This article first appeared on GuruFocus .
Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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WPP PLC ( NYSE:WPP ) delivered H1 2026 results in line with guidance, with like-for-like net sales down 4.7%, showing a clear sequential improvement from Q1 (-6.7%) to Q2 (-2.8%).
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The company achieved a strong new business performance, ranking number one in JP Morgan's net new business rankings for H1 2026, with landmark wins including Estee Lauder, Jaguar Land Rover, and Airbnb.
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Client retention rates improved in H1 2026, with key renewals including Huawei, Tesco, and L'Oreal, supported by a new holistic client success program.
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WPP PLC ( NYSE:WPP ) is making significant strategic progress with the launch of WPP Enterprise Solutions and a new Commerce Practice, positioning the company in high-growth markets.
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The company completed over 15 non-core asset disposals in H1, generating over 200 million pounds in sales proceeds, strengthening the balance sheet and financial flexibility.
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WPP PLC ( NYSE:WPP ) deepened strategic technology partnerships with Google, Adobe, Meta, AWS, and Microsoft, integrating advanced AI capabilities into WPP Open to enhance its competitive offering.
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The company reported a return to growth in China (up 2.6% in H1) and healthcare and auto sectors returned to growth in Q2, indicating stabilization in key areas.
Negative Points
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WPP PLC ( NYSE:WPP ) continues to face a challenging top-line environment, with H1 like-for-like revenue less pass-through costs declining 4.7% due to the impact of historical client losses.
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The company expects the drag from net new business to persist throughout 2026, with gross client losses estimated at the top end of the 500-600 basis point range.
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Headline diluted EPS fell 24.5% year-on-year to 15.1p, impacted by a normalized tax rate and lower profits.
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WPP PLC ( NYSE:WPP ) anticipates a significant step-up in investment in growth drivers and incentive rebuild in H2, leading to a potential 200 basis point decline in second-half margins year-on-year.
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The Middle East remains a volatile region, with revenue down around 10% in H1, and ongoing geopolitical uncertainty poses a risk to the outlook.
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The company continues to see negative trends in CPG (down 6% in Q2) and technology clients (down 8.9% in Q2), with high polarization in spend patterns across sectors.
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WPP PLC ( NYSE:WPP ) expects leverage metrics to remain elevated in 2026, with the path to reduction dependent on improving profitability and continued asset disposals.
Q & A Highlights
Q: Can you quantify the net new business contribution for 2026 and how it has evolved since the Q1 update, and what is the balance of pitches versus defense in the H2 pipeline? A: Joanne Wilson (CFO): Growth losses for the full year are at the top end of the 500-600 basis point range shared at the start of the year, around 600 basis points, with a slight easing in the second half. Growth wins are comfortably ahead of fiscal 2025 levels. Net new business will be a drag in every quarter this year, but the drag is easing quarter-over-quarter. The pipeline is very healthy and higher than last year, with a balanced mix of defensive and offensive opportunities.
Q: You mentioned improving momentum in existing client spending in Q2 versus Q1. What sectors drove this, and can you provide more detail on the dramatic improvement in China and the change in WPP Media's revenue share? A: Joanne Wilson (CFO): We saw growth in the auto and healthcare sectors in Q2, while CPG and tech were impacted by client losses. China returned to growth, up double-digits in Q2, driven by timing benefits and stabilization in the media business, though we don't expect that level to continue in H2. WPP Media's share of net sales increased from 41% to 46% due to the reclassification of agencies like CMI and TMP under the media segment as part of the new reporting structure.
Q: Can you quantify the deflationary impact of AI on pricing, and why are investments and restructuring costs second-half loaded, given the significant margin decline expected in H2? A: Cindy Rose (CEO): It would be hazardous to quantify the deflationary impact of AI, but it presents both risks and opportunities. AI tooling will drive productivity gains and reduce our cost to serve, and clients will expect us to pass those savings on. However, we can help clients reinvest those savings into innovation, representing an expansive opportunity to grow our footprint. Joanne Wilson (CFO): We generate a third of our profit in H1 and two-thirds in H2. H1 benefited from structural cost actions taken in H2 2025 and lower severance, but these tailwinds won't carry through. Elevate 28 savings are skewed to H2, reaching a run rate of 250 million by year-end. Incentives and investments in growth areas will ramp up significantly in H2, hence the margin guidance of 12-13% for the full year.
Q: On the 200 million disposal proceeds for 2026, is this the cash impact, is it net of tax, and should we expect more in 2027? Also, what should we expect in terms of the incentive charge for this year? A: Joanne Wilson (CFO): We have 64 million in H1 cash flow from disposals, and we expect that to increase to at least 200 million for the full year, net of tax. This relates to the long tail of smaller agencies and associates, and we expect some more in 2027. On incentives, they were at an unusually low level in 2025. In 2026, we are rebuilding the incentive pot, and they will be higher than 2025, probably closer to levels seen in 2024.
Q: Can you give a rough estimate of the like-for-like growth for Enterprise Solutions on a pro forma basis, and any hard numbers for the revenue and profit contribution from the Extel disposal? A: Joanne Wilson (CFO): Enterprise Solutions will report like-for-like from January 1, 2027. It's fair to assume the like-for-like is approximating what we see more broadly across WPP Creative. On Extel, it isn't in our numbers nor Kantar's numbers, and it's a significant contribution towards the 200 million, but it's a very immaterial number in terms of overall income with no impact on revenue.
Q: Based on your guidance, existing clients appear to be declining around 1% this year versus 4% last year. Why are existing clients three points better? Also, what does China's stabilization mean for H2, and will the portfolio review generate bigger benefits than 200 million? A: Joanne Wilson (CFO): Last year, tariffs kicked in in April, causing a sharp decline in client spend. That has now stabilized, and we're seeing a lower drag from existing clients. On China, we expect continued stabilization in H2, certainly not at the Q2 level, but an improvement year-on-year. On the portfolio, processes are ongoing for assets identified in the review, and if successful, we will generate more cash proceeds. We'll update in due course.
Q: What is your guidance for the Middle East in H2, given the 10% decline in H1? Also, will personnel costs decline at least mid-single-digit in H2? A: Joanne Wilson (CFO): The Middle East is incredibly volatile, and it's difficult to give guidance. We've been balanced in our planning assumptions, with some markets getting back to growth and others still declining. Our top priority is the safety of our people. On personnel costs, we remain disciplined on discretionary spend and focused on investing in areas that drive the highest ROI.
Q: For the accounts won and lost in H1, what was called out as doing very well or very badly? A: Cindy Rose (CEO): Clients are responding very well to our integration and simplification. We're showing up as one WPP, putting the right talent in front of the right clients without the friction of our historical structure. Our WPP Open platform and data ownership narrative are very compelling and differentiated. On losses, we're in a fiercely competitive market, and defensive pitches are a feature of the landscape. We take every loss as a learning opportunity to drive continuous improvement.
Q: Is reducing gross debt a capital allocation priority, and should we expect more debt tenders? A: Joanne Wilson (CFO): Maintaining an investment grade balance sheet is a priority. Our leverage is elevated at 2.18 times for the 12 months ending June, and we are focused on bringing it down. Adjusted net debt was down from 3.3 billion to 2.9 billion year-on-year. The bigger driver for leverage reduction will be improving underlying profits, alongside bringing down debt.
Q: Can you quantify the easy comps from Q2 2025 and remind us of the comp profile for H
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
