Good morning, everybody. Welcome to our Q3 results for 2026. I am joined here by Radhika, our CFO in London, and Scott, our Chief Growth Officer in Singapore. We are going to run through a brief presentation on Q3. First section, a trading update from Radhika, then Scott will weigh in with an analysis around our clients, and I will come back with a brief summary and outlook, and then we will take Q&A. Over to you, Radhika.
Thank you, Martin. Good morning, everybody. I will start with the financial headlines for the third quarter of 2026. Throughout the third quarter, trading continued to reflect the challenging macroeconomic conditions. Clients remained cautious, with hyperscalers and other technology clients prioritizing CapEx on expanding AI capacity over OpEx. The benefits of the 2025 second half cost actions continue to materialize, and we have maintained our strong discipline on cost control. Third quarter net revenue was GBP 156.3 million, down 6.4% reported and 7.3% like-for-like. Nine-month net revenue was GBP 464.3 million, down 6.2% reported and 5.6% like-for-like. We now expect 2026 full year like-for-like net revenue to be marginally below previous guidance, down high single digits. Operational EBITDA remains at the current analyst consensus level of GBP 85 million, and operational EBITDA margin is now expected to increase by at least 160 basis points to 13.7%.
Adjusted basic earnings per share is expected to be in excess of current analyst consensus of GBP 0.061 per share. Liquidity improvements have significantly reduced net debt levels year-on-year. Net debt at the 30th of September was significantly better than anticipated at GBP 76 million, or 0.7 x pro-forma trailing 12-month Operational EBITDA, a reduction of GBP 75.1 million compared to 30th of September 2025 or GBP 66 million like-for-like. Our year-end target net debt range remains at GBP 50 million-GBP 80 million, and the company expects to be comfortably within this range. The company repurchased a further EUR 50.9 million of our Term Loan B after 30th of September 2026, of which EUR 10.5 million remains subject to settlement. Together with EUR 125.3 million previously repurchased, this reduces the Term Loan B outstanding to EUR 198.8 million, down from EUR 375 million.
Looking across our two practices, Marketing Services and Technology Services, my commentary here is all on a like-for-like basis. Marketing Services delivered third quarter net revenue of GBP 142.7 million, which is down 6.2%, and GBP 424.6 million year- to- date, down 5%, reflecting ongoing caution among technology clients as they continue to prioritize and increase AI infrastructure, CapEx over operational marketing budgets. The practice was further impacted by a scope reduction in BMW, primarily in EMEA, and the ongoing conflicts in the Ukraine and the Middle East. Technology Services generated third quarter net revenue of GBP 13.6 million, down 17.6%, and GBP 39.7 million year- to- date, down 11%, similarly impacted by broader macroeconomic headwinds and continuing longer sales cycle. From a regional standpoint, we saw some encouraging momentum in the third quarter with both EMEA and Asia Pacific up 3.1% and 9.4% respectively, while the Americas declined 10%.
Year- to- date, the Americas declined 4.1%, EMEA 13.3%, and Asia Pacific 5.6%, representing approximately 81%, 14% and 5% of the net revenue respectively. Our improving liquidity continues to support our capital allocation priorities, which remain unchanged. We have established clear capital allocation priorities, focusing on delivering shareholder value through, first, dividends, second, further debt repurchases, and third, share buybacks as net debt falls further. On the 6th of October, we were pleased to pay our first interim dividend of EUR 1.35 per share announced at the interim results. As previously announced, the board has implemented a dividend payout ratio of 50% of adjusted basic earnings per share, subject to financial targets being met, and will recommend a final dividend for 2026 in line with that policy. There will be increased flexibility to consider share buybacks once the company is net debt-free.
With that, I will hand over to Scott for the market update.
Thank you very much, Radhika, and good morning, everybody. Thanks for joining us. A couple of slides from me on our clients. The first one, this slide illustrates where our revenue comes from in terms of industry sector. As you can see, we maintain that exposure to the technology sector with 43% of our revenues from primarily big technology companies. Whilst the sector continues to prioritize CapEx spend on AI capabilities over marketing spend, this remains an important client segment for us.
Clients like Google, Amazon, and Meta are also important partners for us, and as pressure mounts on tech companies to show a return on their AI investments, we are increasingly working with them to illustrate the benefits of AI-driven marketing transformation with both them and our wider client base. We have a really compelling client list with some of the world's leading and most innovative companies, and these are strong relationships that help us attract and retain talent to work on them. Next slide. You can see on the left here that spends per client have begun to stabilize versus the previous year across our top 10, 20, and 50 client cohorts. They are only slightly down. The main challenge for us has not been on existing clients or larger clients, but on that longer tail, which is primarily project-based work.
A lack of new business conversion has impacted us here. The focus now is very much on returning the company to growth. With that, I will hand you back to Martin for the summary.
Thanks, Scott, and thanks, Radhika. Just to summarize where we see ourselves at the end of Q3. Firstly, Q3 net revenue was down just over 6%, and 7.3% like-for-like, and that reflected the continuing uncertainty that we have seen macroeconomically in clients remaining extremely cautious, and technology clients focusing, the hyperscalers focusing on AI CapEx. Year- to- date, net revenue is down just over 6% and reported 5.6% on a like-for-like basis. Full-year like-for-like net revenue now will be estimated to be down high single digits. The company repurchased a further EUR 51 million of its Term Loan B after quarter end, of which about EUR 11 million is still subject to settlement. This, together with the EUR 125 million previously repurchased, reduces the Term Loan B outstanding to just under EUR 200 million, down from the EUR 375 million originally.
We continue to target a year-end net debt of GBP 50 million-GBP 80 million, and anticipate we will be almost debt-free next year. Full-year target for Operational EBITDA is expected to remain at current analyst consensus of around GBP 85 million. I think the consensus EPS estimates are about GBP 0.061. We think we will be in excess of that. Full-year Operational EBITDA margin now expected to increase by at least 160 basis points to 13.7%. The board paid a first-time interim dividend of EUR 1.35 and will recommend a final dividend in line with our previously announced dividend payout ratio of 50% of adjusted basic earnings per share, subject to our financial targets being met. Number of Monks in the company is at now around 6,100, which is down 4% on around 6,350 at December 25, and 6% on a like-for-like basis to last year.
Finally, we remain confident in our strategy, in our business model, and our talent, and together with our scaled client relationships that Scott went through and the strong momentum behind our new go-to-market propositions, we believe we are well-positioned to deliver sustainable long-term growth. With that brief update, we are now open operator for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question via the conference call, please press star one on your telephone keypad. We will pause for a brief moment. Thank you. We will now take our first question from Steve Liechti of Deutsche Numis. Your line is open. Please go ahead.
Yeah. Morning, everybody. Thanks for that. Just a few. Are you able to give us on your Technology Services segment what the like-for-like decline would be in either the third quarter or the nine months? I am just trying to figure out how much of a drag that is relative to your group like-for-like at -5% to -6%. That is the first question. Second question, just on new business, you mentioned, I think, Scott, you mentioned lack of new business. What is going on in terms of your-
To be fair, Steve, it was lack of conversion, not lack of new business.
Oh, conversion. Sorry. Apologies.
Yeah.
Apologies, Martin. Yeah. Just maybe just flesh that out in terms of what is going on in the general-
Yeah
-environment on new business overall.
Yeah.
Then, apologies, this is probably me being ignorant, but there have been some executive changes-
Sure
-and some shift from non-executive to executive. Just talk me through-
Sure
-the operating structure now.
Sure.
Because that is kind of interesting in terms of managing the business. Thanks.
Okay. Let's deal with the last one first. Nirvik Singh, who was a non-executive director, has stepped down from the board and was now responsible for EMEA and for APAC. Nirvik's history, you know, I think, back at WPP and Grey internationally, and now he's responsible. We moved to a I mean, the matrix structure is, I guess all matrices are suboptimal, but this, in our view, is the least suboptimal. We're regionally driven or country driven first, client-driven second, and capability third. And we believe that's the best way of running the business. So we have four regions, three regional heads. James Stephens in North America, Sebastián Caramés in Latin America, and Nirvik in EMEA and APAC. And then we have client leaders like Rick Eiserman around both Google and General Motors, and other client leaders as well. And then we have capability leaders as well behind that.
So that's the basic structure, and that's what Nirvik has moved into doing that. He's based in Dubai, which is a good location for both regions and looking after both regions. On the conversion, Scott can add, but basically, I think we've had a number of significant new business opportunities, but we've not converted, not so much of existing clients, as Scott said, but of the new business pitches. I would say competition is intense, as you would expect. Not just on the media side of the business, where we tend to deal not so much with enterprise clients, but small and medium sized, but also on the creative side as well. And I think that's the issue for us, is how we can up our new business conversion rate, not, again, just to emphasize so much from existing clients.
You have seen the progress at Google and Amazon and T-Mobile and others. It is really a question of conversion of new business opportunities. On the Technology Services, do you want to comment a bit on Technology Services?
Yes. I think-
Steve said how much of a drag-
Sorry. Can I just interrupt?
Yeah, sure.
Can I just interrupt? I didn't mean Technology Services per se. I meant the tech segment of your customer base.
Okay.
So in overall terms, because it's-
Okay.
-40% of the business.
Well-
Do you know what I mean? I am just trying to get-
Yeah
-how much of a drag is that?
Well, look, we are into Q3 this week. I mean, the vast majority of the S&P are going to report this week, and we have not seen a number of the big tech giants. But going into Q2, the CapEx forecast was about GBP 630 billion for the biggest hyperscalers. Coming out of Q2, it was up to about GBP 830, GBP 840, and the forecasts for next year were GBP 1.1 trillion, of which I think GBP 530 billion was going to be funded by debt. Those were the rough numbers.
We will have to see what Q3 brings, but my expectation would be that that expectation for next year of CapEx of over GBP 1 trillion or GBP 1.1 trillion for those biggest hyperscalers will continue, maybe even increase a bit. So I think the direct answer to your question is, it is unlikely that the hyperscalers will switch from CapEx to OpEx at this point in time.
We will see how it shakes out. On a broader point, we are seeing marketing digital transformation, and I emphasize marketing transformation. I am not talking about physical AI or healthcare AI or manufacturing or R&D. I am talking about the marketing. We are seeing extensive transformation in the auto category, as we said in the statement, in financial services, and to a lesser extent, but becoming more meaningful, packaged goods. In all cases, it is due to existential threats, Chinese EVs and AVs in the first case, fintech platforms in the second case, and last but not least, global supply chain issues around the macroeconomic issues around U.S., China, Russia, and Iran. You put that together, we are seeing significant client adoption in those three verticals. I think beyond that, it is much more varied, and it tends still to be around tests, experiments, and pilots.
I think, coming back to your point on the hyperscalers, until we see a significant shift in that, the tech sector is going to continue still on CapEx.
If I can just come back-
Sure
-on the question. Are you able to give me any kind of vague number in terms of what the like-for-like trend in spend has been in that Technology Services segment? If your group, for instance, is not, let us say, -5%-
Yeah
-for the nine months, whatever it is, would the tech be greater than -5%? Would it be a continuing drag, or would it be less than -5%, or would it be in line with that?
There are various. I mean, Scott, we've done a bit of analysis on it, which we've not published, but we've done analysis. Do you want to comment on that?
Yeah. I've got some historic numbers, so I can give you the 2025 numbers. I don't have the up-to-date 2026 ones, but I think the delta's probably quite similar. So in 2025 full year, our Technology Services clients were down just over 13%, and the group at S4 was down 8.3% on the net revenue level. So you can see the delta there, and I'd expect that into 2026, that delta, obviously, the amount would be less because we're down less. But that delta would be quite similar.
Great. I don't want to dominate, but I just wanted to follow- up on that. I hear what you're saying on tech, hyperscalers and stuff like that. I mean, some of your peers have suggested that their tech clients have kind of stabilized a bit, but it is polarized. Are you not seeing any of that at all in your client base?
When you say polarized, what do you mean?
Well, some are down still, some are up now.
No, I think-
So it kind of went one way.
I do not know whether you would call it polarized or not, but if you are saying varied, yes, there is some variation. Without naming names, I can think of one. You have one major hyperscaler who is just in the process of offering redundancy packages to, what was it, 60,000, 70,000 people, 27% of its workforce. Clearly there may be variations between clients. You are thinking about our major tech clients. There is a difference between each and every one of them. By the way, it varies over time. If you get what I just referred to, clearly there is going to be pressure internally on headcount or reduction in headcount, and probably there will be more outsourcing opportunities or embedded model opportunities as a result. It is going to vary over time, and I think we have seen our major clients vary over time.
Some have been more consumed with in-housing or models like that, and some, when they reduce their headcount, they become more prone to outsourcing. It does vary, but I think generally what we are saying is that the tech companies remain, it is not hesitant, it is their priorities are building out capacity with CapEx, and not expanding the marketing budgets and the OpEx budgets. Does that give you enough-
Great. Thanks a lot.
-background? Yeah.
Yeah. No, that is perfect. Thanks for going on.
Thank you. We will now take our next question from Julien Roch of Barclays. Your line is open. Please go ahead.
Yes. Good morning, everybody. The first one is, to be blunt, on one end you say you have great product, strategy and talent. On the other end, organic continue to disappoint.
Sure.
You mentioned macro uncertainty and tech clients focusing on CapEx, but that is unlikely to change next year. So what is going to make you go back to positive organic, right? You just say, we need to increase conversion, which is basically you went to pitches and you lost against other people. So could it be that your new services products are actually not resonating with clients? What is going to turn this ship around? That is my first question. The second one is on net interest. So page 14, you give guidance on a lot of numbers, but not net interest. So can we get some indications for 2026 but also 2027 as you are buying back expensive debt? I would think net interest will go down quite a lot. And then, lastly, coming back on Steve's question on tech.
Scott, you gave us last year -1 3 tech clients versus - 8 for the group. If I look at page eight, tech clients are 43% in Q3 from 42% in Q3 last year. In the first half it was 42% and 42%. It looks like actually tech clients are doing better than the group this year. Can you confirm that? Thank you.
Okay, Scott, do you want to deal with the last one first?
Yeah, I'll come back to you on that, Julien, look at the underlying figures. I think it's us increasing share maybe on some of our clients rather than overall growth. Let me come back to you on that.
Okay. On net interest?
Yes. We do not normally give guidance. It is a bit early for next year, Julien, but just so for this year we are saying GBP 19 million-GBP 21 million NIC, and we are obviously looking at our refinancing. But next year, at this stage, a bit premature, but I would be happy to say GBP 15 million-GBP 16 million at this point.
Okay, and coming back to you. We think the go-to-market propositions, particularly on the content side of the business, are strong. On the data and analytics and media side also, we think the go-to-market propositions have traction. But I think the answer to your question, Julien, is it is highly competitive. And pricing and commercial terms are really important. And given the environment, clients are taking significantly longer periods of time to make decisions. And simply put, we are just not winning enough in our current configuration. We really have to up the conversion by using all the means that we have, the go-to-market propositions, our focus on AI, which I think from a transformation point of view, has significant traction, at least theoretically. We have to just up our conversion rates. It is as simple as that.
I do not think it is lack of opportunity either with existing clients or new clients. It is lack of conversion, and we have to make sure that we convert at a higher frequency to win through. If you look at our major relationships and the AI transformation products or services that we have through Monks.Flow, they do get considerable traction in presentation and conversation. It is a question about delivering it at significant scale. I think we have to keep plugging away.
Okay. But you kind of relaunched yourself 18 months ago, so it is about upping the conversion rate. There are opportunities, we get that. But how are you going to up the conversion rate? Are you coming out with new products? Are you-
Well, I think those that operate in the area are continuously reinventing. You see it in all the LLMs and lab models that are being put out there. There is continuous reinvention. The answer to your question is you are continuously reinventing, reformulating, trying to develop more intelligent models all the time. So it is a moving process. Our biggest client is in the forefront.
Well, I would say our top three or four clients are in the forefront of AI transformation, and they are all using their own technologies and new technologies to develop new formulations literally every day, every week, every month. So it is continuous. Monks.Flow is continually progressing or trying to progress and develop new approaches. So you cannot tie it down to one launch and then you wait and see the results. You are continuously relaunching, adapting, and changing as client needs develop. So it is a continuous process.
Okay. Thank you.
Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We will now move on to our next question from Richard Bushnell of Private Investor. Your line is open. Please go ahead.
Yes, hi. You say that the net debt is GBP 76 million. The pro-forma trailing 12 months is, therefore, 0.7x EBITDA. That suggests over GBP 100 million in trailing pro-forma EBITDA. How do you go from that to GBP 85 million forecast for the end of the year?
Yeah.
Thank you.
Yes. So that reflects the stronger quarter in Q4 of last year. But you are right in your analysis that the trailing EBITDA is GBP 105 million. And what we have said for the year is that we will be in excess of GBP 85 million.
Right. So quite a substantial drop in the fourth quarter.
Well, on a like-for-like basis on the fourth quarter, the fourth quarter of last year was a heavy fourth quarter. And we have said that the seasonal pattern between Q1 and Q2, and Q3 and Q4, it is a heavier Q3 and Q4 as usual, but not as heavy as usual.
Okay. Just on that-
The seasonal profitability has shifted.
Right. Obviously, everybody's aware of the change in the weighting-
Sure
-between the first and second halves. Was there any accounting change that-
No
-created this?
No.
No.
No.
Okay. All right. Thank you very much.
Thank you.
Thank you.
Thank you. We will now take our next question from Andrew Renton of Cavendish. The line is open. Please go ahead.
Morning, all. Thank you for the presentation, and pretty pleasing to see the progress on the de-leveraging side. There are quite a few other players in the market there where that is still a weight around their neck, so good to see that coming down. Can you comment a little bit more on where you think margins can go in this environment? Do you continue seeing that trending higher towards that 20% level we sort of talked a little bit about before, or are things quite tight already as they are?
Sorry, what was the last bit?
Are things quite tight? Can we go more on margin?
Okay. It is not rocket science, I think. Our staff cost to revenue ratio for the year and for the first three quarters is about 71%. The averages, and when we talk about the averages, we are comparing ourselves with substantially different companies, to be fair, and the listed companies that you can compare with have got substantially different profiles. If you take their averages fully loaded with incentives, about 65%, and without incentives, about 62%. So incentives tend to be about 3% or thereabouts, short and long term of net revenue. If we are at sort of 13% or 14%, whatever, and we are at 71%, if we could get to the industry average of 65%, so another six points, and that is where it is. We are running at lower property costs to revenue levels than we have been historically.
If you went back in time, pre-COVID, property cost as a percentage of revenue was much higher than it is now. If we go back, as we are planning to do, to more in-office activity, to three or four days a week, then obviously property costs would rise as a proportion of revenue. Not back to previous levels, but would rise. So there is something going on down the property side as well. To answer your question head on, it is a question of us being a little bit more efficient in the use of our resources and the use of our hubs in particular, because we have hubs in Latin America, in EMEA, and in APAC, which we use effectively, but we probably could use even more effectively offshoring activity at lower cost to clients and lower cost to ourselves. So I think there is more to play for.
The range is in that range. It is between the 13% and 14% and 20% indicated by that staff cost of revenue. Do you want to add?
I agree. So I think you have seen we have taken quite a lot of cost out over the last 18 months, and there is still more to do, but it gets harder, but we will keep looking at it and evolving it, as well as what Martin said about the property, looking at that. So there is definitely room to increase the margin.
Thank you.
Thank you. With no further questions from the line, I will now hand it back to the management team for closing remarks.
Thanks, Operator. Thank you very much. Thanks for joining us for Q3. We are reporting the full year when? In February?
2nd of March.
2nd of March of next year. No doubt we will be in touch before then, but we will have a formal presentation on 2nd of March next year. Thank you very much.