IPG(IPG) - 2025 Q2 - Quarterly Results

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 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 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] - Strong performance was observed at media and healthcare practice areas, along with growth in sports marketing and public relations disciplines[2] - 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] 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] - Adjusted 2025 EBITA margin is expected to be significantly ahead of the previously shared 16.6%, reflecting both structural and operating improvement[3] - Efforts are underway to further develop the portfolio in growth areas such as media trading, commerce, and data-driven marketing[3] 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] - Investments in people and capabilities are leading to positive new business performance[4] 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] - There is strong interest and support from clients, and enthusiasm from practitioners across both organizations to unlock value[5] 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 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 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 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 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 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 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] 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] Selling, General and Administrative (SG&A) Expenses 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] 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 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] - Total restructuring charges are expected to be $375.0 - $400.0 million, including a substantial non-cash portion[21] 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 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 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 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 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 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 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] - 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] 2024 Total Revenue | Metric | 2024 (Billions) | | :---------------- | :----------- | | Total Revenue | $10.7 | 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] - 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][33] - 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] 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 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 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 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 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 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 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) 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 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 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) | |