[Executive Summary & Strategic Outlook](index=1&type=section&id=Executive_Summary_Strategic_Outlook) Interpublic's Q2 2025 performance met expectations with sequential improvement, driven by media and healthcare, on track for full-year targets, with strategic transformation, AI, and Omnicom merger progressing [CEO Commentary](index=1&type=section&id=CEO_Commentary) Interpublic's CEO, Philippe Krakowsky, highlighted Q2 2025 organic revenue in line with expectations, showing sequential improvement driven by strong performance in media and healthcare. The company is on track for its full-year organic net revenue target and expects a significantly improved adjusted EBITA margin. Strategic transformation, AI integration, and the pending merger with Omnicom are key focus areas [Q2 Performance and Strategic Progress](index=1&type=section&id=Q2_Performance_and_Strategic_Progress) Q2 organic revenue met expectations with sequential improvement, driven by strong media and healthcare performance, and a robust adjusted margin due to strategic transformation - Organic revenue was in line with expectations, reflecting the impact of account activity in 2024, with underlying growth showing sequential improvement[2](index=2&type=chunk) - Strong performance was observed at media and healthcare practice areas, along with growth in sports marketing and public relations disciplines[2](index=2&type=chunk) - Adjusted Q2 margin was very strong due to significant progress on the strategic transformation program and improving operating performance at the two largest units[2](index=2&type=chunk) [Full-Year Outlook and Growth Areas](index=1&type=section&id=Full-Year_Outlook_and_Growth_Areas) The company remains on track for its full-year organic net revenue target and anticipates a significantly improved adjusted EBITA margin, while investing in growth areas - The company remains on track against the full-year target for an organic net revenue decrease of **1% to 2%**[3](index=3&type=chunk) - Adjusted 2025 EBITA margin is expected to be significantly ahead of the previously shared **16.6%**, reflecting both structural and operating improvement[3](index=3&type=chunk) - Efforts are underway to further develop the portfolio in growth areas such as media trading, commerce, and data-driven marketing[3](index=3&type=chunk) [AI Integration and New Business](index=1&type=section&id=AI_Integration_and_New_Business) Interpublic is advancing AI integration in workflows and products, leading to client benefits and positive new business performance through strategic investments - Continued progress in embedding artificial intelligence (AI) in workflows and products is allowing the delivery of benefits to clients[4](index=4&type=chunk) - Investments in people and capabilities are leading to positive new business performance[4](index=4&type=chunk) [Omnicom Merger Update](index=1&type=section&id=Omnicom_Merger_Update) The Omnicom merger is on track for H2 completion, with strong client and practitioner support to unlock value - The combination with Omnicom remains on track for completion in the second half of this year[5](index=5&type=chunk) - There is strong interest and support from clients, and enthusiasm from practitioners across both organizations to unlock value[5](index=5&type=chunk) [Second Quarter and First Half 2025 Highlights](index=1&type=section&id=Second_Quarter_and_First_Half_2025_Highlights) Interpublic reported a total revenue of $2.5 billion and net revenue of $2.2 billion for Q2 2025, with an organic net revenue decrease of 3.5%. Reported net income was $162.5 million, while adjusted EBITA reached $393.7 million with an 18.1% margin. Diluted EPS was a loss of $0.44 as reported, but $0.75 as adjusted Q2 2025 Financial Highlights | Metric | Q2 2025 Value | | :-------------------------------- | :---------------- | | Total Revenue (incl. billable expenses) | $2.5 billion | | Net Revenue (before billable expenses) | $2.2 billion | | Organic Net Revenue Decrease | -3.5% | | Reported Net Income | $162.5 million | | Adjusted EBITA (before restructuring & deal costs) | $393.7 million | | Adjusted EBITA Margin | 18.1% | | Diluted Loss Per Share (reported) | $0.44 | | Diluted Earnings Per Share (adjusted) | $0.75 | [Detailed Financial Results](index=2&type=section&id=Detailed_Financial_Results) This section provides a comprehensive analysis of Interpublic's Q2 and H1 2025 financial performance, covering revenue, operating expenses, net results, balance sheet, and shareholder returns [Operating Results](index=2&type=section&id=Operating_Results) Interpublic experienced a decrease in both total and net revenue for Q2 and H1 2025, primarily due to strategic dispositions and organic declines. Despite this, adjusted EBITA (excluding restructuring and deal costs) increased, indicating underlying operational improvement, while reported operating income decreased significantly due to substantial restructuring charges [Revenue Analysis](index=2&type=section&id=Revenue_Analysis) Total and net revenue decreased in Q2 and H1 2025, primarily due to strategic dispositions and organic declines, with minor foreign currency impacts Q2 Revenue Performance | Metric | Q2 2025 (Billions) | Q2 2024 (Billions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Total Revenue (incl. billable expenses) | $2.54 | $2.71 | -6.4% | | Net Revenue (before billable expenses) | $2.17 | $2.33 | -6.6% | | Organic Net Revenue Change (Q2) | -3.5% | N/A | N/A | | Net Dispositions Impact (Q2) | -3.4% | N/A | N/A | | Foreign Currency Impact (Q2) | +0.3% | N/A | N/A | H1 Revenue Performance | Metric | H1 2025 (Billions) | H1 2024 (Billions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Total Revenue (incl. billable expenses) | $4.86 | $5.21 | -6.7% | | Net Revenue (before billable expenses) | $4.17 | $4.51 | -7.6% | | Organic Net Revenue Change (H1) | -3.6% | N/A | N/A | | Net Dispositions Impact (H1) | -3.6% | N/A | N/A | | Foreign Currency Impact (H1) | -0.4% | N/A | N/A | [Operating Income and Adjusted EBITA](index=2&type=section&id=Operating_Income_and_Adjusted_EBITA) Reported operating income decreased significantly due to restructuring and deal costs, but Adjusted EBITA increased, reflecting improved underlying operational performance and margin expansion Q2 Operating Income and Adjusted EBITA | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :------------------------------------------ | :-------- | :-------- | :--------- | | Operating Income | $243.7 | $318.2 | -23.4% | | Adjusted EBITA (before restructuring & deal costs) | $393.7 | $338.9 | +16.2% | | Adjusted EBITA Margin (Q2 2025) | 18.1% | 14.6% | +3.5 pp | H1 Operating Income and Adjusted EBITA | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (%) | | :------------------------------------------ | :-------- | :-------- | :--------- | | Operating Income | $201.7 | $502.4 | -59.9% | | Adjusted EBITA (before restructuring & deal costs) | $580.2 | $544.4 | +6.6% | | Adjusted EBITA Margin (H1 2025) | 13.9% | 12.1% | +1.8 pp | [Operating Expenses Breakdown](index=3&type=section&id=Operating_Expenses_Breakdown) Total operating expenses (excluding billable, restructuring, deal costs, and amortization) decreased in Q2 and H1 2025, driven by reductions in staff costs and office expenses, despite increased SG&A [Salaries and Related Expenses](index=4&type=section&id=Salaries_and_Related_Expenses) Salaries and related expenses decreased in Q2 and H1 2025, primarily due to reductions in base salaries, benefits, and performance-based compensation Q2 Salaries and Related Expenses | Metric | Q2 2025 (Billions) | Q2 2024 (Billions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Salaries and Related Expenses | $1.38 | $1.56 | -11.5% | | Staff Cost Ratio (as % of net revenue) | 63.4% | 66.9% | -3.5 pp | H1 Salaries and Related Expenses | Metric | H1 2025 (Billions) | H1 2024 (Billions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Salaries and Related Expenses | $2.79 | $3.13 | -10.8% | | Staff Cost Ratio (as % of net revenue) | 67.0% | 69.4% | -2.4 pp | - The decrease was primarily driven by decreased base salaries, benefits and tax, as well as decreases in severance and performance-based employee compensation expenses[16](index=16&type=chunk) [Office and Other Direct Expenses](index=4&type=section&id=Office_and_Other_Direct_Expenses) Office and other direct expenses decreased in Q2 and H1 2025, mainly due to lower occupancy and consulting fees, partially offset by increased technology expenses Q2 Office and Other Direct Expenses | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Office and Other Direct Expenses | $325.2 | $358.4 | -9.3% | | As % of Net Revenue (Q2) | 15.0% | 15.4% | -0.4 pp | H1 Office and Other Direct Expenses | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Office and Other Direct Expenses | $644.4 | $680.5 | -5.3% | | As % of Net Revenue (H1) | 15.5% | 15.1% | +0.4 pp | - Decreases were mainly due to lower occupancy expense and professional consulting fees, partially offset by increases in technology & software expenses[17](index=17&type=chunk) [Selling, General and Administrative (SG&A) Expenses](index=4&type=section&id=Selling%2C%20General%20and%20Administrative%20(SG%26A)%20Expenses) SG&A expenses increased in Q2 and H1 2025, driven by deal costs related to the Omnicom merger and higher technology and performance-based compensation expenses Q2 SG&A Expenses | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | SG&A Expenses | $46.4 | $27.6 | +68.1% | | Deal Costs (included) | $10.9 | N/A | N/A | H1 SG&A Expenses | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | SG&A Expenses | $86.8 | $65.6 | +32.3% | | Deal Costs (included) | $15.7 | N/A | N/A | - The increase in SG&A expenses was due to deal costs related to the planned acquisition of IPG by Omnicom, as well as increases in technology & software and performance-based employee compensation expenses[18](index=18&type=chunk) [Depreciation and Amortization](index=5&type=section&id=Depreciation_and_Amortization) Depreciation and amortization expenses decreased slightly in both Q2 and H1 2025 Q2 Depreciation and Amortization | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Depreciation and Amortization | $61.2 | $65.0 | -5.8% | H1 Depreciation and Amortization | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Depreciation and Amortization | $122.2 | $130.2 | -6.1% | [Restructuring Charges](index=2&type=section&id=Restructuring_Charges) Interpublic incurred substantial restructuring charges in Q2 and H1 2025 for business transformation and expense savings, with completion expected by year-end 2025 Q2 Restructuring Charges | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------- | :-------- | :-------- | :--------- | | Restructuring Charges | $118.0 | $0.3 | >(100)% | H1 Restructuring Charges | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (%) | | :-------------------- | :-------- | :-------- | :--------- | | Restructuring Charges | $321.3 | $0.9 | >(100)% | - Restructuring actions are designed to transform the business, enhance offerings, and drive significant structural expense savings, with completion expected by the end of 2025[21](index=21&type=chunk) - Total restructuring charges are expected to be **$375.0 - $400.0 million**, including a substantial non-cash portion[21](index=21&type=chunk) [Net Results](index=3&type=section&id=Net_Results) Net income available to common stockholders decreased significantly in Q2 and H1 2025 due to higher restructuring and deal costs, despite an increase in adjusted diluted EPS and a decrease in income tax provision [Non-Operating Results and Tax](index=5&type=section&id=Non-Operating_Results_and_Tax) Net interest expense and other expenses increased in Q2 and H1 2025, while the income tax provision decreased, impacting overall net results Q2 Non-Operating Results and Tax | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | | :-------------------- | :-------- | :-------- | :------- | | Net Interest Expense | $24.3 | $21.3 | +$3.0 | | Other Expense, Net | $1.4 | $1.2 | +$0.2 | | Income Tax Provision | $54.6 | $75.6 | -$21.0 | H1 Non-Operating Results and Tax | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (Millions) | | :-------------------- | :-------- | :-------- | :------- | | Net Interest Expense | $39.8 | $35.4 | +$4.4 | | Other Expense, Net | $38.3 | $10.7 | +$27.6 | | Income Tax Provision | $45.4 | $122.9 | -$77.5 | Q2 Net Income and EPS | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | | :------------------------------------------ | :----------------- | :----------------- | :------- | | Net Income Available to IPG Common Stockholders | $162.5 | $214.5 | -$52.0 | | Diluted EPS (reported) | $0.44 | $0.57 | -$0.13 | | Diluted EPS (adjusted) | $0.75 | $0.61 | +$0.14 | H1 Net Income and EPS | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (Millions) | | :------------------------------------------ | :----------------- | :----------------- | :------- | | Net Income Available to IPG Common Stockholders | $77.1 | $324.9 | -$247.8 | | Diluted EPS (reported) | $0.21 | $0.86 | -$0.65 | | Diluted EPS (adjusted) | $1.08 | $0.96 | +$0.12 | [Balance Sheet](index=5&type=section&id=Balance_Sheet) As of June 30, 2025, Interpublic's cash and cash equivalents decreased from year-end 2024 but remained stable compared to June 2024. Total debt remained consistent at $2.96 billion Balance Sheet Snapshot | Metric | June 30, 2025 (Billions) | Dec 31, 2024 (Billions) | June 30, 2024 (Billions) | | :---------------------- | :------------ | :----------- | :------------ | | Cash and Cash Equivalents | $1.56 | $2.19 | $1.55 | | Total Debt | $2.96 | $2.96 | N/A | [Shareholder Returns](index=5&type=section&id=Shareholder_Returns) Interpublic continued its share repurchase program in the first half of 2025, buying back 7.4 million shares. The company also declared and paid a common stock cash dividend of $0.330 per share in Q2 2025 [Share Repurchase Program](index=5&type=section&id=Share_Repurchase_Program) In H1 2025, Interpublic repurchased 7.4 million shares for $188.3 million at an average price of $25.29 per share H1 2025 Share Repurchase | Metric | H1 2025 | | :-------------------- | :---------- | | Shares Repurchased | 7.4 million | | Aggregate Cost | $188.3 million | | Average Price Per Share | $25.29 | [Common Stock Dividend](index=6&type=section&id=Common_Stock_Dividend) Interpublic declared and paid a Q2 2025 common stock cash dividend of $0.330 per share, totaling $121.1 million Q2 2025 Common Stock Dividend | Metric | Q2 2025 | | :-------------------------- | :---------- | | Dividend Per Share | $0.330 | | Total Dividends Paid (Q2) | $121.1 million | [About Interpublic](index=6&type=section&id=About_Interpublic) Interpublic (NYSE: IPG) is a values-based, data-fueled, and creatively-driven provider of marketing solutions, home to numerous global brands, with total revenue of $10.7 billion in 2024 - Interpublic (NYSE: IPG) is a values-based, data-fueled, and creatively-driven provider of marketing solutions[29](index=29&type=chunk) - The company is home to global brands including Acxiom, Craft, FCB, FutureBrand, Golin, Initiative, IPG Health, IPG Mediabrands, Jack Morton, KINESSO, MAGNA, McCann, Mediahub, Momentum, MRM, MullenLowe Global, Octagon, UM, and Weber Shandwick[29](index=29&type=chunk) 2024 Total Revenue | Metric | 2024 (Billions) | | :---------------- | :----------- | | Total Revenue | $10.7 | [Cautionary Statement](index=7&type=section&id=Cautionary_Statement) This section contains forward-looking statements subject to risks and uncertainties, including those related to the Omnicom merger, economic conditions, and regulatory changes - The report contains forward-looking statements regarding future plans, trends, events, or financial results, which are based on current expectations and assumptions[31](index=31&type=chunk) - Actual results and outcomes could differ materially due to various risks and uncertainties, including those outlined in the company's most recent Annual Report on Form 10-K[31](index=31&type=chunk)[33](index=33&type=chunk) - Specific risks include those related to the pending merger transaction with Omnicom, challenging economic conditions, ability to attract and retain clients and employees, competitive environment, global economic and political conditions, regulatory changes, cybersecurity events, and critical accounting estimates[34](index=34&type=chunk) [Appendix](index=8&type=section&id=Appendix) The appendix provides detailed consolidated statements of earnings and U.S. GAAP reconciliations of non-GAAP adjusted results for various periods [Consolidated Summary of Earnings](index=9&type=section&id=Consolidated_Summary_of_Earnings) This section provides detailed consolidated statements of earnings for the three and six months ended June 30, 2025, and 2024, outlining revenue, operating expenses, operating income, and net income figures [Three Months Ended June 30, 2025 and 2024](index=9&type=section&id=Three_Months_Ended_June_30_2025_and_2024) This table presents consolidated earnings for Q2 2025 and 2024, including revenue, operating expenses, operating income, and net income Consolidated Statements of Earnings (Q2) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :------------------------------------------ | :----------------- | :----------------- | :--------- | | Revenue before Billable Expenses | $2,172.7 | $2,327.1 | (6.6)% | | Total Revenue | $2,536.8 | $2,710.0 | (6.4)% | | Salaries and Related Expenses | $1,378.2 | $1,557.6 | 11.5% | | Total Operating Expenses | $2,293.1 | $2,391.8 | 4.1% | | Operating Income | $243.7 | $318.2 | 23.4% | | Net Income Available to IPG Common Stockholders | $162.5 | $214.5 | N/A | | Diluted EPS | $0.44 | $0.57 | N/A | [Six Months Ended June 30, 2025 and 2024](index=10&type=section&id=Six_Months_Ended_June_30_2025_and_2024) This table presents consolidated earnings for H1 2025 and 2024, including revenue, operating expenses, operating income, and net income Consolidated Statements of Earnings (H1) | Metric | H1 2025 (Millions) | H1 2024 (Millions) | % Change | | :------------------------------------------ | :----------------- | :----------------- | :--------- | | Revenue before Billable Expenses | $4,169.0 | $4,510.0 | (7.6)% | | Total Revenue | $4,859.4 | $5,205.9 | (6.7)% | | Salaries and Related Expenses | $2,792.6 | $3,130.4 | 10.8% | | Total Operating Expenses | $4,657.7 | $4,703.5 | 1.0% | | Operating Income | $201.7 | $502.4 | 59.9% | | Net Income Available to IPG Common Stockholders | $77.1 | $324.9 | N/A | | Diluted EPS | $0.21 | $0.86 | N/A | [U.S. GAAP Reconciliation of Non-GAAP Adjusted Results](index=11&type=section&id=US_GAAP_Reconciliation_of_Non-GAAP_Adjusted_Results) This section provides detailed reconciliations of various non-GAAP financial measures, such as Adjusted EBITA and Adjusted Earnings Per Diluted Share, to their most directly comparable GAAP measures for both current and prior periods, highlighting adjustments for amortization, restructuring, deal costs, and business dispositions [Three Months Ended June 30, 2025](index=11&type=section&id=Three_Months_Ended_June_30_2025_Reconciliation) This table reconciles Q2 2025 reported GAAP results to non-GAAP adjusted results for operating income, net income, and diluted EPS Q2 2025 GAAP to Non-GAAP Reconciliation | Metric | As Reported (Millions) | Adjustments (Millions) | Adjusted Results (Millions) | | :------------------------------------------ | :--------------------- | :--------------------- | :-------------------------- | | Operating Income | $243.7 | Amortization: $(21.1) | $393.7 (Adj. EBITA before charges) | | | | Restructuring: $(118.0) | | | | | Deal Costs: $(10.9) | | | Net Income Available to IPG Common Stockholders | $162.5 | Amortization: $(16.9) | $277.3 | | | | Restructuring: $(88.4) | | | | | Deal Costs: $(11.0) | | | | | Gains on Sales: $1.5 | | | Diluted EPS | $0.44 | Amortization: $(0.05) | $0.75 | | | | Restructuring: $(0.24) | | | | | Deal Costs: $(0.03) | | | | | Gains on Sales: $0.00 | | [Six Months Ended June 30, 2025](index=12&type=section&id=Six_Months_Ended_June_30_2025_Reconciliation) This table reconciles H1 2025 reported GAAP results to non-GAAP adjusted results for operating income, net income, and diluted EPS H1 2025 GAAP to Non-GAAP Reconciliation | Metric | As Reported (Millions) | Adjustments (Millions) | Adjusted Results (Millions) | | :------------------------------------------ | :--------------------- | :--------------------- | :-------------------------- | | Operating Income | $201.7 | Amortization: $(41.5) | $580.2 (Adj. EBITA before charges) | | | | Restructuring: $(321.3) | | | | | Deal Costs: $(15.7) | | | Net Income Available to IPG Common Stockholders | $77.1 | Amortization: $(33.1) | $401.3 | | | | Restructuring: $(242.1) | | | | | Deal Costs: $(15.6) | | | | | Losses on Sales: $(33.4) | | | Diluted EPS | $0.21 | Amortization: $(0.09) | $1.08 | | | | Restructuring: $(0.65) | | | | | Deal Costs: $(0.04) | | | | | Losses on Sales: $(0.09) | | [Adjusted EBITA Reconciliation (Q2 & H1 2025/2024)](index=13&type=section&id=Adjusted_EBITA_Reconciliation_Q2_%26_H1_2025%2F2024) This table provides a reconciliation of Adjusted EBITA and Adjusted EBITA Margin for Q2 and H1 2025 and 2024 Adjusted EBITA Reconciliation | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | H1 2025 (Millions) | H1 2024 (Millions) | | :---------------------------------------------------- | :-------- | :-------- | :-------- | :-------- | | Revenue Before Billable Expenses | $2,172.7 | $2,327.1 | $4,169.0 | $4,510.0 | | Net Income Available to IPG Common Stockholders | $162.5 | $214.5 | $77.1 | $324.9 | | Operating Income | $243.7 | $318.2 | $201.7 | $502.4 | | Adjusted EBITA | $264.8 | $338.6 | $243.2 | $543.5 | | Adjusted EBITA Margin | 12.2% | 14.6% | 5.8% | 12.1% | | Adjusted EBITA before Restructuring Charges and Deal Costs | $393.7 | $338.9 | $580.2 | $544.4 | | Adjusted EBITA before Restructuring Charges and Deal Costs Margin | 18.1% | 14.6% | 13.9% | 12.1% | [Three Months Ended June 30, 2024](index=14&type=section&id=Three_Months_Ended_June_30_2024_Reconciliation) This table reconciles Q2 2024 reported GAAP results to non-GAAP adjusted results for operating income, net income, and diluted EPS Q2 2024 GAAP to Non-GAAP Reconciliation | Metric | As Reported (Millions) | Adjustments (Millions) | Adjusted Results (Millions) | | :------------------------------------------ | :--------------------- | :--------------------- | :-------------------------- | | Operating Income | $318.2 | Amortization: $(20.4) | $338.9 (Adj. EBITA before charges) | | | | Restructuring: $(0.3) | | | Net Income Available to IPG Common Stockholders | $214.5 | Amortization: $(16.2) | $229.4 | | | | Restructuring: $(0.2) | | | | | Gains on Sales: $1.5 | | | Diluted EPS | $0.57 | Amortization: $(0.04) | $0.61 | | | | Restructuring: $(0.00) | | | | | Gains on Sales: $0.00 | | [Six Months Ended June 30, 2024](index=15&type=section&id=Six_Months_Ended_June_30_2024_Reconciliation) This table reconciles H1 2024 reported GAAP results to non-GAAP adjusted results for operating income, net income, and diluted EPS H1 2024 GAAP to Non-GAAP Reconciliation | Metric | As Reported (Millions) | Adjustments (Millions) | Adjusted Results (Millions) | | :------------------------------------------ | :--------------------- | :--------------------- | :-------------------------- | | Operating Income | $502.4 | Amortization: $(41.1) | $544.4 (Adj. EBITA before charges) | | | | Restructuring: $(0.9) | | | Net Income Available to IPG Common Stockholders | $324.9 | Amortization: $(32.7) | $364.7 | | | | Restructuring: $(0.7) | | | | | Losses on Sales: $(6.4) | | | Diluted EPS | $0.86 | Amortization: $(0.09) | $0.96 | | | | Restructuring: $(0.00) | | | | | Losses on Sales: $(0.02) | |

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201%2E%20Financial%20Statements%20%28Unaudited%29) Unaudited consolidated financial statements for H1 2025 reflect significant declines in revenue and net income, driven by restructuring and acquisition costs Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $4,859.4 | $5,205.9 | -6.7% | | Operating Income | $201.7 | $502.4 | -59.9% | | Net Income Available to IPG Stockholders | $77.1 | $324.9 | -76.3% | | Diluted EPS | $0.21 | $0.86 | -75.6% | Consolidated Balance Sheet Highlights (in billions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1.56 | $2.19 | | Goodwill | $4.80 | $4.69 | | Total Assets | $17.03 | $18.33 | | Long-term debt | $2.92 | $2.92 | | Total Liabilities | $13.24 | $14.42 | | Total Stockholders' Equity | $3.77 | $3.86 | - For the six months ended June 30, 2025, net cash used in operating activities was **$133.0 million**, compared to **$36.7 million** in the prior year period, primarily driven by lower net income and changes in working capital[21](index=21&type=chunk) - The company initiated significant restructuring actions in Q1 2025, incurring charges of **$321.3 million** in the first six months, intended to transform the business and expected to be completed by the end of 2025[85](index=85&type=chunk)[87](index=87&type=chunk) - On December 8, 2024, IPG entered into a merger agreement with Omnicom Group Inc, with the transaction expected to close in the second half of 2025, incurring deal costs of **$15.7 million** in the first six months of 2025[31](index=31&type=chunk)[34](index=34&type=chunk)[38](index=38&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes financial performance decline to macroeconomic caution, client losses, and significant restructuring and merger costs, while highlighting strong liquidity [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Revenue before billable expenses decreased **7.6%** in H1 2025, with operating income plummeting **59.9%** due to significant restructuring charges and organic declines across regions Organic Change in Revenue Before Billable Expenses (YTD June 30, 2025) | Region | Organic Change | | :--- | :--- | | **Consolidated** | **(3.6)%** | | Domestic | (3.3)% | | International | (4.1)% | | - United Kingdom | (8.0)% | | - Continental Europe | (1.0)% | | - Asia Pacific | (11.5)% | | - Latin America | 2.2% | - Salaries and related expenses decreased **10.8%** in H1 2025, primarily due to lower base salaries and severance, falling to **67.0%** of revenue before billable expenses from **69.4%** in H1 2024[176](index=176&type=chunk)[177](index=177&type=chunk) - The company initiated restructuring actions in Q1 2025 with expected total charges of **$375.0 - $400.0 million**, incurring **$321.3 million** for H1 2025, including **$133.4 million** for severance (approx. **2,400 employees**) and **$93.4 million** for lease impairments[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Diluted EPS for H1 2025 was **$0.21**, a significant decrease from **$0.86** in H1 2024, driven by negative impacts from restructuring charges (**$0.65**), amortization of acquired intangibles (**$0.09**), net losses on sales of businesses (**$0.09**), and Omnicom deal costs (**$0.04**)[198](index=198&type=chunk)[200](index=200&type=chunk) [Segment Results](index=40&type=section&id=Segment%20Results) All segments experienced organic revenue declines in H1 2025, with IA&C seeing the sharpest drop and significant EBITA margin contraction due to restructuring charges Segment Performance (Six Months Ended June 30, 2025, in millions) | Segment | Revenue Before Billable Expenses | Organic Change | Segment EBITA | EBITA Margin | | :--- | :--- | :--- | :--- | :--- | | MD&E | $1,835.4 | (0.6)% | $260.2 | 14.2% | | IA&C | $1,642.2 | (8.2)% | $83.1 | 5.1% | | SC&E | $691.4 | (0.0)% | $90.7 | 13.1% | [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and compliance with debt covenants, despite increased net cash used in operating activities in H1 2025 - Key uses of cash in H1 2025 included **$246.4 million** for common stock dividends and **$188.3 million** for share repurchases[231](index=231&type=chunk) - The company maintains a **$1.5 billion** revolving credit facility maturing in May 2029, with **$1.49 billion** total availability as of June 30, 2025, and no borrowings[241](index=241&type=chunk) - The company was in compliance with its credit agreement covenants, with an actual leverage ratio of **1.90x**, well below the required maximum of **3.50x**[242](index=242&type=chunk)[243](index=243&type=chunk) - As of June 30, 2025, **$137.1 million** remained available for repurchase under the 2025 share repurchase program[238](index=238&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no significant change in its exposure to market risks, including interest rates and foreign currency rates, during the second quarter of 2025 - There has been no significant change in the company's exposure to market risk during Q2 2025, with approximately **99%** of debt obligations having fixed interest rates, mitigating interest rate risk[260](index=260&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - As of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[261](index=261&type=chunk) - No changes occurred in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected or are likely to materially affect the controls[263](index=263&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is involved in various legal proceedings, but management does not anticipate a material adverse effect on its financial condition or operations - The company is involved in various legal proceedings from the normal course of business, but management believes the outcomes will not have a material adverse effect on its financial condition[137](index=137&type=chunk)[265](index=265&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K were reported during Q2 2025 - No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K were reported for the second quarter of 2025[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased approximately **4.04 million** shares at an average price of **$24.29** per share, with **$137.1 million** remaining for future repurchases Share Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,544,280 | $24.38 | | May 2025 | 1,539,559 | $24.92 | | June 2025 | 957,720 | $23.11 | | **Total Q2** | **4,041,559** | **$24.29** | - As of June 30, 2025, **$137.1 million** remained available for repurchase under the company's share repurchase programs[267](index=267&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205%2E%20Other%20Information) No other information is reported for this item - None[271](index=271&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206%2E%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Interactive Data Files (XBRL)

Core Insights - Interpublic Group (IPG) reported a 3.5% organic revenue decrease in Q2, but achieved a record 18.1% adjusted EBITDA margin, indicating effective cost management and operational efficiency [1][3] - The company confirmed progress on its merger with Omnicom, projecting a 1%-2% decline in full-year organic net revenue for 2025, while forecasting an adjusted EBITDA margin above the previous guidance of 16.6% [1][8] Financial Performance - Adjusted EBITDA for Q2 reached $393.7 million, with a 350 basis-point year-over-year improvement in adjusted EBITDA margin, attributed to structural cost reductions and operational consolidation [2] - Headcount decreased by approximately 6% year-over-year, totaling 51,300, with restructuring charges amounting to $118 million and projected annualized structural savings exceeding $300 million [2] AI Integration and Revenue Generation - The adoption of the proprietary Interact AI platform has been rapid, with over half of employees utilizing it and 40% engaging daily, enhancing marketing workflows and client solutions [4] - The ASC (Agentic Systems for Commerce) AI tool has been piloted by nearly two dozen clients, showing double-digit percentage increases in impressions and sales, indicating potential for new revenue streams [4][5] Merger Progress and Client Stability - The merger with Omnicom is on track for a second-half 2025 close, having received FTC clearance in the U.S., with stable client support and business performance despite competitive speculation [6][7] - Share buybacks totaled $98 million year-to-date, limited by a $325 million annual cap imposed by the merger agreement [6] Future Outlook - Management anticipates a 1%-2% decrease in organic net revenue for 2025, expecting flat sequential results in Q3 and Q4, while the Omnicom transaction remains on track for completion [8]

Core Insights - Interpublic Group has launched Agentic Systems for Commerce (ASC) to enhance brand management in the complex commerce ecosystem through automation and AI [1][4] - ASC utilizes data from Intelligence Node to provide actionable insights on consumer behavior, pricing, and inventory, enabling brands to optimize sales and margins [2][4] - The offering is already being piloted by nearly two dozen brands, showing double-digit improvements in impressions and sales [3] Company Strategy - The CEO of Interpublic, Philippe Krakowsky, believes ASC can create a new revenue stream and expand the company's capabilities beyond traditional marketing communications [4] - Dr. Jeriad Zoghby, leading the ASC initiative, emphasizes the need for integrated systems that autonomously capture market signals and identify performance opportunities [4][5] - Interpublic appointed Yaniv Sarig as the Global Head of AI Commerce and acquired Intelligence Node to enhance ASC's capabilities [4] Market Impact - ASC represents a shift from standalone tools to intelligent systems, allowing brands to transition from reactive to adaptive operations [5] - The early adoption of ASC by over 20 consumer packaged goods (CPG) brands indicates a recognition of the need for advanced commerce solutions in today's market [4][5]

Core Insights - The Interpublic Group of Companies, Inc. (IPG) reported strong second-quarter 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1] Financial Performance - IPG's adjusted earnings were 75 cents per share, surpassing the Zacks Consensus Estimate by 36.4% and increasing by 23% year-over-year [2] - Net revenues amounted to $2.2 billion, slightly beating consensus estimates but reflecting a 19.8% decline year-over-year [2] - Total revenues reached $2.5 billion, down 7.2% year-over-year, yet outpacing the Zacks Consensus Estimate of $2.2 billion [2] - Operating income for the quarter was $243.7 million, a decrease of 30.6% from the previous year, missing the estimate of $361.5 million [4] - Adjusted EBITA was $264.8 million, down 27.9% year-over-year, and also missed projections of $381.1 million [4] - The adjusted EBITA margin on net revenues was 12.2%, down 240 basis points from the year-ago quarter, missing the estimate of 16.8% [4] Balance Sheet and Cash Flow - At the end of the quarter, IPG had cash and cash equivalents of $1.6 billion, down from $1.9 billion in the previous quarter [5] - Total debt remained flat at $3 billion compared to the preceding quarter [5] - The company paid a common stock cash dividend of 33 cents per share, totaling $121.1 million [5] Future Guidance - IPG anticipates organic net revenue growth of 1-2% year-over-year for 2025 [6] - The adjusted EBITA margin is expected to exceed the 16.6% recorded in the previous quarter [6] - IPG currently holds a Zacks Rank 1 (Strong Buy) [6] Market Performance - IPG shares have declined by 14.3% year-to-date, contrasting with a 30% decline in the industry and a 6.5% rise in the Zacks S&P 500 composite [3]

Here is how Interpublic performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: View all Key Company Metrics for Interpublic here>>> Shares of Interpublic have returned -1.7% over the past month versus the Zacks S&P 500 composite's +5.9% change. The stock currently has a Zacks Rank #1 (Strong Buy), indicating that it could outperform the broader market in the near term. Revenue before billable expenses- International: $746.4 million versus ...

Financial Data and Key Metrics Changes - The company reported an organic revenue decrease of 3.5% for the quarter, consistent with earlier guidance [5][12] - Adjusted EBITDA was $393.7 million with a margin of 18.1%, reflecting significant structural cost reductions [7][19] - Diluted EPS was reported at $0.44, while adjusted diluted EPS was $0.75 [9][13] - The company returned $98 million to shareholders through share repurchases, totaling $188 million year-to-date [9][13] Business Line Data and Key Metrics Changes - Media, Data and Engagement Solutions segment saw a 3.1% organic decrease, impacted by prior account activity [15] - Integrated Advertising and Creativity segment experienced a 6.3% organic decrease, primarily due to a significant client loss in healthcare [16] - Specialized Communications and Experiential Solutions segment achieved 2.3% organic growth, led by Octagon and Momentum [17] Market Data and Key Metrics Changes - U.S. market, accounting for 66% of net revenue, decreased 2.6% organically, while international markets, making up 34% of net revenue, decreased 5.4% organically [18] - Client sector growth was led by food and beverage, financial services, and tech and telecom, while retail, healthcare, and consumer goods faced headwinds [6] Company Strategy and Development Direction - The company is focused on strategic transformation, enhancing service delivery, and leveraging technology to improve operational efficiency [8][26] - The integration with Omnicom is expected to create significant value and strengthen offerings in capabilities and geographies [6][32] - The Interact platform is being utilized to democratize data and enhance AI capabilities across the organization [26][30] Management's Comments on Operating Environment and Future Outlook - The macro environment has been more volatile than anticipated, but client engagement remains constructive [10] - The company is on track for a full-year organic net revenue decrease of 1% to 2% and expects adjusted EBITDA margin to exceed previous guidance of 16.6% [11][41] - Management expressed confidence in the long-term earnings power of the combined entity post-acquisition [50][82] Other Important Information - The company ended the quarter with $1.6 billion in cash and a gross financial debt to EBITDA ratio of 1.9 times [13][24] - The restructuring charge for the quarter was $118 million, with a significant non-cash portion [20][22] - The company has secured antitrust clearance in most jurisdictions for the acquisition by Omnicom, with completion expected in the second half of the year [42][43] Q&A Session Summary Question: Can you speak to what allowed you to realize some of those benefits faster? - Management indicated that the restructuring focused on improving service delivery and structural efficiencies, aided by industry pace of change and the upcoming acquisition [48][50] Question: Can you segment the organic growth between lapping account loss headwinds versus underlying improvement? - Management acknowledged the impact of significant account losses but noted real growth in other parts of the business, particularly in media and healthcare [52][53] Question: How is creative performing overall? - Management noted that traditional creative faces industry-wide challenges but emphasized the importance of connecting creative work to data insights for better outcomes [58][59] Question: What percentage of the business is outcome-based today? - Management stated that outcome-based components are integrated into more than 50% of contracts, indicating a growing trend in the industry [60] Question: Can you provide insights on the pro forma organization post-acquisition? - Management expressed excitement about the combined data assets and commerce capabilities, highlighting the potential for significant client benefits [90][91]

Financial Data and Key Metrics Changes - The company reported an organic revenue decrease of 3.5% for Q2 2025, consistent with earlier guidance [5][12] - Adjusted EBITDA was $393.7 million with a margin of 18.1%, reflecting significant structural cost reductions [7][19] - Diluted EPS was $0.44 as reported, while adjusted diluted EPS was $0.75 [8][12] - The company returned $98 million to shareholders through share repurchases, totaling $188 million year-to-date [9][12] Business Line Data and Key Metrics Changes - Media, Data and Engagement Solutions segment saw a 3.1% organic decrease, impacted by prior account activity [15] - Integrated Advertising and Creativity segment experienced a 6.3% organic decrease, largely due to a significant client loss in healthcare [15] - Specialized Communications and Experiential Solutions segment achieved 2.3% organic growth, driven by Octagon and Momentum [15] Market Data and Key Metrics Changes - U.S. market, accounting for 66% of net revenue, saw a 2.6% organic decrease [17] - International markets, representing 34% of net revenue, experienced a 5.4% organic decrease [19] Company Strategy and Development Direction - The company is focused on strategic transformation, enhancing service delivery, and leveraging technology for operational efficiencies [6][25] - The integration with Omnicom is expected to create significant value and strengthen offerings [6][32] - The Interact platform is central to the company's strategy, automating workflows and enhancing client engagement through AI [25][30] Management's Comments on Operating Environment and Future Outlook - The macro environment has been more volatile than anticipated, but client engagement remains constructive [9][10] - The company is on track for a full-year organic net revenue decrease of 1% to 2% and expects adjusted EBITDA margin to exceed previous guidance of 16.6% [10][41] - Management remains optimistic about the integration with Omnicom and the potential for enhanced capabilities and market position [32][44] Other Important Information - The company ended the quarter with $1.6 billion in cash and a gross financial debt to EBITDA ratio of 1.9 times [13][24] - Restructuring charges for the quarter were $118 million, with a significant non-cash portion [20][22] - The company has secured antitrust clearance in most jurisdictions for the acquisition by Omnicom, with completion expected in the second half of the year [42][43] Q&A Session Summary Question: Annualized savings and margin outlook - Management indicated that savings have been realized faster than expected, with a margin outlook now significantly ahead of 16.6% [46][48] Question: Organic growth segmentation - Management acknowledged the impact of account losses but noted underlying growth in other areas, particularly in media and healthcare [51][52] Question: Creative performance and outcome-based work - Management discussed the challenges in traditional creative sectors but emphasized the importance of data-driven approaches and outcome-based compensation models [56][58] Question: Cost savings run rate - Management confirmed that year-to-date savings are around $300 million, with expectations for ongoing structural savings beyond that [64][70] Question: Staffing and operational leverage - Management indicated that while growth may necessitate new hires, the focus will be on different roles that enhance operational efficiency [75][81]

Core Viewpoint - Interpublic Group (IPG) reported quarterly earnings of $0.75 per share, exceeding the Zacks Consensus Estimate of $0.55 per share, and showing an increase from $0.61 per share a year ago, indicating a strong earnings surprise of +36.36% [1] Financial Performance - The company posted revenues of $2.17 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.28%, although this represents a decline from year-ago revenues of $2.33 billion [2] - Over the last four quarters, Interpublic has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance and Outlook - Interpublic shares have declined approximately 14.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.2% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] Earnings Estimate Revisions - The trend for estimate revisions ahead of the earnings release was favorable, resulting in a Zacks Rank 1 (Strong Buy) for the stock, suggesting expected outperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $0.67 on revenues of $2.17 billion, and for the current fiscal year, it is $2.63 on revenues of $8.78 billion [7] Industry Context - The Advertising and Marketing industry, to which Interpublic belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Performance - Q2 2025 - Total revenue, including billable expenses, reached $2.5 billion[7] - Net revenue experienced an organic decrease of 3.5%[7] - The adjusted EBITA stood at $393.7 million before restructuring charges and deal costs, reflecting an 18.1% margin on revenue before billable expenses[7] - Reported diluted EPS was $0.44, while adjusted diluted EPS reached $0.75[7] - The company repurchased 4.0 million shares, returning $98.3 million to shareholders[7] Revenue Breakdown - Revenue before billable expenses decreased from $2,327.1 million in 2024 to $2,172.7 million in 2025[8] - US organic revenue change was -2.6%, and total International organic change was -5.4%[7] - Organic revenue decline was -3.1% for Media, Data & Engagement Solutions, -6.3% for Integrated Advertising & Creativity Led Solutions, and increased 2.3% for Specialized Communications & Experiential Solutions[11] Expenses and Restructuring - The company incurred pre-tax restructuring charges of $118.0 million[4] - Selling, General and Administrative Expenses increased to $46.4 million, including deal costs of $10.9 million related to the Omnicom acquisition[8] - Restructuring charges for the three months ended June 30, 2025, amounted to $118.0 million, aimed at driving significant structural expense savings[9] Regional Performance - Organic revenue change by region: United States -2.6%, United Kingdom -9.7%, Continental Europe -1.6%, Latin America +1.4%, Asia Pacific -13.6%[15] Liquidity and Debt - Total debt stood at $3.0 billion[29] - Cash and cash equivalents amounted to $1,564.4 million as of June 30, 2025[27]