WPP’s first-quarter like-for-like (LFL) net revenue fell 2.7% to £3.2bn, worse than market expectations of a 2.5% decline. All regions posted LFL net revenue declines, with the UK falling at the fastest pace, down 5.5%.
WPP called out “elevated macro uncertainty in the near term” and expects these factors to continue in the second quarter, before improving in the second half.
WPP is seeing no direct impact from tariffs, and there has been “no significant change” in client spending so far.
Full-year guidance remains unchanged, expecting LFL net revenue growth of -2% to 0%. Underlying operating margins are still expected to remain flat year-on-year, before the impact of exchange rates.
The shares were broadly flat in early trading.
Our view
WPP’s had a soft start to 2025, with revenue falling faster than markets expected. This weakness is expected to continue into the second quarter, but WPP’s hopeful that a pick-up in tech spending and easier comparable numbers will lead to an improved performance later in the year.
At its core, WPP’s media agencies deliver products and services spanning all parts of the advertising and communication spectrum. It boasts some of the world’s largest companies as its customers, and provides them with analytics, paid advertising campaigns and PR. As an idea of scale, WPP boasts a global workforce of 115,000. That’s a lot of mouths to feed and can amplify the downside to profits when revenue dries up.
The group has had a laser-like focus on boosting its digital marketing offerings. The new company plan involves focusing on faster-growing end markets (like how to help clients succeed online) and technology. Hundreds of millions will be spent over the next few years, most of which will go on new staff, technology, including AI, and incentives.
Before it can reach a home stretch, it's worth remembering that WPP's agency business is still being nibbled away at, and it's turning to acquisitions to keep growth coming. The group's doing what it can to combat these challenges, including consolidating and streamlining its offering.
The sale of its stake in PR firm FGS Global brought in around £0.6bn of cash that was used to pay down debt levels, strengthening the balance sheet. That provides some wiggle room to invest in itself or make acquisitions should attractive opportunities arise.
WPP has seen no direct impact from the US-led tariffs so far. But if they lead to an economic slowdown and WPP’s customers need to rein in costs, advertising budgets will likely be one of the first things on the chopping block. There hasn’t been much change in client behaviours yet, but the picture can change quickly.
We’re also mindful of AI. This offers enormous opportunity for WPP, but also risk. There’s a chance the advertising and analytics landscape changes so fast that WPP is left behind if it doesn’t peddle fast enough.
WPP is working hard to try to future-proof the business. But progress hasn’t been as swift as some other names in the advertising world, which has seen WPP’s valuation fall well below the long-run average. Given the slow start to the year, there’s a lot of work to be done to meet full-year guidance, and we can’t rule out further disappointments.
Environmental, social and governance (ESG) risk
The media industry’s ESG risk is relatively low. Product governance is the key risk driver, alongside business ethics, labour relations and data privacy & security.
According to Sustainalytics, WPP’s management of ESG risk is strong.
The group has a board-level sustainability committee assisting in its oversight of corporate responsibility and sustainability matters. Advertising companies collect, analyse and process large volumes of sensitive client data, and there are often large fines in place for failing to comply with privacy or security regulations. WPP’s due diligence process includes a review of ethical risks, such as bribery, corruption, and human rights issues.
WPP key facts
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