it has been slower than we were expecting in 2023, and we feel confident for 2024.

Operator: The next question is from Laura Metayer with Morgan Stanley.

Laura Metayer: Congrats on the strong quarter. Two questions for me, please. The first one on your organic growth guidance. So it's lower than what you achieved in 2023. What makes you think you wouldn't be able to grow as strongly as in '23, even at the top end of your guidance? Is it mostly because of Sapient? Or is there any other reason? And then secondly, can you talk about how your data products differentiate from the marketing products based on first-party data that the large digital platforms offer?

Arthur Sadoun: I'm not sure I really got the second question. Could you give a bit more color what you're looking for here?

Laura Metayer: Yes. So I think Google and Meta have been announcing some marketing products for their clients that leverage the first -- their first party data. And I just wanted to kind of understand a bit more how -- what Epsilon offers differentiate from what these platforms offer basically?

Arthur Sadoun: So I'll go first on this one as Google and Meta are partners, but the big difference is pretty simple. In the case of Epsilon and Publicis Media and Publicis is in general, our clients own their data, which means that every time they are investing with us, everything they learn about the consumer goes back to them. While within the Google garden, everything you learn can, obviously, be shared. So that's a big difference. Now there are some nuances there that I won't detail on that call. But this is a big thing for us is we believe that as it represents almost 50% of investments, walled garden will be extremely important, and we will continue to work with them as our competitor does very well. I mean, it's important for us to have this very strong relationship and continue to build on their scale. But the belief we have, which is unique to Publicis is that if you don't start to have a direct relationship with your customer, would it be only to stay a bit less tomorrow on paid media and more on our digital ecosystem or being able to link what to invest with business outcome and make sure that you build what we call the data goodwill. We believe that we have a very strong advantage when it goes out. On our guidance, honestly, and I'll come back on the detail. But to make a first comment, 4% to 5% is in line with our CAGR, as you know, and we've been very consistent for that. We don't look that much of our performance on a year basis. We look at the journey we had since COVID, and more importantly, since we truly transform Publicis. And so not only it is in line with CAGR, but it is continuing to perform and outperform the market despite what is now very high comparable. We grew at the double pace of our competition on the 4-year basis and 500 basis on this year. And in a macroeconomic context that is still super challenging. We are not dismissing the fact that the context is very difficult. The difference, we believe, between us and our competition is that by shifting from a communication partner to a transformation partner, we are talking to clients that despite the difficulties they are countering still need to continue to invest with people that can come with new solution for a new world. And by the way, this is why we feel so strong about the 4%, is that although, as I said, clients will still be cautious when it comes to CapEx and maybe you have a point here, Laura, which is we are not assuming Sapient to be accretive of our growth this year. Although, we don't know how long it will take this kind of wait-and-see attitude that all of the other IT consulting firm are experiencing, we know that our client will accelerate on personalization at scale. And we know that 50% of our revenue in Epsilon and in Publicis Media will still be very accretive for our business in 2024. This is why, again, if you want to cut a long story short, if things doesn't materially improve in terms of macro, we feel the 4% is very strong. And as you have seen, I think what we said in Q1 is super important. I think that starting the year not being end loaded is super important for us. But what you should take out of that is that the 4% is very solid, and the 5% could be achieved again if the macro improved in H2.

Operator: The next question is from Adam Berlin with UBS.

Adam Berlin: Can I ask a couple of questions on M&A first then a question on Epsilon? On the M&A, obviously, you made the decision to increase the envelope this year. What I'm trying to understand is -- first question is

Arthur Sadoun: Wow, that's a lot. Thank you for that. I'll start with the first one about M&A and further accelerating our growth. Hopefully, you will agree with us that we have tried to manage expectation and regain the trust of our investors over the last 4 years by making sure that we don't overpromise things, okay? So to be clear, for the moment, we believe that 4% to 5%, which is our CAGR is a very strong performance. Most of it maintaining the best financial KPIs of the industry. And so the acquisition we are doing, which is roughly to strengthen our existing capability, particularly outside of the U.S., which hopefully also answer your question on Epsilon, meaning first-party data acquisition outside of the U.S., meaning new digital media like retail media outside of the U.S. or engineering capabilities for Sapient. We are doing all of this to continue the momentum. And if at the end of the day, it resume on more growth, fantastic. But again, we -- our transformation is behind us. We are definitely outperforming our markets when it comes to organic growth and all financial ratios. For us, it's about making the demonstration that we can sustain this performance, and we are very confident on that. And then if we can do better, we can do better. On your question about acquisition and what is our plan for the future between, I would say, M&A and share buybacks. Maybe I'll take a minute -- take a step back actually and tell you what has been the 3 pillar when it comes to our shareholder value creation since 2020, because maybe just going to give you a bit of perspective. I'm going to try to be concise, but that's important because the question you're raising is very important. I think that over the last years, we have done a way better job to give you a clear vision on how we're going to allocate our cash for the year, which is what [MAP] didn't get today. It is always around 3 pillars and it will be around 3 pillars. First, we have a dividend strategy. We have increased significantly our dividend over those years. As you remember, we have stopped applying the discount for payment of dividend in shares. We have suppressed the scrip dividend in 2021, which was a very important thing. And we have consistently increased our payout ratio to the highest of the industry today at 49%. I mean, we are talking about an increase of 70% of our dividend, returning more than €2.2 billion over the last 3 years. The second thing is that we have stabilized the number of shares, again, €200 million this year. We have introduced this kind of active share repurchase program that is having an impact on our cash, because we are talking about more than €0.5 billion of share buyback to this effect. And finally, and that conclude to your question, hopefully. I mean, investing in our capabilities through bolt-on is something that we believe is highly strategic. I told you, in the last 3 years, we have grown by 40%, thanks to that, and we have improved also our offer that has helped to win new business. So we believe that we have the right balance between dividends, as I said, share repurchase and investment in our capabilities. And then as I said before, this has allowed us in the last 4 years together, total shareholder return of 160%. It is 27% on average over 4 years, which is twice as high as the second best performer of the industry. So we're going to continue to play with those 4 pillars and continue with the transparency.

Operator: The next question is from Adrien de Saint Hilaire with Bank of America.

Adrien de Saint Hilaire: Well done on those impressive numbers and outlook. I've got a few questions, if you don't mind. First, maybe a bit of a left field question. But Creative is something a bit of a revival in your business, which I suppose is driven by the strong growth of production. Just wondering if you could comment on the underlying profitability of production versus legacy Creative. Sticking on the topic of profitability, I know you don't really break out the profitability of each business. But can we have a sense of where Sapient and Epsilon are standing today? I know you've got an integrated country model, but some color there would be much appreciated. And then maybe third question is, Arthur, what's your expectation in terms of market share gains and potentially big reviews in Media in 2024? Do you think we'll see more of the likes of Pfizer that we saw in '23 or is there going to be a bit of a pause here?

Arthur Sadoun: Thank you very much, Mr. Hilaire. I'll start with the Creative. First of all, we have what we believe is a strong performance for what it is, which is Creative with a low-single digit after our performance that was good last year. So we feel good about how we got there. And as you said, it is partly due to production. What make us very confident in production and in the fact that it's going to be a growth engine that we will be able to differentiate from our peers is that production as media, by the way, is going to be about Data and Technology tomorrow. I think the big things we have seen in the last 5 years is how do you link data with media and deliver personalization at scale. The next big question is going to be how do you link data with production, thanks to tech and be able to deliver product -- content that is truly personalized. I don't know if you have seen our Wishes, but that's a great example on how you use Data & Technology and particularly GenAI to make sure that you deliver personalized message to 100,000 people. That, for us, is not only exciting, but we believe a source of growth. Now, it's extremely difficult. It's going to take time and this is why we stay cautious at this stage. Do you want to take the question on profitability?

Michel-Alain Proch: Yes, sure. So I mean, in terms of profitability, just reminding a bit the different element that we've given in the past. Media is accretive to the group profitability as you all know. Epsilon, when we bought, it was actually below the group standard, and after the work we've done in the last year is now in line with group. And Sapient is below the group margin of 18%, but have been improving every year in the last 3 years. And finally, I make the link with the -- it's the question you had about production. So production is indeed a part, it's representing 25% of our pillar production and creation. This 25% is growing faster than creation. And indeed, production has a profitability which is below creation. So basically, the improvement in Sapient, the improvement in Epsilon is compensating the fact that the production development is having a push-down on the creation margin. And that's the reason why we are at a stable 18%.

Arthur Sadoun: On the market share and review. So first, on market share, yes, we are planning and our objective is definitely to gain market share again in 2024. As we are planning to double roughly -- to grow, sorry, roughly at the double of our peers, it should translate into market share. On the review, as you know now, we are not disclosing, not discussing any new business anymore. What I can tell you is that, yes, there will be some big pitches. They are in the press at the moment. What maybe can be helpful for you is there is nothing that is a defense pitch at Publicis that could have an impact for 2024, which means that it's one of the reasons why the 4% is so solid, too, is that I'm touching wood because you're not going to like what I'm telling you, but we are in a business where you can always lose an account. And so it could happen tomorrow. But for the moment and for the year, there is nothing that will have a material impact on our growth in 2024. So only opportunity to grow with some opportunities that are very serious for us.

Operator: The next question is from Lisa Yang with Goldman Sachs.

Lisa Yang: I have a couple as well. Maybe on the margins, could you maybe give us a bit more color in terms of your assumptions to get to flat margin? Obviously, we know about the additional €100 million in AI investments. But given, obviously, the strong organic growth, like maybe you can talk about the other potential headwinds that would prevent margins from increasing? And just like over the coming years, like we think about '24, '25, '26 and onwards, how do you see margins evolving especially with all the efficiencies you can get from GenAI and basically your superiors of organic growth? That's the first question. The second one is on the share buyback. Could you maybe just explain a bit more -- elaborate on why you decided not to increase your share buyback? I understand your pillars and your approach over the last 3 years, but your cash position is significant, and you will continue to increase given your free cash flow generation. So what will make you reconsider a share buyback and how would you be thinking of returning future excess cash? Is it just mostly through increasing the payout, which is already at close to the top end of the range? Or yes, just how you're thinking about the possibility of a buyback in the future? And third, probably just housekeeping question, given the increased M&A envelope, what contribution from M&A we should expect this year on the top line? And could you also get a guidance on net interest and tax?

Arthur Sadoun: Thank you, Lisa. I propose you take margin and contribution. And then I'll say well on share buyback, right?

Michel-Alain Proch: Yes, sure. So Lisa, let's take the -- I would say, the financial assumption question. So on the structure of the P&L, if I begin with this for 2023, personnel costs represent, as you know, 65%, 65.0% and non-personnel costs 17.0%, and that bring you to the 18%. So we are going -- one of the -- maybe you've seen that in 2023, we've spent a bit more than €100 million, €110 million of severance because we've decided to make the localized adjustment that were required on the basis of the change of our business model at the end of this year in order to have a good start in 2024. So we are expecting less severance in 2024, between €80 million and €90 million. So it's about 0.2, it's 20 bps of improvement on personnel costs. And in the other way around, you remember that we are investing €100 million into AI in 2024. So €100 million is about 80 bps. And this 80 bps, it's invested about half of it, so 40 bps into personnel expense, so hiring people, hiring specialists, training and so forth and so on. And another 40 bps in non-personnel costs which is mostly the cost of the cloud infrastructure plus the licenses and the licenses and the SaaS expense that we need. So concluding on this, you should see a slight bump-up of the personnel cost to 65.2. If you do the 65.0 plus 0.2, minus 0.4, so 65.2. And when you look at the non-personnel costs to answer your question, so you begin with 17%. You add up 0.4 and we find our platform of organization that we have underlined several time is allowing us to find 60 bps of efficiencies, which is bringing us to a non-personnel cost of 16.8%. So obviously, let's be very humble on this. I'm not precise at 10 bps. But overall, that would be the dynamics on personnel and non-personnel costs. Maybe Arthur, I take the net -- I think you had a question about interest income. So on interest income, you see that our headline this year was €20 million, an improvement of €100 million compared to 2022. It's entirely coming from an improved remuneration of our cash due to the higher interest rates, both on the dollar, by the way, and on the euro. So it's €100 million more than 2022. For 2024, we've taken as an assumption that there will be a decrease into the Central Bank interest rates. We think this decrease will happen. Obviously, I don't have a crystal ball here, but it happen midyear, something like this for an average between 100 bps and 125 bps. And if you factor this on our basis of cash, it brings you to a headline, which should be instead of 20 should be more around 50 to 60. I'm sorry. I'm sorry, -- I am not -- have I -- no, just -- have I answered everything or you had something on tax. I'm not sure. There was tax, too?

Lisa Yang: Yes, just the guidance on tax and M&A contribution to the top line?

Michel-Alain Proch: Okay. So I finish up on tax, Arthur.

Arthur Sadoun: Okay.

Michel-Alain Proch: So we -- it's -- so 24.1% this year, which is a bit exceptional and we closed a certain number of tax audit positively. So it had a positive impact on the ETR, but you should take as an assumption 24.5% for -- as a proxy for 2024. I'm done.

Arthur Sadoun: Not to -- on your question on share buyback and not to go back again to our pillars and what we are doing, particularly with our share repurchase program to stabilize account. I will make you may be a larger answer, including margin because at the end of the day, our logic on share buyback is the same as margin. They are -- we are thinking about those 2 things in the same way. We are always trying to find the right balance between investing in our growth, which is our priority and the right return to shareholder. And if you look at how we stand in front of you today, I think we have found the right balance between delivering a growth that is a double of our peers and a TSR that is twice as high as the second in the market. So again, do we have the opportunity to deliver a bit more margin in the future? We said that next year, our plan will be slightly accretive. Should we do more share buyback? Again, we are giving a first step here. We think that we have made progress over the year. And that at the end of the day, what matters the most for us is how can we grow faster, how can the return to our shareholder be higher? And I guess on both fronts, we are coming with a strong set of results this year.

Operator: The next question is from Julien Roch with Barclays.

Julien Roch: [Foreign Language] 2 questions. The first one, Tech, Media and Creative have been at roughly 1/3 for a couple of years, where clearly, they're no longer at a 1/3 because they have different growth rates. So it would be amazing if we could get the exact percentage of revenue for Sapient, I think you gave it at the 9 months at 18%. So Sapient, Epsilon, Media, Creative and One Publicis, i.e., the small countries because they're not Creative, their mix. So that will be 5 numbers. I know you don't give them, but that would really help us forecast Publicis better. So if you don't ask, you don't get. And then I'm sorry, Arthur, again on the returns, you were very clear. But with your very precise guidance on free cash flow, dividend, buyback and M&A next year, you basically not going to have a change to the metrics. So you are on 0.2 net debt to EBITDA, and I understand it's a balance between investment and return to shareholders, but 0.2 strikes me as very, very conservative. So what do you think a company like Publicis should be in net debt to EBITDA? And why do you think 0.2, which is very conservative is the right answer?

Arthur Sadoun: I'm going to give it -- first, I'll let Michel-Alain answer on both, and then I will do an answer on both, okay? Come on, come on [indiscernible].

Michel-Alain Proch: Sounds good. Okay. So I'll begin with the leverage. So on the leverage, Julien, you know that we are looking at our debt, which is the financial debt plus the debt of the lease compared to the EBITDA. And as you've seen, we have a deleverage from a leverage, which was 1.2 to a leverage, which is 1.0. With the capital allocation we have for 2024, we do not expect more deleverage, okay? So we expect this 1.0 to be stable, which is boiling down into an average net debt, which is going to be roughly the same, obviously, depending the variation of working capital from 1 month to another, but should be pretty much the same. And I mean we are not giving a leverage target per se but we feel comfortable as a structure with a leverage at 1.0. So that's the first point. On the split of each practice, the weight of each practice in revenue, indeed, we're not giving the detail in a percentage, and I know you're disappointed by this what -- and indeed, we've said that Sapient, we've given the number of Sapient. So I'm going to give you the number of Sapient, which is 16% for -- in weight on the total of the group revenue.

Arthur Sadoun: Yes. A couple of points on that. First, we said very clearly that Media plus Epsilon was 50% of our business, super accretive, actually double-digit growth for 3 years, if I'm not wrong now. So if you add to that the 16% of Sapient, that will recover growth in the future only because clients will have to invest in their business transformation, and we have a fantastic offer. You understand the reason of our confidence to continue to outperform our peers and deliver strong growth over the last year. So hopefully, this helps a lot. What I would tell you also is that -- and again, we are not naming any pitch, but you will be surprised of the number of media pitch we are winning because we are infusing some creativity into it. So although you will see the revenue stream, increasing in the future in some areas and maybe decreasing in others, it's going to be more integrated every day because at the end of the day, this is our strength. Our strength is to connect data with Creative, Media and Technology like no one else. This allow us to truly bring -- to bring transformation to our clients. And so again, we are treating all of those areas with the same level of care and investments. Coming back on your cash allocation question, again, we are always trying to look at the best balance between returns and M&A. I talked about that. But we also have to admit that we want to be prudent with our data. This is in the gene of this company. But having said that, and let me repeat it again because, Julien, you know us for a long time. You look at the significant progress we have made in the last 3 years in order to increase our return to shareholders. I think you can see a path that is pretty encouraging for the future.

Operator: The next question is from Christophe Cherblanc with Societe Generale.

Christophe Cherblanc: My first question was on headcount. Can you give us the headcount at the end of '23? And what are the plans for -- at least for Q1? And again, on headcount, only 18 months, 2 years ago, we were speaking about the Great Resignation. It seems staff turnover is coming down everywhere. So what is it at Publicis? And is there a staff turnover level, which is too low for you, meaning that you're losing some flexibility to adjust your skill set? That's the first question. And the second question is on CapEx. So Michel-Alain mentioned the rise of SaaS-related expenses. So does it mean that the lower CapEx that we saw in '23 is going to be maintained over '24?

Arthur Sadoun: Thank you very much. We're going to start with CapEx and then take the headcount question because I will add on to what you have to say on this one. So I'll let you start with CapEx.

Michel-Alain Proch: Okay. So on CapEx, you are right. We are using more and more SaaS licenses, SaaS and the OpEx, which are not going into CapEx. So the -- I think that the level of 2023 is particularly low, but having CapEx in between €200 million to €220 million is a good proxy. On the headcount. So on the headcount throughout the year, we have recruited -- net recruited 3,700 people with more in the second semester than in the first. And roughly the first 2 quarters was around 700, 600, 700, so you see relatively low. And then after in the second semester, it was about 1,200 by quarter -- Q3, Q4. Your question about -- so it's bringing the total headcount of the company to 102,000 people. In between end of 2022 and end of 2023, you've got the 3,700 that I mentioned, plus 1,800 that we have acquired, mostly through Practia and the Corra acquisition we bought -- which brought the largest part of the headcount. Finally, in Q1 2024, we are expecting to have a net recruit, which is going to be around the one we had in Q3, Q4, so about between 1,200, 1,300 something like this.

Arthur Sadoun: I will add just a couple of points there. I mean, we can talk about data and technology all day long, but we are still a people business. And one of the things that makes me super confident for the future is the level of attractivity we are having in the industry today. We are hopefully at the moment, a safe place and an exciting place at the same time, which is pretty rare. We talked a lot about the 3,700 people that we hire at the time that people are laying off, but we didn't insist enough on our bonus pool. I mean we have sustained a very high level of bonus pool, a bit more than €0.5 billion, if I'm right. And we did that consistently, and we are continuing to do that. And we don't consider this as an ability to adjust on anything. This goes first because our people goes first. The last thing is obvious is with 4% to 5%. Of course, we are in a trend to continue to hire. Having said that, of course, we do that very selectively and we are upgrading our bench months after months. If you ask when we meet with our manager, we said, look, there are only 2 priorities. It's a very simple business. It's our clients and our people, and we should bring the same level of care to both.

Christophe Cherblanc: And so on the staff turnover, is it down sharply versus 2022?

Arthur Sadoun: Versus 2022, no, no, no, not really. It has stabilized. The Great Resignation is done. I would say the big topic is not this one. The big topic is return to the office. As you have seen, we have been pretty clear that we want our people to come back. I guess, we are the only one in our industry that did that, but this is absolutely critical for us because we want to preserve the culture. We want the youths to continue to learn. And we want to make sure that by getting together, we can accelerate our growth. So I don't see any problem on the staff turnover getting down. I do see a challenge for our industry to bring people back, particularly in the U.S. and it's not the case in Europe or in Asia.

Operator: The next question is from Conor O'Shea with Kepler Cheuvreux.

Conor O’Shea: Just 2 remaining questions. First question on client sector spend. So you mentioned that, Arthur, that TMT was the only sector down in 2023 in terms of spend and in common with your peers. With their improvement in their own top line over the last few quarters, are you seeing any improvement? Or is there expectation of improvement in 2024? And conversely, on the luxury goods side. I think we've had some of the major players suggesting they will rein back their spend, which has been increasing very significantly in the last few years. Are you seeing any of that? And to what extent are you exposed to that? And then just a follow-up question on the -- just a small part of your business, the Middle East and Africa, but one of your peers had sort of very weak organic growth numbers there. And in your press release, the margins fell quite significantly, seem to be very volatile 1 year to the next. But can you give us any insight as to whether the geopolitical situation there is having any impact on your business?

Arthur Sadoun: Again, MAP, maybe you take a bit of both starting with the client sector on that list and then I'll recap.

Michel-Alain Proch: Yes. No. So I think on the client sector, we're definitely not in the same situation as some of our competitor. In 2023, as you have seen, I mean, yes, we've seen a decrease in TMT, but a slight one, which at the end of the day, bow down to minus 3%. The reason behind this is simply because we are not selling the same services. I mean, it's clearly what we are selling is very useful to the transformation of our clients. So that's for TMT. So we don't expect a great rebound of TMT in 2024. But at the same time, we are cautiously -- let's say, we are cautiously confident. On the dynamic by sector, I think you'll carry on to see our large sector increase grew during 2024. I'm mentioning, obviously, health care, automotive, food and beverage, retail and non-food consumer products. So in non-food consumer products, that's where we have our -- the luxury sector that you were mentioning, on which, again, we are cautiously confident. So I think that's on the sector. Maybe I addressed right away the point about MEA. So in MEA, we have a very, very strong operation, which is extremely well integrated between marketing transformation and Sapient. It's, I think, one of the best model of operation we have throughout the world. We have opened some very large clients in the area. And the reason why you see a pressure on margin is very simple. It's due to Israel and the situation in Israel, in which basically with the triggering of the war, we suddenly had, as you can imagine, drop into revenue. And as we've done with previous conflict with Ukraine, we obviously decided not to adjust our resources, keep everybody on the payroll and make sure that we help them the most possible to go through this difficult time.

Arthur Sadoun: Middle East and Africa is a very dynamic region for us. As MAP said, it is truly advanced in our model because we started from scratch in areas like Sapient. So we build it from the ground. And by the way, the one that has built that over the last 7 years will be our new CFO starting tomorrow. So he is finishing this today and starting his new job tomorrow, but that's Loris Nold, who has built this operation over time with great teams over there. On client spend, I'm not going to add a lot, but I will still because I think we need to always do a better job on that, insist on what MAP said about the difference of offer we have with our competition, okay? Tech, telco. Telco is really about personalization at scale now. And the fact that we have Epsilon plus media plus our ability to deliver content that is personalized, allow us to mitigate the downturn in this area better than anyone else, at least when you look at our numbers. So I think -- hopefully, this answer your point, Conor, and we're going to move to the last question, right? That's the last question.

Operator: The last question is from Tom Singlehurst with Citi.

Tom Singlehurst: Yes. It's Tom here from Citi. First things first, a big thank you to Michel-Alain, Alessandra for all your hard work over the last few years, and I know you've got great successes in place, but I think you'll be much missed. I thought I should say that to begin with. But 2 questions. One, on the phasing of growth through the year. You're quite clear that you expect the 1Q 4% to 5%. But then you talk about or at least alluded to maybe a slightly stronger second half. I'm just wondering whether we should read anything into what that means for the second quarter, I suppose the way you would square it is maybe the second quarter gets a bit tougher, but I'm conscious I might be over-reading that. So a discussion of phasing through the year would be useful. And then the second question on M&A. I mean if we look at what's driven the success of the group in the U.S., it's that sort of combination of scale, capability and the sort of integrated approach to go-to-market. I'm just interested in whether you feel that in areas like APAC and LATAM, you have the scale that's necessary to really dominate in the event that those markets sort of rebound a bit more aggressively. So can you talk about M&A and sort of geographic sort of holds in the group? That would be very much appreciated.

Arthur Sadoun: Tom from Citi, you have stolen my conclusion on MAP and Alessandra. So -- but it's fine. I'll come back to that later on. Look, I'll start with APAC and LATAM. Honestly, it is 2 regions where we feel very confident. And if you look at our track record and performance, particularly in APAC and particularly in China, hopefully, you will agree with me. I think we have made interesting and significant investment for the region in LATAM. We've been technology on first-party data that position us well for the future. Now, we have to be very honest. It's a small part of our business and the growth is only having a small material impact on our overall business. So -- but we feel that we have a good offer. We are winning stuff. Again, we are not naming any client anymore. But if you look in the price, you will see that we have a couple of significant wins there. So I feel good about that. I think we should have spent more time on Asia and particularly on China. What is happening there is pretty remarkable for Publicis. And the job that has been done by Jane and the team in the region is very, very strong. I mean, let's be clear. China is not a big country for us, but it is in -- most of our clients are the second country, our global clients and sometimes the first. And so when you look at our new business track record in this region, our ability to stay positive and continue to grow despite the difficulties that the countries have been confronted to. And by the way, looking at the leader in the market and the complexity it is to grow there, again, we feel that not only we have the right team, but to come back to your question, we have the right capabilities, okay? And so we feel good in both regions. Now again, I don't want to oversell you anything. What makes the biggest part of our business is the U.S. and Europe. It's great to see, by the way, that Europe is growing double digit for the second year in a row. It's great to see, and this is something that is going to be interesting to look on overall business, the dynamic that we continue to have in the U.S. despite very strong comparable Q4 and this is a very good news, I guess. And so we feel good about that. Let me maybe take your phasing on growth as a wrap-up. I'm not going to come back on 2023. I guess, we talked enough about that. Let's go on 2024 and I'll address -- answer on your question. We have a guidance from 4% to 5%, with, as I said, a very solid 4% and Q1 within this guidance, to come back to your question. This is particularly important when you know that the macroeconomic context is not improving and that the comparable is pretty high, okay? I am not going to give you a guidance for Q2, but you should not see anything wrong about Q2. For the moment, we are on a track record that make us confident for the year. Now, of course, we're going to try to shoot for the 5%. But for the 5% to happen, we need again to see less cut in classical advertising, and it's way too early to say. And we need our clients at Sapient, but as any other IT consultant to understand that it's time to reinvest. And the way this happened now, which, of course, there will be almost no lag between the moment of the macroeconomic situation gets better and the fact that they invest because the plan are there is that the CapEx needs to be spent, make us confident that if we can get an H2 that is a bit beyond guidance. In H2, we could get to the 5%. And so we have done on purpose to give you a guidance that is pretty short. What -- now that is pretty narrow, not only because, again, we knew exactly what I'll deliver to get there, but more importantly, because, again, we feel confident for 2024, thanks to our model and thanks to our people. Look, you've stolen my conclusion, but I would like to thank again Michel-Alain for those 3 years. I would like to thank Alessandra that has been with us since the difficult time of Publicis. I mean, I don't know if there is an IR that has such a growth track record over the time you've been there. So you came with us at the moment that many people who are doubting us, and you were there all along the journey. I wish you both very good luck with your new job. I mean, one will be in London, the other one in Switzerland. I don't know which I prefer, but I'm not going to make any comments on that call. What I can tell you is that we're going to both miss you a lot and we are very grateful for everything you've been doing. We'll come back to Jean-Michel. It's not like it's a new thing. Most of you know him. Loris is not that far. It's pretty funny because we decided and we're close to that because I think it says a lot about Publicis. We are focused on execution. Our transformation is done. Big acquisition is done. We are about to outperform the market consistently year after year and increasing the shareholder return year after year. And so the fact that Loris is still today working on his former job, while having prepared this transition for the last 3 months and be ready to meet some investors tomorrow is exactly what we want, which is focus on our business, focus on our clients and focusing in bringing you the best return. So I thank you very much for listening, and I guess, I will see some of you in the coming days.