Dentsu Group’s Q1 FY2026 results show the company is still in a rebuilding phase, but with a clearer path to improved profitability and a somewhat firmer regional footing than a year ago.
The group posted 0.8% organic growth, up from 0.2% in Q1 FY2025, while net revenue increased 2.7% year on year to ¥295.1 billion ($1.86 billion).
Underlying operating profit rose 11.5% to ¥37.8 billion ($238.55 million), and the operating margin improved to 12.8%, up 100 basis points from 11.8% a year earlier.
The company said the quarter was broadly in line with expectations and reiterated full-year FY2026 guidance for 0% to 1% organic growth and an operating margin in the 13% range.
Management also remained cautious on the macro backdrop, pointing to geopolitical uncertainty, higher prices and a still-uneven global advertising environment. The result is not a dramatic turnaround, but it does suggest Dentsu is making progress on the operating side while continuing to deal with weaker demand in some overseas markets.
Dentsu's new boss, 56-year-old Takeshi Sano, took the top job on 27 March. In a recent interview with Campaign he described Dentsu as a “tiger, not elephants,” alluding to his “big three” rivals and the need for agility. Meanwhile, Heineken reappointed Dentsu to its global media account last week following a competitive pitch – a vital retention after another top client, Microsoft, switched the bulk of its media business to Publicis Groupe without a pitch in April.
APAC performance
Japan remains the bedrock of the business and once again delivered the strongest performance. Organic growth in Japan reached 4.7%, marking the 12th consecutive positive quarter, while net revenue came in at ¥128.9 billion ($813.45 million).
The market was supported by internet advertising, television, digital transformation and business transformation, and Dentsu said organic growth exceeded its expectations. Although net revenue was slightly lower year on year because Carta Holdings was reclassified as an equity-method affiliate, underlying operating profit still rose 5.6% to ¥39.8 billion ($251.17 million) and operating margin improved to 30.8%.
APAC, excluding Japan remained the weakest region and continues to be a challenge. Organic growth fell 7.5%, and net revenue declined 1.3% to ¥22.8 billion ($143.88 million). Media was broadly stable in China and Taiwan, but creative and CXM remained weak, and the market picture was uneven. India grew, while Australia, China and Singapore declined. Underlying operating loss was ¥3.2 billion ($20.19 million), essentially unchanged from the prior-year quarter, and the operating margin stayed deeply negative at -13.9%. Suggesting the region has not yet found a consistent growth engine outside Japan.
Australia sits within that broader APAC challenge, but Dentsu is making structural changes there as part of a wider ANZ transformation. The company recently announced it has reshaped its CXM business, phasing out the Merkle brand and selling its Salesforce practice in ANZ to US-based holding company Enduring Ventures. It will keep experience, commerce and data & technology capabilities integrated into media and creative. It also announced it will consolidate media brands Carat and iProspect in the market.
Dentsu said ANZ has suffered three straight years of organic decline, but it expects the restructuring to help return the business to low-single-digit growth in FY2026.
Americas and EMEA
The Americas remained mixed. Organic growth declined 3.0%, with the U.S. as the main drag, although net revenue was broadly flat at ¥76.4 billion ($482.14 million) because of currency effects. Media was stable, CXM continued to improve sequentially, and creative remained weaker due to prior-year client losses. Underlying operating profit fell to ¥12.3 billion ($77.62 million), and the operating margin slipped to 16.1% from 17.7% a year earlier. Dentsu said the region was generally in line with expectations and that it's continuing to manage the business carefully.
EMEA was the clearest improvement outside Japan. Organic growth returned to positive territory at 0.8%, while net revenue rose 15.0% to ¥65.5 billion ($413.35 million), mainly helped by exchange rates. Media grew 5.3% organically, while creative and CXM remained negative, but the region still swung to positive underlying operating profit of ¥2.5 billion ($15.78 million) from an underlying loss of ¥1.6 billion ($10.10 million) a year earlier. The operating margin improved to 3.9% from -2.7%. Dentsu also said it will restructure EMEA from July 1, 2026, by simplifying the number of clusters and streamlining regional HQ functions, a move expected to save about ¥1.7 billion ($10.73 million) annually.
Outlook
Across the group, Dentsu is continuing to invest in rebuilding the business foundation while pursuing cost discipline. It reiterated its plan for a one-time ¥50 billion ($315.54 million) investment in FY2025, followed by an additional ¥45 billion ($283.98 million) over the next three years, mainly in AI, data & technology and talent.
The group says it has already identified about 90% of the operating cost reductions needed to reach its FY2027 target margin of 16% to 17%, with annual savings of around ¥50 billion ($315.54 million).
Dentsu says that AI remains central to its future. In Japan, more than 4,500 AI agents and more than 1,300 AI applications are already in use, supporting client work and internal productivity. The company’s Mugen AI Ads solution has been deployed in more than 200 client projects and is said to have improved advertising effectiveness by an average of 1.5 times.
Internationally, Dentsu is using AI to connect media, creative and customer experience through dentsu.AI and agentic workflows, and it plans to offer an updated agentic-first version of dentsu.Connect to early adopters in Q4. The company is also positioning AI as “Opportunity beyond Optimisation,” which is a useful clue to how it wants investors and clients to think about the platform shift.
Takeshi Sano, president and global CEO, dentsu, said: “We remain focused on putting client centricity, agility, and collaboration at the forefront of our approach while simplifying our overall structure and offer. This allows us to make faster decisions and bring our full range of capabilities together for clients across every market.
"Within this competitive environment, we continue to aspire to be the distinctive 'Growth Partner' in every market, driving our clients’ success locally, regionally and globally. This means we anticipate what clients need, rather than waiting to be asked, and we focus on growing their business and their brands, not just delivering marketing services. This is driving our performance today, and it is how we will accelerate our growth."
