Good morning, this is the conference operator. Welcome, and thank you for joining the Publicis Groupe third quarter 2023 revenue conference call. 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 Mr. Arthur Sadoun, Chairman and CEO. Please go ahead, sir.
Thank you, Sherry. Bonjour, and welcome to Publicis Groupe Q3 2023 revenue call. I am Arthur Sadoun. I'm here in Paris with our CFO, Michel-Alain Proch. Alessandra Girolami is also here, and we'll be available to take all of your questions offline after this session. I will start this call by sharing the main highlights of our Q3. Michel-Alain will then take you through the detail of our numbers. After that, I will conclude with our outlook for the year. Finally, we will take all of your questions together. But before we start, please take the time to read the disclaimer, which is an important legal matter. Okay, let's dive into our presentation. There are three key highlights to take out of our numbers this quarter. Thanks to the strength of our model, we over-delivered in Q3 with +5.3% organic growth.
We are outperforming the industry on growth with +22% in Q3 versus 19%. We are upgrading our 2023 guidance once again this year on all KPIs. Let's get into the details of our Q3 performance. First, ahead of expectations, we posted +5.3% organic growth this quarter. This comes after two years at double-digit growth and despite a macroeconomic context, which became more difficult over the quarter. We have been able to achieve this mainly thanks to our unique go-to-market in media and our balanced revenue mix. Media, which represents one third of our revenue, continued to experience strong new business momentum. Fueled by market share gains, media was strongly accretive in Q3, with high single-digit growth on top of double-digit last year.
When it comes to our data and tech activities, another third of our revenue, we have seen five different client dynamics this quarter, resulting in very solid growth overall. On the one hand, as anticipated, clients took a more conservative approach to CapEx, choosing to delay some business transformation work as experienced by all comparable consulting firms. In this tough business environment, Publicis Sapient nonetheless achieved a +1.2% organic growth, despite a very strong comparable base at +18% in Q3 2022. On the other hand, we saw increased client demand for first-party data management in a soon-to-be cookieless world. This was visible in Epsilon's strong performance, which further accelerated to double digits with +10.5% organic growth in the quarter after double digits also last year.
Finally, Creative posted a resilient performance with organic growth in the low single digits for the quarter. The strength of our model was once again visible across all regions this quarter. In a more challenging microeconomic environment, as anticipated, the U.S. posted a very solid +3.2% organic growth on the top of two years of double-digit growth. Europe came above expectations, growing double digits this quarter with a +10.7% organic after 11% last year. This includes another outstanding performance from the U.K. at +10% after a +23% growth in Q3 2022. Asia PAC improved again this quarter with +3.8%, despite China facing slow economic recovery. Second highlight, we continue to outperform the industry on growth. This is particularly visible compared to 2019 level, with +22% in Q3.
You can actually see the acceleration despite the macroeconomic context coming after +20% in Q2 and +18% in Q1. It is worth noting the contribution of our two main geographies in Q3, the U.S. and Europe, which together represent about 85% of our net revenue. The U.S. grew at +24%, and Europe is clearly closing the gap at +23% since 2019. Looking more broadly at the first nine months of 2023, we have delivered +20% organic growth since 2019, led by rapid growth in Epsilon and Publicis Sapient at circa 30%. Finally, on a reported basis, including Forex and acquisition, our first nine months net revenue is EUR 9.6 billion, which is 38% higher than in 2019.
Third, we are raising our 2023 guidance once again this year on all KPIs. We are doing this despite ongoing macroeconomic uncertainties, leading to a slowdown in digital business transformation market and some budget cuts in classic advertising. Thanks to the strength of our model, and after a better-than-expected Q3, we are now aiming at +5.5%-6% organic growth for 2023. We are also upgrading our operating margin to 18% and our free cash flow to close to EUR 1.7 billion. I will now leave the floor to Michel-Alain, who will give you the details of our Q3 numbers before coming back on our outlook.
Thank you, Arthur, and good morning to all of you. Glad to be with you today. I will begin with a slide showing the evolution of the net revenue for the third quarter and first nine months of 2023. In Q3, the group posted net revenue of EUR 3,241 million, representing an organic growth of 5.3%. This very strong performance comes actually on top of two years at double-digit. Reported net revenue was broadly stable in the quarter due to the following elements: First, a negative Forex impact of EUR 189 million, out of which EUR 138 million linked to the USD to euro rate. Second, acquisitions, net of disposal, contributed EUR 32 million to the group revenue, mostly reflecting the contributions of Practia, Quora, and Tequila.
On the first nine months, our net euros reported growth was 4.9%, and organic growth was 6.5%. Let's move to the next slide, which captures the dynamics of our Q3 organic and reported growth by region. North America posted a very solid 3% organic growth. It's worth noting that this follows two years at double-digit and leads to a 23% organic growth versus 2019. Additionally, the negative impact of Forex was obviously significant due to the USD to euro rate, bringing the region reported growth to circa -3.7%. Europe also recorded a stronger-than-expected performance, with double-digit organic growth this quarter after 11% last year. Europe has grown 23% versus 2019 on an organic basis, clearly closing the performance gap with the U.S.
Asia Pacific posted a 3.8% organic growth, notably led by India and Singapore, more than compensating a softer China. Middle East and Africa accelerated this quarter, posting organic growth of 18.2%, bringing the performance versus 2019 to 32%. Latin America posted 6.9% organic growth this quarter, leading to a 27% progression versus 2019. So let's dive now into more detail, starting with North America on the next slide. As I have just mentioned, the region posted a very solid performance at 3% organic growth this quarter. In the U.S., representing 60% of the group revenue, organic growth was 3.2%. Media posted once again this quarter, a strong performance, up mid-single digit on top of double digit last year.
Growth was fueled by new business won in the last 18 months, notably in the pharma and food and beverage sectors. When it comes to creative, the performance was slightly negative. This came on top of a high single-digit growth last year and mostly reflected some anticipated cuts in classical advertising. Publicis Sapient performance was stable, reflecting two main elements. First, a very strong base of +21% last year. Second, a slowdown in DBT projects, as experienced by other comparable consulting firms, as clients adopted a more cautious approach to CapEx. Epsilon accelerated to over 10% organically, on top of 14% last year. All its division recorded growth this quarter, with a notably strong contribution from digital media and data, driven by strong demand for data-driven marketing and advertising solutions. Let's now turn to the performance in Europe.
As I mentioned earlier, Europe posted a standout performance with double-digit growth this quarter, after 11% in Q3 last year. Excluding outdoor media activities and the Drugstore, our activities in the region grew by 10.2%. The U.K., which represent 10% of our net revenue, was again very strong at 10% on a particularly high base of +23% organic last year. This performance was equally led by strong media, benefiting from global wins, and by creative with local wins. Publicis Sapient grew mid-single digit after a record Q3 last year that saw a strong ramp-up of major contracts. France, which represent 5% of our net revenue, posted a 6.5% organic growth, excluding outdoor media activities and the Drugstore. This was led by another solid performance in media. Publicis Sapient also contributed well, with a double-digit organic growth.
Germany, which represents 3% of our net revenue, posted 4% organic growth, including mid-single-digit growth in media and low single-digit in creative. Publicis Sapient was broadly stable on a high comparable base last year. Lastly, our operation in Central and Eastern Europe posted another very solid 15.9% growth on an organic basis. Poland, Hungary, and Turkey were all in double-digit again, while the activity in Ukraine continued to build up. Turning to the next slide, I will detail now our performance in the rest of the world. Asia Pac, which represent 9% of group net revenue in Q3, improved sequentially to 3.8% organic growth on the back of a strong media performance.
This performance was achieved despite a softer China at -2.5% organic, due to delays in spend in Q3, following the real estate downturn and lower consumer spending since summer. Thanks to our solid business momentum, we anticipate our operation there to return to positive territory in Q4. Southeast Asia grew double digits this quarter, led by growth in India and Singapore, benefiting from new business wins, while Thailand returned to positive territory as anticipated. Australia and New Zealand together posted a broadly stable performance. In Middle East and Africa, we posted 18.2% organic growth, driven by strong dynamics at Publicis Sapient in the Middle East, while both creative and media posted very solid performances. Latin America grew 6.9% organically, led by Argentina, while Brazil was slightly down and Mexico broadly stable.
The integration of Practia in Argentina, aiming to support the expansion of Publicis Sapient in the Americas, is well underway. On the following slide, you will find the group performance by client industry for the first nine months. This is based on an analysis of our main clients, representing 92% of our net revenue, and it excludes outdoor media activities and the Drugstore. On the first nine months of the year, I would like to highlight that all of our client industries were positive, with the exception of TMT, that was only marginally down, and financial, stable on the period. Let me give you some color about all the other growing sectors. Food and beverage, healthcare, and leisure and travel, among others, continue to post double-digit growth.
The retail sector posted 9% on top of more than 20% growth last year, thanks to new business across different activities. Automotive continued to grow at low single-digit in Q3. Moving to the next slide, net financial debt. The group closing net debt reached EUR 714 million at the end of September 2023. This is an increase of about EUR 500 million compared to the end of June, mainly due to, first, the dividend that we paid in July for EUR 740 million. Second, an increase in the tax paid in the U.S., linked to higher profits before tax on the one hand, and to the payment of the R&D-related TCGA tax for 2023 on the other, and lastly, partly offset by the generation of free cash flow on the period.
The average net debt on the last twelve months is EUR 451 million, decreasing by circa EUR 40 million compared to end of June 2023. When we include the average lease, this represent a leverage of 1.1 times EBITDA, improving versus 1.3 times a year ago. This concludes my financial presentation, and now I give the floor back to you, Arthur.
Thank you, Michel. As you have seen, we delivered a strong Q3, ahead of expectation in a global context that has become increasingly challenging throughout the quarter. More broadly, looking at our performance over the years, it is clear that we have become a bigger and stronger company that is more resilient to business cycle. When it come to the rest of the year, we are confident in upgrading our 2023 guidance once again on all KPIs. Let me break down the three reasons why we are confident. First, we continue to gain market share. By seamlessly integrating real-time data and technology into media, creative, and production, we have built a go-to-market which set us apart from competition. As a result, we have topped the new business rankings four times in the last five years and won over $10 billion in new media billings.
This is 2.5 times the level reached by our closest competitor over the period. It has had a material impact on our organic growth when compared to peers over the years. This was actually demonstrated in H1, when we deliver organic growth at +7.1%, outperforming the industry average by 500 basis points. Our strong Q3 make us confident that we will continue to outperform the market on growth. Second, we are more resilient to business cycle, thanks to our revenue mix. It is what allow us, once again, to post strong growth this quarter at +5.3%, ahead of expectations and above our four-year CAGR, despite macroeconomic conditions.
In Q3, the strength of our revenue mix materialize through the power of our data and media offer, which represent 50% of our revenue on the back of market share gains and increased client spend on first-party data. This very strong dynamic help us outperform the market, despite anticipated slower growth at Publicis Sapient, which represent roughly 16% of our revenue, and that is currently seeing some project being delayed, like all comparable consulting firms. However, there is no doubt that the demand from client for digital business transformation will bounce back again, even more in a world through AI. Third, we have an agile platform organization, which allow us to deliver sustainable industry-high financial ratios.
Thanks to our country model and our global delivery centers, combined with our shared services and Marcel, we are able to optimize and allocate resources real-time to areas of growth, while building expertise across-scale talent pools around the world. These drive real efficiencies that not only allow us to mitigate wage inflation, but also support growth by giving us the means to invest in talent and technology. All this while delivering the best financial KPIs, as demonstrated in H1, when we outperform the average industry operating margin by 500 basis points. Thanks to our go-to-markets, revenue mix, and platform organization, we are confident for the rest of 2023, even in the face of macroeconomic uncertainties.
When it comes to organic growth, we are now in position to upgrade our guidance from circa 5% to within the range of +5.5%-6% for the full year. Actually, our +5.5% is solid and factors in economic and social tensions that affect client spend, further delays in digital business transformation, and negative end-of-year adjustments of advertiser budgets. We could move closer to the higher end of our guidance if we see fewer cuts in classic advertising, a faster ramp-up in new business, and some positive impact from increased client budgets in Q4. For Q4, the full year guidance means 3% at the floor, which could reach 5% as a stretch. This is an upgrade from the circa +3% we previously anticipated.
At the same time, we will continue to deliver our industry high financial ratios with an upgrade of our operating margin guidance to 18% and free cash flow close to EUR 1.7 billion. Voilà. As you have seen, we posted a strong Q3, over-delivering on organic growth once again this quarter. We also continued to outperform the industry on all KPIs for the last four years. We are upgrading our guidance for the year despite ongoing macroeconomic challenges. Hopefully, this makes a demonstration that our model is truly differentiating and set us apart from our peers. Before we finish, let me thank our client for their continued trust and our talent for their incredible effort. I can't end this presentation without a special thought for our Publicis team and family in Israel. Thank you very much for listening.
Now, with Michel-Alain, we are ready to take all of your questions.
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 Nicholas Langlet of BNP Paribas.
Good morning, everyone, and well done for the solid Q3. So I've got three questions. Please. The first one and second, can you tell us a bit more about the growth slowdown you have seen in Q3? Are you starting to see any consolidation of projects, or it's still very much delayed on executing the contract? And looking ahead, when do you expect the momentum to turn around and return to a more normative growth rate for Sapient? Secondly, on your media business, which continued to do very well, notably in Europe. You mentioned the benefits of the global wins on media. Is there anything else driving this notable outperformance in the region? And how sustainable do you think it is in the next few quarters? And finally, on M&A, so it was a quiet Q3. What are the reason being this?
Are there any advanced projects in the pipeline to close by the end of the year? And how should we think about next year? Are you still targeting EUR 500 million-EUR 600 million investment on that? Thank you very much.
Thank you, Nicola. I'm going to start with Sapient, and I will pass on to Sharon for M&A, and I will close with media, if you're fine. There is several question into your question on Sapient, and I'm going to try to summarize everything. First, I think it's important to answer your question, to put things back into perspective, huh? I don't know if you were there at the time, but since we reposition our operation in the U.S. with Sapient in 2019, a long time ago, 4 years ago, Publicis Sapient has grown by 30% over 4 years, with actually 18% in 2022. It is important to remark that on a 4-year stack, Q3 of this year shows an acceleration with 30% after a 28% in H1.
Now, to come back to your question, as you know, the DBT market is definitely experiencing what we call a slowdown, mostly due to delayed CapEx projects. Clearly, clients are in a wait and see attitude. This is the case, and I'm sure you have heard other system integrator and IT consulting presenting their result. This is the case for roughly every consulting firm, actually all consulting firm that could be comparable to us, including the market leader. And so when it comes to Publicis, although our pipeline remain robust, and I'll come back to that as you ask the question, we are seeing the same kind of delays, particularly in the U.S., when you talk about region, and particularly in financial services and retail for the vertical.
Now, despite this tough environment, we are pleased to see that Publicis Sapient in Q3, which is not the case of most of their competitors, has been successful in growing by +1.2%. Okay? And again, if you want, to come back to your question about the model and what can we expect, what I can tell you is two things that are very important for us and that we are closely monitoring with Nigel Vaz, the CEO. First, there is no change in the underlying business of Publicis. To date, the pipe did not decrease, and there is no large opportunities that have been lost, okay? What we see, as I said, is really a kind of client cautiousness on spend, leading to projects that are actually progressing slower than usual from one stage to another.
And again, I think that this kind of extended sales cycle is something that, you are seeing everywhere at the moment. But honestly, when you look ahead, there is absolutely no doubt that the Publicis Sapient growth will rebound, at the second our client will start to regain confidence and resume spend, they will put money in their transformation because this is an imperative that they can't miss. And if I can add the buzzword of the moment, although the moment is being very long now, AI will actually accelerate the need for our clients to bring business transformation, not only on their entire operation, but particularly on marketing.
So we feel very confident that when CapEx investment will come back, we will be the first to actually see the benefit of that, which in a way, we are seeing at the moment as we are performing a bit also there, despite the slowdown, that is significant, of course.
Maybe I take the question, Nicola, about M&A. You're right, we haven't closed anything significant during the Q3, but we do have the pipe to reach our EUR 500-600 million envelope target that we have indicated to in a previous call. But obviously, you know that timing of an M&A depends on availability and target and negotiation processes, and all this obviously while respecting the very strong group financial discipline. Arthur, do you want to take the last question on media?
Yeah, I, I kept media for the end because these deserve a very long answer about the model and the sustainability. So I'm going to start by the end. This is sustainable, okay? I don't know at this level, but the fact that we're going to continue to gain market share is sustainable for a very simple reason, is that we have a unique model. We are combining two things that no one else is combining at our scale. On one side, we are the leader in media, particularly in the U.S. We have the most scale, and scale matter in this business. Second, media operation have been transformed by Dave Penski and his team in such a way that today we are able to connect them with the first-party data of Epsilon that is, again, leading the market in first-party. What does it mean?
It means that every time we get into a pitch, we are leading what client are looking for, which is personalization at scale. Scale, thanks to Publicis Media, personalization, thanks to Epsilon, all of this connected, thanks to our business model. The second reason why we are confident in the growth of Publicis Media is not only that we are gaining market share with new clients or with existing client that we are extending, is that we are leading the two major areas of growth for media in the future, that are retail media and Connected TV. And the reason why we are leading in those two areas are the same, which is we have the first-party data. Even Google is starting to do first-party data.
We have the first-party data, and we have the scale in media that allow us to actually lead in an area like retail media, where we see that our client will spend more money there than in linear TV very soon, a source of growth for us. Also, in everything that has to do with connected TV, because the future of advertising when it comes to TV is personalized. It is our ability through a single identity to deliver a message that can be scaled on TV, okay? We have, of course, a favorite place with the media owner on one side and the technology on the other. I can go on and on on that, but as I want to make sure we take all the questions, I guess we're going to stop here. Thank you, Nicola.
The next question, sir, is from Silvia Cunio of Deutsche Bank.
Thank you. Good morning, everyone, and congratulations on the results. I would like to ask a couple of questions. The first is on the implied guidance for Q4. Thanks for sharing some color about the expectations for the low end versus the high end. The question is, if you could please talk a bit more about what made you more comfortable compared to the H1 stage, and if you could please remind us of the comparatives and share some color about the visibility that you have at this stage on clients' budgets for the rest of the year. Then second question on your expectations on the macro environment, which you mentioned has become more difficult over the quarter. Can you please share some color by region or by sector, perhaps, and how this shapes up your view for growth in 2024?
Perhaps you can also talk about your thoughts about how much the new business to date can contribute to 2024 growth. Thank you.
Wow! That's a lot of questions. First of all, new business. What is very interesting to see, as we always publish, it's the first, it's always an exercise that is complicated to do on the quarter, but it's something that you can look back with a bit of perspective. If you look at the contribution on new business into our overall mix and how it plays against competitors, you see that in H1, we grew 500 basis points more than the average of the industry. It tells you a lot about our ability to gain market share, which we think is very important. We can't quantify exactly the impact of new business into our growth, because what is new business, in a way?
Is that when you win more scope into an existing client, is that new business or organic? But what we can tell you is now, hopefully, you're starting to see the difference between us and our peers, not only in H1, 2023, but also when you take the four-year stack. And I invite you to look at the four-year stack for us and our competitors, to see how quarter after quarter, we are actually making the gap bigger, thanks to our ability to win market share, particularly, with new business. On the guidance thing, what can I tell you about that? Again, we have tried, and this was very important for us, to give you as much color as possible.
We know the level of uncertainty that is in the market at the moment, and we, we have a model today that not only allow us to outperform, but also to be very confident in what we are telling you. This is why we are giving this level of granularity between, what, we believe, is could be a 5.5, and how we can go closer to 6%. I can come back on the, on the reason why, if you're interested. But to, to answer more broadly your question, I would say that, there are three reasons which I tried to explain in my presentation, but that are fundamental to our model.
The first, I'm not going to come back on that, is we are winning market share, and it's a market share game at the moment, and we are leading on that. Second, which gave us a kind of confidence in the future, is the fact that our revenue mix is so well balanced. And that's very interesting because you see that even when digital business transformation is slowing down for the entire IT consulting industry, and of course, having an impact on us, not only we continue to outperform our own market, but we actually outperform the system integrator market. And so our ability to have this revenue mix, again, make us confident that we will deliver.
Third, although we are not talking that much about margin on this call, the platform organization that we have put in place gave us the necessary flexibility, not only to deliver the highest ratio of the market, but continue to pay a level of bonus and increase that get us the best talent and the necessary money to invest into our technology. When it comes to 2024, it's of course way too early to give you any guidance at this stage, and hopefully you will agree even more with the recent events. What I can tell you is everything that we said so far, we play, and of course our objective is continue to outperform the market. We did that for the last four years, and this will be our objective for next year. Thank you very much.
Thank you.
Yeah.
The next question is from Lisa Yang of Goldman Sachs.
Good morning, and congratulations on the results. I also have three questions. Firstly, could you maybe explain the acceleration you've seen at Epsilon? I mean, to me, that was the biggest surprise. I mean, obviously, demand for first-party data has been there. I don't think it's necessarily new. Yeah, what drove that acceleration? Basically, is that sustainable into Q4, into next year, that basically that double-digit growth? I mean, second question, if you could just come back to the Q4 guidance and maybe share, especially for Sapient, what are you baking in at the low end, at the upper end of the guidance range? Like when you, could, could is it like so slightly negative, slightly positive for Sapient, as an example?
Third question, could you maybe give us a bit of a color in terms of the headcount, how has that evolved in Q3? What are you expecting for the rest of the year and planning for next year, especially given the level of new business ramp and how much basically people you need to hire? Thank you.
Thank you very much, Isa. We're going to take the question in the order of the inverse order. So we're going to start with headcount, headcount, and then go up. So I'll let you start.
Hi. So we hired 1,200 net recruits in Q3, with half of them strengthening our global delivery center, so mostly in Central Europe and in India. So in total, it represent a total of 2,500 since the beginning of the year. So it means if you do the rough calculation, it's a 2.5% increase in headcount. Actually, we are crossing the line of the 100,000 headcount, which is demonstrating our very efficient control of resources when we delivered 6.5% organic growth on the nine months. And basically, we have our net hires, who are mostly allocated to the ramp-up of new business in media, data, and production. Arthur?
I'm going to try to put Sapient and Epsilon a bit in the same boat to answer both, because again, it's interesting to look at our data and tech capabilities overall. So if I start with the assumption for the fourth quarter, I think, as you know, we are actually not giving assumption by practice for the quarter. But honestly, what I can tell you is that you should expect for Q4, roughly the same trends as the one you have experienced and we have experienced in Q3, which is, creative will continue to experience some classic marketing cuts, we know that. Media and Epsilon will continue to outperform, and I will come back on Epsilon.
When it comes to Publicis Sapient, again, we are expecting the same kind of trends. We are going to see, again, some delays in digital business transformation projects. This has been clearly said by the leader of IT consulting a couple of weeks ago, and you should expect the same for us, which is roughly. This means that for Publicis Sapient, particularly in Q4, what I can tell you is that we expect this to be broadly stable, like in Q3, to maybe slightly negative, as you know, we have to take into consideration that this is an adjustment quarter. But roughly take the same trends.
I think what is very important there, and this is why we wanted to give you some colors, is that all of this is baked in our guidance for Q4, that goes from 3%-5%. And the strengths of our model make us very confident to deliver, and you have seen the assumption we have made. By the way, it's interesting to see in the assumption that to get closer to the 6%, we are not assuming that digital business transformation will take off again. You can't have a market leader saying that they will be negative in the next quarter and not anticipate that it won't take. This is not we are expecting.
We are expecting the same trends, but we are being, at the same time, very confident, but also cautious because we know the market fact, and it gives even more credit to our revenue mix balance, which is, of course, what makes our strengths. Sorry, I need a bit of water because I still lack a bit of saliva after everything I went through. On Epsilon, look, it's, as you said, it's a great story, huh? We are growing by +10.5% after last year, growing by 14%.
It came above our expectation, and I have to admit that, when we decided with Maurice Lévy to make this acquisition, 4, 5 years ago now, we knew it was absolutely critical to have a leading position in data, and this is why we made this big investment at the time. That has been, of course, a disruption that we had to integrate. But I can tell you that we were anticipating how strategic will be first-party data for the entire market and how much clients will realize that not having direct contact with their customer will be a strategic issue. And again, when you see Google that now is trying to appeal to clients through first-party data, you understand, hopefully, why this is so core and important to our model.
What I can tell you is that, again, if you put Sapient in perspective, they have been growing by 31% since 2019, okay? It is largely better than what we expected when we made the acquisition. As you would remember, it was a flattish operation. We were aiming for 3% or 5%, and we did way better than that. What I can tell you is that it will continue to outperform in Q4 for sure. What I can tell you also, which was one of your questions, and, to be fair to the entire ecosystem, is there are two reasons why we are growing like that. First, is interest for first-party. The second is a connection with Publicis Media, because part of Epsilon growth is also the new business win we have in media.
as Publicis Media is winning also thanks to Epsilon. Epsilon is benefiting from the win of Publicis Media with new clients. So you can see the ecosystem that we have created there that truly make a difference.
Arthur, can I just ask a very quick follow-up? How do you basically allocate the revenue and, you know, between the media business and Epsilon? Just feels like, you know, the frontier is becoming increasingly blurred. So, like, when you win a new contract, like how much would you decide to allocate to Epsilon versus Publicis Media?
I think that in 2015, Maurice Lévy said something that stays very true at Publicis. At Publicis, we have no silos, no solos, and no bozos. And, we have killed the P&L frontier a long time ago per country, which mean that when one win, everyone win at the end. So of course, for reporting reason, we are giving you the number as they are, but what matters to everyone is how we win together more than how they win in their own line.
Thank you.
The next question is from Adrian De San Hilaire of Bank of America.
Yes, good morning, everyone, and indeed, congratulations on those strong numbers. Maybe changing tack a little bit. So there's been a lot of noise from a number of companies around the impact of anti-obesity drugs in the U.S. recently. I'm just wondering if you're observing a negative reaction from clients in the FMCG restaurant space in general because of these anti-obesity drugs. Secondly, a number of consumer-facing companies have seen some fairly disappointing results of late. For these type of clients, are you observing the usual reaction, which is that they tend to cut marketing spending, or are they holding onto their marketing budgets to try and combat this weaker trends? And then maybe lastly, on Epsilon, indeed, super successful in the U.S. and helping on the media sides.
Is there any possibility for you to roll this business out in Europe, either organically or through acquisitions, to also make a difference in this part of the world? Maybe Asia as well.
Thank you, Connor. So first of all, there is no negative reaction. I'll start by that. When it comes to the industry, maybe, Matt, you want to say a word about that?
Yeah, no. So just to give you a bit of color by industry, we actually have. We haven't seen. Well, first of all, on the healthcare business, we don't see an impact for this end of the obesity drug. Clearly, healthcare have been a very strong contributor of growth since the beginning of the year. As far as non-food consumer product, we are carry on posting a growth, a slight growth, but still a growth. So clearly, we don't see here consuming-facing companies cutting down their, particularly, I would say, their advertising investment.
I mean, it's true that there are, as Arthur said, there are cuts into classic advertising, but they are distributed in several industries and not particularly into one.
So first of all, I should have recognized by the accent it was not Connor, but Adrian. So sorry for that. Coming back to what Matt said, there is not one-size-fits-all in this category. Some are ahead in their transformation and actually doing very well, and some are late and actually suffering and cutting. And on both cases, it could be interesting for us, and this is also why we are winning pretty much in this category today, is that we have a good benchmark of clients in this industry that we have transformed pretty radically with good success, and other that are decided to join, for us to be able to put the same model in place. So we feel confident in the category for the rest for the year to come.
On Epsilon, I think we are not doing a great job listening to your question and explaining the expansion we're having outside of the US. So, you are right, when you say that, Epsilon has a leading position in the US that is not replicated outside of the world for the moment. But we have made massive progress in building first-party data in key country like the UK, where we have more than 50 million, I think it's 60. Same thing in France, where we are around 30 and 40.
We are doing partnership with some retailer through retail media to continue to build our base, and our ability to have spread third part first, first party and an Epsilon model outside of the U.S., is also one of the reason why in media, we are not only winning in the U.S., but also outside of the U.S. One thing that explains, because it's good when it's in the numbers, one thing that explains the very good performance, particularly of the U.K., is actually the second wave of additional revenue due to global wins that started in the U.S. through Epsilon, that are now being expanded, particularly in Europe, through the same model.
Thank you so much, guys.
Thank you.
The next question is from Julian Rock of Barclays.
Bonjour, Arthur, Michel, Alessandra, Lorraine, and Maxine. Bonjour, bravo, encore une fois. Bonjour, bravo. 3 questions. On net new business, another great year, but net new business mathematically only help organic if the current year has more wins than the previous. So have you more wins in 2023 than in 2022, and you expect net new business to boost organic incrementally in 2024? It's all about incremental. That's the first question.
The second one is two questions on Europe. So you did 10.2, ex drugstore, thanks to the UK and Central and Eastern Europe. Is there some one-off characteristics to Eastern Europe's 15.9% growth, like, election in Poland or something? And then the second one is, if you calculate the rest, so total less UK, France, Germany, and Eastern Europe, it seems to be up 18% organically. I mean, it could be rounding, but why is it 18? Thank you.
I will leave Michel on Europe. I'll make a quick comment on new business first before we go to Europe. First of all, as you know, we don't disclose new business anymore. We let the number talk. What you need to understand, and it's true this year, as it was last year, by the way, is we had a super busy H1, with structural wins, some that are public, some other that are not. It's true that in H2 now, we are more in the phase of integration. It's not that we are not pitching, but the level of activities is lower. Having said that, when you win a big structural new business, it takes roughly 12 months to ramp up.
As you have seen, this is one of the assumption we are making to get closer to the 6% for the year, is a faster ramp up of stuff that we have won in H1 that could start to truly ramp up in Q4. It's too early to say. What I can tell you is that the new business machine is continuing to win, deliver revenue, new opportunities for growth, for transformation, and we continue to see the same pace. I'll pass on to Michel-Alain for Europe.
Yeah. Hi. Yeah, so on Europe, a couple of things. First of all, there's no one-off in Central Eastern Europe in the 15.9%. We see in there a strong ramp-up of our production activities on the base of several contracts we've signed with European clients. And when you look at Europe by itself, it's really the combination of a very strong media, okay? Plus a creative, which is almost high single digit, based on a certain number of local wins that we had. So and finally, I address your last question about what you could call, you know, rest of Europe.
If I give you the split, roughly, Europe in this quarter is contributing EUR 75 million of growth. In rough numbers, U.K. is contributing EUR 30 million, France is contributing EUR 15 million, out of which EUR 5 million is coming from our outdoor activity. Germany is contributing EUR 5 million, C.E. is contributing EUR 10 million, and to reach the EUR 75 million, the rest of the countries are contributing EUR 15 million. That's mostly coming from Italy, Spain, Netherlands, and Belgium, which are contributing this EUR 15 million, Nordics being stable. Your calculation is right. It's about 15-16% of growth. And no one-off.
Okay. Just, after y ou cut a bit. Did you say that net new business were bigger this year than last year? Just to confirm.
No, I think this is roughly the same pace. Again, it's very difficult to put a strict number because if you look at the wins we had in the last 12 months, because you need to take a rollout of 12 months, some wins are done on existing clients, so is that new business or is that new clients? It's difficult to say, but you see the same pace, and we make sure, by the way, we continue on the same pace quarter after quarter.
Merci beaucoup.
Merci beaucoup.
The next question is from Connor O'Shea of Kepler Cheuvreux.
Yes, thank you. Thanks for taking my questions, congratulations on the numbers, from my side as well. Three quick questions. First question on the TMT client sector, understandably weak this year. You seeing any signs of that changing for the better, as some of those players have delivered better numbers in the last quarter or two? Could that augur well for 2024 marketing budgets? Second question on the auto sector, which is also a big sector for you, there's obviously some union strike activity among the U.S. auto makers, which seems to be accelerating. Could that be a problem for this sector in terms of activity, you know, into the end of the year or into the start of next year?
The last question, maybe for Michel-Alain, I wonder if you could give us an estimate of the Forex translation drag in Q4, if currency rates remain more or less unchanged from the current. Thank you.
I'm going to take the two first, as this give a bit of time to Michel-Alain to prepare the last. I mean, this TMT things is difficult for me to answer because I want to be clear, of course, we see some cuts like everyone else, but we see it spread into different industries. And again, this is why we are so happy to see that, creative is resilient and the overall model is overperforming, is that we see those cuts, but we are far from seeing a dramatic decline in tech, honestly. I know tech is a big word, but we are not seeing that. Actually, if you look at our performance on tech, Q3 was slightly down, like in H1, but nothing dramatic. You see what I mean?
So again, we see some cuts, we see some cuts in every domain. We see some cuts of twofold, people that are suffering, and they are cutting their marketing budget, and they are canceling some advertising projects. And delayed in digital business transformation, again, it doesn't mean some cuts because the pipe is still strong, but the sales process is longer. But I won't be able to tell you that it come in particular from one industry. The question you raise on auto is a great question. First of all, auto is a sector that is accelerating its transformation pretty dramatically. So we are very optimistic in our ability to help our clients in this area and have growth for the future. I think it's way too early to draw any conclusion from the strikes. Too early.
This is something that we are following very, very closely. Again, this is something that is baked in our guidance for the rest of the year. This is what I was saying. When it comes to social tensions, these are baked in our guidance in the 5.5%-6%, and this is again what we try to demonstrate. The 5.5% is very solid. The stretch to 6% will depend on a series of things like auto.
Thank you.
Michel-Alain?
Yeah. So, Connor, a couple of points here. On the currency impact on net revenue, if I look at the first three quarters, it's accumulated, it's EUR 200 million. And you have about EUR 10 million in H1, and in Q3, EUR 190 million, okay? And this EUR 200 million, in our view, will go to EUR 350 million for the year, that you can split between EUR 210 million on the dollar and EUR 140 million for the other currencies. I just want to precise one thing about the dollar. This is taking into account the recent increase of the USD to euro rate, to a spot of 1.05.
So if you put this 1.05 to the rest of the year, it's giving you compounding FX effects assumption for the entire year at around 1.08, and maybe some of you will remember that it was our initial assumption at the beginning of the year. So long and short, Connor, at the end of nine months, the drag is EUR 200 million, and we expect it to be EUR 350 million for the year.
Perfect. Many thanks, Michel-Alain.
Thank you very much.
The next question is from Tom Singlehurst of Citi.
Yeah. Good morning. Thanks for taking the questions, and congratulations on the results. I had two questions, if it was okay, on retail media. The first one, you know, I'm conscious you bought Profitero in May last year. I know it's small, but I'm just wondering whether, you know, given that kicking into organic growth for the first time, whether you can talk about retail media and maybe also the JV, the Unlimitail JV with Carrefour. So that was the first question. And the second one, I mean, if we look back at Epsilon, actually, you know, the, the, the, the sort of, the capabilities it provides and, and, and the impact it has on your broader business is, you know, something you identified all the way back in early 2018, when you first outlined your vision.
Obviously, at that point, you had planned via PeopleCloud to serve that organically, but you decided along the way to really accelerate that push with the Epsilon transaction, which obviously attracted some skepticism at the time. I'm just interested whether you feel you might need to accelerate your push into retail media with something more dramatic at some point. Thank you.
Thank you very much, Tom. It's a very complex and large question because we are basically talking about a big part of what is the future of advertising, which is first-party data, which again, we know now is the future of marketing and retail media. That is going to be a big part of our client spend in the future. So I, I'll try to make a few comments. Maybe I'll start a bit about Epsilon. You're right. When we made the acquisition in 2018, we did it knowing that it was absolutely key to put data at the core of our model. And to be clear, you can't be in marketing today if you are not a people champion.
And what Epsilon brought us is to be a people champion, with assets that no one else has and a view on customer that no one else has. It was done, by the way, and I know you were there, based on the strategy that we lay out in 2018 when we did our investor day. And we said: We're going to build the PeopleCloud, and this is going to be a tool, hands-on keyboards for our clients to navigate this overly complex world of media. We never thought it would be that complex at the time. We never thought it would be so useful, and today, PeopleCloud is deployed on most of our clients, with Epsilon at the core. So what you see, I would say, is a visible part of the iceberg, which is how Epsilon is delivering growth for the group.
What you don't see is how Epsilon, being at the core of our model, help us in many activities, starting with PeopleCloud. That goes to your second point, which is one area where Epsilon is massively helping, is on retail media. And so you're right, we did two small acquisition, Citrus and Profitero, that, by the way, are growing very strongly, but on a very small basis. We didn't buy those those capabilities to grow, but to grow, to have a material impact on our growth. We bought it because putting their technology combined with the first-party data of Epsilon, we could grow materially, which you find in the Epsilon number, by the way. There is a reason why we are double-digit.
The reason why we are double-digit is because not only we have leveraged the technology that we bought 4 years ago, but we have added new bricks that allow us to continue to accelerate in growing segments like retail media. What is fantastic about Citrus and Profitero, but I don't want to give too much detail if some of the competition is listening, is we have the two ends of the spectrum, which is on one hand, we know how our client need to place media on the dotcom, on Carrefour.fr, Walmart.com, whatever. We also know how our clients are placed in terms of digital shelves, and how their products are being at the right price, if they are out of stock, and their competition, by the way.
Knowing exactly what happened on the digital shelf on the other, and how you should place advertising on the other, you understand a big part of why we are winning as much as we are winning in the CPG world and in the retail world at the moment. It's an overall story that we deserve to spend more time, but, hopefully, you get what we are trying to do, and this is why I love your question to close on that, is we are a company that is soon 100 years old, that has always been innovating in the forefront of what is next in our industry. It has been pushed by Maurice Lévy for decades. This is what we are modestly trying to do also, and our ability to always be on the forefront of what is coming.
By the way, will it be for technology or for people? Now, we didn't talk about return to the office, but this is a big topic for us, is, I think, the reason why we are outperforming today. Retail media is one of the bridge that will continue to grow and will continue to help us outperform. I think that was the last question. I will close very quickly. First of all, thanking you for being on that call. Just a couple of remarks. First, hopefully, you, you, you understood that despite a quarter that has been increasingly difficult for the world, we are very strong on our feet. We continue to deliver what we promise.
We do it, ads in our business, winning market share, leveraging our revenue mix, making sure that through our platform organization, we can control the cost, not only to deliver the margin, but to reward our people and make sure that we continue to invest. Hopefully, you understand that we are confident for Q4, which is important with everything that is happening. This is why we spend so much time and my entire second part to tell you the reason of our confidence, and more importantly, the assumption we are making for the 5.5 to get closer to the 6. And I want to, it looks easy because we come on the call every quarter and we meet, but I would like to finish with this because this is really about our people.
This has asked a lot of effort to get there, and some will remember, our Q3 call in 2019. It's a lot of work for our people, and the good news about what we are doing today and why, again, we feel confident and energized, is we are only in execution. Our job is to execute the strategy. We are not distracted by anything else than, again, coming back to your comment, have the best product, have the best talent, outperform on growth, and continue to deliver the best margin of the market. That's our focus 100% of our time. I thank you very much, and hopefully see you soon. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephone.