Good afternoon, ladies and gentlemen, and welcome to the Omnicom First Quarter 2022 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded. At this time, I'd like to introduce you to your host for today's conference, Senior Vice President of Investor Relations, Gregory Lundberg. Please go ahead.

Good afternoon. Thank you for joining our first quarter 2022 earnings call. With me today are John Wren, Chairman and Chief Executive Officer; and Phil Angelastro, Executive Vice President and Chief Financial Officer. On our website, omnicomgroup.com, we've posted a press release along with a presentation covering the information we'll review today as well as a webcast of this call. An archived version will be available when today's call concludes. Before we start, I'd like to remind everyone to read the forward-looking statements, non-GAAP financial and other information that we have included at the end of our investor presentation. Certain of the statements made today may constitute forward-looking statements, and these statements are our present expectations. Relevant factors that could cause actual results to differ materially are listed in our earnings materials and in our SEC filings, including our 2021 Form 10-K. During the course of today's call, we will also discuss certain non-GAAP measures. You can find the reconciliation of these to the nearest comparable GAAP measures in the presentation materials. We will begin the call with an overview of our business from John then Phil will review our financial results for the quarter. After our prepared remarks, we will open the line up for your questions. I'll now hand the call over to John.

Thank you, Greg. Good afternoon, everybody, and thank you for joining today. We are pleased to share our first quarter results. Before I discuss our performance, I want to address the ongoing war in Ukraine. We continue to be witnesses to this horrific war, and our focus remains the safety and well-being of our Ukrainian colleagues and their families. We've been in constant contact with our agency leaders in Ukraine and continue to deliver needed humanitarian assistance and support. I was privileged to meet our senior regional leaders in Warsaw a few weeks ago. I continue to admire the tremendous bravery of our Ukrainian colleagues as they defend their country and protect their families. Since the onset of the war, our teams in the region from Poland, Czech Republic, Romania, Slovakia, Bulgaria, and Hungary have been providing extraordinary support to their coworkers from Ukraine. It was truly remarkable to see. I'm honored to lead a company with a culture of caring and compassion that displays such unity and strength. I want to extend my gratitude to our people around the world that have selflessly and tirelessly worked to help our Ukrainian colleagues. We hope for an end to these atrocities and a peaceful resolution to the war. Omnicom will continue to offer whatever assistance is necessary and will support our people for as long as needed. Turning now to our financials. We increased our operating margin and exceeded our expectations for the quarter with organic growth of 11.9%. We made the decision to withdraw from Russia and dispose of our operations. As a result, the financials for the quarter reflect our Russian business only through the end of February. We also took a charge arising from the effects of the war in Ukraine. Phil will provide more details during his remarks. Our revenue growth and margin performance in the quarter were very strong across all geographies and disciplines. Our revenue performance reflects the continuing investments that our clients are making to strengthen their marketing, branding, consumer experience, e-commerce, and digital transformation efforts in a rapidly evolving digital economy. Operating profit margin for the quarter, excluding the charge arising from the effects of the war in Ukraine, was also very strong at 13.7%. This is 10 basis points higher than our margin in 2021. I want to commend our agency management teams for growing their businesses while tightly managing costs in line with revenue growth. Earnings per share for the quarter, excluding the charge, was $1.39, up 4.5% versus 2021. Finally, our cash flow and balance sheet remain very strong and support our primary uses of cash: dividends, acquisitions, and share repurchases. During the quarter, we continued to invest internally and through accretive acquisitions in high-growth areas like CRM and Precision Marketing, digital transformation in MarTech, data and analytics, e-commerce, performance media, and the health sector. In the quarter, we acquired TA Digital, a leading global digital experience consultancy. The acquisition further expands the digital transformation, content management, commerce, and customer experience capabilities within the Precision Marketing group. Throughout the group, our agencies are delivering connected consumer experiences across media and commerce platforms within owned, paid, and earned environments. All of this is enabled by Omni ID, our proprietary person-based identity solution, delivering reach and precision that is part of our Omni open operating system. Omni ID is built to be privacy compliant and is a future-proof framework for a post-cookie marketplace. It delivers the highest possible degree of first-party and CRM data management, control, and governance. Our investments in these high-growth areas, in our data and technology capabilities, and in our best-in-class talent have positioned us extremely well to service our clients now and in the future. I want to take a moment to welcome and congratulate two new members of our Board of Directors: Patricia Salas Pineda and Mark Gerstein. The diversity of Omnicom's Board is something we take pride in, especially as we look to continue to improve diversity, equity, and inclusion throughout our entire organization. At the end of 2021, we saw meaningful progress in our workforce diversity across all professional levels in the United States. We're not done, and we will continue to drive improvements throughout 2022. Overall, we're very pleased with our quarterly results. While we are off to a strong start in 2022, we continue to plan cautiously for the remainder of the year, given the ongoing war in Ukraine, the effects of the pandemic across markets, the continuing disruption of global supply chains, and the economic risk posed by higher inflation and oil prices. With that said, given our strong performance in the first quarter, we are increasing our forecast for organic growth to between 6% and 6.5% for the full year 2022, and we anticipate delivering the same strong operating margins for the full year 2022 that we delivered in 2021. I'm confident we'll continue to operate at a high level through this business cycle as our agencies remain an integral partner in growing our clients' businesses. I want to thank our people around the world for your compassion and dedication. You have continued to produce incredible work for our clients. Your resilience not only drives our financial success; it defines who we are as a company. So thank you once again. I want to now turn the call over to Phil for a closer look at our financials.

Thanks, John, and good afternoon. Thank you for taking the time to join us today. Our first quarter results were very strong. It's good to see the continued momentum, which resulted in growth across every one of our disciplines. Before we go into the details, please turn to Slide 3, where I'd like to draw your attention to the fact that our operating profit and EPS were negatively impacted by the announcement of our withdrawal from Russia as well as charges related to the effects of the war in Ukraine on our agencies there. We have sold or are committed to dispose of all of our businesses in Russia. And during the quarter, these actions resulted in a pretax charge of $113.4 million. As a result, operating profit of $353 million was down $112.4 million or 24.1% compared to Q1 of 2021. Our tax rate was elevated due to the non-deductibility of the charges plus an additional $4.8 million tax charge related to our withdrawal from Russia. Reported revenues were down slightly as strong organic growth of 11.9% was offset by the negative impact of foreign exchange rates and disposition revenue in excess of acquisition revenue. Turning to Slide 4, which shows non-GAAP adjusted amounts. You can see after adjusting for the charge, our first quarter operating profit was $466.4 million, slightly above last year. And our operating profit margin was 13.7%, also slightly above last year. Amortization expense was flat year-over-year, and as a result, non-GAAP adjusted EBITDA and EBITDA margin were flat with last year. As a reminder, last year's 15.4% operating profit margin included a gain from the sale of a subsidiary of $51 million, which was recorded in the second quarter. As John said, we are still comfortable with our guidance of 15.4% for the full year 2022. Slide 5 shows the non-GAAP adjusted amount for net income of $292 million for the first quarter and diluted EPS of $1.39 per share, up 4.5%. We are pleased with this underlying performance and the strong organic growth across our businesses and geographies as well as a work and travel environment that continues to normalize. Let's now go into some more detail, beginning on Slide 6. Our organic growth was a strong 11.9% or $408 million. The impact of foreign exchange rates decreased our revenue by 2.5 percentage points. If rates stay where they were as of April 15, we estimate the impact of foreign exchange rates will reduce our revenue by approximately 3% in the second quarter and by 2% for the year. The impact on revenue from our net acquisitions and dispositions decreased revenue by 9.9%. This was consistent with our expectations and is primarily the result of disposition activity from Q2 of 2021 and our advertising and media discipline in the U.S., which we will cycle through after the second quarter. We expect this reduction from dispositions, including the disposition of our businesses in Russia, to reduce our revenue by approximately 6.5% in the second quarter of 2022. And we expect acquisitions, net of dispositions, based on deals completed to date, to be approximately negative 4.5% for the full year. Now let's look at the changes in our total revenues by business discipline on Slide 7. Advertising and media, our largest category, posted 9% organic growth in the quarter, with continued momentum in both our media and our creative agencies. Precision Marketing grew 20.3% organically in the quarter and is now approximately 10% of our total revenues, up two points from the first quarter of last year. Our strong growth is being led by demand for our capabilities in digital transformation, MarTech, data and analytics, and activation. In particular, Credera continues to perform exceptionally well. Commerce and Brand Consulting was up 13.8%, led by our branding agencies and continued benefits from corporate spin-offs, brand architecture work, and widespread focus on corporate reputation around DE&I and ESG issues. We're also seeing increased demand from clients looking for retail media, e-commerce, and DTC solutions. Experiential had organic growth of 68% compared to negative 33% in Q1 of 2021, reflecting an increase in the number of global in-person events. These events are important to our clients' brands because they engage with customers and build loyalty in unique ways. Results were especially strong in the Middle East. As we look forward this year, we expect growth to continue but will likely be choppy by quarter as clients adjust to the post-COVID environment. Execution and support was up 6.3%, led by demand in field marketing and a pickup in physical retail activity. PR was up a very strong 14%, reflecting growth from both long-standing and new clients and a pickup in overall activity as clients adapt their post-pandemic positioning. Healthcare grew 7.7% with strong performance across our agencies. Turning to Slide 8. We saw strong organic growth rates in virtually every region, and we're pleased that growth was solid within each of these regions and across all of our disciplines. In the U.S., our 10.6% organic growth was led by Precision Marketing, Advertising and Media, and Public Relations. Outside of the U.S., growth was led by Europe, and its growth was driven by advertising and media, experiential, and PR. The Asia-Pacific region was also a key driver, as was the Middle East, which saw strong growth in experiential and advertising and media. Looking at revenue by industry sector on Slide 9. Relative to the first quarter of 2021, the broad distribution of our clients remained fairly stable. The only notable shifts were a two-point increase in technology, offset by a reduction in revenue from clients in the travel and entertainment industry. But this change was largely driven by the disposition of a business that had a high concentration of clients in this industry in Q1 of 2021. Let's move down the income statement now on Slide 10 and review our operating expenses for the quarter. In total, our operating expense levels were down by 20 basis points year-over-year despite the significant pickup in our business activity and the continuation of our strategic investments in the business. When you look at operating expenses as a percentage of revenue, the year-over-year comparison is not comparable because the impact of dispositions made subsequent to Q1 of 2021. Salary-related service costs, our largest category increased by 8.8%, consistent with growth in our revenues, excluding dispositions and acquisitions. Adjusting 2021 for amounts related to acquisitions and dispositions, salary and related service costs were 53% of revenue, roughly the same level as this year. Third-party service costs were down $199 million or 22%. They decreased by approximately $315 million from dispositions and were offset by an increase of approximately $114 million from growth in our businesses. Adjusting 2021 for amounts related to acquisitions and dispositions, third-party service costs were approximately 19% of revenue, similar to the level this year. Occupancy and other costs, which are less directly linked to changes in revenue, were up 2.9% year-over-year due to an increasing number of people returning to the office, partially offset by lower rent and other occupancy costs as we continue to efficiently manage our real estate portfolio. The increase in SG&A expenses on a year-over-year basis was due primarily to a normalization of our business. At 2.8% of revenues this quarter, SG&A has been around this level for 12 months now and is in line with our pre-pandemic run rate. There's one thing I would like to highlight regarding interest expense going forward. Please remember that our interest expense in Q2 of 2021 had a $26 million one-time charge related to the early redemption of our 3.625% notes. Our total interest expense that quarter was $80 million compared to just $51 million this quarter and $43 million net of interest income. We expect net interest expense for the second quarter and the remainder of 2022 to approximate that run rate. We expect our tax rate for the remainder of the year to approximate 26.5%, similar to our rate this quarter after adjusting for the charges arising from the effects of the war in Ukraine. Our diluted share count was down 3.2% primarily due to our share repurchase activity in the second half of 2021 and in the first quarter of 2022. Let's now turn to Slide 11 for our cash flow performance. We define free cash flow as net cash provided by operating activities, excluding changes in working capital, which are generally positive for us on an annual basis. Free cash flow of $340 million was down $43 million. Adjusting for the cash-related portion of the charges arising from the effects of the war in Ukraine of $48 million, free cash flow was flat year-on-year. Regarding our uses of cash, we used $147 million of cash to pay dividends to common shareholders and another $14 million for dividends to non-controlling interest shareholders. Our capital expenditures of $23 million were back to normalized levels. Acquisitions net of dispositions and other items were $259 million. As highlighted at the back of this presentation, this included the purchase of TA Digital and is aligned with our stated strategy of pursuing acquisitions in our faster-growing disciplines. And lastly, our stock repurchases during the first quarter were $287 million net. This puts us on the way toward our historical annual range of $500 million to $600 million. This capital allocation mix may vary in emphasis as opportunities present themselves. But our overall approach and philosophy have not changed. Slide 12 is an overview of our credit, liquidity, and debt maturity schedule. There were no changes in our long-term debt outstanding during the quarter. As of March 31, our total leverage was 2.5 times. In addition to the $4 billion of cash and short-term investments on the balance sheet, we also have a $2 billion U.S. commercial paper program backstopped by our $2.5 billion revolving credit facility. I'll end my prepared remarks today on Slide 13, which shows our strong return on invested capital of 26.4% for the 12 months ended March 31, and a 41.7% return on equity. These returns are both extremely strong and are a reflection of our consistent operating performance and consistent approach to capital allocation. At this point, operator, please open the lines for questions and answers. Thank you.

Our first question comes from David Karnovsky of JPMorgan. Please go ahead.

Just on the outlook, given the really strong results in Q1, it does appear you're assuming not a significant deceleration in organic for the rest of the year on what I think are relatively similar to your comps. Just wondering, John, if you could speak a little bit more to the conversations you're having with clients on inflation, supply chain, and the economy and kind of how that's impacting your view on guidance?

Sure. Thank you for the question, David. Our guidance is based on a thorough review at every level—company, sector, and practice area. Almost every client I've spoken with, across the U.S. and Europe, acknowledges the existing uncertainty. However, they are not withdrawing from their spending or commitment to their brands right now, but the uncertainty remains. We are confident in our performance and forecasts, which is why we raised our estimates. In my 26 years, I can’t recall ever raising our estimates after the first quarter before. While our estimates are conservative, keep in mind that project work will arise throughout the year, and the further into the year we get, the more unpredictable it becomes. It's difficult to predict how everything will unfold. In the U.S., there’s a strong case that we might be at peak inflation, but the duration of conflicts and other impacts are uncertain. We feel comfortable maintaining our estimates for this year, which we indicated would be between 6% and 6.5%, along with maintaining last year’s margins of 15.4%.

Okay. And then maybe just a follow-up on the outlook. I would be interested to get your views on areas like experiential and execution and support, at the end of 2021, these segments were running still well below 2019, and we did see a big acceleration for events in the quarter, maybe less so for execution. Just wondering, how much of a lift towards pre-pandemic levels you're expecting or seeing as restrictions fully go away?

That's an interesting question, and it connects well with your previous inquiry. If I had been asked this a month ago, I would have had a very positive outlook. However, the situation changed with the shutdown in Shanghai. Such decisions are typically planned, but the interval between assigning the business and execution is usually short, generally not exceeding 12 to 14 weeks. It’s somewhat hard to believe that shutting down a city as large as Shanghai would happen in the manner that the Chinese government chose. Therefore, we are taking a more cautious approach. We remain confident in our forecasts for the U.S. in this area and are mostly confident about our forecasts for Europe and the Middle East, but we have adjusted our expectations for Asia.

I think our expectations for those two disciplines are certainly more subject or we've got less visibility. It's probably a better way to describe it when you get to the second half of the year. Certainly, the businesses have done a good job getting ready to come out of COVID, and they've been growing coming out of COVID. So we're happy with their performance. But as we look at the second half of the year, since they're largely project-based, their forecasts are probably more conservative than most and I think subject to a little bit more uncertainty in terms of clients' spending plans especially experiential given some of the changes that could occur like the ones here that are being experienced in China right now. So, those two disciplines in particular, we're certainly happy with our operating performance, but in the second half, there's a little less visibility to how they're going to perform sitting here today.

And the next question comes from the line of Jason Bazinet with Citi. Please go ahead.

I want to ask this question because I'm sure a cynic will bring it up tomorrow if I don’t address it. The increase in the outlook, which is unusual since you typically don’t do this in the first quarter, is noted with margins at 15.4 relative to your previous outlook. A cynic might interpret this as being due to inflation running higher than you expected. Is that an incorrect interpretation of the increase in organic growth?

Yes, I'd say it is.

Yes. One reminder, I think, in terms of the expectations of operating margin for the year, the prior year baseline of 15.4% included a gain on the sale of business of $50 million. So, there is some operating performance improvement expected for the year. But yes, I don't know if that's what you're after or you just focus perfect.

No, no, that's perfect, super helpful. Thank you.

Sure.

And the next question comes from the line of Tim Nollen with Macquarie. Please go ahead.

It's a very strong result in Q1. If you compare the Q1 acceleration to the Q4 number, you'll see that in Q4 '21 compared to Q4 '20, the organic growth was basically flat. However, in Q1 '22 compared to Q2, there's a 14% increase based on my figures. This indicates a surprisingly strong growth figure. Given the significant year-over-year comparison in Q2, which was 24.4% last year, I wonder if you could provide any insights on how to approach Q2, considering everything you've mentioned regarding the full year outlook and the uncertainties in the second half. That would be very helpful.

Sure. I'm not sure if this is a precise answer, but two things absolutely impacted. When you look at just year-to-year, I think the impact of COVID added to that recovery at that rate. But also, I don't want anyone to forget that for the four years prior to COVID, we were cleaning up our portfolio. And we emerged from last year with a portfolio we feel we're very, very strongly about, and we think is well suited to provide what our clients need today. I don't know if that fully answers your question. If you can follow up, it's okay to.

Yes, I find that helpful. I understand there are many factors at play. It's just that Q2 presents a particularly tough comparison. So it's reassuring to hear about the optimism concerning growth in the second half of the year. I'm just trying to figure out how to approach the growth rate for Q2, considering the strong previous performance.

Yes. In terms of profit, Q2 has that the proceeds from the sale, the gain from the sale that Phil when he answered the last question. Yes. From a revenue standpoint, the first quarter of 2021 serves as a baseline, marking the end of the lingering effects of COVID as we transitioned out of it, mainly starting in the second quarter of last year. Thus, the performance bar for this quarter isn't set particularly high compared to last year's metrics. We're very pleased with the results. As we move into the second quarter, it’s important to note that last year’s second quarter was essentially the first quarter post-COVID, where performance significantly improved because the numbers from 2020 were notably low and not very comparable. This was a period when the business finally started to rebound, setting the baseline for the second quarter of 2022. Nevertheless, the first quarter's performance is quite encouraging, and we feel we have some momentum. We anticipate that this momentum will carry on into the latter half of the year. As John pointed out, there is a bit more uncertainty and less visibility as we look toward the second half from our current standpoint.

Sure. Yes, understandable. Now if I look back at the last four quarters, basically, well, Q2, Q3, and Q4 of last year, all more or less in percentage organic growth terms reversed the declines of the prior year almost precisely. And now just your Q1 was just such a stronger number versus that. So, obviously that, that's good to see. Could I just maybe tack on one other last thing? You said, John, that you're pretty optimistic, you're pretty confident in your forecast for Europe. I just wonder if you could comment a little bit more. Obviously, Russia and Ukraine aside, anything else you could comment on growth in the other regions, maybe the border regions, the neighboring countries, Poland, et cetera. And as you move further west, are you still that optimistic on the growth?

The good news is that these numbers represent a small portion of our business. Recently, I had the chance to meet with leaders from various disciplines ranging from Romania to Poland along the Ukrainian border. They are all optimistic about their business prospects, but their main priority is supporting the Ukrainians crossing the border due to sudden population increases and related needs. The major markets—namely the U.K., Spain, France, Germany, and Italy—along with Belgium and the Netherlands, are all performing strongly and are in excellent condition.

Next, we'll go to the line of Dan Salmon with BMO Capital. Please go ahead.

I have a couple of questions. First, John, in the past, you've emphasized the importance of Omnicom remaining neutral regarding various technologies, whether that's AdTech or MarTech, and you've also expressed a similar view on third-party data assets. So my question is, does the Omni ID represent a small step in that direction? I would like to hear a bit about it specifically, but I'm more interested in the broader perspective. Secondly, Phil, you mentioned the increase in the technology vertical as a percentage of revenue. Is this simply a reflection of where the verticals stood this quarter, or would you like to see that trend continue?

Omni ID is very distinctive. We have invested significantly in it over a long duration, testing and validating its effectiveness for global clients. When considering the data that is accessible, in light of various privacy laws, our access is comparable, if not superior, to others who assert ownership of data. They acquired a business that had prior revenue, so they are not giving it away to their clients, and it remains available for purchase. There is no special advantage in their offerings that we lack. An essential point about Omni ID is our extensive experience over many years; we have trained over 40,000 staff globally in its use and have implemented it for a considerable number of our largest clients. The value of insights or data lies not in the data itself but in how it is utilized and analyzed for the benefit of the client and their sales needs. Beyond that, I won't disclose what gives our product its distinctiveness.

Yes, fair enough.

Yes, regarding your second question, Dan. The technology sector's revenue as a share of our total earnings or the revenues from our clients in this industry relative to Omnicom's overall revenues has increased. This is largely due to a shift in our business mix, as I mentioned earlier. There was a decline in travel and entertainment revenue mainly because we divested a business that had significant exposure in that area. However, we've seen positive growth in nearly all of our divisions with tech clients. We're pleased to see growth in any of these industry groups, including technology. Our services have clearly resonated with several clients in the tech sector as well as in healthcare and other industries. We hope to see continued growth in this area, but generally, when looking at our more than 5,000 clients, those industry metrics fluctuate infrequently. I don’t anticipate significant changes in those percentages on a quarterly basis. It requires considerable effort to shift those figures, and I don’t expect major changes moving forward.

And next, we'll go to the line of Steven Cahall with Wells Fargo. Please go ahead.

Maybe first, I think historically, the media buying business has been a leading indicator of advertising inflection points. And I know you gave a bit of a conservative guide for the outlook of the rest of the year, certainly makes a lot of sense given the macro as to why you've done that. So just wondering, if there's been any evidence in your media buying business that things are either slowing down or inflecting? Or is it more just that you step back and you look at this overall picture and especially with the strong start to the year, just warrants itself to be a little bit cautious?

I concur with the previous comments. Given the current global situation, it makes sense to be somewhat cautious. However, we are quite pleased with our media business as a whole, which has seen success with both existing clients and new opportunities. Historically, inflation has positively impacted this segment of the business, and we do not anticipate any significant changes at this time. Another aspect to consider is the upcoming streaming wars, which I have been predicting since they began. In an environment where consumers may need to be more careful with their spending, I believe we will witness an increase in advertising across various services. Platforms like Hulu have demonstrated that this approach is effective, and I expect others to follow suit. In my opinion, they will inevitably adapt. The current environment will only accelerate this trend. Overall, I feel very confident in our portfolio.

And then maybe just a follow-up. Your comment about inflation. I know that at times inflation has been a helper to growth whether that's in media buying or where your clients use revenue as a basis to set their ad spend. So at this point in the inflation cycle, do you view inflation as a risk to the business? Or is it helping your organic growth profile right now?

You asked about a segment of my business and the impact of inflation. As I mentioned earlier, we base our forecasts on our actual circumstances. We're confident that we've considered everything, which is why we're maintaining and even improving our margins compared to last year due to an exceptional gain from the sale of a subsidiary last year. There are many factors at play, and we've dedicated significant time to analyzing the information we receive from our various subsidiaries in the markets where we operate. I’m not sure if Phil has anything to add.

I have a few additional points to make. As John mentioned, our agencies have taken into account some of the challenges in today's environment while preparing their forecasts. Our businesses are facing these challenges head-on. We are actively pursuing efficiency plans that include outsourcing, off-shoring, automation, and other initiatives. We have a flexible cost structure, and our agencies have effectively managed it in relation to the revenue they generate. So far, we haven't observed any cuts in our clients' spending plans, as they need to continue selling in both inflationary and non-inflationary conditions. We believe that clients who are successful will keep investing in marketing, branding, and our services because their need to sell remains strong. While we are somewhat cautious about the second half of the year, we remain optimistic about our business performance and our direction for the remainder of 2022.

And next, we'll go to the line of Ben Swinburne with Morgan Stanley. Please go ahead.

Phil, just a couple of quick housekeeping on the guidance and I have a question for John. Maybe, Phil, is the 15.4, including the Russia charge, the margin guidance for '22? And I was just wondering, I don't know if you'd answer this, but does your new guidance reflect any different outlook for your European business relative to what you guys gave us at the beginning of the year?

Regarding Russia and Ukraine, the 15.4 does not include the $113 million charge we incurred this quarter related to Russia. While we may have good prospects, this situation was entirely unforeseen when we spoke in February. It has been challenging to navigate, primarily due to the impact on our personnel, as John mentioned earlier in his remarks. The 15.4 figure excludes that charge. As for Europe, we haven't observed any substantial changes in our forecasts. We've had several discussions with our business leaders in the region, and while John can provide additional insights from his client interactions there, our European forecasts remain largely unchanged at this time.

Got it. And then on another topic, John, I don't know if you saw this article in the journal yesterday about e-commerce slowing and sort of a rebound in brick-and-mortar which I thought was interesting. I'm wondering like when you look at your businesses, you have exposure in both of those areas. I think field marketing is probably an area you guys over-index. Are you seeing some of this in the performance of your discipline, sort of this normalization of e-commerce trend a bit and a rebound in sort of maybe more traditional retail activity? And is that something you see in your results and maybe you expect that to continue through the year. I'd be interested in your insights on that topic.

Ben, I didn't catch that article yesterday, but I will read it now to understand its content. From my discussions with our clients, I haven't observed any decline in e-commerce. Therefore, to answer your question, I haven't seen any evidence to support the claims made in the article.

I'll start with my comments. The short answer is no. We haven't observed significant increases in growth trends compared to our expectations from the past few quarters. I believe these are solid businesses, but they are somewhat project-based, which means clients may adjust their investments more quickly than in some of our other areas. However, they have performed well, and we anticipate that will continue. Their growth profile is likely a bit lower than other segments of our business. As reflected in the revenue breakdown we provide, our expectations for the remainder of the year for them are not as strong as for the rest of the business.

And next, we'll go to the line of Craig Huber with Huber Research Partners. Please go ahead.

John, my first question, with all the privacy data changes out there, both with iOS, for example, but also government-mandated privacy changes out there over the last couple of years. Is that good, bad or sort of indifferent for your business? How do you sort of view that right now?

Well, it's changing. You're absolutely right, very rapidly. As a matter of fact, I don't know that he's on staff, but we just brought on a very, very experienced, dedicated attorney who spent his entire career working on just these privacy issues as well as the other people that were already within the company. I think net-net, we'll benefit from that because we haven't made any huge investments or put strong expensive stakes in the ground. And we're pretty agile, and we can adapt and adjust to whatever the environment is and whatever changes the various jurisdictions come up with. And I think this is going to be a constant theme for a good long time. And I'm much happier with our decision to be as agile as we are today than the day that we made that decision several years ago.

Yes, I think the changes are only going to make it more complex for clients to reach the consumers they're trying to reach. And in that environment, we certainly think it benefits us because we're an independent third party with the skills and the tools and the technology to help them make the appropriate decisions they need to make to continue to find and reach those consumers. So the complexity certainly, we view it as a positive.

And also, John, you said in 26 years, helping to run the company, it's the first time you can recall that you've raised the outlook for organic revenue this early on in the calendar year. Just maybe a little bit more meat on that. What exactly are you seeing out there, if you could just help us understand why you felt compelled to change your outlook right now given all the huge number of macro issues out there that people are grappling with?

There are several factors contributing to organic growth. One is acquiring new business, and the other involves the inevitable losses that every company experiences at times throughout the previous year, particularly when they haven't completed a full year yet. We entered 2022 in a strong position, following a successful 2021, which gives us considerable confidence. Our outlook is not solely determined from a corporate perspective; instead, it is genuinely based on detailed feedback from our practice leaders and networks through weekly discussions that capture even minor changes occurring in the market. This keeps us closely attuned to current developments.

Yes. Some of it is simple math. When you look at the strong performance in the first quarter, if we hadn't adjusted the guidance for organic growth for the full year compared to where we were in February, you might be asking us a different question about why we haven't increased our guidance. It was indeed a strong performance in the first quarter, and I believe the change was motivated by our expectations, as we remain optimistic about the rest of the year. There is some uncertainty in the latter half, but we are comfortable with our current position and how our businesses are performing.

And we're pretty good at math.

And we have no other questioners in queue at this time.

Well, I really want to thank all of you for spending the time with us and speaking with us today. And we look forward to speaking with you in the coming weeks.

Thank you.

Thank you. And that does conclude our conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.