Welcome to our 32nd annual Media and Telecom Conference. I'm thrilled to start the day with Rich Gelfond, CEO of IMAX Corporation, and Rich has a lot to talk about today. You've clearly managed your business extremely well in what can only be described as a very challenging box office environment post-pandemic. What impact has your global programming strategy had on your business?
A really significant impact, Jessica. As a matter of fact, if you look at the theatrical exhibition industry in general, and particularly North American box office, it's having a very challenging year. For IMAX, this will be a record year. We've guided to $1.2 billion in box office revenue, and you know we're tracking very well against that number. As a matter of fact, the only reason I'm going to reveal this is because online, at the end of every month, we post our box office, so we're going to post it today. Quarter to date, we're at about $270 million, and consensus is $286 million, and we have a month to go. While others in theatrical have kind of been, you know, negative and saying the box office is terrible, not to go too overboard with it, quarter to date, we're up 40% from last year.
The North American exhibitors with their box office is down 14% quarter to date. We're just in a completely different business, and we've been saying that for years. Last year, I guess, was the first year investors really understood that much more, and our stock has been on a tear, and we're close to a five-year high on a consistent basis. You know, who cares about that? What I care about is how the business is doing, and it reflects very much reality. Some of the key points, and I'm sure we'll get into this, is we've really pivoted where we do not just North American movies, but global content. One third of our box office year to date is foreign language film.
We're doing a film now called Demon Slayer, which is a Japanese film, and it has already become the biggest film in Japan in the history of IMAX. I don't remember exactly the number offhand, but we're releasing it in 40 other countries. This movie will do really high numbers for us, and I bet most people here never even heard of the movie. I think one of the bigger issues with Hollywood is that they have a mantra, which is streaming, streaming, streaming, and they've been just so focused on streaming. Pre-pandemic, Hollywood's market share was 80% of content. Last year, it was 60%. If I were running a company, you know, I think I'd have a lot to answer for losing 40% market share over that period of time.
Everybody seems to be doubling down on streaming, whereas the only ones I could think of are IMAX and Netflix that have really been looking globally for box office, and it's been really.
I thought I was just saying that you sound like the Netflix of theatrical, you know, you take a lot of local content, and it translates.
Yeah, and it's not just in the country it plays in. Demon Slayer is a good example because, you know, we're showing that in 40 other countries. Then just briefly, you know, we also do alternative content. In the last week or two, we've done a dead re-release of a film, a dead live concert from Golden Gate Park. We have Prince playing right now. Later in the year, we have The Stones. We all, you know, we program it like almost like someone who owned a box would program it. We did League of Legends finals in China, the final, and it sold out in 160 theaters pretty quickly. We have a totally different view. We think we know we have a platform, and we're in 90 countries, and it's just a different business.
Right. We'll get back to some of the comments that you made. In a world where premium or demand for premium is so great, how do you think about the positioning of IMAX in the overall landscape?
I think your point about premium applies beyond theatrical. If you look at sporting events, things like F1 or Formula One, or you look at concerts, the public post-pandemic seems to really be seeking out premium experiences. We have competitors. Their biggest similarity is they have an X in the name, and that is how they compete with us. The public really wants premium experiences, and they're willing to pay extra for them. Our market share has gone up consistently. We have a 40% higher market share than we had pre-pandemic. One of my favorite statistics is in indexing in the United States, in our 50-plus year history, before this year, we had five films where we did over 20% of the box office on 1% of the screens.
In the last three months, we've had three films that have done over 20% of the box office on 1% of the screens. When you look at the demand, because part of your question was, how do you sustain that, the ecosystem really gets the numbers. The studios are really leaning in. The directors are certainly leaning in. What we do is we have a Filmed For IMAX program where we use IMAX cameras, both film and digital, to capture images. For 2026, we already have 11 films committed, which is about the number we had for all of this year. In 2027 and 2028, we even have films for 2029. I think it's become like a virtuous cycle where I talked to one director last week who called me up to talk about the next few films he was making. He said, I need dates for 2027 and 2028.
He said, we got to talk about it now because I'm not going to release the film if it's not released in IMAX.
Wow. On that topic, Filmed For IMAX films, I think you've more than doubled the number of titles this year since, in the past year, almost doubled. Can you talk a little bit about how you're able to drive studios and filmmakers to use the technology in production?
Yeah. As a matter of fact, I like to think about how much content we put through the network. This year, we'll have 130 separate pieces of content. That includes Hollywood films, local language films, or alternative, all that. We don't have to push it through. There's a demand. This anecdote I was telling you about the filmmaker, he called me last week on vacation to make sure that he gets these dates. There are projects out to 2028, 2029 where the filmmakers are driving it and the studios are driving it. One of our most difficult nuts to crack, not surprisingly, historically, was the Walt Disney Company because their brand is so strong and they lean into their brand. They observed that IMAX was doing all this over-indexing. It started on their own. They said, we want to lean in heavily to the IMAX brand.
They do it really way in advance. Avatar is the end of this year. We already, with them, have a great brand campaign centered obviously around Jim Cameron and the movie, but IMAX is a really big part of it. It's much more their ability to read the financial results. They're coming to us.
Right. What is the typical difference in how these films perform, the films in IMAX versus, call it, a regular film?
In IMAX, you know, we used to be about 10% of the domestic box office for kind of a blockbuster, sort of like a Marvel film or, you know, another kind of action film. This year, we're doing 15% on those kinds of films. If you're dating a blockbuster film, it kind of sounds hard for me to believe, even though I'm saying it, a lot of the studios plan their release schedule around the availability of IMAX screens. You know, a lot of behind-the-scenes trading takes place where a studio is saying, I'm going to release a film on this date, but we're booked with someone else, and they move the date. There were two films dated on the same date, Predator from Disney and Running Man from Paramount, you know, this year.
You know that we were going to share screens for both of them, but they worked it out, so they moved the dates. Now we have a full week to play Predator and a full week to play Running Man. You know, it's kind of ironic because all this is very much in the background. We play a strong role in curating how these films fall together. It's not an accident that a lot of blockbusters aren't dated on the same date because the studios really want an IMAX release.
Do you envision a point in time where most or all of your films across your network are filmed for IMAX?
I don't think so, Jessica. The reason is we like to do really special films. I'm obviously coming up in 2026. One of the most special is Odyssey that Christopher Nolan is doing. You know, Chris approached us, I don't know, a year and a half ago to say, could I have July 17, 2026? We usually don't make this big a commitment, but we committed three weeks to him to do that. Increasingly, that's very much what happened. In 2026, we're playing the new Star Wars: The Mandalorian film. We locked that down, I don't know, six months, eight months ago. If you think of the real Avatar, we locked up a long time ago. The studios and the filmmakers recognize the incremental box office. Also, you know, this kind of sounds weird, especially at a financial conference, because you would think, you know, it's all about the money.
For the filmmakers, it's about more than the money. It's about painting on the biggest canvas on the planet, and it's the way they want their movie shown and the way they want to do it. When they work with us and they have really good financial results, and we've done tests where you ask how much the audience likes a film after they've seen it in IMAX, and you ask how much they like the film seeing it in a regular theater. By the way, they're separate groups you ask, but you get a much higher like score. It actually makes the film better for the audience.
Going back to one of your earlier points, especially at a time where people are leaning into premium and especially coming off a time when they got a little tired of watching everything on the couch and, you know, taking all kinds of breaks and their kids coming in and out. This has become a much more popular way to watch movies, and the filmmakers really know that.
Right. There's a lot going on. We've kind of alluded to streaming or talked about streaming a little bit already. Look, I'm going to go back to that. There's just so much going on in theatrical production and distribution, even with the streamers. You have Amazon MGM with coming releases, Mercy, and also Project Hail Mary. Apple released Formula F1. Netflix K-pop Demon Hunters went from streaming to theaters. Now with the streamers coming to theaters, can you talk about the implications for this on your business and theatrical overall?
At a very high level, you know, what drives IMAX are these slots that we have. Even though I said there's 130 pieces of content, the main blockbuster slots, I don't know, there are 15 of them that drive a lot of the box office during the year. You have the studios competing for those slots. Now you have the streamers competing for those slots. If there were five people competing for these slots, you now have eight because you have Apple and you have Amazon and you have Netflix. Like in any business, having a stable supply, more demand, I mean, that's a really good thing for your business in the most simple terms. We've made a particular push into streamers. A lot of people have treated streaming or theatrical as like a religion.
You know, I'll never show something streamed or I'll never take my product and put it in a theater. We have a much more pragmatic view, and I really think we're going to succeed at it. The new model is it's going to be some kind of hybrid. You know, we figured out that we want to be part of that hybrid. A couple of very quick examples: in F1, which was produced by Jerry Bruckheimer and Joe Kosinski directed it, both of whom did Top Gun, and they did Top Gun with IMAX where we were really successful. A year or two before they started the movie, they came to see us and they said, you know, tell us what an IMAX date could be because we haven't succeeded theatrically and we want to lean into theatrical. We were a part of it.
Their distributor was Warner Brothers, but they didn't hire their distributor until about six months after we reached a deal. They did an unconventional route. They didn't go through a studio. They went to us. We're close to $100 million in IMAX in F1, and the film has done about $600 million worldwide. We're about 15% of the global box office. It's a different movie in IMAX. I wouldn't say that about every movie, but if you see it, it's just a completely different movie. You know, I could talk about this for a month, but Narnia is coming out the end of 2026, and that's a Netflix film. Everybody knows that Netflix has had kind of a bias against theatrical, and you know, everybody is fighting with everybody else. Greta Gerwig is the one who really started it.
She felt that she was really making an IMAX movie, and she always wanted to make an IMAX movie. She and we came up with a plan where we talked to Netflix. In Thanksgiving of 2026, the film is coming out in IMAX a month before it comes out on streaming. The agreement we made, which you understand, we did not have to do that movie. We are not like a theatrical North American exhibitor that needs the content. We have more demand than we have supply. We were able to drive a deal that worked for IMAX, which is one where we said, OK, we will do it, but we want theatrical marketing. We want Greta to do her interviews, real premieres. You will see the marketing, which we are already working on, much of which is going to say see it in IMAX and in Netflix.
It is exclusive to the IMAX network, so our roughly 1,800 theaters worldwide. If you are not in the IMAX business, you are not showing that movie. I think that is a tremendous opportunity. We saw this weekend even with the K-pop movie that Netflix released that, despite at a high level people fighting, the audience is really happy to see the right movie, which you could stream in a theatrical way. It has really worked. Netflix can speak for themselves, but at Netflix, I think there are a lot of people, including Ted to some extent, that think this is a good experiment and are looking forward to the results of it. I know it is hard to believe, but we get along really well. We are working together. I do think the other part of your question had to do with traditional exhibitors.
I do think over time there is going to be a model where theatrical and streaming work together. I think this weekend was just the beginning of it. I do think not only because of the slots, but because of the filmmakers, will be significant beneficiaries of that.
No, all things definitely seem to point to theatrical, even with Netflix, which is a huge change. There is also other stuff going on in the industry. It seems like finally, after years and years of expecting this, that media consolidation just seems inevitable. We're starting to see the beginning with Paramount and Skydance, and this rampant speculation about Legendary and Lionsgate or Lionsgate and somebody. Likely sale of Warner Brothers post the split from WBD. Are there any implications of all of this on your business?
Yes, I think they're mostly good ones because I think what you do is you bring more capital to studios or entities that are undercapitalized. Paramount Skydance is a really good example. David Ellison announced at, I guess, some conference recently that he's going to do, I think, 20 blockbuster sorts of films rather than Paramount was doing 80 a year just because of the capital constraints they were operating under. I don't remember the number, but we've done probably 15 movies or more with Skydance over the years. We have a great relationship with David and with Jeff. We're already discussing more movies that they could do in IMAX. That's kind of one example. Your other part about consolidation, another place I would go is like Amazon MGM. Amazon was very kind of leaning away from theatrical. They bought MGM.
In the list, you mentioned Hail Mary and Mercy and a number of other movies. They're very interested in IMAX release. There's the numbers. Despite what some people say, you can't deny the fact that a theatrical release enhances the value of streaming. In fact, we did a study. I don't talk that much about it because it's not the most scientific thing, but I think it directionally is important where we showed consumers movie posters. Some of them said, see it at IMAX, and some didn't. We said, how likely would you be to want to see this movie in streaming? One reason I don't want to push it too hard because it was almost too good to be true. When you put the IMAX name on the poster, so many more people said they want to see the streaming version.
I think F1 is going to be a great test right now because Apple really held a fairly long window. Originally, they made it for streaming. I think we're going to see great streaming numbers. I think it's going to work for them. I think the exhibitors, like we just saw this weekend, are just going to decide how is it better for me not to play that content? I just think it's like kids in a sandbox. When people kind of get real about what's best for their business, they're going to converge in a way that's going to be good for everyone.
Maybe moving on to markets outside of the U.S., you generate the majority of your revenue outside of North America. How much more runway is left for growth in these markets where you still seem somewhat underpenetrated?
We give out kind of guidance about what the addressable market is. The last time we did that was three years ago. We're going to have an investor day later this year, and we're going to give out a new or revised version. We're about 50% penetrated now of our total addressable market. Even the U.S., which is one of the most penetrated, we made deals with eight new different chains last year. In Australia, last year we had four screens, and the year before we had two. By the time Avatar opens this year, I think there'll be 10. It's the kind of thing, it's a very weird dynamic because people say, you know, it works in Malaysia and Korea and Japan, but it's never going to work in Australia. Then surprise, it works in Australia.
You have the theater chains compete with each other, and that's what's going on now in Australia. That's why it's grown so rapidly. Another really rapid growth market is Japan, where we've had 11 signings so far this year for new theaters, and the most we've ever had, I think, is 12. Western Europe is still very underpenetrated. Obviously, the Middle East is a really good growth area for entertainment in general. For IMAX, the disposable income is high. The IMAX ticket premium, they could afford it. That's a very good market for us. A little ways, probably a little farther back, is South America. There are a lot of, I hate to use the word at a conference like this, but there are a lot of tariffs coming from South America. It's really hurt our growth in the region because they're so high.
Obviously, that world is changing fairly rapidly. We'll see what happens there. Most of our growth will come outside of North America. By the way, two-thirds of our revenues are outside North America now. Before anyone asked the question, the economics are virtually the same, you know, anywhere in the world. It's not, you know, it's not like a subsidized thing. Formula One, I think, did two-thirds of its business outside of North America. I think, you know, again, for a relatively small company, we're really global. I think, you know, that will really sustain our addressable market over the next number of years.
I don't want to front run your investors' egg, but have you said what your network potential is?
We haven't, and we probably will do that in our investor day.
OK. Then.
Other than to say it's about double where it is now, we haven't said that.
In the first half of this year, your local language box office is already over 50% higher than in 2024. How do you view local language content evolving as a percentage of your mix?
If you go back to pre-pandemic around 2019, in China, local language did pretty well for us. That was about it. I don't remember the number. I think it was probably 10% of our box office local language. In 2023 and 2024, it was around 20% of our box office. As I said, this year, we're about a third right now. Earlier in the year, as you know, there was a Chinese film called Nezha 2, which did over $2 billion, mostly in China, but globally. We were, it was 40% of our box office. Now it's settled down to around 33%. As I said, Demon Slayer is going to be a pretty big movie. I think 40% is a reasonable goal over the next couple of years, but it could be a lot more than that.
A little anecdote that's right up to date is we had a very good second quarter. We beat on almost every line, and our stock went down 15%. The reason was everybody said, oh, August, this could be a terrible month. Fantastic Four is the last of the blockbuster movies coming out of Hollywood. We tried to say we have Demon Slayer, we have alternative content, this, that. Investors are very much in this North American mindset. Had they sold off the North American exhibitors, they would have been right because, as I said, they were down 14%. We're back higher than we were then because we're quarter to date up 40%. I think that's one of the biggest disconnects. People think of our business like they think about North American exhibitors. The local language business is huge.
There's been a huge change in the local language business in the last couple of years, which is that we did very well in the country where the film was from. If we did a Japanese movie, it did very well in Japan or a Chinese movie in China. They've started to migrate. A lot of the box office, I don't remember the name of the movie, but anime is very successful globally. Some of the anime movies we've done give us more box office in China than they give us in Japan. That's a trend I definitely see happening. I think eventually it's an opportunity for Hollywood. They're still so obsessed with this streaming narrative, and nobody asks my opinion, so they can run their business the way they want. I think that's an obvious way to go. I think you'll see more of that.
Right. How do you think about allocating capital across regions? Do you see opportunity here in the U.S., China, or, you know, is the rest of the world more interesting?
We have two models for our theaters. One is where we sell our equipment, and one is where we do joint ventures. Just a high-level version of our model, when you blend it all, in addition to upfront payments for our systems, we get around 18% of the box office. If somebody buys a ticket, we get paid by the studio, and we get paid by the exhibitor. We get paid more if it's a joint venture because obviously we've gotten less money upfront, whereas that's called a sale-type lease. We've been a little bit cautious about our capital. A bad story probably, but one not so bad for us is we had 60 theaters in Russia, which are all closed now, but we didn't joint venture any of them. We sold them. We got cash upfront. When that happened, it didn't really have a dramatic effect on us.
Jess, it really depends, you know, very much on the territory. In China, we used to do more joint ventures, but we've cut it back as the global situation has changed a little bit. I think, you know, since we're generating more cash, I think you'll see us allocating more to JVs in the right territories. We did a pretty big deal with AMC this year and a pretty big deal with Regal, where we did a number of theaters in the U.S. and some foreign markets. We think about it less by region and more by country. Again, Japan is one we love doing JVs with because their per-screen averages are so high. Again, we get a percentage of the box office. You'd rather do a joint venture in Japan than you would in India because the box office is so much higher.
I think that's maybe a better way to think about capital allocation.
OK. Maybe moving on to some of the things about content. For years, franchises and superhero films dominated the box office. More recently, they've had mixed success at best. We've seen some of the original IP do really well. How do you view these dynamics?
I think it's good for IMAX because of Warner's seven movies in a row that have been number one. Every one of them was an IMAX film. Sinners is a pretty good example. Those of you who haven't seen it, I'm sure you know it's basically a vampire story about the Jim Crow South. That doesn't scream IMAX to you, but Warner Brothers and we both really leaned into the fact that it was filmed with IMAX film. It was the first movie after Oppenheimer, which won the Academy Award and did close to $1 billion, and Odyssey, which is the next one being filmed with IMAX film cameras. The narrative was auteur filmmaker, filmed with IMAX film. Ryan Coogler really leaned into that narrative. It broke out in the first week. Obviously, it was a great movie by a great filmmaker.
That's not a formula that works if it's not a really good filmmaker. I think it kind of says to the public that this is a special movie. It was shot with IMAX film cameras. I'm sure most people here heard the anecdote that we and Universal put tickets on sale for Odyssey a year in advance. We only put some on for the film ones, and it completely sold out a year in advance. That's kind of the power of the IMAX brand to have something to, I mean, no one had seen a trailer. Chris Nolan is notoriously secretive about his product, but it sold out. In New York, I think it sold out in one minute. I think for original IP, it helps us because we can really help distinguish it from other IP. I also think the media is way too quick to generalize.
Yes, superhero movies haven't done quite as well. If you look, like one example, Fantastic Four, this was the best Fantastic Four in the franchise ever. I think you have to scratch a little below the numbers to see what's really going on. Who would have thought that this year, horror, I guess that's another example, like Conjuring opens next week, and it's tracking extremely well. Final Destination, which Warner did, did really well. Sinners did really well. I think people's tastes change. Obviously, Westerns used to be a big deal, and they're not anymore. I think the studios are just going to be flexible and understand that they need to go in different directions.
Right. Over the years, you've experimented with a lot of different kinds of content. You mentioned earlier some of the concerts, Prince and the Rolling Stones, et cetera. You've done live events. You've done some sporting stuff. You have experimented. What's been successful and how big of an opportunity is this for IMAX?
As I said, I was really surprised by League of Legends. By the way, we not only sold out, but at a higher ticket price than the regular IMAX ticket price. The other thing that was good about it was it brought a completely different audience in who learned what IMAX was. They came back, presumably, to do other things. This recent run of films we just did, we did Prince over a couple of days, a re-release, and we did $2 million this weekend on it. This week, prior weekend is a really interesting example. We did about close to $15 million over the weekend, and we did $3 million on a 50-year-old movie, Steven Spielberg's Jaws. I was worried about it because I thought the shark might not look so good, six stories high, but apparently it looked OK. We did the Prince movie.
We brought back Formula One, which still has playtime in it and did well. There were three or four local language movies together. By the way, just as a way to give you context, this year was really a rapid change. We had been building to this year, and IMAX was on a great trajectory until the pandemic came. Obviously, the pandemic affected us. Last year, 2024, was our best domestic box office ever. It is not like this is overnight, but it has been happening over time in this way. We shifted our focus a little bit to how to program these theaters a little bit better than just blockbuster films coming out that weekend. We have a different philosophy about doing it. Our original budget for this weekend was $4.4 million, our internal budget. We did $15 million.
I am using that as an example of just how much our business has changed and the way we are managing it has changed.
Right. Diversified portfolio. Given the strength, I have to ask this question because everyone has to ask an AI question. I mean, given the strength of your brand, the reputation as the most premium offering with leading technology, what are the opportunities and the challenges of AI for IMAX? Just maybe talk a little bit about how you're currently integrating AI in the business and how you think that might even change over time.
The most obvious example, which we're doing, is just how to make our business systems better. Whether it's how to make programming decisions by getting more data and analyzing more deeply how things play, you'd kind of be surprised, or maybe you wouldn't be, by how dated a lot of the analytics are. We're playing a film that's kind of similar to Mission Impossible 2, so it'll do the same as Mission Impossible 2. You could use AI tools to be a lot more sophisticated than that, and we're doing that. We monitor every IMAX theater in the world in real time. Whether you're in Shanghai or you're in St. Louis, when you go to an IMAX theater, we know whether the bulb is getting old. We know whether the sound is loud enough. A lot of people think, wow, it's a brand, how exciting, use your brand.
The brand is the sum of the parts. The brand isn't something that exists outside. We get tons of real-time data, and we're trying to figure out ways to better capture that data. Could we control our inventory better by understanding something's going to break two months from now? Save costs. We're obviously using it the way a lot of other companies are in the finance area, finance marketing. We're using it in the image enhancement area to some extent, which remember, we don't only film with our cameras, but we take other content and we blow it up. Obviously, Jaws would be one example. It wasn't filmed last week. There are a lot of tools out there that help you clean it up. As I said, I was really personally afraid of what that shark would look like.
There are a lot of tools available that can make it better. There is the whole question of the software aspect and what it does to filmmaking. I know there's a lot of controversy over what role it's going to play. I would say we're not trying to invent new applications, but we pay close attention to it and where it's going and how it's going to change filmmaking. I was on the set of Star Wars: The Mandalorian (film), the new Star Wars movie that Jon Favreau is using. By the way, it's not AI. The way they have new tools that can help film an IMAX version at the same time you can film a regular theatrical version is completely different than you could have done years ago. For those of you who don't know, we have a different aspect ratio.
IMAX is much more vertical than the letterbox and horizontal. You would take one version and you would blow it up or you wouldn't. Favreau and the Disney team invented a tool, ironically, and they'll talk more about this, using the Vision Pro, where at the same time, he could shoot an IMAX version to a different aspect ratio and shoot a regular version. These kinds of tools for filmmakers, whether they're strictly AI or they're more coming out of the innovation that's coming out, I think will help us further differentiate our content.
OK, in the less than a minute we have left, I just want to ask the question. As you look out over the next 12 months or, you know, through 2026, what are you most excited about? What do you think the surprise will be?
Those are two different questions. What am I excited about and what could the surprise be? You can't not be excited about Odyssey. It's the first film ever shot completely with IMAX cameras. We spent a fair amount of money and developed a new generation of cameras, which has a lot more features and is much more flexible. The principal photography is pretty much done. As you know, the cast is like a red carpet in itself. Chris's track record and Emma is obviously quite enviable. Very excited about that. For this year, very excited about Avatar. I've seen, I don't know, 20 minutes of the footage. I think it's dumb to bet against Jim Cameron. I think he knows what he's doing. Extremely excited about that. Next year, the new Star Wars movie coming out, really excited about. Surprise ones, I'm trying to think about that.
This year, my pick was Formula One. I think it was the surprise hit of this year. I'm just not going to go out there, Jess, because I hate to, and as you know, I like saying whatever I think, whatever the consequence is. I just think it's a little too early to say what it's going to be. There are a lot of kind of original content. Again, I'm not naming these, but one of them, like Amazon MGM, is doing Hail Mary, which has gotten a lot of positive views around it. I think Disney always comes up. This year it was Lilo and Stitch. They always have things that you haven't thought about before. How could you bet against Warner with the winning streak they're on right now? I've looked at some of the Paramount stuff coming.
I'm quite sure there will be, but it's too early to identify them.
Right. We're like totally out of time, but thank you so much.
OK, thank you.
OK. Good. Right. OK. Good morning, everyone. My name is Adrien de Saint-Hilaire. I work at Bank of America. I've got the great pleasure of leading our European Media Research Department. It is my great pleasure to be welcoming Arthur Sadoun.
The pleasure is mine.
Thank you.
Great to see you guys.
I think it's the first time you come to this event. We're very, very glad.
That's the first, yeah.
To have you there. We've got Arthur for about 40 minutes. If you don't mind, maybe, Arthur, we can kick off with some questions of mine. Maybe what I suggest.
As long as we don't talk about current trading. I'm kidding. I'm kidding. I'm kidding.
Let's kill off the current trading questions.
To start off with, t hen we can broaden out maybe to the longer-term discussion if that's OK with you, Arthur.
To whatever you want.
Fantastic. Talking about trading and current business trends, at your last results, you slightly raised your full-year guidance. It still implied that H2 would be a bit slower than H1. I think you said that your guidance would assume that there would be some app cuts maybe sometime later in the year. Where do we stand on that?
I think we can fairly say that we had a good summer. Summer has been good. What we have experienced is, first, the marketing cuts that we have discussed in Q2 did not happen, did not materialize so far, which is a good sign. Second, it's very interesting to see that we have more AI projects at IMAX Corporation every day. Don't get me wrong, it's still the strategic phase, which is not where there is material impact on the revenue, but we can see a cadence. By the way, although it has been a very busy first part of the year in new business, we have continued to win over the summer. When you add all of this, actually, you look at the underlying business between H1 and H2, and there is no deceleration. There is a comparable that is tougher that you need to take into consideration.
The business is still on the same pace. We have to be a bit cautious because we just have the first months of the second half. We feel very confident that the five now is very solid, to make a long story short.
Yep, that's very clear.
That's good, no?
I think that's great information. Can you perhaps talk about the pitching activity of late? You've been very, very successful into the first part of the year. You also touched on the fact that maybe pitches could be a bit lower in terms of intensity in the second half.
We see, I mean, again, H1 has been historically high for us. We won, I guess, 70% of the pitches and 100% of the big one. By the way, I just have to say that once for all, which is the big one we won in H1, we won't have impact before next year. We won't see any impact for the moment. It has been an amazing time. I think it has been at the crossroads of two things, which is best model, best people, best tech, basically, on one side. Second, a single focus on our client, while some of our competitors are pretty busy doing other things at the moment. That was awesome. This historically high track record, I don't know if it's going to replicate in H2. What I do know is that we have a good momentum at the moment.
I would say the pitch rate is closer from what we have experienced last year than what we have experienced in H1 this year, which was, again, a very particular situation. No real slowdown on new business. Again, some wins, some that are public, some that are not, but feeling good about that.
Just so that we tackle any potential downside risk, is there any major account that you're currently defending and that, you know, there could be a risk of maybe a loss at some point?
At the moment we're talking, no. We are in a business where I could have a call on my phone that has been charging at the moment that will change what I'm telling you. What is sure is that if you look at 12 months, there could not be any impact of big losses that will come onto our numbers. I would have to receive a call when I leave that would tell me that maybe there will be a pitch, then I will have to pitch, then I will have to lose, then I will have to transition. This will take 12 months before we see that. I thank you for asking the question because I think that what the market is not understanding enough, at least, is that where I think we are doing a great job is not in new business.
We are number one by far, as you know. It's in client retention. It's funny because if you look at H2 last year, some of our competitors have major wins. Some of you, by the way, started to think there is a revival here. You look at the number this year, and you don't see in the number the wins. Basically, for two reasons. Maybe they have given away too much, which we don't do. We don't buy market share. This is why, by the way, there are some pitches. Talking about big pitches, there are some pitches last year that we didn't take for this reason. That's number one. Second, because they are losing.
If you ask me, what keeps me awake at night is not to win a new client, even though we are winning more than anyone else, it is to make sure that we bring to our existing client the best model. I guess if I was an investor, this is what I would look first, which is, are we doing what is right for our current clients, so much so that they don't even want to go and see outside if it means something for them?
Yep, understood.
I think we'll build on that later.
No doubt. Maybe if I can touch on one part of the business, which hasn't exactly perhaps lived up to expectations, or maybe that's been a little disappointing, let's say, is Sapient. Q2 was actually better from your perspective. Is that the start of a proper recovery, or are you still seeing things touch and go here?
First of all, this kind of wait-and-see attitude that has been described by all of our competitors on Sapient, which are basically the Accenture and Capgemini of the world, is still here. Clients, and I guess you see that everywhere, are kind of reluctant to spend a big CapEx. Everyone is excited about the promise of AI. Before you move again from the strategic phase to the implementation phase, there is a lot of money that needs to be spent, and we still see that. I want to be, again, careful, but what we are seeing at the moment is pretty encouraging. We are seeing, as I said, more AI projects going through. We believe that Q1 was definitely the bottom of the swimming pool, which is a good thing. Sorry, that's a French expression. I don't know if you say that in English, but he understands.
That's the lowest we could go for sure. If you ask me what we see at the moment, because of the reason of the momentum coming back slowly, we see a Q3 that will improve versus H1. It gives you an indication. Again, we are one month into the quarter. It's project-based. You need to remember that Sapient is roughly 15% of our revenue. Whether you have a new project that starts earlier, it has an impact. I won't tell you that I'm ecstatic about what I see. I think that with the capabilities we have, it should already be going double digit as it did in the past. We are seeing slowly, and hopefully my competitors will see the same and stay the same, we are seeing that project.
I was telling you, you know, we're having our COMEX at the moment in New York, so I left it to come with you. I should thank Maurice Levy every day for having bought 12 years ago a tech consulting that is going to be able to do true AI integration for all of our clients. What Singh is absolutely certain is that we can talk hours about the potential of AI, and I can show you a super UX of what we can do with production, blah, blah, blah, blah, blah, blah, blah. If our clients do not build all of this AI machine on the right tech foundation, it will never work. It will be built on sand. We are in a unique position with Sapient to help every one of our clients truly transform their marketing.
If you add to that the fact that Sapient is a business that doesn't do outsourcing, what is going to be disrupted is, of course, this kind of heavy headcount business in transformation. We don't have this part. We just have AI and engineers that can bring our clients through new products into the AI transformation. We are fit in terms of structure for what AI can do for our clients. We are at the heart of all of our clients speaking about transformation with our Sapient people. I have never felt so confident about the power of Sapient as long as clients realize that they now have to move from architecting what they need to do to putting the money and doing it, which, again, I don't want to be too optimistic, and things have changed again the last days. I think clients start to stabilize.
If you look at where they are today, they just have two main concerns. Concern number one is how I'm going to deal with the tariff, how I'm going to deal with the macro situation, and how I'm going to deal with my own industry that is being disrupted. That's one thing. On the other side, you have, is AI an empowerment or a challenge for me? We are in a unique place because of the trust, because of our capabilities, because of our model, because of our people to actually help them with that. I want to stay very cautious on how fast Sapient can take over, not take over, take off. What is certain is we will see an improvement in Q3 versus H1 for sure. We feel better about the number of projects.
We feel super confident when we look at what we can bring and the structure we've got. We have to work.
Interesting. Very oftentimes, I think people refer to Epsilon as being a key success factor in pitches, but maybe not so Sapient. Is Sapient something that is being used in day-to-day pitching?
It's funny you said that because it's exactly, I shouldn't share that. I hope there is no competition on the line. I think that one of the big reasons why we've been winning in media for so many years is we've been saying, look, it's great to have scale in media. We have it as competitors. It's great to have access to a wealth of data through the platform. We have it as the competitors. What we have on the top of that is Epsilon with identity that allows you to anchor all the source of data you have into a single persona and connect this persona not only with the media, with the content, and measure it if you want to make a long story short. That was the pitch. That was prior to AI.
Yep.
Because now that you have AI, you can do two things. First, you can superpower what we do with Epsilon. A good example of that is what we do with Influencer. Second, it's not enough to have the data, and we are leading on that. It's not enough to have the capabilities, and we are leading on that. You need the tech expert that will build the tech foundation. That's another area where we are the only one to have it end-to-end, I would say, with Accenture. Accenture doesn't do the media.
Yep, yep, yep.
That's it. For the moment, maybe the challenge.
Maybe that's a question that I will be asking potentially a bit.
That will be fun.
OK, can we maybe switch gears a bit and move to another activity of Publicis, which is doing actually very well, but generally speaking, has been perceived as at risk from AI disruption, which is the creative part of your business? I think you mentioned that it grew high single digit organic in the second quarter. What's the driver behind this? The common view in general is that AI is leading to price deflation, fee pressure, et cetera, et cetera. How are you able to drive that high single digit?
If you don't mind, I'm going to take a step back because the question that is behind your question, if again, I read what I've read in terms of reports and, by the way, how I've seen the stock reacting in the last quarters, is there is a common thought that there will be industry that will be AI winner and other that will be AI loser. I think this is completely wrong.
Yep.
I think you will be an AI winner and AI loser in every industry. It's not that I think. You just have to look around. I mean, financial services, you already start to see who's obviously an AI winner. Tech companies that you thought would be thriving forever are starting to have problems, and others that were maybe more in the midst are doing well. The question is, are we winning or are we losing with AI? That's the big question.
Yep.
It is going to be true for every industry. I think that when you look at the marketing services, what you need to take out, and I'm going to come back to your point, what you need to take out of our result in H1 is that we are clearly winning with AI. I'm not saying we're going to be an AI winner. It's too early to say. Today, we are winning with AI. How do you think we get 500 basis points of gap with our competition on goals and 300 basis points on margin if it's not by our ability to take what we were doing well and beat the competition and accelerate it through AI? Why do you think we are winning all of our media pitches? Maybe you remember, two years ago, we launched CoreAI.
That was based on the $12 billion we invested in data and technology. 100% of our win, and 100% of the reason why we win, is because we put CoreAI at the center of our media platform. Why are we growing almost double digits on creative when the rest of the industry is down? Our AI production platform, growing double digit, representing a third of our creative. What is very interesting for people to know here is that creative for us is only 25%.
Yep.
Out of this 25%, 8% is production, which means that we are exposed to storytelling, which is definitely the place where there would be the most disruption, only by 17%.
Yep.
It's a third of our competition.
Yep, yep.
Which means that, to come back to your question, the reason why we are winning is twofold: AI production platform and our ability to win market share. To be clear, no one so far has seen.
Impact of AI on their storytelling business. If there is a decline somewhere else, it's because they are losing market share. It doesn't mean that it's not coming. This is why we feel good about the 18%, that we will have to reboot like everyone else. That's, and I can go on and on on the reasons why we are winning with AI. Another one, for example, is when you look at M&A. I mean, we spent $2 billion. They are growing 20% on average at the moment. Why are they growing way more than they were growing before acquisition? Simply because thanks to AI, we've been able to connect them to our data. It's particularly true for creative because this is where you see the biggest gap. AI is helping us to win, and it is what is in our number, and it's particularly true for our creative business.
Great. Maybe a bit of a, let me say, a sensitive question, which is...
I love sensitive question. Tough question and sensitive question. That's why I like it.
Since Publicis and all the agencies are a people-based business, that's why it's maybe a bit sensitive. Do you see that there is an opportunity around further margin expansion thanks to AI implementation in the...
Of course. The question is how much are we going to have to invest before it delivers the savings? That's true for everyone. If you ask me, there is a reason why we have actually increased our margin despite all the investment we have made this year, because we are basically the only ones who still pay bonuses and raise our people, which is why we're winning also. We have spent $300 million of OpEx into our AI. I'm not even talking about what we spend in terms of M&A. We have a huge cost of onboarding and winning new business because this is a cost. Despite all of that, we're growing 18% plus, a bit more than 18%, which is again 300% more. Why? We have already automated many things in the last two years since we launched Core AI, and we're going to continue to do that.
What we experience is for $1 of saving, there is in year one basically $0.80 of investment in year one. Let's come back to the point I was making before about our clients. We have too many clients at the moment that are not ready to spend this $0.80 on year one, although they can amortize it, to get the $1 of savings a year after. That's what we're expecting now to move forward.
Interesting. Again, switching gears to the last part of the business, the biggest, in fact, the connected media part, which is growing in a high single digit. Loads of questions that I can ask on that. Oftentimes we hear from investors that they don't know or they're unsure about the sustainability of the model. Yeah, the fact that you integrate scale and data, for example. What would you say on that?
I mean, we have been outperforming for six years the market pretty significantly. I've got news for you, which is in 2026, we're going to still outperform. That's done already. I don't know what I should do or say to convince. By the way, we are winning all the pitches and we have a retention rate of 100%. I don't know what I should do or say to convince them. Now, if I want to give you a bit of granularity on that, I actually think that the connected media we have created is going to even accelerate with the rise of AI. I'm going to tell you why. It's a very simple model. It's to say, which is a big difference with WPP, but where I guess we are aligned now with Omnicom. Omnicom for a while, I mean, John was saying we don't need the data.
You remember that time, everyone changes mind one day, which is great. I think both of us are aligned now. By the way, there might be a reason why we're winning, both of us, is that at the end of the day, the future of marketing lies in identity. I'm sorry to be, is that, and I guess you asked a very good question the other day on the call. The only way for our client to be successful is to make sure that they can engage directly with their customer at an individual level. It was true four years ago for a car, and all car manufacturers realize that, but it was a big money item. It is true also for pet care today.
If you have a cat, you want to be able to talk to the cat owner, not only to make sure that you know what kind of product, but also to make sure that you can go to the vet. This is how it works. It's true if you eat chocolate. I know everyone has a mouse, but now you need to go directly to a customer. Why do you need that? Because this comes back to your point, which is you need identity to basically do three things. First, to be able to recognize not only your customer, but your prospect. For many of our clients, they don't have direct access to prospects. They need to start building their audience on those two. The second thing is to make sure, to come back to your point, that you can connect the full media ecosystem.
The reason why there is still growth for the year to come is that we have actually increased considerably our addressable markets. Yesterday, we were media buyer. Today, we help our clients connect their full media ecosystem, from publishers to CRM to commerce to, again, influencer, which again increased our base of what we can do for our clients and increased what we do for our clients. This is why we are growing so fast. Where AI makes a big difference is that as AI is only data connecting to data, three years ago, I was not able to connect 5 million influencers into a single platform and truly understand what are the followers of those 5 million influencers that could be useful for my pet food company. Now I can. I can do it at an individual level.
To come back to your question, and I'll finish with my last point, what I guess the market is not understanding is the reason why we are still growing at that pace and we will continue to grow is that every day with connected media, we are increasing our addressable markets. Every day we are making it more efficient thanks to AI. It's very interesting. The last point that you do with identity is measurement. I think the thing that we are not doing a very good job at the moment where we really need to progress is that the $12 billion of investment we have made are actually over-leveraged now thanks to how we can connect it thanks to AI. This allows us to empower our clients with what they really need to be AI-ready and, more importantly, to think in terms of business outcome.
You will have a lot of tech companies that will come and explain to you that they have the best product, but they can't talk to their client about the end benefit, which is what is this going to bring to my business in terms of saving and in terms of growth. I'm sorry I'm talking around about that, but I can go on and on on this question. This is at the end of the day, ultimately what clients are expecting from what we bring. By connecting the entire media ecosystem, we're able to deliver those business outcomes. Sorry, it was a long answer.
No, sure. Super interesting. I want to stick to that topic for a minute because in June, there were some announcements just before the Cannes Lions from Meta that they would launch during 2026 and tools that would allow advertisers to create their own ads, even buy their own ads and do the things that people perceive to be done by agencies. I know that Meta clarified later on that this was more aimed at SMEs than large corporations. What would be your take on that? Do you see that as a threat to your business?
I'm going to make a short answer and a long answer. The short answer is Meta is a bit less than 5% of our client spend. Thinking that our, not talking about SMO and SMEs, thinking that our client can go end to end with one platform makes no sense. I think there is something that is bigger beyond that. Maybe I'll spend a minute on that. Maybe it's interesting for the audience. If it's not, you said like this and I would stop immediately. How can I say that? I'm being careful with the words now because I like to be provocative. I'm an ad guy, but sometimes my provocation doesn't help my stock price. I'm being careful. I think we should never forget that at the core of who we are, we are a service business.
We are today a service business that is by far the most advanced when it comes to AI. We are still a service business. The reason why we've been successful in the last eight years is because we always said to our clients, don't choose us if you're looking for a media agency or a creative partner. Go where you get a better price going somewhere else. By the way, they will kill the margin for you. Just do it. If you're looking for true transformation, we are the right partner for you. This is the reason why we've been winning, because we've been telling our clients the world is changing. If you want a transformation partner, we're here for you. If you want a media agency, go to competition. This has been increasing through time. Why? Because clients want more transformation and AI is helping.
This is why we're winning. Where we feel very confident, and I would say incredibly excited actually, is that the world is getting more complex every day. The number of LLM, agentic network, system is, I mean, the palette of possibility you have to be AI empowered as a client is just massive. Our role here, which I think is a fantastic white space, is to be the one that truly connects all of this great technology. We will never compete with a Meta or a Google or Anthropic on spending hundreds of billions to get the best product. We're going to let them race, but we're going to make sure that whatever they create, thanks to our tech infrastructure that we can create for our client, thanks to our data and our identity, thanks to agentic AI that we can put on the top of that.
By the way, thanks to our people and expertise, we can actually connect our data, connect our technology, connect their agents to deliver on business outcome. The reason why we're winning today is this, because we are the only one who's having the tech experts, the data, the expert in media and technology, and the AI through Core AI to bring everything together. To come back to your question, this was the long answer. Meta is a very important partner for us. Everything they are creating at the moment in terms of AI is very useful for us. It's only a tiny bit of the ecosystem our client needs to build. By the way, I'll finish with this, people are starting to get fired because they come to their board or their COMEX with a single interpretation of what AI can do in silo. That's over.
Everyone understands now that it's about connecting end to end all of your AI strategy in order to truly deliver business outcome and not just the nice things that you can show on a webcast. This is exactly what we do. We connect all of that.
Okay.
That was long, I know.
Yeah, no, as always, I think very, very interesting and detailed. Sometimes the perception that investors have about agencies is that they're chiefly, I would say, cost-plus businesses. Maybe one other way to split your revenue would be to look at what is actually driven by business outcomes, as you said, and what is still driven by, I would say, the traditional legacy part of agencies. Is that a split that you have a look at?
There are two questions in your question. First of all, we have a revenue mix that is very different from competition. We have spent $12 billion in data and technology on one side. We created the power of one to make sure that they are truly implicated. Today, 60% of our revenue is in connecting media, growing as single digits. 15% is in Sapient, not growing as it should, but coming soon. Only 25% is in creative with, again, 8%. If you look at Sapient, it's 100% AI, 100%. Media is 80% AI already. Creative is 30%, which is, again, the production. We still have work to do there. To come back to your question, when it comes to Publicis, when you look at our revenue mix, the legacy business, I mean, if I want to be negative, I will tell you, yes, we still have 18% of legacy business.
That's it. That's a reality. This revenue mix, we are the only one who have it. There was another question in your question, which is remuneration. Today, we have two legs. We are paid for our people and we are paid for our technology. Technology is taking over people, but we don't want this to be too much the case because the reason why we are profitable, again, is because we are a service business. People, clients value what we bring. People understand that it's not only about giving you a product and do whatever you want with it. It's about telling to the client, for this, you should take this product. For this, you should take this product. For this, you should take our product. We need to put that all together in a safe place, infused by data, delivered by great people, focused on business outcome.
We don't want to lose it. By the way, this is far from disappearing.
Yeah.
If you ask me, I've got a big question about the SaaS business.
Yeah.
Which is, is SaaS going to be disrupted by AI so much that it will disappear? Maybe. What we do, at least I will be retired for a long time.
All right. Maybe another theme in the industry, which is resurfacing, is M&A and large-scale M&A.
Yeah, I've seen that.
We've seen the deal between IPG and Omnicom. There's been some press articles recently about Dentsu putting their international business for sale, some speculation about what may happen at WPP or S4 Capital.
Yeah.
What sort of role do you want to play in there? Do you want to participate in that sort of large scale consolidation between agency holders or...
First of all, the Omnicom IPG merger, acquisition, whatever you want to call it, is going to happen. I know you're seeing Philippe tonight. This is one of the best things that could happen to our market. The problem we're having at the moment is a perception from my investor that we are in a declining market, which by the way is not the case. It's just that there is, first of all, way more players than those four old co, and they are, most of them, growing. Second, it's true that at the moment we have two wooden players.
Yeah.
We have WPP on one side that I'm confident that now Cindy is going to come with a plan and make something good. You have IPG that is moving to Omnicom, and we know that John is doing a great job. We're going to find ourselves in a position. We are hopefully touching wood. We're going to have three strong players taking basically 100% of the big pitches. We're going to reduce drastically the competitive landscape by 25% with players that know that we're here for the long run and we should not do anything stupid. I feel very good about that. Coming back to your question, I think I've been very clear so far, but if I need to be, again, I will. By the way, look, reading at the price this morning, maybe I should. We are not interested in consolidating more of the same.
If it was true a year ago, it is even truer today. I mean, it's actually not even truer. It's the gap. I mean, I saw myself seeing that exactly a year ago for good reason, because we are not interested in more of the same for the sake of efficiencies. One year later, with the speed of what AI is bringing us and the question we should ask ourselves and how we can automate many, many, many things, it's definitely not what we're interested in. We are interested in, and I know you're going to come with your share buyback question soon. We are interested in buying capabilities that will continue to make us outperform the market and deliver what we believe is the best shareholder value of this industry by far.
Okay, I'll reserve the share buyback.
You can.
If you're buying your own capabilities.
By the way, we're replacing cash. We don't buy with our shares ever.
Yeah. Okay. I think your message on like large scale M&A was...
I'll follow this. Yeah.
Maybe if we can discuss a bit about the acquisitions that you have completed in the last two years. You have acquired more data sets. You have acquired more assets into influential marketing. You touched on the growth that these new, I'd say, units deliver. What has been the rationale for spending, I'd say, that much money on those deals? From the outside, it seems like the initial multiples seem a bit elevated, maybe.
Do you think so?
No, they seem so, yeah.
No, you know.
...ability for the past...
It's funny you said that because 2023 was a year where multiples were very high. We didn't buy anything. We buy like $200 million. I believe that every acquisition we have made in 2024 and in 2025, multiples were pretty reasonable. Apart from the multiple, our strategy here is very simple. We have made a very painful transformation, and you have seen it on the other side. Sorry to say it, but we spent $10 billion in data and technology when you guys were putting me a gun to the head and saying you need to do share buyback. My competitor did that, and look where they are. It has been extremely painful. The second thing is we said no silos, no solos, no bozos.
We fired all the bozos, and we broke down the P&L barrier and truly integrated this data and technology into our media and creative, which means that they are AI-proof today. This has been incredibly difficult. Third, and I don't know if you were in at that time, we said AI will matter. It was in 2017, and we started playing with AI almost 10 years ago now. Thanks to that, we have built a unique model. Now our obsession is to make sure that we keep growing and keep innovating to keep leading thanks to smaller acquisitions that come and complement what we do. What we are looking for is acquisitions that bring us IPs, technology, people, and that can accelerate our existing business. If they don't fit, and by the way, the right price, we're not interested. If they don't fit with that, we're not interested.
If you take the last big thing we did, which is all around influencer, I don't even know where to start there. The excitement and the interest we got from our clients when we told them, if I want to cut a long story short, thanks to the AI platform we have bought and the 15 million influencers we've got that we can connect to our identity, we're able basically to get to the reach of the Super Bowl for a tenth of the price. By the way, know exactly who you talk to and can measure that. This is invaluable. By the way, I'm not even that interested about the fact that we are going to double our acquisition in terms of revenue this year. The impact it's having on the rest of the business is way more important.
We would not win all the picks we're winning if we didn't have that. I'm obsessed by that. To come back to your question, if it's to add more people that are doing media, more people that are doing creative at a time where, by the way, it's going to be disruptive, I'm not interested. I'm interested in buying those capabilities in identity resolution, in intelligent content, in this new kind of media that, by the way, can include a very traditional thing. We have made some acquisitions in sports where we're able to take those sports events and link it to influencers and then to commerce. This is amazing. That's the only thing we're interested in because, again, it delivers the growth. Yes, we have been spending money for sure, roughly $2 billion in two and a half years, I would say.
It's growing 25% and it makes the rest grow 5% because, again, you're going to ask me, are we going to do 4.8 or 5.2? At the end of the day, it's the same number. It's 500 basis points more than competition, which is a demonstration that, thanks to AI, we actually extract ourselves from the pack.
Understood. I don't want to end the conversation on share buyback, so let me ask it. You sound incredibly confident. You've shown the numbers.
No, I'm not. I'm sorry, but I'm cutting you. The good news is we have a track record.
Yeah.
I was confident seven years ago and I didn't have a track record. I'm very serious. People are moving away from our results. Now that you have a view of the industry, and I'm not only talking about those guys, I'm talking about the tech industry overall. I'm talking about AI winners and AI losers. If you take 30 minutes to look at the results in a different industry that broadly does marketing services, you will see that we are winning thanks to AI in an incredible way. It's not that I'm confident. We have a track record now.
Yes, I'll say both. You sound incredibly confident about the future and you have a strong track record. However, the share price performance this year has been a bit mixed, let's say, and the multiple of Publicis has de-rated. You generate a lot of cash. You have a very, very strong balance sheet. Would you be open to the idea of actually buying into your own capabilities by doing a share repurchase program?
I think that the reason why the stock went down is because we did a poor job in communicating what we do, how we do. I'm going to spend more time on that now in the coming weeks because I think there are three reasons. Reason number one, we wanted to demonstrate to the market that our guidance was bulletproof despite all the difficulties of this world. By the way, the difficulties of our peers. I think we spent too much time showing all the risk that was baked into what can happen. I would have said H1 is going to be like H2 despite the comparable. This is something that we need to reassure on. The summer helped a lot because, again, we feel more confident. I'm coming to your question. The second thing is this market thing. We came just after the WPP warning.
By the way, as you remember, the Omnicom in Q1 also did the same. I think John and I and Cindy tomorrow, but let's give her a bit of time, need to do a better job to explain that we are in an industry that is growing and creating value. I think as an industry, we have a better job to do. Even though I think we're extracting ourselves a bit, I could put also the CEO of Accenture, the CEO of... I think we have a better job to do. The last thing is we definitely did a poor job explaining how much we were winning thanks to AI because we didn't talk about it basically. For me, it was assumed we are the people. I think people put us in the wrong bucket.
Yep.
To come back to your question, the reason why we are winning thanks to AI and delivering what is, again, the best TSR of the industry for the last six years is because we invest. We invest in capabilities. When we have the opportunity to invest, we do at a reasonable amount of time because we have a cash allocation strategy that I think is very shareholder-friendly. 50% of our dividend goes in cash, but our profit goes in cash and dividends. That's not a small thing. We buy back share to make sure that the share count doesn't move. As you've been following us for a while, these are two massive progress. I'm not saying that if we don't find what we're looking for in what stays forever, we won't do some share buyback. I don't want to tell you that this is our priority. It is not.
Our priority is to continue to maximize shareholder value. We have made a clear demonstration in the last year that we have the right strategy to do that. Believe me, we're going to continue to do so. When I look at the perspective of this year and next year, at least for the next 12 months, let's say, I feel very confident that the kind of bumps we're having at the moment because of this uncertainty on the macro, because of our industry, and because of this AI winner-loser thing will actually go away and make us come back where we deserve to be.
Since we have about 90 seconds left, I think I want to finish off on talking about maybe 2026. You've already won a lot of business. Indeed, you mentioned the biggest one, Mars, isn't impacting 2025, so it will impact 2026. How much visibility do you have now on 2026?
Visibility is increasing, which is good news. It's increasing for two reasons. First, again, because new business starts to materialize. We see how this is going to trend. Second, this works for the first H1, we don't have anything very dangerous coming at least today, maybe tomorrow, but that gives us a bit of time. Third, we are seeing more AI projects and AI opportunities coming every day. For all of these reasons, we are very confident. We know that for the seventh consecutive year, we're going to outperform GDP and our peers. For the rest, we'll have to wait a bit, I guess. You know, maybe I'll close with that. It has been extremely painful to be where we are. I think we have been working very hard, so we deserve a bit of it.
Also, we've been very lucky because we made some investments, particularly in data, which again, you don't have AI if you don't have the data, and in technology that put us today in a position where we can feel very confident about what is coming in terms of technology transformation, rise of AI, and these needs for every one of our clients to be AI empowered. We are a solution that can connect all the solutions around to truly deliver business outcome.
I think that's a great way to conclude. [Foreign langauge]
Thank you. Merci. Merci beaucoup.