Omnicom Group(OMC) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights Overview of Q2 2025 Performance Omnicom reported Q2 2025 revenue of $4.02 billion, a 4.2% increase year-over-year, driven by 3.0% organic growth, while GAAP net income and EPS declined due to acquisition and repositioning costs, with non-GAAP adjusted EPS rising 5.1% Q2 2025 Key Financial Metrics vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $4,015.6 M | $3,853.8 M | +4.2% | | Organic Growth | 3.0% | N/A | N/A | | Operating Income | $439.2 M | $510.3 M | -13.9% | | Operating Income Margin | 10.9% | 13.2% | -2.3 p.p. | | Net Income | $257.6 M | $328.1 M | -21.5% | | Diluted EPS | $1.31 | $1.65 | -20.6% | | Adjusted EBITA | $613.8 M | $589.6 M | +4.1% | | Adjusted EBITA Margin | 15.3% | 15.3% | 0.0 p.p. | | Non-GAAP Adjusted Diluted EPS | $2.05 | $1.95 | +5.1% | CEO Statement CEO John Wren highlighted the company's resilience and 3.0% organic growth, attributing it to the Omni platform, and noted the U.S. antitrust clearance for the Interpublic (IPG) acquisition as a key strategic milestone - Achieved solid 3.0% organic revenue growth despite ongoing macroeconomic and geopolitical uncertainty[4] - Continued investment in the Omni operating platform is driving client outcomes and enhancing operational efficiency[4] - The transformational acquisition of Interpublic (IPG) successfully cleared U.S. antitrust review, with an expected close later in the year[4] Detailed Financial Analysis Revenue Analysis Total revenue for Q2 2025 increased 4.2% to $4,015.6 million, driven by 3.0% organic growth, with Media & Advertising and Latin America showing strong performance, while Public Relations and Healthcare declined Q2 2025 Revenue Growth Components (vs. Q2 2024) | Component | Impact on Revenue | Percentage Change | | :--- | :--- | :--- | | Organic Growth | +$116.8 M | +3.0% | | Foreign Currency Translation | +$42.4 M | +1.1% | | Acquisitions, net of dispositions | +$2.6 M | +0.1% | | Total Revenue Increase | +$161.8 M | +4.2% | Q2 2025 Organic Growth by Discipline (vs. Q2 2024) | Discipline | Organic Growth | | :--- | :--- | | Media & Advertising | +8.2% | | Precision Marketing | +5.0% | | Experiential | +2.9% | | Execution & Support | +1.5% | | Healthcare | -4.9% | | Public Relations | -9.3% | | Branding & Retail Commerce | -16.9% | Q2 2025 Organic Growth by Region (vs. Q2 2024) | Region | Organic Growth | | :--- | :--- | | Latin America | +18.0% | | Asia Pacific | +6.5% | | United States | +3.0% | | Euro Markets & Other Europe | +2.5% | | Other North America | +2.4% | | Middle East & Africa | +0.9% | | United Kingdom | -2.5% | Expense Analysis Operating expenses increased 7.0% to $3,576.4 million due to $66.0 million in IPG acquisition costs and $88.8 million in repositioning costs, while salary and service costs rose 4.7% - Operating expenses increased 7.0% YoY to $3,576.4 million[10] - Q2 2025 expenses included $66.0 million in costs related to the pending IPG acquisition and $88.8 million in repositioning costs, primarily for severance[10] Change in Salary and Service Costs (Q2 2025 vs Q2 2024) | Cost Component | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Salary and related costs | $1,827.8 M | -0.5% | | Third-party service costs | $918.4 M | +13.2% | | Third-party incidental costs | $186.4 M | +22.6% | | Total Salary and service costs | $2,932.6 M | +4.7% | - SG&A expenses increased 53.5% to $170.4 million, primarily due to the $66.0 million in acquisition-related costs[13] Profitability Analysis GAAP operating income fell 13.9% to $439.2 million and net income decreased 21.5% to $257.6 million, primarily due to acquisition and repositioning costs, which also increased the effective tax rate to 30.2% Operating Income and Margin (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating Income | $439.2 M | $510.3 M | | Operating Margin | 10.9% | 13.2% | - Acquisition-related costs and repositioning costs decreased the operating margin by 3.9 percentage points in Q2 2025[14] Net Income and Diluted EPS (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $257.6 M | $328.1 M | | Diluted EPS | $1.31 | $1.65 | - The effective tax rate increased to 30.2% in Q2 2025 from 26.4% in Q2 2024, primarily due to the non-deductibility of certain acquisition-related costs[16] Non-GAAP Performance Measures Non-GAAP Adjusted EBITA increased 4.1% to $613.8 million with a stable 15.3% margin, and Non-GAAP Adjusted Diluted EPS grew 5.1% to $2.05, reflecting underlying business performance excluding specific one-time costs EBITA and Adjusted EBITA (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | EBITA | $459.0 M | $531.8 M | -13.7% | | EBITA Margin | 11.4% | 13.8% | -2.4 p.p. | | Adjusted EBITA | $613.8 M | $589.6 M | +4.1% | | Adjusted EBITA Margin | 15.3% | 15.3% | 0.0 p.p. | GAAP vs Non-GAAP Adjusted Diluted EPS (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | GAAP Diluted EPS | $1.31 | $1.65 | -20.6% | | Non-GAAP Adjusted Diluted EPS | $2.05 | $1.95 | +5.1% | Key Disclosures and Company Information Risks and Forward-Looking Statements The company faces significant risks from the pending IPG merger, including completion and integration challenges, alongside broader risks from global economic conditions, client spending reductions, cybersecurity threats, and AI technology management - Significant risks are related to the pending IPG merger, including potential for the merger not to be completed, regulatory delays or restrictions, loss of key employees, and failure to realize anticipated benefits[30] - The company faces risks from global economic conditions, geopolitical events, inflation, and changes in central bank interest rate policies[19][30] - Other noted risks include reductions in client spending, cybersecurity incidents, and the effective management of risks and efficiencies related to Artificial Intelligence (AI) technologies[30] Definitions and Non-GAAP Measures The report defines key revenue components and explains the use of Non-GAAP measures like EBITA and adjusted metrics to enhance performance comparability by excluding specific non-recurring or non-cash items - Organic growth is calculated by subtracting the foreign exchange rate impact and the net acquisition/disposition revenue component from total revenue growth[23] - EBITA is defined as earnings before interest, taxes, and amortization of acquired intangible assets and internally developed strategic platform assets[28][45] - Non-GAAP measures are presented because management believes they are useful for evaluating the impact of certain items on operating performance and allow for better comparability between reporting periods[28] Company and Investor Information Omnicom, a leading global marketing and communications company serving over 5,000 clients in more than 70 countries, will host a conference call on July 15, 2025, to discuss its financial results - Omnicom is a leading provider of data-inspired, creative marketing and sales solutions, serving over 5,000 clients in more than 70 countries[26] - A conference call to review the financial results is scheduled for Tuesday, July 15, 2025, at 4:30 p.m. Eastern Time[24] Consolidated Financial Statements (Unaudited) Consolidated Statements of Income The unaudited Consolidated Statements of Income detail financial performance for Q2 2025, showing revenue of $4,015.6 million and net income of $257.6 million, and for the six-month period, revenue of $7,706.0 million and net income of $545.3 million Consolidated Statements of Income (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $4,015.6 | $3,853.8 | | Total Operating Expenses | $3,576.4 | $3,343.5 | | Operating Income | $439.2 | $510.3 | | Net Income - Omnicom Group Inc. | $257.6 | $328.1 | Consolidated Statements of Income (Six Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $7,706.0 | $7,484.3 | | Total Operating Expenses | $6,814.2 | $6,495.1 | | Operating Income | $891.8 | $989.2 | | Net Income - Omnicom Group Inc. | $545.3 | $646.7 | Detail of Operating Expenses This statement details operating expense components for Q2 2025, showing total operating expenses of $3,576.4 million, with $2,932.6 million in salary and service costs and $170.4 million in SG&A, including acquisition-related costs Detail of Operating Expenses (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Total salary and service costs | $2,932.6 | $2,800.1 | | Occupancy and other costs | $325.9 | $314.2 | | Repositioning costs | $88.8 | $57.8 | | Selling, general and administrative expenses | $170.4 | $111.0 | | Depreciation and amortization | $58.7 | $60.4 | | Total operating expenses | $3,576.4 | $3,343.5 | Reconciliation of Non-GAAP Financial Measures This section provides detailed reconciliations of GAAP to Non-GAAP measures, including Net Income to EBITA and Adjusted EBITA, and adjustments to Operating Income, Net Income, and EPS, detailing the impact of repositioning, acquisition costs, and amortization Reconciliation of Operating Income to Adjusted EBITA (Q2 2025) | ($ in millions) | Amount | | :--- | :--- | | Operating Income (GAAP) | $439.2 | | Add back: amortization | $19.8 | | EBITA | $459.0 | | Add back: Repositioning costs | $88.8 | | Add back: Acquisition related costs | $66.0 | | EBITA - Adjusted (Non-GAAP) | $613.8 | Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income (Q2 2025) | ($ in millions) | Amount | | :--- | :--- | | Net Income - Reported (GAAP) | $257.6 | | Add: Repositioning costs (after-tax) | $67.2 | | Add: Acquisition related costs (after-tax) | $61.6 | | Add: Amortization (after-tax) | $14.7 | | Non-GAAP Net Income - Adjusted | $401.1 |