Ad group Interpublic misses on sales and profit as tech firms spend less

(Reuters) – Advertising group Interpublic missed Wall Street estimates for third quarter revenue and profit on Friday, as spending from its technology and telecom clients stayed muted, sending its shares down nearly 3% before the bell.

The results underscored an uneven recovery in the ad market, where lower spending by tech firms worried about the economy have offset higher promotions from media and healthcare clients.

“During the third quarter, revenue performance did not measure up to expectations,” CEO Philippe Krakowsky said.

He added that concerns about the economy were also leading to project delays and slower onboarding of new businesses.

The maker of ad campaigns for the likes of Google (NASDAQ:) and Samsung (KS:) posted a net revenue of $2.31 billion, missing estimates of $2.38 billion, according to LSEG data. Its earnings of 70 cents per share also came short of expectations for 73 cents per share.

Interpublic blamed some of the weakness on its digital ad business, which includes agencies such as R/GA and Huge and has a lot of exposure to tech and telecom clients.

The company has the second largest exposure among ad agencies to tech and telecom sectors, which represented 15% of the 2022 net revenue generated by its top 500 clients, based on MoffettNathanson analysts’ estimate.

The results came in contrast with upbeat earnings of U.S. rival Omnicom and France’s Publicis, both of which topped quarterly earnings expectations earlier this month.

Interpublic, which also owns Mediabrands and MullenLowe, said it expected organic growth of around 1% in the fourth quarter and was on track to deliver on its margin goal of 16.7% for the year.

Its shares were down at $27.7 in pre-market trading. They have declined 14% this year.