Welcome to the Omnicom Second 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. [Operator Instructions] 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.

Thank you for joining our second 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 posted a press release along with the 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 An archived version will be available when today's call concludes.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 today, I'd like to remind everyone to read the forward-looking statements, non-GAAP financial and other information that we've 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 and then Phil will review our financial results for the quarter. After our prepared remarks, we will open up the line for your questions. I'll now hand the call to John.

Thank you, Greg. Good afternoon, everyone, and thank you for joining us today. We're pleased to share our second quarter results. Our second quarter performance was very strong. We exceeded our expectations with organic growth of 11.3%, which was broad-based across our agencies, disciplines, regions and client sectors. Operating profit margin for the quarter was 15.2%, 70 basis points higher than our comparable margin in 2021. Our agency management teams continue to grow their top line while closely managing costs in line with revenue. Earnings per share for the quarter was $1.68, up 15.1% versus the comparable amount in 2021. Finally, our cash flow, liquidity and balance sheet remain very strong and we continue to support our primary uses of cash, dividends, acquisitions and share repurchases. Phil will cover our results in more detail during his remarks. During the quarter, we continue to focus on evolving our existing capabilities to meet the needs of our clients and prospects. Most notably, we expanded and strengthened our e-commerce and retail media capabilities. At the Cannes Lions Festival of Creativity in June, we announced a number of first of its kind e-commerce collaborations with Amazon, Instacart, Kroger and Walmart. We now have more than 1,500 certified experts helping our clients navigate the complexity of executing media and driving sales on retail media platforms. The commerce partnerships we recently announced will provide us with additional access to online and in-store transactions and audiences, so we can deliver more precise and actionable consumer insights, more effective creative ideas and content and more targeted media for our clients. We are delivering these services by leveraging the power of our omni platform. We have developed omni commerce which integrates data about audiences, shopper behavior, media, content, shelf analytics, sales and inventory. Omni commerce enables us to maximize brand awareness and increase the effectiveness of our clients' retail media investments, driving product sales and profitability. We're pleased to see our efforts in this critical area being recognized in a recent Forrester report which noted that Omnicom Media Group leads across our peer set in retail and commerce media, audience intelligence capabilities, optimization and operations automation. Going forward, we will continue to invest organically and through acquisitions in e-commerce and retail media as well as in our other growth areas, including performance media, CRM and Precision Marketing, digital transformation and MarTech Consulting and the health sector. As we continue to expand the capabilities of Omni, we are maintaining our privacy-first approach in how we aggregate and manage data on behalf of our clients and partners. To oversee these efforts, we recently appointed Brian Clayton as Omnicom's Chief Data Privacy Officer. Brian has an extensive background in data privacy that incorporates data ethics, governance and protection. He will be a key member of our team as we continue to protect the privacy and security of the data we manage. Clients are rightfully demanding greater insight and control over their data as third-party cookies come to an end and has increasingly complex data privacy laws and regulations emerge around the globe. Our approach is to ensure that we have Omnicom-wide privacy practices, frameworks and programs that safeguard the security of client data, employee data and data we obtain from third-party partners. Continuing with some key leadership additions, I'm pleased to announce the appointment of Matt McNally as CEO of Omnicom Health Group. He succeeds Ed Weiss, who recently announced his retirement. Christina Hansen was named U.S. CEO of OMD. Christy has served as the network's Global Chief Strategy Officer since 2018. She succeeds John Osborn, who after more than 30 years with Omnicom, is stepping back to focus on his long-standing work with non-profit organizations. In June, we attended the Cannes Lions. Omnicom agencies for more than 30 countries won over 120 Lions. Two of our creative networks, DDB and BBDO, placed in the top five in the Network of the Year competition. In media, OMD won Media Network of the Year, which was followed by a recent report from Forrester naming Omnicom Media Group as having the strongest current offering in the marketplace. Congratulations to all our agencies and people on their exceptional performance. DE&I continues to be a top priority for us. And during the quarter, we issued our diversity, equity and inclusion performance report. I encourage our people and stakeholders to read the report on our website and know we are committed to keep building on our progress moving forward. Overall, we are very pleased with our progress on our key strategic initiatives and our first half financial results. Our notable new partnerships and continued investments in high-growth areas position us extremely well to service our clients now and in the future. While we remain confident in our strategies and execution, we're retaining a healthy level of caution due to the existing macro factors, including the ongoing war in the Ukraine, the effects of the pandemic across markets, the continuing disruption of global supply chains and the economic risks posed by higher inflation and rising interest rates. Even with this backdrop, we are continuing to see strong demand for our services, and based on our first half results, are increasing our organic revenue growth forecast to between 6.5% to 7% for the full year in 2022. We also continue to anticipate delivering the same strong operating margin of 15.4% in 2022 that we delivered in 2021. Before I finish, I'd like to address the ongoing challenges our people are facing around the globe. The war in the Ukraine continues to impact the lives of our colleagues and their families in Ukraine and is having an effect on our people around the world. We remain steadfast in supporting them for as long as needed. In the U.S., we're continued to encounter mass shootings, senseless acts of gun violence and racially motivated hate crimes. My heart goes out to the families of the victims of these crimes. Finally, the Supreme Court's decision to overturn was a step back in the advancement of women's rights and is having a detrimental effect on many of our colleagues. We're committed to ensuring our people have equal access to health services no matter where they live in the United States. Our actions with respect to the Ukraine war and the recent Supreme Court decisions reflect our commitment to always put the safety and well-being of our colleagues first. I will now turn the call over to Phil for a closer look at our financial results. Phil?

Thanks, John. As John said, our second quarter results were very solid. Organic growth continued at a very high rate, driven by performance across all of our disciplines. Our growth delivered healthy operating margins and good earnings per share performance. And we continue to return a significant portion of our free cash flow to our investors through dividends and additional share buybacks. Let's go into the financial details of the quarter, beginning on Slide 4. This view of the reported income statement shows adjustments to make the second quarter of the prior year comparable as well as making the six months for both 2021 and 2022 comparable. As we described last year, for the second quarter of 2021, operating expenses in the second quarter of last year benefited from a gain on the sale of a subsidiary. Interest expense includes a charge in the second quarter of last year on the early extinguishment of debt. And income tax expense in the second quarter of last year was also impacted by the early extinguishment of debt. In addition, as we discussed last quarter, for the year-to-date 2022 period, operating expenses included charges arising from the effects of the war in Ukraine in the first quarter of this year, and income taxes were also impacted by these charges. As you can see at the bottom of the slide, the net effects of these items resulted in strong EPS of $1.68 versus $1.46 from Q1 of 2021 as adjusted, representing EPS growth of 15.1% in the second quarter. For the six months, EPS of $3.07 as adjusted grew 10% from $2.79, also as adjusted. Our reported tax rate was 26.5% this quarter, the same level we expect for the remainder of the year. Net interest expense for Q2 of $40.1 million declined by $6.8 million from $46.9 million in Q2 of 2021, excluding the charge from the early extinguishment of debt last year, as previously discussed. The decline was principally driven by an increase in interest income in Q2 of 2022 of approximately $4 million. Given our principal debt is fixed rate, we expect net interest expense to decline in the second half compared to the prior year as interest income increases due to higher investing rates compared to 2021. Lastly, our diluted share count was down almost 5% year-over-year in the second quarter due to our ongoing share repurchase activity. Now let's look at our results in more detail, beginning with revenues on Slide 5. Reported revenues were flat as another quarter of strong organic growth at 11.3% was offset by the negative impact of foreign exchange rates and disposition revenue in excess of acquisition revenue. Both of these impacts were expected as we saw the dollar continue to strengthen globally and as we pass the final two months of our divestiture of a specialty media subsidiary last June, which was included in our Advertising & Media discipline in the U.S. The year-to-date results closely mirror the second quarter. If rates stay where they were as of July 15, we estimate that the impact of foreign exchange rates will reduce our revenue by approximately 6% in the third quarter and by 4.5% for the year. Based on deals completed to date, we expect the impact from net acquisitions and dispositions will result in a reduction of our revenue by approximately 1% in the third quarter, primarily resulting from the disposition of our businesses in Russia, and by approximately 4.5% for the full year. Turning to Slide 6. It's clear that our organic strength was broad-based across all of our disciplines. Advertising & Media, our largest category, posted 8% organic growth in the quarter, with strong performance in both our media and our creative agencies. Precision Marketing continued its strong performance with 21% organic growth in the second quarter. Commerce & Brand Consulting was up 11%, led by our branding and design agencies. Experiential had organic growth of 37%, but it's worth noting that lockdowns in Q2 in China weighed on these otherwise good results. As a reference, in reported dollar terms for the first six months of 2022, this discipline has reached approximately 80% of its pre-pandemic revenue levels. Execution & Support was up 9%, led by our merchandising and point-of-sale businesses. PR was up a very strong 16%, reflecting growth from both long-standing and new clients and increased business activity across many sectors of the economy. And Healthcare, which is 10% of our revenues, grew an impressive 9%. Turning to Slide 7. We once again saw strong organic growth rates in every region with the exception of Asia-Pacific, which was impacted by the lockdowns in China, as I just mentioned. This was nicely offset by acceleration in the U.S., Europe and the U.K. In the U.S., which is more than half of our revenues, our 10.7% organic growth was primarily driven by growth in Advertising & Media, Public Relations, Precision Marketing and Healthcare. Outside of the U.S., growth was led by Europe, which was primarily driven by Advertising & Media, Experiential and PR. Despite the headwinds in Experiential in Asia, the region saw strong results in Advertising & Media, brand consulting and Healthcare. Looking at revenue by industry sector on Slide 8 relative to the second quarter of 2021. The broad distribution of our clients remained relatively stable. As a percentage of the total, we did see an increase in technology, offset by reductions in both retail and travel and entertainment. Two sectors that have both been impacted by the economy and by some lingering pandemic effects. Let's now turn to Slide 9 and look at our operating expenses for the quarter. In total, our operating expenses were relatively flat, which is a good result given the strong growth in our business, tight labor markets in several regions and our continued investment in our strategic focus areas. Salary and related service costs were 50.5% of revenue compared to 50.9% last year after adjusting 2021 for amounts related to acquisitions and dispositions. Third-party service costs were 21.4% of revenue compared to 20.1% last year, also after adjusting for amounts related to acquisitions and dispositions with the increase reflecting growth in our businesses. Occupancy and other costs, which are less directly linked to changes in revenue, were flat year-over-year. We will continue to manage our real estate footprint in alignment with how people are working in our offices post pandemic. And it's also worth mentioning that our rent expense was down this quarter. S&A expenses were up 7.5% year-over-year, following the increase in our business activity, including higher marketing and professional fees compared to last year. Turning to Slide 10. Our second quarter operating profit was $541.6 million, a 4.6% increase from last year and our operating profit margin of 15.2% on total revenues was well above the comparable amount for last year of 14.5% as adjusted. Please turn now to Slide 11 for our cash flow performance. As you know, 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 for the first six months of 2022 was $768 million, down $28 million or 3.5% from the first half of last year. However, $48 million of the charges we recorded in the first quarter for the effects of the war in Ukraine were cash-related. Absent this, we were up a bit year-over-year. Regarding our uses of cash, we used $294 million of cash to pay dividends to common shareholders and another $38 million for dividends to non-controlling interest shareholders. Our capital expenditures of $43 million were at normal levels. Acquisitions net of dispositions and other items were $289 million. And lastly, our net stock repurchases during the first quarter were $393 million, including another $100 million in the second quarter. As we said on our call in April, for the full year 2022, we expect we will spend at our historical annual range of around $500 million to $600 million. On Slide 12 is an overview of our credit, liquidity and debt maturities. There were no changes in our outstanding debt during the second quarter, and our gross leverage at June 30 was 2.4x. In addition to $3.3 billion of cash and short-term investments, 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 24.4% for the 12 months ended June 30, a 41.9% return on equity. These are very strong and very competitive returns and reflect Omnicom's consistent operating performance and approach to capital allocation. At this point, operator, please open the lines up for questions and answers. Thank you.

[Operator Instructions] We'll go to the line of Steven Cahall with Wells Fargo. Please go ahead.

So maybe first question, you could just talk a little bit about how the business compares today to what it was like in previous cycles. A lot of change in the industry, a lot of it has changed in the complexion of the Company as you've bought and sold certain businesses. So maybe, John, I would just love to get your take on how different the business is maybe to some of the last times we were heading into a more volatile macroeconomic environment? And then to kind of follow up on that, you gave the flattish margin guidance for the year on a really strong organic growth number. What I'm wondering is, let's just say that maybe next year the growth isn't going to be so good because of the macro for the industry. Does it also mean that the margins are pretty steady? Have we just kind of reached a point where the margins are kind of steady through the cycle? Or should we expect margins to be down a bit if organic growth slows down? I would just love to get your view on the margins. Thank you.

Okay. This has probably been my one, two, third, fourth -- at least fourth, but we haven't gotten through the recession yet. I've been through three others. And the way I'd categorize the portfolio today is it's more fit for purpose than any time in my career. You're absolutely right in pointing out. We've spent a lot of time cleaning up the portfolio. And in the last 18 months have been adding to those areas, which are the highest growth. And the way I referred to it is fit for purpose. So I'm pleased where we stand, the management changes that we've made. And across the board, there's always little things to do, but there are fewer things to get correct in -- at any other point in my career. And so we're very pleased. We continue to invest organically in things that we believe will add to our revenue next year and beyond. And those investments are getting made as we speak. And they're included already in the numbers that you see reflected and reported here. In terms of margins, it's way too early to predict what next year's margins are going to be. But we've always endeavored and I think -- I would think there is an example where we've had time to plan where we've not been able to maintain margins and we endeavor always to improve them. We're constantly looking at our major expenses, which are matching staff to revenue and our management throughout the Company is very, very aware and very capable of doing that. And the second biggest expense is real estate, which improves every single year for us.

Yes, just one clarifying point. You referred to margins in 2022 being flat. When you carve out the second quarter non-recurring gain from the disposal of a business we had last year and you keep margins flat, that represents somewhere around 30-plus basis points of improvement year-on-year, lifetime. So -- and like John said, certainly, we're always focused on ways to be more efficient, utilizing outsourcing and offshoring and automation. And there's just an awful lot of uncertainties out there in the future, but we're always trying to be more efficient and then deliver that improvement prospectively.

Next, we'll go to the line of Jason Bazinet with Citi. Please go ahead.

Well, I haven't lived through as many recessions you guys have, but I've lived through three, and let me -- at least on the sell-side, and let me just ask this question. The behavior on the buy-side, historically is a company misses, another company misses and then the buy-side wakes up and says, hey, it's a recession. This is the only time I can remember where the buy-side is convinced that there's a recession when there isn't as much tangible evidence on the ground of a slowdown. And so, I guess my question for you is, does the buy-side's pessimism seem reasonable to you based on what you're hearing from your clients, I guess not this year, but potentially next year?

Well, we just got back from the Cannes Festival where we had the occasion to be personally with quite a number of our largest clients. And if I had to characterize a point of view, everybody is cautious because of the unknowns that are out there. But most sophisticated marketers who have lived through past recessions know that if they cut back too dearly, they lose sales as the recoveries start to happen. So people are very cautious about serious cutbacks with -- as long as there's no dramatic traumas in the marketplace. So, we'll know more because every one of our reforecast and then certainly once we get into planning towards the end of the year for next year, is done from a bottoms-up point of view, where we're speaking to individual offices, managers, people who have day-to-day contact with clients. And we also get sight on media spending and some commitments that they have to extend into the coming months to help us manage our organization. So -- and I don't know anything about your business.

Next, we'll go the line of Tim Nollen with Macquarie. Please go ahead.

I'll continue the line of thought on if and when we go into a recession, which seems to be everybody's foregone conclusion. But again, I think it's remarkable that there seems to be no sign at all in your numbers thus far. But my question is, in prior recessionary periods, we saw a very clear shift from, let's call it, traditional media into digital media or brand advertising into targeted marketing, whatever that may be. And I just wonder, how are you thinking about if there's a slowdown of whatever magnitude going into next year, what happens like what is left to shift to digital, if I could ask it that way. And what areas within that might be of interest that could sort of hold the fort -- I mean, there's the connected TV. You mentioned e-commerce several times on this call. If you could just enlighten us a bit more as to what the sort of resilient or even possibly growth the areas might be.

Sure. Tim, as we look out, there's going to be a couple of areas where advertising is going to be absolutely necessary, especially as you get into things like the streaming wars that I anticipate will be coming next year. Also as the subscription services have to become ad-supported, that will create opportunities for our clients. And with the data and our capabilities to optimize client spending we should be able to take advantage of that to the benefit of the client proving that $1 invested gets such a $1 return. So also when they compare to prior periods, as I said -- mentioned just briefly a couple of minutes ago, I truly think we have a more balanced and fit-for-purpose portfolio today than at any other point in my career. And we are able to pivot. We're a great deal more agile. And whether it's digital or whatever the requirement is in reaching the customer and we're terribly focused on Precision Marketing. Which when you boil it down, is selling things. And that's why we exist to attract clients to products and to move them our shelves or out of warehouses and sell and I'm pleased. I'm never 100% satisfied. That's why we're always making investments. And our reference to e-commerce is very important, not only this year and next year, but once you look at projections about where this marketplace is expected to go in the next couple of years, we're making investments that will keep us fit for purpose as we move forward. So I don't know if that covers it, Tim, but...

Yes. No. That's great. Could I ask one quick follow-on?

Certainly.

Sure.

Which is about -- it's just -- probably just nitpicking and I might know the answer, but it's looking at your revenue in Q2 and year-to-date. It looks like Asia-Pac was the laggard in Q2, and it looks like it slowed meaningfully from Q1. And just -- is this related to China lockdowns? Or just if you could just let us know why that particular reason sticks out versus the rest?

Yes. I think China is the exception, and we felt that probably most dearly in our executional businesses, where the shutdowns prevented us and prevented clients from having trade shows and other type of affairs, which are generally a part of our revenue. So shutdowns do affect those executional areas more than almost any other area.

Next, we'll go to the line of David Karnovsky with JPMorgan. Please go ahead.

Wondering if you could stick to your performance through the quarter. Outside of events with China, which you just spoke about, were there any observed changes in client budgets and some of the headlines were macro worsened even at the margin? And then, John, as it relates to areas like digital transformation or CRM which have had really strong tailwinds coming out of the pandemic, would you expect client spend here to adjust down with a softening economy? Or is the investment that marketers are making right now a lot more structural than that?

I believe that the investments clients are making are structural and they will continue. And we haven't announced it, we've already won business. It doesn't really start until the first quarter of next year. So I have reason to believe my statement. The first part of your question, I'm sorry, if you would.

Just about performance through the quarter, did you observe any changes in client budgets, some of the headlines around macro worsened, obviously leaving aside the China event stuff that you just spoke about.

Sure. No other macro trends that I can point out. There are always puts and takes in terms of what clients are doing. And I'd say on balance, because of the portfolio and because of the agility that we've developed, we're able to shift with the clients as that occurs.

We're not as focused on a monthly number, David. I wouldn't say that we saw any trends in -- yes, the months of this second quarter that were unusual that would lead us to conclude anything different other than yes, it was a very good quarter, and our expectations have gone up as a result of it as John had indicated earlier.

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

I have two questions. First is on the M&A environment. John, you've talked about wanting to put more capital to work on the acquisition front. You made some this year. But I'm wondering if just the change in the market backdrop -- capital market backdrop has changed your appetite at all? Or maybe have seller multiples come in at all given private market valuations, I think, have started to follow public market valuation so much? Or maybe have your areas of focus shifted at all? And then I had a follow-up.

Sure. Our area of focus hasn't changed at all. We -- I commented the areas we're most interested in, in my prepared remarks. And I think that's fairly consistent with where we've been all year. I do think that -- although I'm waiting for it to come through, that people on potential targets are adjusting their expectations, albeit not quick enough for us in terms of the cost of capital and what that's going to do to the fantasy land that occurred for -- if I get back 24 or 30 months, we're coming back into more normalcy as the Fed increases rates, and then other areas in the world to defend their currencies and markets also could increase rates. That's going to make deals more reasonable than they were this time last year.

Great. And then I was just wondering if you guys could help us interpret the full year guidance a little bit. You've outperformed the first half to what you laid out back at the beginning of the year, outperformed quite a bit. Rough numbers, I think you're up 11.5% in the first half, guiding to 6.5% to 7% for the year. So that, I think, plugs out to like fairly low single-digit growth in the second half. Is that kind of continued conservatism, pragmatism like we saw in the first half? Or is that -- is your visibility reasonably solid, so that's probably where we should expect you to be? Because that's obviously a pretty significant deceleration from what a strong first half you've had.

Well, you've known us for quite a while. And again, we're going to refer back to my prepared remarks, we remain cautious, and you know that we're cautious. We increased the guidance from -- in each of the past two quarters. Modestly, you could argue, given where we are for six months. And it is us just simply being cautious. We're not ones to overextend ourselves. And for those that have followed us for a long time, not for the third quarter, but in terms of the fourth quarter, there's -- for the last, God knows how many years, always caution about the amount of project business that happens at the end of the year. I'll know better by the time we get to October. But we weren't going to project that was going to come through at this point because we prefer to be cautious and then over-deliver if we can.

Yes. And that came through last year, right, in the fourth quarter?

It did oddly enough. I mean it's -- in the last over two decades, I think it's come through in all but two years. So -- but again, that becomes is there going to be heat in Europe in the fourth quarter or not.

So yes, I think our expectations as it relates to our Experiential and execution businesses are probably rightly cautious and more cautious than certainly the rest of the portfolio as we head into the second half. But overall, I think we're cautious mainly because of the things that are outside of our control.

And thank you for getting that question out of the way.

Next, we go to the line of Benjamin Rosner with Moffett Nathanson. Please go ahead.

Great. Following up on an earlier question on margins as it relates to the recession as well. So in prior economic downturns, you've been able to effectively manage margins given the variable cost nature of your business model. But now you expect to have over 10,000 engineers at the Company this year. This is much more compared to less than 1,000 engineers around five or so years ago. So my question is does having more engineers or technical talent, does that meet your operating cost model more fixed and less variable than it was in prior economic downturns? And in this context, how are you thinking about managing margins, if there is a recession?

Well, a major component in the flexibility of our costs, our incentive pools was company by company, targets are set and margin -- I mean, incentives are earned based upon performance, and that takes into consideration the full P&L of that operating unit. So that more than any one item helps us through this process in any short-term period. We've also expanded in expanding our engineers. We've expanded them on principally offshore. And we're certainly not planning any cutbacks at all with the engineers are all making significant contributions to our present business and what we anticipate we're going to require in the future. So I don't see it changing. The change in mix of our employee base is not detrimental to our ability to manage it.

And next, we'll go the line of Dan Salmon with BMO Capital Markets. Please go ahead.

So a couple of follow-ups on retail media and e-commerce services. First, I probably asked this before, I'll probably ask it again, spend? And sort of related to that, can you talk about retail media traction beyond the CPG vertical broadly? And then second, on e-commerce services, I'd say there's a bit of a debate among investors right now and whether we're seeing e-commerce simply go through a lull right now as a broad reopening happens or whether the long-term opportunity really isn't as big as everyone's pandemic peak expectations? Are you seeing that from clients? Are they pulling back in big e-commerce projects or pausing to evaluate that further?

It's really -- it's a client-by-client discussion. And I believe every client knows and understands as they go forward, that it's going to be an increasing part of how they reach and service their customers. The packaged goods area that you're referring to is a reasonable size of our portfolio. It's not disproportionate in terms of the balance in the portfolio. So it's part of the puts and takes that we've seen. And -- but as I look forward and as the team looks forward, it's a very important area. We are prepared and we've targeted acquisitions in this area. We're making investments in building out technology in the commerce area to be supportive of that anticipated business. And I don't think you can compare us to that environment and the impact that it had on certain parts of the market during COVID because people couldn't get out of their houses. There is going to be a lull in those companies. It's more an ever-increasing important place to our clients and so therefore to us as we move forward.

I'd just add, it's another area of increased complexity for our clients to navigate. And as a result, it benefits us because we can help them navigate some additional choices that they now have. We can help them find customers on a new retail media platform inside a video game, et cetera. And the more complexity feeds into the capabilities that we have to help our clients reevaluate or evaluate the decisions they have to make about where to most efficiently spend their marketing dollars. So we certainly believe e-commerce is here for the long run. It's not going away. We're going to continue to make investments on our side, and we think clients will continue to do so on their side as well.

And the proof point of this is how many boxes I have to break up every week that are delivered from a house.

Fair point.

Next, we go to the line of Craig Huber with Huber Research Partners. Please go ahead.

Similar question what Ben had earlier. Just looking at this on a three-year basis, our first quarter up about 12% organically, put it up about 10% versus 1Q of '19. Second quarter, post some numbers here, up 11.3% organic was up 6.5% versus 2Q of '19. But then using your top end of your guidance for the year of 7% for organic revenue puts the second half of the year up, call it, 2.5% to 3%. But again, looking at that versus the second half of '19, it will only be up 1%, 1.5%. So, we go from -- on a three-year basis, we're up 10% first quarter versus three years ago, 6.5% in the second quarter to up 1%, 1.5% in the back half of the year. I mean that's quite a deceleration. I know you've said repeatedly you're trying to be cautious here. But I'm just curious, I'd love to hear your thoughts on this. Is there something else working in here too that the overall environment is significantly slowing as well? And if that is the case, I'd love it if you could just touch on some of the areas globally or by client verticals to help explain that significant slow. And again, I realize you're saying you're being cautious here. I don't blame you at all. I just want to hear your thoughts further, please.

Yes. Except for the executional business is to require social gatherings, which are affected by closedowns, which Phil talked about. The math of what you're talking about is absolutely correct and it's reflected in us being cautious. I think there's only one short paragraph in my prepared remarks, as you can go back and look at where I emphasize that word. And we endeavor every day to exceed our forecast. So that's not a prediction in this environment. I don't know if I did justice to your question.

Yes, the -- Craig, the portfolio is quite a bit different than it was in '19 now here in 2022. So, I can certainly say, we're not focused on 2019 anymore and looking back to how we're growing relative to three years ago is not something that we spend any time on. We're focused on the portfolio we have today and how the business is doing today. So, as it relates to '19, I don't think there's any meaningful trends that we would draw where the world has changed quite a bit since then and our portfolio has changed quite a bit since then. And I think as far as the numbers go in the second half, 2.5-plus percent is just about right in terms of what 7% for the year would be. And I think we've touched on our cautious outlook and how we've looked at the guidance that we provided, and we're pretty comfortable with that guidance.

Sure. My other question is on Asia. In the second quarter at 4.7% organic number, if you took out China, can you tell us the rest of Asia-Pacific be similar up low double digits, similar organically to the rest of the portfolio? How would it attract taking out China?

If you give Phil one second, he'll try to answer your question. You also have to recall that it's only this year, this is the third time and God knows how many quarters that I've been around that we've even forecasted revenue. So being infants at it -- you're going to formally -- so being infants at it, you could anticipate our caution.

So, I think it's safe to say the rest of the portfolio in Asia performed consistently in terms of organic growth with the rest of our portfolio and the reported numbers.

And at this time, there are no further questions, handing it back to management for closing comments.

Certainly, I'm going to thank you all for joining us today. We really appreciate your time, and we look forward to seeing you at investor events over the coming weeks and months. Thanks a lot.

Thank you.

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