Good evening, everyone, and welcome to Ipsos 2023 first quarter results. This conference call it will be hosted by Mr. Ben Page, CEO of the group, and Mr. Dan Lévy, CFO of the group. As a reminder, this call is being recorded. During the call, you will be on listen only. Later on the call, during the Q&A session, you will have the opportunity to ask question. This can be done by pressing star one on your telephone keypad to register your questions at any time. I would now like to turn the call over to Mr. Ben Page. Please go ahead, sir.
Thank you very much, Ben. I'm Ben Page, the CEO, and it's great to be here to talk you through our Q1 results. I think before we get into the detail, I think it's just very important to remember what I said back on the 15th of February when we released the full year 2022 results, and that is that the path of revenue recognition during 2023 at Ipsos will be completely different to 2022, and that is, of course, what we are now seeing. Let's just look at the numbers. We have positive momentum, but negative re-revenue at this point. First of all, we have EUR 532 million of revenue. That is the second highest figure that Ipsos has ever achieved.
As my colleague Dan, our CFO, will explain, we are facing a cliff edge comparator. As a result of that, the revenue is down 2.8% because of this cliff edge effect of the major COVID contracts, which were present in 2022, but of course ended at the end of March 2022. There's a very, very tough comparison in this quarter, which then gets much easier for the rest of the year. If you put aside the COVID contracts, the organic growth net of those is 0.6%. The order book, which is basically the revenue which is visible and confirmed but not yet booked in the system, and Dan can explain the technicalities on that, but it's visible for this year.
Net of the COVID contracts is currently up 3.3% and has been building during this quarter. March was up 6.4%. We saw a deceleration at the end of last year with uncertainty. We are seeing an acceleration during Q1, but it is a very volatile situation out there. I thought the fact that the economists talk about the Mona Lisa economy, or the, you know, however you look at it looks different, was quite interesting. We'll come back to that during this presentation. Overall, we have good momentum, and I'd like Dan now to take us through just some of the underlying factors with the adverse effects on the comparison and some of the other things that are going on. Dan.
Thank you very much, Ben. Obviously, as Ben just explained, the decline in Q1 revenue is first of all due to very strong adverse base effects, which were actually expected as we announced it in February for our full year results. The first adverse effect is obviously the fact that we had a very strong Q1 last year with an organic growth above 12%. We had more than 20% growth organic in the Americas in Q1, and we had double-digit growth in China before the lockdown that hit China in 2022. Obviously this is a huge base effect which hits now our revenue in Q1.
The second base effect is actually the cliff edge effect of the large COVID contracts, which as you will remember, ended at the end of Q1 last year, which were in the revenue of Q1 2022, and which are not anymore in the revenue of Q1 2023. If you strip out the effect of this COVID contract, organic growth would be in Q1 of +0.6%. In addition to these two base effect which were expected, we are facing in Q1, two other headwinds. The first one is a kind of wait-and-see attitude from our major tech clients in the U.S. These clients are reorganizing, which means that some of the clients, Ipsos, of the contact that Ipsos has with them has changed.
They are changing their strategy. All of this means that some of the projects, which they forecast were actually delayed. As you see on this chart, the revenue on the big tech clients in Q1 is down by EUR 7 million. Of course, there are a lot of needs that remain from these clients, because we do a lot of things with them. We do trackers, we do mystery shopping, we do corporate reputation, and we are going to keep on doing that. Also we have new needs from them, particularly on AI, because we are currently working with some of the big tech clients on their private version of generative AI models. There are a lot of opportunity for growth going forward.
Currently in the Q1, we have this cliff edge linked to the reorganization. The second headwind we have seen in Q1 is actually linked to the rebound in China. In China, the rebound of that, of activity is clearly seen in our numbers in the order book. In the order book, as you can see, is growing organically since January, by more than 13%, but it is not seen yet in the revenue. The revenue are down by 3.9% because the Q1 revenue are still impacted by the lockdowns.
It is important to see that, when you have a recovery in the way we recognize the revenue, the recovery is always seen first in the order book and then is transformed into revenue because the recognition of revenue at Ipsos is basically from the start of the work till the end of the project.
There is always a lag between order book and revenue when there is a rebound in activity, and this is actually exactly what we see this quarter in China with a revenue down and a very strong order book. Maybe more generally speaking, I think it's important to note that the Q1 at Ipsos is the smallest quarter in revenue, usually, as opposed to the other quarters. As a consequence, Q1 revenue is not a very, is not very predictive of the full year performance, whereas order book is a far better indicator because usually at the end of March, we have more than half of the order book of the year, which is already booked.
Despite the adverse base effect that we described before, as Ben said just before, the first quarter of 2023 is the second-best ever performance. As you can see on this chart, we have grown by 9% in Q1 as compared to 2021. If to an extent, if you do the bridge above the cliff edge effect of 2022, we have grown by 25% organically as compared to 2019. I think it is important to show that because it shows the resilience of Ipsos business model, it is always important to look at a medium and long-term performance rather than to focus only on the quarter-by-quarter results, which can be volatile as we see in our Q1 results.
If we now turn to the breakdown, revenue breakdown by region, obviously, we see a decline in EMEA by 6% organically, which is basically linked partly to the war in Ukraine, but more importantly by the end of the COVID contract. If you strip out the effect of this COVID contract, or we'll have an organic growth by of more than 1% in EMEA. Organic growth in America was overall 1%, with quite different situations between Latin America, which grew organically by 9% in Q1, and North America, which was overall stable, impacted, as we said before, by the reorganization in some big tech clients.
But again, this kind of stability in revenue in North America has to be put in perspective with the very strong Q1 we had last year, because globally, Americas grew by 22%, as you can see on the slide, in Q1 2022. It's important to note as well that our the order book in Q1 in the U.S. is positive with a 3.3% organic growth. Asia Pacific, we have a very good momentum in India, growing by more than 20%. But obviously, Asia Pacific suffered from the situation in China and the end of the zero COVID policy. China is the biggest country here in Asia Pacific. I'd explained before, we are seeing a recovery in China.
In terms of audience now, our performance in the clients and employees and consumers research activities remain broadly stable in Q1. Again, after a very strong performance in Q1 last year, you can see on this chart that it was respectively 20% organic growth and 17% organic growth. Again, the reorganization in big tech clients waited on the performance. We have, on the other hand, very good performance on our Brand Health Tracking activities, consumer experience activities, and data analytics. Ipsos.Digital as well is doing very well, and Ben will come to that in a few minutes. Citizens is decreasing by 30%. That's also expected because of the end of the last COVID contract.
If you take out the last COVID contract, then the public sector would grow organically by 8%, which I think shows again the need for the government in a multi-crisis world to inform public policy decisions with reliable data. Finally, our doctors and patients activity is down by 5%, again, with a strong comparison to last year, which was 11%, and also due to delays in decision-making in some pharmaceutical clients. Now over to Ben for some highlights on the business and for the outlook for the year.
Thanks, Dan. The United States, as you've heard, the order book is up 3.3% over the quarter. Just to give you a bit more detail on that, because the United States is our largest market, and indeed it's the largest market for the research industry generally. The tech sector is very mixed. You've got retrenchment that is well-publicized in several of the largest players, and that's causing people to reappraise programs, et cetera. At the same time, it's worth saying that one of the largest tech companies in the world has massively increased its spending with us, and I think it's actually close to our annual budget for that client. It really does vary. Net-net, spending is down in Q1.
We can see, though, visibility on big tech companies spending with several contracts that have been confirmed, yet to be signed, coming through in the next quarter. We're expecting an acceleration there. We've also, of course, got double-digit growth in some of our offerings that we're prioritizing. Things like market mix modeling, that's up 25% in our marketing management and analytics business. Our work on ad testing in the United States, again, driven heavily by Ipsos.Digital, where we've automated a lot of that work. That's up 13%.
Ipsos.Digital itself in the United States is up 35%. Finally, the other thing that we've seen, which also explains this slower growth this quarter, is the tension in the American government between the Senate and Congress, which is making government federal spending slow down and decision-making slow down. Again, these very major contracts that are definitely confirmed, but are being commissioned on a quarterly rather than annual basis because of potential cuts in government or freezes in government spending while the Republicans and the Democrats agree a budget. That has slowed down the confirmation of contracts, but we have no concern about those in the medium term for the rest of the year. That's the United States catching up after delays.
China, as we've discussed, is up 13.5% in terms of its order book as it bounces back. Although a lot of that has come through in the last month, and therefore, isn't recognized in terms of revenue. That's important. We can see growth across our business in China, both in terms of food and beverage, in FMCG, in telecoms, and also interestingly, in automotive. You'll know, you may have read about the very strong competition in the EV market in China, which again, is driving demand. We've also interestingly got rising demand from Chinese companies wanting to go global. Although the death of globalization is often talked about in the media, actually, China is a fully integrated into global economy in most aspects.
Those businesses still want to grow outside China, and we can help them. Finally, Ipsos.Digital itself, our automated solution now available in Mandarin, and again, growing rapidly. That's the situation in China. Again, we are expecting the recovery, perhaps coming a little bit slower in revenue terms than we might hope, but certainly there very visibly in terms of confirmed orders, which will be booked as revenue in 2023. Ipsos.Digital itself, we're aiming, as we said, for revenue of EUR 100 million by the end of this year. Currently, the revenue is up 36%, and is again, like the rest of our business, has accelerated during Q1.
Things that are helping drive that growth, multi-language availability now for Switzerland and Belgium, very important. The platform being live now in Mandarin, but also coming live in Japan, in April. After that, we will move to Spanish for the rest of Latin America. Alongside expanded geographies that we're able to offer the solution in, we're also, of course, adding new products all the time. The next two that are planned to go live in Q2, pack testing, very important for our innovation business, and that will go live in Q2, and creative early-stage testing, and that will also go live in Q2. As one of our biggest healthcare client puts it, a great option for us, we can write our own survey. We're also supported by the account team when needed.
The language and the results are understood by marketing. We get benchmarks that we need. The reporting is easy, just the click of a button. Again, we're comfortable with the development of Ipsos.Digital. It's an important part of what we do, and we will continue and have a clear roadmap for the next few years of putting more and more of our products onto that platform, you know, again, offering us, you know, faster results, more client control, and generally something that we enjoy working with our clients on. Overall, we can see in our order book a year that is in line with our guidance. As Dan has already commented, the order book at this point in the year is a better predictor of outcome looking back historically than is our revenue in the quarter.
On average, for the last 5 years, we've had 52.5% of our full year actually achieved revenue visible in the order book at the end of Q1. This year, it's 53%, based on an organic growth of 5%. Because of that, I think all other things being equal, this is what we are seeing, and that means that it sustains our 5% growth guidance at this point of the year. Having said that, it is, you know, it's a volatile world out there. The work that we do, looking at consumer confidence, both for the world's largest banks, but also for media organizations around the world.
You know, you can see here, if just looking at the global aggregate data from our monthly tracker, you can see the COVID effect of and the V-shaped recovery. Then, of course, and I think this is the, you know, the series of things that have surprised central bankers, the war in Ukraine, nobody much could have predicted that, maybe, with the knock-on energy effects. All of that, of course, mounting to a cost of living crisis in many countries. You can see Latin America recovering, and that's partly explaining our very rapid growth, continued rapid growth in Latin America. North America feeling less confident than it did before the pandemic. Europe, Asia Pacific, still, you know, still not quite recovered from before the pandemic.
It's this general volatility which you see in the stock markets, the reactions to things like the Silicon Valley Bank, I think just means that it is still an uncertain world. You know, as I've said many times in these meetings, uncertainty is the only certainty in many ways. Having said all that, in terms of our order book and what we can see booked, the trajectory that we can see taking place in our major countries, we're confirming at this stage organic growth of 5% and an operating margin of 13%, around 13%. I know you will have some questions which we'll come to. We have a AGM on the 15th of May, our annual general meeting. There'll be some more details there.
On the 14th of June, Dan and I and some of my new colleagues who you have yet to meet. We'll take you through how we are going on our long-term plan for 2025 and some of the changes that are going on inside the company to try and improve productivity, make things faster, et cetera, et cetera. With that, Dan and I are very happy to take questions. Thank you.
Ladies and gentlemen, as a reminder, if you'd like to ask question, press star one on your phone keypad. To withdraw your question, please press star two. The first question comes from the line of Emmanuel Matot calling from ODDO. Please go ahead.
Hello, Ben. Hello, Dan.
Hi.
Hi.
Three questions for me.
Oh.
Three questions. First, if I remember well, Ben, you were expecting in February a very low organic sales growth in Q1, but not a negative figure. Why Q1 was below your initial expectations? Which sectors should recover the fastest in the coming quarters? Second, in case the organic sales growth will not recover as expected, would you be ready to take quick action to protect the EBIT margin? My last question is about the deal between NielsenIQ and GfK.
Yeah.
The tie-up is likely to face a full-scale EU antitrust investigations with regulators demanding asset sales in return for clearing the deal. Could that be an opportunity for you to buy some of their assets in retail and consumer measurement, or it is not strategic businesses at all for Ipsos? Thank you.
Okay. Interesting questions. I think it's, I think it's fair to say that as you know, we were expecting revenue to be lower than the previous year, but not to be, you know, not to see a negative effect in that way. I think the part of the reason is that when I think about the business, I tend to think about the AOT, as we call it, the order book, which is a much, you know, for the first part of the year, really is the way in which to understand how the year is turning out. Because basically the revenue, as I say, is not a very strong predictor.
Nevertheless, yes, it is a surprise, and I think part of that is this combined effect both of the slowdown in the COVID contracts, but also then the knock-on effects of the restructuring in the tech sector. We do have some very major orders in the tech sector that will come through in the next quarter. If we don't see the growth that we need in terms of revenue, as the year pans out, we will be taking, you know, tough action on cost and payroll. We're actually employing fewer people at this point in the year already than previous years because by managing attrition, et cetera. Absolutely. You saw our ability to do that in 2020.
Absolutely, we will manage our costs to try and protect our margins as much as we can without damaging the business. In terms of GfK and Nielsen, it depends what they have to sell. We were very satisfied with our purchase of part of GfK back in, I think, 2018. You know, never say never. Let's see what they're talking about. We have very little debt, and obviously we are interested in acquisitions that fit with our longer-term strategy.
Yeah. Thank you very much, Ben.
The next question comes from Conor O'Shea, calling from Kepler Cheuvreux. Please go ahead.
Yeah. Thank you. Thank you. Good evening, everybody. A couple of questions from my side as well. Just the first question just on the growth and understanding completely the multi-year comp in Q1 was on a different level to other quarters. Just wondering how we should look at the negative growth. I think you've said in the past, Ben and Dan, that, you know, two-thirds of your contracts are, you know, index-linked to inflation or short, or short-term contracts with current pricing. Are we seeing in Q1 at least, you know, price increases on most of your contracts but much lower volume? That's the first question.
Second question just on the TMT, the tech sector comments which makes sense, just wondering if, how that ties in with, you know, EMEA being the weakest region. Understanding was most of your tech clients are in the US. I know there's the COVID contracts which are mostly in EMEA, wondering if there are any other factors explaining that. Just in terms of the activities, can you just explain, I might have missed this at the start of the call, what's going on in your kind of, you know, healthcare unit down 5%. I think we've heard from some of the other peers in this group that, you know, that growth has come off quite a lot post-pandemic.
just wondering what you're seeing there.
Well, Dan will help me with anything, any more details, but let's take those from the top. We're continuing to put through price increases. In a sense, I mean, we just, it's funny, I've just been, I was just looking at average price increases being put in by different markets. We're not publishing that, but we are basically putting through price. We continue to put through price increases. That in itself hasn't become a worry. I think, you know, overall volume is the thing that we need to look for. The TMT work in terms of Europe, actually, there is a lot of work for the tech players.
Okay.
Yes. Yes, there's a lot. It's a very large component of the United States. There's actually also a major component in across EMEA. Particularly, remember, the UK is our second largest market globally on its own. The other thing that's going on in EMEA is that we are in a rebound situation in Germany, and it's obviously one of the largest markets in Europe. We've recently appointed a new country manager, Dr Christoph Preuß. He is in the business in the process of restructuring, reorganizing and refocusing that business. That I think explains part of it. You know, that is certainly a factor, plus the ongoing war in Ukraine. On healthcare, the situation, I mean, obviously we had good growth yesterday, last year.
There is a slowdown with some of the major pharma companies, post the pandemic, post COVID. Some of them have been beneficiaries, others are reorganizing. That, again, is not as dramatic as in the tech sector, but it is leading to, again, some delays in decision making. You know, we will be sort of, in a sense, responding to that. It doesn't change my longer term confidence in the healthcare sector at all. We need to really make sure that we've got the right people in the right places. Dan, I don't know if you want to add to any of that.
No, maybe just one point on prices. It is clear, I think that Ipsos has been successful in increasing prices in 2022 and facing the inflation wave. We are obviously continuing to do that every day. The point is that because of the inflation globally is decreasing a little bit, even though core inflation is not decreasing, it is true that it is a bit tougher after 2 years to keep on increasing prices. We are doing that. The discussion with the client can be a bit tougher than it used to be in the first place.
And we-
Okay.
Yeah, pay rises obviously are under pressure. We're going to be pretty disciplined about that. You've got the full year effects of May pay rises last year now visible in our books this year. We will be very disciplined on that.
Okay, understood. Just, sorry, just one follow-up on the, on the comments you made, Ben, on a lower headcount.
Yeah
in Q1. Is that versus December or versus March last year?
Versus December.
Versus December. Roughly how much in percentage?
I don't think we're publishing at the moment.
Okay.
it's.
A little bit lower
managed, let's put it that way. Yeah.
Okay. Okay. Understood. Many thanks.
Thank you.
We currently have no question coming through, so as a reminder, if you'd like to ask a question, please press star one now. We still have no question coming through, so as a final reminder, if you'd like to ask a question, please press star one now. We have one question calling, coming from Peter Testa, calling from One Investments. Please go ahead.
Hi. I was just trying to ask a bit about the link between pipeline, or intake and revenue. You give a comment of accelerating in March on the signings.
Yes
... after a period of less execution, maybe of bookings into Q1. What sort of, you know, time lag would you expect between the pickup in bookings and the pickup in revenue? Because of the slower Q1, will that be short? Do you expect it to be quicker? Associated, I have a follow-up for that, please.
I think it pretty much depends on the project. Typically, we have an average maturity of project, which is a few months, four to five months. Typically, if you have a project of three months, for instance, the recognition of revenue would be from the start of the project till the end of the project. It would be over the three months. If it's a project of one year, it would the revenue recognition would be over the year. Typically, on average, because we have a three to five months average maturity, you would expect to see the impact of the order book in revenue to lag by a few months. That's typically the average.
Again, I mean, it's important to understand that if you do a project with Ipsos.Digital, that's pretty much a 24 or 48 hours project. For others, big projects like public affairs or tracking, it could be a year or many years project.
I mean, in one country, we won EUR 20 million of work, but of course it's spread over the next three to five years. It's, you know. That's just one team in one country. Yeah, that's the challenge. I think, you know, the next three to five months, it should be.
Yeah.
You know, the bookings will be visible.
Yeah.
Okay. The exit rate will be, say, visible as you, in revenue terms, as you exit Q2?
We should certainly see a pickup.
Yeah. Okay. The other sort of associated question is that, you know, you've been good at trying to isolate COVID work, but, you know, there's been other elements which have been harder to define. I mean, obviously in medical pharma clients, there's been a bit of, you know, blow back and the COVID and some of the government work, there's been budget that's been reallocated. It's a bit harder to understand, you know, how, you know, that work, that budget might get reallocated now.
I was wondering if you saw any sense on some of the customer segments which were spending a fair bit on COVID who aren't, the extent to which they're now, you know, making progress and reallocating that budget into other Ipsos projects, other data projects which are important to them, whether you've seen that now, whether you expect to see that later.
Government is, as Dan Lévy has mentioned, is up 8% putting aside the COVID work. We can see actually in some of the larger countries where we have our public affairs and government business concentrated, we can actually see a pickup in demand and particularly for very major contracts. Government, I think, is fairly clear. What probably has been more of a surprise in a way is the sort of disruption in both the tech sector and the, you know, the...
I mean, I think the challenge for the tech players is that they saw accelerated growth during the pandemic and thought that there was some new paradigm that had arrived, and now they've returned to growth and they still employ many more people than they did in 2019, but it's not quite the growth that they were expecting, so they're reappraising their model. Generative AI is also a massive disruptor for them. It's a massive exciting opportunity for us in terms of applying it across our business. Finally, healthcare, I, you know, again, I think it's a very mixed bag depending on which clients you look at. That is, you know, that certainly is slowing things down.
again, we will make some changes there, and we should see that pick up.
Okay. The last question I have was just on the comments about employee, but on the other hand, on the margin you talked about, you know, mix and productivity. I was wondering the extent to which the employee count is reflecting business mix changes as much as any particular leaning on productivity at this stage. I mean, obviously, you know, the less people, clip boards, more data and more strategic tools have very different headcount requirements. Whether that's driving it mostly.
It's not so much that as, trying to adjust our general desire to keep pushing on productivity as a business.
Yeah. Okay. Thank you very much.
Pleasure.
The next question comes from the line of Stephen Benhamou, calling from BNP Paribas Exane. Please go ahead.
Hello, guys. Thanks for taking my question. Just one, just quick one, please. About your CMD in June, you're mentioning the fact that you will update your plan. Do you mean, is it, I mean, a focus on a business perspective? Or would you update your guidance on a quantitative basis? Thank you.
It's not, I mean, at the moment, we're not planning to change the guidance for the year or to do so on June 14th. That day is really just about talking about some of the parts of the plan, like our plans for acquisitions, the progress on acquisitions, the progress on investments in technology and automation, further digitization, and overall how the three-year or four-year strategy announced last year is playing out. I think, you know, there's a lot of work going on beneath the surface. We will perhaps detail some of that and some of the innovations there. It's more that than a business update, which we'll obviously be reporting normally on Q2 in July.
All right. Very clear. One last question, please. It's about M&A. You're mentioning that you've identified a lot of targets in several sectors. Should we expect an acceleration of the M&A strategy in the coming quarter? Is it more back-ended loaded for the end of the year? How should we expect your strategy to be delivered?
Well, we're following the same strategy, but these deals, particularly where you're talking to owners who are selling you their baby, can, you know, take a long time. I think, as I've said before on these types of calls, when I sold my business to Ipsos in 2005, I think it was around 4 years from the first launch to the final completion of the transaction. Now that may be a bit of a long courtship, but it makes. It's just an example of the, of why the predictions are, you know, making firm predictions I think is probably not sensible. Yes, we have a lot of LOIs out at the moment, you know, letters of intent.
We will see what comes through, and we'll keep you updated, you know, absolutely as and when. We can talk a bit more about the detail on that perhaps on the 14th of June.
All right. Thank you, guys.
Thank you.
Thank you.
Another question coming from Conor O'Shea from Kepler Cheuvreux. Please go ahead.
Yes, thank you. Just a couple of questions as there are a few on the line. Just, you may have given this number at the start of the call, but on new services, we gave the growth on Ipsos.Digital of 36%. Can you give us a sense of what the level for the overall group of new services was in the first quarter? The second question, just in terms of client group, I don't know if you mentioned CPG, how that's trending, any change in sort of behavior or activity noticeable in that sector for now? You know, that would be very useful to know. Thank you.
On new services, we introduced the new services category in this reporting back in 2015. I think one of the things, and we have been faithfully updating new services in these presentations since 2015. We haven't done that this time because we're reviewing what is a new service. This is, it's pretty important because things that were new in 2015 really shouldn't, probably shouldn't be defined.
Mm-hmm.
as new in 2023. We need to, I think there's a whole range of things that are not in there that we need to put in there, and there's a range of things that we need to take out. We will update on that on the Investor Day in June on how we're.
Okay.
Defining that, and probably give you a bit more detail of composition, so you can see exactly what we're talking about. You know, generally, we have a, you know, there's a, there's a lot of excitement. The KnowledgePanel work is going well. We've launched that in more countries. This is, of course, a gold standard digital product that allows you to interview representative samples very, very quickly. That includes people who are not even online, where we install the internet in their house in order to get fully representative coverage of a country. It's very successful in America and in the UK. It's launched in France, Germany coming up, et cetera. We will. I think the bottom line is we'll update that on June 14th.
Okay.
Basically, steady as she goes. You've seen the profits. Most of those companies have made good profits. You've seen our beer clients in the news recently with improved margins, even where the volumes have gone down because they've been able to pass through inflation. I mean, I think we reported consumers were up 20% last year. It's only up +1% so far, the order book, of course, is further ahead, we will again have some interesting things to talk about on June 14th, I'd suggest.
Okay. I guess at that stage you'll go into a little bit more detail about, the sort of practical impact of what you can see from, AI's impact on the...
Absolutely.
on the industry.
I mean, I think, it's a really, really exciting time. We are working at speed and pace with hundreds of people across the company using generative AI to see how it can be applied safely and securely, respecting all privacy laws, et cetera. Yes, we'll update you on some of that, but it's moving pretty quickly, I think, is the bottom line. Actually, sort of quantifying that in a definitive fashion for you may take a little bit longer, but it is one of the most exciting technologies that I've seen. I mean, Often generative AI is as good as a graduate trainee, which from one of our Europe's finest universities with 12 months experience. Let's put it that way.
Means that we can foresee a lot of things in terms of client-facing business, but also internally, because generative AI can be very useful in terms of being more efficient on the way we script the questionnaire, on the way.
Translations.
report to the clients. Exactly. It's both external and internal.
Okay. Fantastic.
It needs to be. We need to make sure that it's applied, you know, consistently, safely, et cetera. That, obviously, you know, you can't put any proprietary information into ChatGPT because it's, you know, it's in the public domain effectively. We have, as I say, sandbox versions of some of the beta tests from some of the major producers of, or major tech companies that we're looking at at the moment. We should have more, a more sort of structured update on that, I think, on June 14th. It is really. I mean, I am, every week, I am pleasantly surprised.
Interesting. I just one quick, one fast last question?
Yeah.
Can you a sense of what, roughly what proportion of your revenues had come from, still come from survey-based?
Sure.
activity as opposed to observational?
Well, that's.
Other. Or other.
I'd say often that is an interesting observational versus. I'm not sure we have a statistic on that. We think that about 68% perhaps might come from surveys as opposed to observational work.
68? 68?
Just 2/3. Yes, 2/3.
Two thirds. Two thirds.
Yeah. Yeah. Yeah.
Okay. How has that trended say the last five years?
obviously the observational work is rising.
Okay. Yeah.
The survey portion is going down slowly. There's life in surveys yet. I think the key point, and this is, this is a serious one, it's that.
Mm-hmm.
In a sense, if you look at the media sector, you know, there is still print. Print is suffering.
Mm-hmm.
But it has a place. In our, even in our world, and it's very, you know, part of our very deliberate strategy is to maintain the ability to speak to all of humanity. As Google put it, a third of the world is not even online yet. We need to be able to reach everybody, and to do that, we need good offline capabilities in some markets. That's important to us actually because of, particularly because of the requirement often for governments to be able to reach properly representative samples. We, in the same way that the media space is fragmented, but nothing quite dies. Radio keeps going, you know. It becomes digital, et cetera. In this, you know, in our business, we're obviously digitizing more and more.
Online data collection rises every year, which is great because it drives better gross margin. Actually the ability to reach everybody, and that was a major feature, having that physical infrastructure to be able to do the COVID work, which was a huge opportunity for us. That's something that we won't abandon lightly.
Understood. Makes sense. Thank you. Great. Great clear.
Thank you.
Yeah, no further questions.