Investing.com — Shares in edged lower on Tuesday after the advertising group reported a decline in first-quarter revenue, as ongoing weakness in client spending offset a modestly better-than-expected performance and a reiterated full-year outlook.
The company said revenue for the quarter fell 6.6% year-on-year to £3.03 billion, while revenue less pass-through costs, a key industry metric, declined 8.9% on a reported basis to £2.26 billion.
On a like-for-like basis, revenue less pass-through costs was down 6.7%, slightly ahead of analyst expectations for a decline of around 7.7% to 7.8%.
Performance remained weak across most parts of the business. WPP’s Global Integrated Agencies division reported a 7.4% like-for-like decline, including an 8.5% drop at its media arm, while other integrated agencies fell 6.4%. Public relations revenues declined 2.6% and specialist agencies were down 2.3%.
Regionally, North America, WPP’s largest market, saw revenue fall 7.8% on a like-for-like basis, broadly in line with expectations.
The United Kingdom declined 6.6%, Western Continental Europe fell 4.7%, and the rest of the world dropped 6.9%, reflecting continued pressure across major advertising markets.
The company said all client sectors recorded declines in the quarter, with its top 25 clients seeing spending fall 9.4% year-on-year, partly due to prior account losses.
WPP noted that underlying trends were somewhat better when excluding those losses, but did not provide a specific figure.
Chief executive Cindy Rose said the group was encouraged by new business momentum and ongoing client wins, pointing to assignments from companies such as Estee Lauder, Wendy’s, SC Johnson and Norwegian Cruise Lines, as well as key client retentions including Tesco, Huawei and Red Bull.
WPP reiterated its guidance for 2026, expecting like-for-like revenue less pass-through costs to decline by a mid- to high-single-digit percentage in the first half of the year, with an improving trajectory in the second half. It also maintained its forecast for a headline operating profit margin of 12% to 13% for the full year.
The company flagged some near-term uncertainty linked to geopolitical tensions in the Middle East, where revenue fell 12.6% in the quarter, although the region accounts for around 2% of group business.
“On the positive side, we expect small consensus upgrades for 1H26 consensus (currently -6.8%) on the back of slightly better 1Q,” said analysts at Morgan Stanley, but cautioned that the broader picture of declining revenues and weak client spending was unlikely to materially change investor sentiment.