Hello, everyone, and welcome to the Havas third quarter 2025 revenues conference call. The speaker today is François Laroze, Chief Financial Officer and Chief Operating Officer. Please note this conference is being recorded, and for the duration of the call, your lines will be on "Listen Only." However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing pound key five on your telephone keypad to register your participation at any time. Please note that three questions and one follow-up question are allowed for each analyst. I will now hand you over to your host, François Laroze, to begin the conference. Thank you.
Good evening, everyone. Thank you for being here today for this conference call regarding Havas third quarter 2025 revenues. I will start the presentation with Q3 and nine months' financial performance. I will then describe how confident we are in our business model and our challenger positioning. I will conclude with the 2025 full-year guidance that we have decided to sharpen upwards. Let's start with the revenue of the third quarter. We have delivered a revenue of EUR 656 million on this quarter, including 3.8% of organic growth. It's an acceleration of our organic after the first quarter of 2.1%, second 2.6%. To this organic growth, we have the addition of 1% of scope impact and - 3.9% of forex impact. We have also an acceleration of the negative forex impact, which comes half from U.S. dollar to euro conversion and half from Latin American currencies.
Overall, the growth of the group has been 0.9% for the third quarter. On nine months cumulative, the revenue is EUR 2.202 billion, including an organic growth of 2.8%, a scope effect of 1.2%, and a negative forex impact of - 1.8%. It's a 2.2% growth for the group on the nine first months. If we move by region, you see that on this third quarter, the performance mainly comes from the U.S., which has delivered a very high organic of 7.4%, but also Europe 1.9%, Asia Pacific 8.2%. After a low Q2, we have a bounce back of this region and - 4.6% on Latin America, reminding that the performance of the Q3 2024 of this region was extremely high, which explained part of this performance. In cumulative figures, all the regions have contributed to the growth of 2.2%: U.S.
5%, Europe 1.5%, Asia 1.6%, and Latin America still + 3.8%. In terms of M&A bolt-on strategy, we are continuing this strategy since the beginning of the year. We have already closed six deals since January 2025, and we intend to close another 2- 4 until the end of the year, which will lead to 8- 10 deals for the year 2025. This deal will complement our geography, our sum of expertise in which we want to accelerate. The organic performance of the quarter really illustrates our solid business model and is clearly the result of our challenger positioning within the industry. To deliver such a performance, we are confident on our retention, on our in-business and new business. First of all, our duty is to retain our existing clients, ensuring that we deliver a good level of service to the client.
And this implies continuous engagement of our teams at each level of the organization. We also develop our in-business performance, what we call also cross-fertilization of existing clients. Thanks to our integrated model, and you know that Havas has been a pioneer in integrations for more than 10 years, we develop more business with existing clients. Clients can be proposed a full range of services: data, e-commerce, customer experience, entertainment, and integration works very well at Havas. We have experience working together. In this last quarter, for example, we have been able to retain BBC in the U.K., Hugo Boss in Germany, or expand the scope of Reckitt during the third quarter. Retention in-business and the third pillar is obviously new business because we have to be extremely performing also in new business, knowing that our drivers are clearly, again, the integrated model.
Our operating system Converge AI, which accelerates the adoption of AI for all our clients, and obviously the level of excellence of our talented teams in creative, media, and health division. During this quarter, we notably won British Telecom Sentinel for SCI. Let's have a rapid focus on the performance of North America, which has been very strong, as I said earlier, 7.4% on the quarter, 5% in cumulative figures. It's clearly the illustration of the combination between in-business and new business. It's worth mentioning that most of the wins that we have achieved during this last quarter have been done at village level, meaning that we propose to our client the full scope of Havas services from media to data, including creative assignments or some others. Let's give some examples in the U.S.
with the one I described of Sentinel, which is a health company, an insurance health company, SCI, which is an education company, or CarBuddy, Morton Salt, or Standard Steamer in Chicago. We have also won Activision Blizzard at a global level based on the U.S., which is a single media assignment, but all the other assignments were village assignments with all the scope of Havas services. Let's have a few words on the new Horizon JV, which has been announced a few days ago, which marks a major strategic step for Havas. This new entity combines the strength of both groups to U.S.-centric global clients with international ambition. Horizon didn't have the capabilities to service its U.S. clients outside the U.S. They were lacking an international network. They have chosen Havas to partner with, Havas being able to service all these U.S.
clients all over the world to complement the U.S. assignments. It's only good news for Havas as it will deliver accurate new revenues, new profitability based on the results that we will share at the group level. A few words on our margin to tell you that we are still on our route to increase the margin quarter after quarter, still based on our top-line organic growth, aiming more profitable top-line. I was referring to in-business revenue, which are more profitable than the new business revenues. Always the cost management, and we are continuously working on our cost management, and we are especially focused this year and for the coming quarters on the headcount management as we want to maintain stable our headcount and being able to deliver more revenues with the same headcount thanks to all our profitability or our efficiency, partly due to AI.
Our M&A strategy, reminding that the acquisitions we make are always accurate in terms of profitability and contribute to our organic growth. After having tried to convince you in the efficiency of our business model, in the efficiency of our challenger positioning, we give you some indication of our guidance. Thanks to this quite strong third quarter, thanks to the vision we got on the last quarter, we have decided to sharpen upwards our organic growth for the full year and the guidance is now in a range from 2.5%- 3% instead of above 2% for the initial guidance given one year ago. Same for the EBIT margin, we were in the.
Sorry, everyone. Apparently, we lost the speakers. We can't hear them anymore. Let us find a way to reconnect them.
Ok, merci. Depuis combien de temps?
Je ne sais pas.
Merde.
We can hear you now. You can resume the conference. It just happened.
Can you hear me now again?
Yes, we can hear you. You can resume.
Can you tell us at what moment we have been t he transcript.
One minute ago.
One minute ago.
Yeah.
Maybe the most important one. I will start, and sorry if I repeat because I don't know where I lost you, to tell you that we were convinced by the success of our business model. We are convinced by our positioning as a challenger, and what we have decided to sharpen our guidance upwards on the organic growth of the full year and on the EBIT margin. The organic growth from 2.5%, from above 2% previously to a range of 2.5%- 3%, and the adjusted EBIT margin with an increase of 50 basis points. With an ambition of 12.9%, replacing a guidance in a range of 12.5%- 13.5%. The other guidance in pay-to-ratio short-term, pay-to-ratio mid-term, and adjusted EBIT margin mid-term are unchanged. Now, I listen to your questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. Note that three questions and one follow-up question are allowed for each analyst. The next question comes from Annick Maas from Bernstein. Please go ahead.
Hi, good evening. Very great set of results. Thank you very much for the call today. I have a few. The first one is you've won some new business. I guess most of it is going to impact 2026. Can you put the business wins you've done so far in numbers for next year? My second one is on M&A. You haven't really spent all your M&A envelope, I believe. How shall we think about M&A for the rest of the year? My third one is you just briefly mentioned headcount management that you expect to continue to do. Is that already included in the new margin guidance or not? Thank you.
Okay, thank you, Annick. On the first question, as you said, most of our wins will mainly impact 2026, even if we have some impact starting in Q4 for some of the clients. Nevertheless, we don't give any impact in million euros yet before the ending of our budget process. On the M&A envelope, you're right, below the forecast which I've given, 1.2%. We still have, as we said, from two to four deals to close until the end of the year. It will depend on our ability to close these figures. If we only close two, we will be below our initial forecast of 1.5%. It will depend clearly on the last two months in which we'll see, but we will be in a range between 1.2% and 1.5% impact of the scope on the whole year.
On headcount management, it has been included clearly in the new guidance as we have started this strong headcount management since the beginning of the year. Up to now, the headcount at group level has been very stable since January 2025, and therefore, we have already been able to deliver more revenues with the same headcount, which is our ambition for the coming quarters.
Great, thank you very much. I have one follow-up. Just Dentsu International might be sold or have some assets to sell. Would you potentially be interested in some of the assets that are within Dentsu International? Thank you.
Yes, yes. We know that Dentsu International may be for sale. We have not been contacted by Dentsu. We know that it's a very strong and big asset all over the world with a nice network, with some acquisition which has been done over the last two or three years. Clearly, Havas as a group does not project itself as a buyer for the entire international network. It would be too big for Havas looking at its balance sheet. Nevertheless, we remain very agile. If we were to be proposed some partnership or some disposal of certain assets, we certainly would consider that. We do not intend to study the network as a whole, but could be interested in part of it or in a partnership with some of the agencies of the network. We consider it a great asset.
Great. Thank you very much.
The next question comes from Julien Roques from Barclays. Please go ahead.
Bonsoir, François, bonsoir, Delphine. Congratulations on those great results. My first two questions are some numbers on FX. If current exchange rates stay the same, what will be the FX impact in Q4 in either euro, millions, or percentage? That's my first question. The second question is, can you give us some indication of financial cost and tax rate for the full year? Thirdly, on AI, which is the subject that people speak the most about on agencies, I wanted to know where you were with Converge and the work you were doing with clients. If you could give us some concrete examples of kind of AI-related work you were already doing for clients. Thank you.
Okay. Julien, thank you for your questions. The first one on FX, our forecast is that the FX would remain roughly at the same level as they are today. It will be a 4%- 5% negative impact on the last quarter compared with the 3.9% that we have had on the third quarter. That's our guess today, knowing that it's not easy for, it's quite easy for U.S. dollar. It's not as easy for the Latin American countries. On the financial cost and tax rate, we don't update the forecast we gave, and we are exactly in line with what we gave during the result of the first half, but we have not revised our forecast for financial and tax rates. On AI, we are obviously in motion for any AI subject. Now, AI is at the core of all our businesses.
All our 23,000 employees are working in one way or another with AI. We are really working as an AI, really, agent. We are building agents in most of our organizations. Today, we are working in all types of business with the support of AI. We have launched, it was disclosed in Cannes, but we have now invested a lot in our Vermeer product, which is AI-driven that helps the production of video very rapidly. We are working with our clients who are asking for AI answers. We are working in all types of assignments in creative, in media with the clients to use AI in our services. It is really at the core of our offer today.
Okay, thank you. As another follow-up, you said you didn't change your guidance on financial and tax. Can you remind us what the guidance is?
I will send you because it was not really a guidance. We just gave some figures at the end of the first half, and we have not revised, and we will send that to you.
Okay, thank you.
The next question comes from laura metayer from Morgan Stanley. Please go ahead.
Hi, François and Delphine. Thank you for taking my question. Two questions, please. On the joint venture you've announced, Horizon Media, can you talk a little bit about the concrete benefits that Havas is hoping to get out of it? I assume that one of the benefits is to gain scale in the U.S. in media. Can you please confirm that is the case? I have a question on the in-business opportunity. When you think about your clients, what would you say is the proportion of clients that do not take, you know, 100% of the services that Havas offers these days? I'm just trying to evaluate what's the potential upside from cross-selling the full suite of Havas to clients. Thank you.
Thank you. Thank you for this question. On Horizon, I would say that the main objective of Horizon Global is to propose to take advantage of U.S. clients which would like to extend their scope outside of the U.S. and proposing that through Havas network. Let's take two simple examples. If we have a new client who comes to the market with an international pitch, including U.S. and the rest of the world, today, Horizon can't propose any answer. Havas sometimes is not able to answer because of the lack of size in the U.S. By gathering our strength, our respective strength, we can go to this client and proposing to him the strength of Horizon in the U.S. and the strength of Havas outside the U.S. In that case, we will share all the revenues and all the results of the whole scope, including U.S. and outside the U.S.
The main outcome of it is the increase of our revenues and our profits coming from this kind of client. We have already two clients since the announcement, which has been done, I think, last week. We have two clients which are U.S.-based clients with international ambition, with international subsidiaries who came to us and telling us, "I would like to have you part of the pitch as Horizon Global." They know that Horizon Global means Horizon for the U.S. and Havas for the rest of the world. In another case, if it's just an extension of an existing client of Horizon, if Horizon has a client for a long time, we want to have a single offer all over the world. In that case, we will propose the international network, and we will only share 50% of the profit and revenues outside the U.S.
It's something that can only generate new revenues and new profits for Havas, knowing that we keep the ambition of Havas in the U.S. and that we will compete with Horizon for certain clients which are not in the JV. It's a very simple and should be very efficient and win-win system we propose. In terms of in-business, I think I see the question on the number of clients which are not already fully shared between all the expertise. There is still room for growing that if we take our top 30 clients, we have roughly half of them which have all the services and half who have not yet all the services. There is still room for growing, having some health clients that will move to media or move to PR.
We consider we have done not half of the way because we won't be able to have 100% of our clients, but we can do far better in the coming quarters.
Thank you. That's helpful.
As a reminder, if you wish to ask a question, please dial the pound key five on your telephone keypad. The next question comes from Nicolas Langley from BNP Paribas. Please go ahead.
Hello, François. Good afternoon, everyone. Just to come back on the JV with Horizon, do you have an idea of the revenue opportunity over the next 12 months? Do you see from the JV, or at least give us the number of pitches where the JV is currently part with? Looking ahead, what are the main KPIs you would follow to judge whether the JV is a success or not? What's the timeline for a potential expansion of the partnership to new geographies, new services, or more integration of your tech platform? Thank you.
On the JV of Horizon, we don't give any guidance on the revenues. As I told you, we have already, in less than one week, two clients that went to us, which doesn't mean we have won them yet, but they went to us considering that the offer of Horizon Global, gathering Horizon Media in the U.S. and Havas Media outside of the U.S., is very attractive to them. They consider that we can be really part of a pitch in which we wouldn't have been part, neither Horizon nor Havas, without this JV. We will see the type of ambition in the coming weeks, coming months. We'll be able to see what it can deliver, but it's clearly clients that are in a range from $100 million- $200 million or more of billings and with an extraction ratio to be defined.
If we win a client, that will be a mid-size to a large-size client. It could be very efficient in case we are able to win clients within the JV. On the second question, Nicolas, I'm not sure I caught you on the partnership.
Yeah, the second question is what's the main performance indicator you will follow to make sure that the JV is a success and you want to potentially expand it? What's the timeline to take that decision? Are you taking a cautious approach and it might take a couple of quarters or even years, or you might expand quicker the partnership?
No, no, I think we could have a precise view in the coming six months. We consider that if in the coming six months we have been able at least to participate to, let's say, more than five pitches or reviews together, it's a first indicator. Then we see how much we can transform and how much we can win. I would say that even on the call of the first quarter, we'll have a clear indication whether it works or not. Today, it seems to start quite positively with this, as I said, with these two clients which have called us and asked us to participate to the pitch. We know we will participate to the pitch. We have not won yet. We have to win. We are confident that if we win, we'll deliver profitable revenues.
It will be very accurate to revenues and profitability if we are able to win. Yes, it's a matter of months. I think that in four or five months' time, when we will announce the result of the full year and the first quarter, we'll have some flavor on the success of the JV.
Okay, thank you, François.
As a last reminder, if you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. We will wait a few more seconds for participants to manifest themselves. There are no more questions at this time. I hand the conference back to the speaker for any closing remarks.
Thank you for your attention. We are very pleased and thank you for your questions. If necessary, Delphine remains at your disposal for any follow-up and any other questions. Thank you and have a good evening to all. Thank you.