Good morning. This is the conference operator. Welcome, thank you for joining the Publicis Groupe Q1 2023 Revenue Presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and one at any time. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Arthur Sadoun, Chairman and CEO. Please go ahead, sir.
Thank you, Sherri. Bonjour, welcome to the Publicis Groupe Q1 2023 revenue call. I am Arthur Sadoun, I'm here in Paris with our CFO, Michel-Alain Proch. As usual, we'll take your questions together after this presentation. Alessandra Girolami is also here will be available to take all of your questions offline after this session. I will start this call by sharing our Q1 highlights. Michel-Alain will provide more details on our members, I will conclude with our outlook for the rest of the year. Before we start, please take the time to read the disclaimer, which is an important legal matter. Okay. In an increasingly uncertain global macroeconomic context, the strength of our model with our revenue mix, our go-to market, and our platform organization, gives us full confidence to deliver the 2023 guidance we set in February.
I would like to start by actually giving you a broader context about what we have delivered. After two years of double-digit growth, we posted a strong start to 2021. Our Q1 net revenue was up +10% on a reported basis. Organic growth was ahead of expectations at +7.1%. It is important to note that this performance came on the top of a very solid +10.5% organic growth in Q1 last year. We start to deep dive deeper into our Q1 highlights. In a market that will continue to change dramatically, we were able to capture, once again, the shift in client investment towards first-party data management, digital media, and commerce with, as you will see, a direct positive impact on our creative and media operation.
First, this was clearly visible in the double-digit performance of our activities in data and tech that together represent 1/3 of our revenue and were again this quarter accretive to our growth. Epsilon was up +10% organically on the top of +7% in Q1 2022, with solid growth across all divisions. Publicis Sapient continued to gain market share, with net revenue up +11% organically after +19% in Q1 2022. The relevance of our offer with real-time data and tech at the core was also visible in the rest of our business, with very solid performance of media and creative this quarter. Media grew high single digit organically, fueled by new business gain and after a double-digit increase in 2022. Creative sustained its solid momentum, with mid-single digit growth this quarter, thanks mainly to scope extensions, notably in production.
Let's turn now to our regions. The U.S., our largest geography, continued to post a strong performance this quarter with a +5.8% organic growth on the top of a +8% last year. Epsilon and Publicis Sapient stood out by contributing again significantly to the country growth. Europe confirmed the very strong dynamic of the previous quarters. The region posted +12.3% organic growth on the top of a +14.9% last year. This performance was largely driven by the U.K., our largest country in Europe. Organic growth was +24%, led again by outstanding members at Publicis Sapient, but also the contribution of global 2022 media wins that we actually upped in London.
France was up low single digit despite a high comparable base last year, fueled by several new business wins, notably, in big accounts in media. Germany is actually accelerating to double digit this quarter. In Asia, organic growth was up +0.8% this quarter due to a very high comparable base of 14% in Q1 last year, and a decline in revenue in Thailand due to delays in phasing of a large business transformation project. Actually, more importantly, China posted very solid numbers with +3.7% organic growth despite the difficult health situation in January and a high comparable base of +10.6% in Q1, 2022.
Let's be clear, we're confident that Asia will accelerate growth as early as Q2, thanks to a sustained new business momentum, the current improvement of the health situation in China, and easier comparable in Thailand. Beyond the short-term numbers, it is important to put our performance in perspective to truly appreciate the strengths of our model. Since the pre-COVID situation, the group has changed dimension by growing its Q1 net revenue by +45% on a reported basis, of which +18% organically. Our long-term investments in Epsilon and Publicis Sapient have boosted our organic growth at +24% and +28% respectively compared to Q1 2019. Our model has leverage and strengths in all of our region, with the U.S. up +20% organically versus 2019, Europe up +15%, and Asia up +20%.
Last but not least, our unique go-to-markets continue to drive new business gains and also external recognitions. Our new business momentum that saw us top industry rankings for the fourth time in five years has been further confirmed in the past weeks by several reports. After a record 2022 commercially, we are off to a very solid start to the year across all of our capabilities. Of note, we won Adobe International Media, Walgreens Media, as well as Sonepar in business transformation, and expanded our image with Mondelez in production. We also scored a number of local creative wins, of which Dunkin' US, KB Home, Premier League, and King in the U.K.
When it comes to external recognition, not only did we score high in the industry for creative and media, but we also received acknowledgment by leading industry analyst firms for our data and tech expertise that not only set us apart from competition, but also place us well ahead on some of the most renowned tech service companies. This was notably the case with Epsilon, that Forrester named a leader once again in loyalty technology solution. I will now leave the floor to Michel, who will give you further detail on the numbers, and I will come back to talk to you about our prospects for the year.
Thank you, Arthur. Good morning to all of you. It's a pleasure to be with you today. I will begin with the evolution of our net revenue for the Q1 of the year. The group posted a net revenue of EUR 3,079 million in Q1, which represent an organic growth of 7.1%. This comes on top of 10.5% last year and is ahead of our expectation, as Arthur just explained. Reported growth was at 10%. We recorded a EUR 14 million positive impact from acquisition and disposal. On the one hand, this includes EUR 31 million net revenue from our acquisition, the most significant contributions being Profitero, Tremend, Yieldify, and Retargetly acquired in the last 12 months.
On the other hand, it takes into account the impact of the disposal for EUR 17 million, mainly the exit of our operation in Russia that we will annualize from April 1st. This quarter, foreign exchange rates contributed a positive EUR 61 million, which is equivalent to circa 2% of net revenue. This was driven by a positive EUR 78 million related to the evolution of the USD to EUR FX rate, while the GBP had a negative impact of EUR 13 million. Let's move on to the next slide, which gives the dynamics of our Q1 organic growth by geography. North America posted another very solid quarter with 5.7% organic growth. The impact of the USD to EUR was a positive 450 basis points on growth this quarter.
Together with the impact of acquisition, this led to a 10.9% reported growth overall in the region. With 12.3% organic growth, Europe accelerated, largely driven by the very strong performance of Publicis Sapient in the U.K.. Asia Pac posted a slight organic growth of 4.8%, including a solid performance in China despite the health situation in January. Middle East and Africa and Latin America both posted solid organic growth at 16.6% and 7.8% respectively. I will detail the performance of each region in the following slides. I begin with North America in this slide.
As I have just said, our operation in the region posted a 5.7% organic growth in Q1, mainly driven by the U.S. at 5.8%, while Canada was at 3.2%. Let's now focus on the U.S., where our operation grew 5.8% organically, with solid momentum for all our activities in the country. This is all the more remarkable that it comes on top of an 8% organic growth in the same period last year. With a 20% organic growth since 2019, our performance in the U.S. confirms the strength of our offer in this geography, where our model is the most advanced. Media grew at mid-single-digit rate this quarter on top of double-digit last year.
This was supported by both positive underlying trends with existing clients and new business won in 2022, particularly in food and beverage, retail, and healthcare sectors. Creative came in stronger than anticipated and posted mid-single digit growth this quarter. This was achieved thanks to fewer budget cuts than expected, solid production, and scope extensions with existing clients, notably in automotive, food and beverage, and retail. Publicis Sapient posted a 8% organic growth in Q1. This performance was particularly solid, considering the 16% growth in Q1 last year and confirms the ongoing demand for digital business transformation. Epsilon posted a double-digit organic growth in Q1, thereby remaining very accretive to the country's number. All of its division posted very solid performance in the quarter, and it's worth noting that CitrusAd, our retail media activity, continued to grow at a very high pace.
Let's turn to the performance of Europe in the following slide. As I mentioned earlier, Europe recorded an organic growth of 12.3%, including our outdoor media activities in the Drugstore, and 12.8% excluding those activities. The U.K., which is 9% of group net revenue in Q1, recorded organic growth of 23.9%. Like in Q4, Publicis Sapient, which represent 1/3 of revenue in the country, was the largest driver of the UK's outstanding performance. Publicis Sapient activity continue to benefit from ongoing large projects, particularly in the financial and retail sector. Media activities grew double digit, driven by global new business wins signed in 2022, notably in the automotive and non-food consumer sectors. Creative activities were up high single digit this quarter.
France, which represent 5% of group net revenue in Q1, posted organic growth of 2.9%, including our outdoor media activities and the Drugstore, organic growth reached 2% this quarter. Media was very solid, particularly in the automotive, food, and non-food consumer sector. Publicis Sapient was softer on the back of a very high comparison basis. Germany, representing 3% of group net revenue, posted a double-digit organic growth. Media grew by a strong double digit, mostly on the back of global clients. Publicis Sapient also posted a strong performance, supported by the win of local clients. Creative was broadly flat. Let's finish by a few words on Central and Eastern Europe. The performance in the region was very strong at 11% organic, with Turkey, Czech Republic, and Hungary largely driving growth.
Turning now to the next slide, where I will detail our performance in the rest of the world. In Asia Pac, which represents 8% of group net revenue in Q1, we deliver a 0.8% organic growth. Overall, in the region, media grew double digit, while creative remained stable. The activity at Publicis Sapient declined in the region due to the delayed phasing of a large project in Thailand. Without this impact, the region would be close to 4% organic growth. Let me break this down for the main countries. China posted a solid performance at 3.7% organic growth this quarter, despite the health situation in January, That's notably thanks to new business wins in food and beverage. Australia, Malaysia, and Vietnam were also growth contributors.
In Middle East and Africa, we posted a 16.6% organic growth in Q1, benefiting from strong creative and Publicis Sapient in the Middle East and a very solid media activity in Africa. Latin America posted a 7.8% organic, with most countries recording positive growth this quarter, especially in Argentina, Mexico, Colombia, largely driven by media. On the next slide, you'll find the Groupe performance by client industry for the quarter. This is based on an analysis of our main clients representing 92% of our net revenue. It also excludes outdoor media activities and The Drugstore. This quarter, all of our client industry were positive but one, with six of them growing double-digit. Among those, I would like to highlight the following ones. Food and beverage grew 19%, continuing to perform very well on the back of last year new business ramp-up.
Healthcare was up 13% this quarter on top of 12% last year, with media in the U.S. and Publicis Sapient being the main contributors. We saw a similar dynamic in retail, which grew 16% in the quarter. Leisure and travel was up 14%, continuing to benefit from the momentum in tourism and hospitality. On the contrary, TMT posted the 7% decline in the quarter. This performance was notably due to some phasing in media, combined with a particularly high base last year. It's worth noting the solid performance in the financial sector on top of a double-digit organic in Q1 2022, as well as in non-food consumer and automotive, which grew in line with full year 2022. Moving to the next slide, net debt.
The group closing net debt at the end of March was EUR 442 million, representing a negative net debt variation of circa EUR 1.1 billion over the quarter, showing the usual seasonality of working capital at this period of the year. This compared to a net debt variation of circa EUR 640 million in Q1 2022. This stronger variation of circa EUR 400 million is largely explained by several reason. First, the EUR 220 million share repurchase fully executed in the quarter in order to cover employee long-term incentive plans. Second, a EUR 110 million cash tax payment made in January 2023 related to 2022, and reflecting the new application of US Tax Cuts and Jobs Act on the capitalization of R&D expenses, as I explained in February in our full year earnings call.
Finally, about EUR 100 million additional outflow in working capital versus Q1 2022 due to some phasing effects, and it will normalize during the year. The 12-month average net debt was EUR 563 million at the end of Q1 2023. This is EUR 714 million below end of Q1 2022, and EUR 122 million below end of 2022 level. We are fully on track to meet our average net debt objective for the full year at circa EUR 300 million. This concludes my financial presentation, and I now give the floor back to you, Arthur.
Thank you, Michel. As you saw, we are a strong start to the year that again proves the ability of our unique model to actually gain market share. It is clear that the current macroeconomic environment is increasingly challenging, with the recent tension in the banking system adding to the ongoing war in Ukraine, high inflation and interest rates. Our revenue mix, our go-to-market, and our platform organization gives us greater resilience to business cycle. This is why we are able to confirm all of our guidance KPIs for 2023, despite this changing context. Actually, when it comes to organic growth, our strong Q1 and our expectation for a solid Q2 between 3%-5% increase our confidence to reach the top half of the 3%-5% range for the full year.
This means 2023 organic growth is now expected between 4%-5%. Let's now go through the drivers of this differentiation that make us confident for the rest of the year. It starts with our revenue mix. As we said in the past, thanks to our decade-long investment, we now have 1/3 of our revenue in real-time data and technologies. This is the reason why we have grown faster than the industry and the global economy, particularly since the pandemic. Concretely, in 2022, we outperformed the industry average organic growth by 300 basis points on a three-year basis, led by Epsilon and Publicis Sapient, which again will be accretive in 2023. We are not stopping there. We keep on adding value and scale to our future-facing expertise to actually strengthen our competitive advantage.
This is the case in identity marketing, where we constantly enrich Epsilon capabilities and its 300 million profiles globally. More recently, with the acquisition of Yieldify to increase brand online personalization, Also Retargetly that extends our footprint in LATAM. In digital media, we are building solutions based on our real identities to increase our client business outcomes through fast-growing new channels by connecting Epsilon to our scale in media for connected TV and to CitrusAd for technology and retail media. Next year, when it comes to business transformation, we will continue to further our scale and our global footprint in everything we do. This is what we have done when we have gone through the acquisition of Practia, making sure that we add not only capabilities in LATAM, but also a new Global Delivery Center to our global map.
It is very important to note that we can today count on one-third of our talents working in data and technology. This puts us at the heart of our clients' structural needs, as you have seen. It is also a huge asset to lead in areas like AI. Since the rise of ChatGPT, everyone has been talking about the future of AI. In our case, it is already a reality that is accelerating the value and the speed of everything we do. AI is at the core of Publicis' operating system and at the service of our clients. When we launched Marcel in 2017 with the support of Satya Nadella and Microsoft, it was on the promise that AI will help us identify the best-suited talent for any given brief, propose tailormade learning and development programs for everyone, and make sure industry knowledge was better shared and used.
Today, the vast majority of our people are connected to Marcel and are already using AI regularly. It is now a huge competitive advantage, not only in recruitment, but also, of course, in retention. To fully harvest the power of AI to the benefit of our clients, we have equipped our team with AI-driven tools. This is, of course, true at Publicis Sapient, where we offer to our clients new AI capabilities to deliver enhanced customer experience with faster project development, and at Epsilon that use AI model to update, to enrich, and activate real-time our first-party data. Our capabilities further extend to media, where AI is playing a key role to optimize planning and buying, but also powers our retail media and advanced TV offering. Same thing for our creative business, where AI optimize production process and boost dynamic creativity.
In fact, we enter in partnership with OpenAI before its recent popularity to deliver innovative, personalized, and sell solution to our clients. I mean, there is no doubt that AI will radically change the shape of workforce and skills quickly. We must make sure that all of our people are capable of harvesting the machine capabilities at the service of our clients. We are committed to empower all of our people, integrating AI in their daily work. Secondly, what drive our confidence for this year is our go-to-market. Not only do we have differentiating assets that perform well on a standalone basis, but they also contribute materially to the performance of our creative and media. What sets us apart from competition is actually our ability to connect our different expertise.
By integrating real-time data and technology into creative production and media, we are positioning ourselves as a true marketing transformation partner for our clients. The strength of our model has been visible in our new business track record in the last five years. The momentum continued in Q1 and will contribute to our growth. Of note, our recent win of Walgreens Media show the indisputable superiority of our model run on real IDs that not only bring efficiency in terms of investment, but also competitive advantage for our clients. In 2023, our focus will be on delivering the best services to our existing and recently won clients while winning market share with the right value. Lastly, our platform organization provides us with agility, which is increasingly required to navigate a more complex world.
With our country model, our global delivery centers, and our shared services, we have the ability to maximize resources allocation locally, manage recruitments closely, and benefit from scale talent pool globally. Not only does our platform create efficiencies to mitigate wage inflation and post year after year the best financial KPIs, but it also enable us to invest in our growth and in our people. Voilà. To wrap up, we are confirming our 2023 expectations set in February despite the rising macroeconomic uncertainties. When it comes to revenue, our better-than-expected Q1 and a very solid anticipated Q2 make us confident to now deliver between 4%-5% organic growth this year. This will come while maintaining industry high financial ratio with an operating margin rate of 17.5%-18% and free cash flow of circa EUR 1.6 billion.
Thanks to the combination of our revenue mix. Our go-to market and our platform organization that definitely sets us apart from competition. We will continue to deliver on our commitments and accompany our clients in their transformation. I would like to thank our talent for their continued effort and of course, thank our clients for their trust. Now with Michel-Alain, we are ready to take all of your questions.
Excuse me, this is the conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question comes from Lina Ghayor of BNP Paribas Exane.
Hi, good morning. Bonjour Arthur, Michel. I hope you can hear me well. Congrats on the results. I have 3 questions. The first one is on Publicis Sapient. The performance is impressive, particularly in the context of the tough comparatives. Could you just explain a little bit more what happened by geography and client vertical? Typically, the U.S. grew 8%, which is strong, but half of the rest. Any update on the asset dynamics and your thoughts around the growth outlook would be appreciated. The second question is on trends. You now expect organic growth for the year to be between 4%-5%, with 3%-5% for Q2. Back of the envelope, it implies three-ish for H2, if my calculation is correct, which is still healthy, given the macro environment.
My question is, what do you see in your client behavior at the moment, and what have you baked in on the macro side in your guidance? The last question is on ChatGPT-like technologies and AI more broadly. You mentioned some elements in the presentation, but where do you see generative AI impacting your business on the unit economics? Typically, for example, pricing, but also on the cost front. I would be also interested to hear what is the client appetite either on the training side or media buying side. Any concrete example would be highly appreciated. That's it. Thank you.
Wow, that's a lot, Lina. Thank you. If I'm well, we have a question on Sapient, mainly on the U.S. and client vertical. We have a question on the rest of the year and then a question on ChatGPT. I'm gonna start if it's fine for you, Michel. If you wanna add anything, please do so. Maybe I'll start by your second question about the trends for the year and how we anticipate the rest of the year. What can I tell you on that? First of all, as we said, for Q2, we expect a very solid quarter between 3%-5%. Again, it's very important to consider that we are going through a higher comparable in Q2 than in Q1 on the three-year basis.
When we go to H2, we are of course taking 3 factor into consideration. The first is, as everyone has mentioned, increasingly macroeconomic challenges that are rising for sure. Second, which is important for us, a higher comparable base since the pandemic with H2 last year that was growing 400 basis points faster than H1, so big gap and you have seen the acceleration we had last year. Also a Q4, which is always an adjustment quarter, even more in such a volatile year. That's the assumption we're making. Despite those three factors, it's very important to note that we have not changed our assumptions for H2 thanks to the strength of our model. All that I explained about our revenue mix, that we continue to be accretive, the new business that we win, but also our platform organization when it comes to margin.
What we have done to actually move from 4 to 5 is simply reflecting on the full year are stronger than expected Q1 that came at 7.1%. When I move on to, I'm gonna move into Sapient. Why not now? Let's do Sapient in the U.S. I mean, I should start by the beginning. Overall, having Sapient again, double-digit growth in Q1 after the track record they were having on the three-year basis, is something that is a good news for us. It happens higher than expected for a single reason, is that we were expecting that some business transformation project could have been delayed. They have not been delayed so far. I think, again, in the economic challenges that our clients are facing, we don't think they're gonna cut their investments on transformation.
We can expect that some will postpone some decision, and we are prepared for that. We were in Q1, we are in Q2, and this is a very important element. Now, when it comes to the U.S. I mean, I will start by reminding you that Sapient had an outstanding performance in the U.S. in 2022, 17.5%. For those who were there with us a couple of years ago, this is incredibly strong and building on already a very good momentum. Despite this very high comparable, we are delivering 8% in Q1, which mean that we have delivered +36% organic growth since the start of the pandemic.
They have grown by itself inorganic, okay? I mean, we are absolutely convinced that Sapient will be accretive to our growth again this year, despite, as I said, some slower decision process in smaller projects. You might have heard that, by the way, from other system integrators. I think that in the U.S., everyone will agree that on smaller accounts there might be some delay. We are absolutely certain that Publicis Sapient not only will continue to be very solid in the U.S., and this for the third year consecutively, but will also accelerate elsewhere, particularly in the U.K. The U.K. case, if I can U.K. case, if I can spend a minute on that, is very interesting. You would remember that in 2020 and 2021, and maybe the beginning of 2022, the performance was pretty poor.
We told you the reason why the performance is poor is because a few clients that are very loyal and very happy with us have decided to stop and postpone their investment. We had to take the hit at the time, and now that they have started to invest again, we are taking the benefit of it, as you can see in our results in the U.K.. AI. You're asking all the questions. What can I tell you about generative AI? I mean, clearly I'm not gonna come back on everything I said by why AI is already at the core of Publicis operating model. By the way, why AI is already at the service of our clients. It is, if I may, native at Sapient. It is absolutely core in the way we refresh our data in Epsilon.
It's having a massive impact on how we can maximize our client investment in media, and even more importantly, how we can boost our retail media offer. It has to play also in creative, in production and ideation. This is where, at the moment, generative AI is having the biggest impact. Of course, I guess the question you get behind that is, can generative AI hit our creative business in the future? I mean, I've been working in creative agencies for the last 25 years now. If there is an area that I know pretty well, it's definitely this one. You know, I have seen the ideation process when we create ad and the production process change radically several times over the last 2 decades.
It's very interesting to see that every time creative agencies has always been able to adapt to new technology and continue to deliver great value for their clients. To be clear, I think that generative AI for the creative business is gonna be an opportunity. I am definitely not worried about the ability of our agency to adapt and leverage the potential of AI. I also want to be clear that the fact that it's gonna take time before it become a reality across the board. This is not something that will change overnight.
What is certain is that what we might lose in terms of our revenue through a faster process, because maybe there was a less account, which would be fine, will be largely compensated by the necessity to multiply the number of creative assets due to personalization at scale. By the way, you see that in our production number today. As you have seen, creative is strong in Q1. It's partly due to the fact that we have to produce more assets. If I want to make a long story short on this one, it's possible that, you know, tomorrow we get paid less for a single ad, but we will have to deliver way more volume as personalization increase. Definitely we see generative AI, as long as we are capable of mastering it, more as an opportunity than a threat.
Sorry I've been long, but I think it was three important questions.
Thank you.
The next question, sir, is from Julien Roch of Barclays.
Bonjour, Arthur Sadoun. Bonjour, Michel-Alain Proch. Two easy questions for Michel-Alain Proch. The first one is indication for working capital in 2023. Two, the split between media and creative in the two-third you're talking about. A more difficult question for Arthur Sadoun, following up on the theme of artificial intelligence. I just heard what you said in terms of less revenue per ad, but more ad, therefore net-net the same. Historically, you run your business on a cost-plus basis. Let's say you win a content creative budget where a client will spend EUR 100. Historically, you say we're making EUR 80 in a margin, we're gonna spend EUR 82 on what the client wants.
Thanks to AI, it will cost you far less to deliver the same value ad. Illustratively, let's say EUR 40. If the clients were still spending EUR 100, you'd make a massive margin of EUR 60 rather than EUR 18. I would think the client will say, "Well, I'm gonna pay you less, EUR 60, EUR 70, so you make a higher margin and I pay less, and everybody's happy." Why, why in that specific case, why aren't you saying that AI will lead to lower revenue, but higher operating profit?
Okay. first, I'm definitely not saying that AI will lead to lower revenue. What I'm saying is that we might get paid less for a single ad one day. We are far from that. It will add to the volume of ad that we have to produce because of personalization at scale. Actually, I need to answer your question a bit differently, Julien, because this is a critical question, the one you're asking, and this is where we still have a lot of work to do to change the perception of what we do for our clients and why what we do not only make us unique, but we believe creates the opportunity to be the only one that can truly outperform the market, is we have shifted from a communication partner to a transformation partner.
Where we make our money and our margin, because this is valued services, is our ability to accompany our clients in the transformation you just talked. The reason why we see AI as an opportunity is that, you know what, maybe one day on what we are doing in the past, we'll get paid less on creative, but it will be more compensated by our ability to bring what is needed for, you know, generative AI creative work, which is first-party data, which we are the only one that can deliver with Epsilon, the only one among the holding company.
The necessary technology and technological ecosystem to produce it, which is what we do, of course, with Publicis Sapient, that work with, you know, as a system integrator with all the platform like Adobe, and our ability to help our clients build the overall model for this to work. Don't get me wrong, I am not saying that generative AI will skip our creative re-revenue at the moment. What I'm telling you is that because we are not on the same positioning that our competition, because thanks to the vision of Maurice ten years ago with Sapient, we have started to invest in technology and data differently from our competitors and integrate it at the heart of our creative and media business. You should ask yourself the question why we are winning in creative, but also why we are winning so much on media.
It's because of this integration. The ability we have today to take generative AI and see it as an opportunity for our client to further accelerate their transformation, represent more source of revenue as a transformation partner than a risk as a former communication partner. I think I gave enough time for Michel-Alain to take the two other questions.
Thank you. Thank you, Arthur. Hi, Julien. On the working cap, yeah. At the on the Q1, as I was commenting the variation of net debt, part of the EUR 400 million stronger variation of net debt we had in Q1 2023 versus Q1 2022 is coming from about EUR 100 million of outflow in working capital, which is really phasing effect, nothing to worry about. We'll normalize during the year. To give you a data point, Julien, I'm like last year, I'm targeting to be roughly at 0 in working capital for the year.
On your second question, which was the split between media and creative, I think you are referring to one of the first slide of Arthur, when we say 2/3. Yeah, it's 1/3, 1/3, roughly. The mix of the company hasn't changed compared to 2022. 1/3 that then take, 1/3 creative and production, obviously it's in there. One-third media. As Arthur was mentioning in the beginning of the call, a strong performance of media, high single digit, and actually a better performance than expected in creative with mid-single digit.
By the way, it's important to note that when we say data and technology, we are talking about engineering and actually AI capabilities, which we have with 1/3 of our revenue. We should not underestimate how much we have digitalized and bring technology into our media business, for example, and starting to do it very well in production and ideation. We have the discussion on AI.
Okay. Very clear. Thank you very much.
Thank you.
The next question is from Christophe Cherblanc of Société Générale .
Yes. Good morning. Thanks for taking my question. First one was on headcounts. Can you give us the headcount at the end of Q1, and what are your plans for Q2 at that stage? I think, Arthur, you mentioned some consultants were slowing down a bit. Do you plan to soft land the Sapient workforce? That's the first one. The second one was on the offshoring. What room do you see to increase the share of offshoring in your setup? I mean, if we speak again in five years, will the mix be 30-70 versus 25-75 today? Arthur, you mentioned the fact there was a balance between the cost advantage and the flexibility and the ability to tap talent.
If you had to pick a number, would you say it's balanced between the cost issue and the flexibility issue? The last one is still on offshoring on Practia. I think, I guess that's for Michel-Alain. Can you give us some numbers, orders of magnitude of margin revenues? More importantly, maybe how many Practia do you see on the market? That kind of asset for us is very hard to see from the outside. Thank you.
I'm gonna let Michel-Alain answer the three, and then maybe I'll make some comment on the top of that.
Yeah. Sure. Sure. Okay. Hi, Christophe. On the headcount, at the end of the quarter, we are a bit more than 98,000 people. We have added during the Q1 a net hiring of 700 people. Maybe Christophe, just for you to remember, what we've decided with Arthur is to stabilize the headcount in Q4 of 2022. You remember that we were hiring for the first three quarters of 2022 between 2,500 and 3,000 people as we were still catching up on our revenue trajectory. We stabilize in Q4.
With in Q1, we have 700 more net hiring that we have concentrated mostly on Epsilon. As you have seen, Epsilon is delivering double-digit growth on our Global Delivery Centers at the second place. I will make the link with your second question about offshoring. Finally, in Europe, because in Europe, we are delivering, as you see, 12% growth. We have a very granular monitoring of the accounts on a monthly basis, operation by operation. On the second part, which is the offshoring, in term of global number, you remember them.
We have about 25% of our headcount, which are based in Global Delivery Centers. This is obviously different practice by practice. As I have already mentioned, Sapient is already at a high number, which is about 70% of its headcount. Epsilon is just below with a bit more than 50% of its headcount. Media is around 30%. Production is about 20%, and it's not significant for creative. As you can see, first, I think we are leading the industry in terms of showing leverage, first point.
The second point is that we still have way to go in some practice, on the basis of the numbers that I just explained. I finish up on Practia, if it's okay with you, Arthur. On Practia, you understand the move we are making. It's a move which is very comparable to the one we've made with Tremend in Romania. Going back a bit in time, Sapient was relying on 1 very large global delivery center in India. We have doubled it with the acquisition of Tremend in Romania last year.
Here we are creating a third global delivery center for Sapient in order to better serve our client based in North America, having this global delivery center on the same time zone. Arthur, you want to intervene?
No.
No, no. Okay. All right. So maybe, that's the first reason, Global Delivery Center. The second reason is obviously entering a new market, which is one of the fastest markets for DBT, which is Latin America. Arthur?
No. Maybe, to build a few points and to come back to your point, Christophe, it's very interesting to see what we are doing with Practia or what we have done with Tremend, because it comes back to about your point on offshoring and what we're expecting from offshoring. The reason why we are putting a new center in Latin America is for time zone reason more than anything. Why?
I come back to the question you were asking me between expertise and cost, et cetera, is that you need to understand that the platform model we have put in place that was initiated 20 years ago, maybe, with the shared services that was complemented with a Global Delivery Center and the country model to get a seamless access, is making a huge difference in term of managing our cost base, and you see the kind of financial ratio we're having, but also to make sure that we get immediate and direct access to data and technology to our clients. The reason why it's so important to be in Latin America is that we wanna make sure that we can serve the needs real-time of the West Coast of the U.S.
Nigel Vaz has built a model now with those three centers where we can work 24/7 without any bumps in the communication. I'm coming back on the question you raised about why are we doing this. I mean, it's three reason, and believe me, they are in this order. First is expertise. I mean, when you look at the high-end service we are bringing with Publicis Sapient, with Epsilon or even with our MediaNow, but mainly with Publicis Sapient, we have access to high-end, high-skilled, high-trained engineer, and this is making a big difference. To be clear, I have been. My first trip as a CEO, six years ago now, I'm getting older, was to go to India. I started by India because I wanted to understand exactly what we were doing there and how we were working directly with our clients.
I found there very high-skilled engineer, and that's the second point, I found them at scale. If you look at how we have been developing our workflow there, it makes a huge difference. Then costs come because, yes, if you allocate resources better, by definition, it is less expensive. You need great talent at scale, and those Global Delivery Center allow us to do that, you know, in India, in Eastern Europe, and now in Argentina. I went there actually to meet those guys and make sure that the feeling was the same. We were there with Nigel, and we consider that they were a great thing to do.
I will finish with a point that, again, come back on where we have to do a better job to explain our differentiation. Building Global Delivery Center in India is extremely hard because you have to start small where scale matters. You have to start new when young engineer will look for established brand where they can grow faster. We have been incredibly lucky again, when Maurice decided to buy Publicis Sapient, and I know that at one point it was a bit controversial, but now it's proving its full power. What we have built there is not only a great company with great brand and great top talent, but also an organization that is the organization of the future.
We started immediately, but I think it was 10,000 or 12,000 engineers based in India on the global delivery model that we have been able to scale. It's very important to say that the first mover advantage and the fact that we're already there, in our opinion, give us a 5-10 year advance to anyone who wants to start to build that.
Okay, thank you.
The next question is from Conor O'Shea of Kepler Cheuvreux.
Yes. Thank you. Morning, everybody. Congratulations on the numbers as well. From my side, just three quick questions, if I could. First, on Epsilon, can you give us a little bit of detail behind which activities within Epsilon how fast it's growing, and if there's a big gap between the growth in the various activities within Epsilon? Second question in terms of just the digital advertising market in general, particularly in the U.S., are you seeing any signs of that bottoming out? In particular with regard to your CJ Affiliate activity, so I think now within the media business, is that revenue is declining for that unit from your perspective as well? The third question, just in terms of the U.K. business, obviously an excellent performance again.
There was an announcement in the last week or so that the head of the U.K. business, Publicis U.K. business in, Annette King is leaving to Accenture. Just wondering if that has any potential destabilizing impact on the business in the coming quarters. Thank you.
Great, thank you, Conor. What we're gonna do is, maybe you can give the number on Epsilon. I'll make a comment, and then I'll take the two others, okay?
Yes, sure. Hi, Conor. As I was saying on the call, the four division of Epsilon have been growing this quarter, tech, auto, digital media and data. We say with an organic growth for Epsilon at 10%. And we see a good distribution of the performance among these four division. There is not an outlier.
Mm.
It's pretty much within the average number of 10% for Epsilon.
I mean, we are very pleased to see Epsilon performance. I'll start by that. We have been talking a lot about Sapient so far, but for those who were there four years ago now when we made the acquisition. At the moment while the market gave us the credit to have paid a good price but was anticipating a growth between 0%-3%, continuing to deliver a double-digit growth is remarkable. If I wanna be honest, I think it is 80% thanks to the work of the team that is outstanding today and the integration of this team within Publicis Groupe to really bring together identity marketing and our scale in media and creating new products for retail media, winning the biggest comp pitch.
That's 80% to their credit. I have to admit that there is a good 20% that is due to four years later. four years ago, no one was anticipating that the shift from third-party cookies to first-party data will be so fast and will be in every client mind so quickly. This of course represent a massive trend, the third-party cookies to first-party data management in order to make sure that you can build digital ecosystem and truly transform your business. That is giving us a fantastic tailwind also. On media and digital media. Look, first of all, we had an outstanding year last year on media in general. We are having a good quarter as you have seen.
What really defines the trend is what happens at the upfront in the U.S. in a couple of weeks. I think it's too early to draw any conclusion. What I can tell you is so far, as we said, we have seen some localized cuts in more traditional advertising, but nothing material and more importantly, no real movement into that. I propose that we wait for the upfront and maybe we can take back this discussion after when we talk in July. It's too early.
Mm.
When it comes to the U.K., first of all, again, one of the good surprise of Q1 is Europe. As you have seen on the kind of four-year stack, we are closer from the 15% when the U.S. is at 20, they are coming back, which is a great news. I would say U.S. is more on the kind of three-year stack of our competitors, Europe. It's keeping up and progressing. When you look at the number, it's particularly due to the U.K., as you commented, for two reason, we want to be very transparent on that and we have been transparent even with the price.
Sapiens coming back very strongly because some projects that have been stopped are starting again, and the team there is doing an outstanding job. It's on the top of that, winning new business in other industries. The side effects of the global pitch we have won in the U.S. that are now starting to deploy in the rest of the world, and mainly Europe. We took the strategic decision to make U.K. the base for our business when it comes to Europe in media. This, of course, is having an impact on the organic growth. When it comes to Annette King, I will first start by thanking her for 10 years at Publicis. We are very happy to have her with us, and I would say she's the life of the agencies.
We have taken strong decision in September, when we decided to put in place a new director plus and then a new organization for Europe, where I have asked Loris Nold, that was truly outperforming the market in Asia to come and take Europe. He decided to make an external recruitment with Demet, from one of our competitor that is definitely someone that is already having a big impact. You have to understand that in this condition, people decide to move on. I can't blame them for that. I can just thank them for the time they have spent with us.
Very clear. Thank you.
The final question, gentlemen, is from Adrien de Saint Hilaire of Bank of America.
Yeah. Thank you very much for squeezing me in. I've got a few questions, if you don't mind. All of your peers are now talking of margins being flat at worse or up at best. I know at Publicis you run a slightly different model, but I'm just curious, given the slightly better organic sales growth, if you see any scope, let's say, for out performance there, perhaps some extra work done around real estate optimization. Then I have two more questions around Sapient. Perhaps, Arthur, you can talk about the pipeline of projects that you see. Do you see a lot of RFPs at the moment around digital transformation compared to previous years?
Maybe more specifically, I was interested with this contract with Sonepar, not a company I'm very familiar with, but I noticed that they're ready to spend EUR 1 billion around digital transformation over five years. How does that contract specifically split between Sapient and the two other partners which have been selected? Thank you very much.
Okay. If it's okay, Arthur, I begin with margin.
Okay.
All right. As far as margin is concerned, we very confident into our operating margin guidance, Adrien. With 17%-18% for 2023, we are delivering, as you know, the industry highest ratio while supporting growth. I just want to add one point here, which is if you take the midpoint of this guidance, it's actually 50 basis points above the average of the last three years. We are doing all this while maintaining a high bonus pool at about EUR 500 million, which is the same level of 2022.
Again, if we go back a bit in time, remember that this bonus pool was EUR 200 million in 2019. In average, we're doing 50 basis points better than the last three years. All this while absorbing EUR 300 million and more, more bonuses. I'm not going to go into detail of our cost assumption. I just want to tell you know, I gave you cost assumption for the year for fixed PC and for G&A. They haven't changed. Fixed PC will evolve broadly in line with the revenue. G&A will increase slightly as we are progressively seeing return to more face-to-face meetings with clients. Long and short, you know, can we do more than 18 if we decide? Yeah. I mean, we can.
I mean, are we doing to do more? No, because we want to place a guidance which is sustainable for our business to support growth and allowing us to invest into talent and technology. Arthur?
I mean, as I am already in my seventh year now, so things are moving very fast. I remember the time where everyone was telling us, "You should sacrifice margin to get growth." We say it's not about sacrificing margin because we are not here to buy market share. We are here to build a model for the future that, by the way, lies on growth pillar that are sustainable on the long term. What we are achieving here, at least what we have achieved last year and what we aim to achieve this year again, is outperforming on growth, outperforming on margin, and rewarding our people better than anyone else because we know that talent matters.
Honestly, if you ask me what we are the most proud of today, looking at the Q4 season as we are going first, is not only we raise our salaries, not only we gave two weeks of additional salaries to everyone that doesn't have a variable remuneration, but we actually increased our bonus pool that was already historically high in 2021 by 20%, while again delivering the best margin, while our competitors were actually declining their bonus pool. That's very important for us, and this has been perceived not only by our people, but by our clients. On Sapiens, look, we are extremely happy with the Sonepar partnership. It is a great company. It has been done by Publicis Sapient in France, and Liz and her team, with, of course, the support of Agathe.
This is a fantastic win. I'm sorry, I can't give you more detail. I shouldn't say win. It's a fantastic partnership. I don't wanna get into too much detail as we are again not giving any specific on our clients. Maybe a bit more of colors on the Sapient pipeline, as you ask. I mean, those guys are doing an outstanding job when it's come to securing, developing their existing clients, when it comes to winning new clients. Double-digit growth again in this context is truly strong. I will not compare to other system integrators and the leader of the market in particular, we are at least at the same level, which I think it's a good sign of our competitiveness.
Although they are more selective in the kind of pitch they are taking on new clients, they are showing the superiority of their offer. What we see at the moment, again, is a strong pipeline. Again, as the system integrators, competitors told you already in their call, we have to be cautious because we consider it would be normal for some of our clients to sometimes delay a bit some investment just because they are going through a couple of quarter of uncertainty. We have on one side to be pretty excited about the pipeline we're seeing, and on the other pretty cautious when it comes to the ability of some of our clients that again, we haven't seen in Q1, though, outperforming or performing better than expected in Q1, but we need to stay cautious.
I think that was the last question. Maybe I'll take one second more to wrap up what we discussed today. I hope that what you wanna take out of this call is that despite the increasingly challenging microeconomics context that you know, this is why we did not come back on that so much, we definitely feel confident in delivering a very solid Q2 and organic growth for the full year that is now between 4% to 5%. We believe we're gonna do all of this while reaching once again the highest financial KPIs of the market. Michel just came back on that.
We need to do a better job at explaining what we do, I wanna just wrap up with the 3 reasons why we believe that actually we are the only one that can truly outperform the industry this year. The first is the uniqueness of our revenue mix. When you have 30% of your revenue and data and technology, that will be accretive of our growth. We know that our clients are gonna continue to transform. Again, some project could be delayed, but this is a massive strength, not only in term of pushing our growth, but also pushing our business and helping us to really be at the cutting edge of our offer. This is something that no one else has in this business. It has been built over time.
It has not always been easy, but we actually made the right acquisition at the right time with the right integration. The second, and as you have seen, we are being more cautious in not spending too much time in any of the particular wins, but the tailwinds that are coming from our IT to continue to top the new business charts will help us again this year. It did in Europe in Q1, and it will continue over the year. Last but not least, but I guess this is something we will discuss more in Q2, our platform organization is definitely giving us the agility to deliver on our financial objective while continuing to invest in our people and in our technology.
I mean, I had a few question with the press and with you when in the last meetings about, you know, where are we in term of transformation, where are the next steps. Hopefully you are feeling now that our transformation is really behind us. We can only focus on one thing, which is the execution of our roadmap with the team, despite all the uncertainties and with real success at the moment. You can be sure that what we're gonna do in the coming months is to be closer to our client than ever, because as we discussed, every challenge they are facing is something that we need to face with them and can represent an opportunity to be an even better partner in their transformation. We're gonna take particular care of our people.
We didn't talk about returning to the office and what we are doing there, but a lot is being done, and we will continue constantly to innovate. We talked a bit about AI. Well, I thank you very much. Wish you a great day. Any further question, Alessandra is here for you. Merci.
Merci. Bye-bye.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.