Ipsos Third Quarter Results : An Example of Resilience
Q3 2020An Example of
Resilience
Q3 revenue: €468.6 million Q3 YTD
organic growth: (9.9)%Q3 organic growth:
(3.3)%
Paris, October 22, 2020 – Ipsos
posted revenue of €468.6 million in Q3 2020. This was down 6.2%
compared to the same period last year. Exchange rate effects had a
3.8% negative effect. Changes in the scope of consolidation had a
0.9% positive effect. The decline in revenue at constant exchange
rates is limited to just 3.3%, reflecting the beginning of a
renewed stability since June. The business is recovering
month-by-month. Net of exchange rate effects and changes in the
scope of consolidation, the decrease was 9.9% from January to
September compared to 13.5% from January to June.
CONSOLIDATED REVENUE BY QUARTER
Consolidated revenue (in millions of euros) |
2020 |
2019 |
Total Periodic Change 2020 / 2019 |
Third quarter growth |
Q1 |
428.7 |
422.1 |
1.6% |
0 |
Q2 |
357.3 |
481.3 |
(25.8)% |
(25.3)% |
Q3 |
468.6 |
499.4 |
(6.2)% |
(3.3)% |
Q3 YTD revenue |
1,254.6 |
1,402.7 |
(10.6)% |
(9.9)% |
Q4 |
- |
600.5 |
- |
- |
Annual total |
- |
2,003.3 |
- |
- |
Performance by region
Ipsos saw mixed
revenue performances across regions. The EMEA (Europe, Middle East
and Africa) region, which suffered the least in the first half, was
also the one to recover the fastest. Ipsos saw renewed revenue
growth there, driven by the combination of multiple favorable
factors. The large “developing” countries in the region, including
in particular Russia, Turkey and Poland posted encouraging
performances while in Western Europe, in the wake of the “major
lockdown” many health authorities put in place mechanisms to
measure the spread of the virus in which Ipsos is often called to
play a role, mainly in the United Kingdom and France.In this
region, following +0.5% in Q1 and (9.5)% in Q2, Q3 saw growth of
11% eliminating the effects of exchange rates and scope of
consolidation. This recovery may continue until the end of the year
even if double-digit organic growth would remain a very ambitious
target.The deterioration in the health situation is thus bad news
from this perspective. In the Americas and Asia Pacific, the pace
of recovery is slower because in these zones the operations in
developing countries continue to suffer. It is also true that Ipsos
has less of a footprint than in Europe in public policy monitoring
programs, even though these activities have developed in recent
years. China, as well as the US, India and South Korea posted much
stronger performances than their respective
regions.PERFORMANCE BY REGION
In millions of euros |
Q3 YTD revenue |
Contribution (%) |
Organic growth Q3 YTD |
Reminder H1 2020 Organic growth |
EMEA |
589.0 |
47% |
(2.5)% |
(9.5)% |
Americas |
449.0 |
36% |
(14.5)% |
(15.5)% |
Asia Pacific |
216.6 |
17% |
(17.5)% |
(19)% |
Q3 YTD revenue |
1,254.6 |
100% |
(9.9)% |
(13.5)% |
Performance by audienceAn
analysis of the performance by audience confirms these findings.
The Q3 YTD picture remains volatile even if revenue numbers are
improving month-by-month in the services in which Ipsos targets
consumers, and especially patients, health professionals and
citizens. The services dedicated to studying customer behaviors and
opinions are for their part still down insofar as the sectors that
are the biggest consumers of such, like transport, hospitality, and
catering, are precisely those that have been hit the hardest by the
pandemic.The change in the value of contracts in the health and
public opinion fields is highly indicative of the changes Ipsos has
seen in the structure of its business over the past two years, as a
result of the acquisition of certain GfK divisions in October 2018
and the outbreak of the pandemic in February 2020.In the services
dedicated to surveying doctors and patients, Ipsos posted revenue
of €173 million in the first nine months of 2018, rising to €210
million in 2019 and stabilizing at this high level in 2020. Their
contribution to total Ipsos revenue was 11% in 2018, 15% in 2019
and 17% this year.In the services through which citizens and
citizen groups are surveyed, Ipsos posted revenue of €140 million
from January to September 2018, rising to €180 million in the same
period of 2019 and now €244 million in the first nine months of
2020. Their respective percentage contributions to Ipsos revenue
was 12% in 2018, 13% in 2019, rising to 19% this year.
We should remind that there are three barriers
Ipsos is facing:
- General uncertainty, which has an impact on planned investments
and on the growth of private sector companies, particularly when
they are global. For at least some time, they often withdraw into
their home markets to the detriment of foreign markets,
particularly developing countries;
- Some sectors have been hit head on by the health crisis, with
lasting effects;
- Some services require the use of very well-defined protocols,
involving personal interaction between Ipsos interviewers or
analysts on one hand and those who are interviewed or observed on
the other hand. Here, the difficulties performing the contracts
have led to delays, and even cancellations that ultimately dragged
down, at least temporarily, Ipsos revenue levels.
While these barriers are still there, their
negative effects have eased since June. On one hand, as further
proof of its scientific and technical capabilities and agility,
Ipsos has been able to convince certain public and private clients
to switch to new more digital contactless solutions, thereby
enabling the resumption of programs that had been
suspended. Secondly, companies, public institutions or NGOs
cannot stay on the sidelines. They must take action and, at a time
when the consequences are huge, their access to fresh reliable
information is key.
PERFORMANCE BY AUDIENCE
In millions of euros |
Revenue Q3 YTD |
Contribution (%) |
Organic growth Q3 YTD |
Reminder H1 2020 Organic growth |
Consumers1 |
518.4 |
41% |
(17)% |
(19)% |
Clients and employees2 |
283.5 |
23% |
(22.5)% |
(21)% |
Citizens3 |
244.1 |
19% |
27% |
11.5% |
Doctors and patients4 |
208.5 |
17% |
1% |
(5.5)% |
Revenue Q3 YTD |
1,254.6 |
100% |
(9.9)% |
(13.5)% |
*Breakdown of Service Lines by audience segment:
breakdown of revenue by audience segment is non-financial data,
likely to change over time in line with changes in the structure of
Ipsos teams:
1- Brand Health Tracking, Creative Excellence,
Innovation, Ipsos UU, Ipsos MMA, Market Strategy &
Understanding, Observer (excl. public sector), Social Intelligence
Analytics2- Automotive & Mobility Dev, Audience Measurement,
Customer Experience, Channel Performance (including Retail
Performance and Mystery Shopping), Media development3- Public
Affairs, Corporate Reputation4- Pharma (quantitative and
qualitative)
OTHER INFORMATION ABOUT BUSINESS CONDITIONS IN
Q3
In the first nine months of 2020, the
Group’s net income and operating margin
ratios were at similar levels to those recorded
over the same period last year. This follows a drop of around 230
basis points in the operating margin in the first half of 2020, as
a result of the slowdown from mid-March caused by the pandemic. The
suddenness of this slowdown meant that it wasn’t possible to
immediately cut operating costs to the same extent, because they
are in part fixed and were proportionate to the growth previously
forecast for 2020.The various cost-cutting measures put in place
made it possible to largely make up for this shortfall, with the
company being well on the way to achieving the €109 million
cost-saving plan announced for full-year 2020 (including around €42
million in salaries - plus €29 million in government subsidies –
and close to €38 million in general overheads).
Free cash flow was positive and in line with
forecasts for Q3, following a record first half due to the twin
effect of the cash received at the start of the year following the
high level of sales in Q4 2019 and the lower working capital
requirements due to the decline in revenue in 2020. It stood at
€177 million over the first nine months of the year.
The company invested close to twenty million euros in its
non-current investments (in particular in the two acquisitions of
Maritz Mystery Shopping and Askia completed at end-January
2020).
Net borrowings stood at €435
million, down from December 31, 2019 (€578 million). The net debt
ratio stood at 40.5% compared with 51.5% at December 31, 2019 and
60.3% at September 30, 2019.
Cash position. The cash
position stood at €215 million at September 30, 2020 compared with
€165 million at December 31, 2019, ensuringIpsos a strong cash
position. The group also has around €400 million in
available cash facilities enabling it to meet its debt
repayments in 2020 and 2021.In September, the company met a private
debt market maturity (USPP) of USD 185 million at
end-September, without needing any refinancing.
OUTLOOK FOR 2020
Ipsos has been recovering month-by-month since
the end of the "great lockdown" in Europe.From June to September,
our sales (net of cancellations and postponements) increased by 6%
at constant exchange rates and scope of consolidation compared with
last year. The company is on a favorable path that should allow it
to reduce the rate of decline in its revenue over the full-year.At
the current pace, the combination of maintaining a strong order
book, a proven ability to maintain decent price levels and rigorous
management of our cost base should enable the company to achieve
solid financial results and a good cash flow generation.The Ipsos
teams have been working hard and communicating extensively with all
the clients with whom they are honored to work. Our raison d'être:
"To deliver reliable information that provides a true understanding
of Society, Markets and Individuals" is, and remains, their guide
when they innovate, collaborate and implement with maximum
diligence "Triple A" services, as they have decided to call
them.Indeed, companies and institutions that choose to entrust us
with some or all of their research programs on the state of Society
and Markets and on people’s changing behaviors and expectations
know that they must have access to reliable, consistent, fresh and
understandable information. In our language, "Triple A" refers to
solutions that are "Appropriate, Agile, Affordable".Every day,
Ipsos proves its agility, robustness, knowledge of clients and
their expectations, as well as its ability to use scientific
know-how and technologies that enable it to produce and disseminate
more reliable information, faster, at an affordable price.Ipsos’
outlook for the remainder of the year, and by extension for 2021,
is good. There is, however, one obvious caveat. It was expected
that the COVID-19 pandemic would still be around for many months
until effective treatments for doctors and citizens were available
to counter the effects of the virus and vaccines available to stop
or even prevent its spread.It was not necessarily expected that the
pandemic would increase in intensity as is currently the case in
Europe and elsewhere, including the United States.The lesson from
the spring wave of the pandemic is clear. Ipsos saw business fall
due to the drastic measures taken to limit the spread of the virus
rather than to the epidemic itself. It was the "great lockdown"
that slowed revenue and led to the shutdown of certain programs for
technical reasons.As of the date of publication of this press
release, no major country has reintroduced widespread lockdowns. As
a result, the level of new orders remains strong. No one can
predict today what decisions will be taken by the health
authorities in the countries most affected by the new wave of the
pandemic.In reality, our only certainty is that our business will
be affected if many countries reintroduce widespread lockdowns for
several weeks or even months.That said, the various scenarios, from
the most restrictive to the most optimistic, do not call into
question the financial and operational strength of our company.
ABOUT IPSOS
Ipsos is the third largest market research company in the world,
present in 90 markets and employing more than 18,000 people.
Our passionately curious research professionals, analysts and
scientists have built unique multi-specialist capabilities that
provide true understanding and powerful insights into the actions,
opinions and motivations of citizens, consumers, patients,
customers or employees. Our 75 business solutions are based on
primary data from our surveys, social media monitoring, and
qualitative or observational techniques.
“Game Changers” – our tagline – summarizes our ambition to help
our 5,000 clients navigate with confidence our rapidly changing
world.
Founded in France in 1975, Ipsos has been listed on Euronext
Paris since July 1, 1999. The company is part of the SBF 120 and
Mid-60 indices and is eligible for the Deferred Settlement Service
(SRD).ISIN code FR0000073298, Reuters ISOS.PA, Bloomberg IPS:FP
www.ipsos.com