Omnicom Group(OMC) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides Omnicom Group Inc.'s unaudited consolidated financial statements and management's analysis of financial condition and results Item 1. Financial Statements This section presents Omnicom Group Inc.'s unaudited consolidated financial statements and detailed notes for the specified periods Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific reporting dates Consolidated Balance Sheet Highlights (in millions) | Item | Sep 30, 2025 | Dec 31, 2024 | | :---------------------------------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $3,406.5 | $4,339.4 | | Accounts receivable, net | $8,586.0 | $9,242.0 | | Work in process | $2,023.5 | $1,622.2 | | Total Current Assets | $15,192.0 | $16,223.0 | | Goodwill | $10,915.2 | $10,677.4 | | Total Assets | $28,838.6 | $29,620.7 | | Accounts payable | $11,320.4 | $12,484.4 | | Current portion of debt | $1,399.0 | — | | Total Current Liabilities | $16,443.6 | $16,300.3 | | Long-Term Debt | $4,876.2 | $6,035.3 | | Total Equity | $5,122.7 | $4,745.9 | | Total Liabilities and Equity | $28,838.6 | $29,620.7 | Consolidated Statements of Income This section details the company's financial performance over specific reporting periods Consolidated Statements of Income Highlights (in millions, except per share amounts) | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $4,037.1 | $3,882.6 | $11,743.1 | $11,366.9 | | Operating Income | $530.1 | $600.1 | $1,421.9 | $1,589.3 | | Net Income - Omnicom Group Inc. | $341.3 | $385.9 | $886.6 | $1,032.6 | | Diluted Net Income Per Share | $1.75 | $1.95 | $4.51 | $5.19 | - Revenue increased by 4.0% for the three months and 3.3% for the nine months ended September 30, 2025, compared to the prior year periods. Operating Income decreased by 11.7% for the three months and 10.5% for the nine months. Net Income attributable to Omnicom Group Inc. decreased by 11.6% for the three months and 14.1% for the nine months[9] Consolidated Statements of Comprehensive Income This section presents the total change in equity from non-owner sources for the reporting periods Consolidated Statements of Comprehensive Income Highlights (in millions) | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Income | $360.4 | $409.9 | $941.6 | $1,095.1 | | Foreign currency translation adjustment | $(60.6) | $180.2 | $155.2 | $62.0 | | Other Comprehensive Income (Loss) | $(59.2) | $181.6 | $159.4 | $65.9 | | Comprehensive Income - Omnicom Group Inc. | $285.1 | $557.1 | $1,035.4 | $1,095.9 | - Foreign currency translation adjustment significantly impacted Other Comprehensive Income (Loss), shifting from a gain of $180.2 million in Q3 2024 to a loss of $60.6 million in Q3 2025[11] Consolidated Statements of Equity This section outlines changes in shareholders' equity over the reporting periods Consolidated Statements of Equity Highlights (in millions, except per share amounts) | Item | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Beginning Balance (Retained Earnings) | $11,500.5 | $10,571.5 | | Net income | $886.6 | $1,032.6 | | Common stock dividends declared | $(412.0) | $(413.9) | | Common stock repurchased | $(314.1) | $(365.3) | | Total Shareholders' Equity (Ending) | $4,613.3 | $3,951.3 | | Dividends Declared Per Common Share | $2.10 | $2.10 | - Shareholders' Equity increased to $4,613.3 million at September 30, 2025, from $3,951.3 million at September 30, 2024. Common stock repurchases decreased from $365.3 million in 2024 to $314.1 million in 2025 for the nine-month period[13] Consolidated Statements of Cash Flows This section reports the cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in millions) | Item | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net Cash Used In Operating Activities | $(99.2) | $(191.5) | | Net Cash Used In Investing Activities | $(60.8) | $(993.3) | | Net Cash (Used In) Provided By Financing Activities | $(907.5) | $293.4 | | Effect of foreign exchange rate changes on cash | $134.6 | $(6.7) | | Net Decrease in Cash and Cash Equivalents | $(932.9) | $(898.1) | | Cash and Cash Equivalents at the End of Period | $3,406.5 | $3,533.9 | - Net cash used in operating activities decreased by 48.3% to $(99.2) million in 2025, while net cash used in investing activities significantly decreased from $(993.3) million in 2024 to $(60.8) million in 2025, primarily due to lower acquisition spending. Financing activities shifted from providing $293.4 million in 2024 to using $(907.5) million in 2025[15] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements 1. Presentation of Financial Statements This note outlines the basis of financial statement presentation and significant accounting events - Omnicom entered into an Agreement and Plan of Merger to acquire The Interpublic Group of Companies, Inc. (IPG) on December 8, 2024, with shareholder approval on March 18, 2025. The merger is subject to regulatory approvals, with EU approval pending and closing expected by end of November 2025[19][20] - Acquisition-related costs of $60.8 million (three months) and $160.6 million (nine months) were recorded in selling, general and administrative expenses for 2025[19] - Omnicom offered to exchange up to $2.95 billion of IPG's outstanding senior notes for new Omnicom notes in Q3 2025, with sufficient tenders received[21] - Global economic conditions, geopolitical events, inflation, and central bank interest rate policies are identified as risks causing economic uncertainty and volatility[22] 2. Revenue This note details the company's revenue recognition policies and disaggregates revenue by discipline and geographic market - Omnicom provides data-inspired, creative marketing and sales solutions across disciplines including Media & Advertising, Precision Marketing, Public Relations, Healthcare, Branding & Retail Commerce, Experiential, and Execution & Support[24][25] Revenue by Discipline (in millions) | Discipline | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Media & Advertising | $2,353.8 | $2,129.0 | $6,693.3 | $6,184.2 | | Precision Marketing | $462.5 | $450.6 | $1,369.9 | $1,303.1 | | Public Relations | $377.2 | $404.0 | $1,112.8 | $1,195.3 | | Healthcare | $331.2 | $337.1 | $969.5 | $999.1 | | Branding & Retail Commerce | $144.8 | $181.7 | $452.9 | $549.3 | | Experiential | $152.2 | $174.3 | $503.2 | $512.5 | | Execution & Support | $215.4 | $205.9 | $641.5 | $623.4 | | Total Revenue | $4,037.1 | $3,882.6 | $11,743.1 | $11,366.9 | Revenue by Geographic Market (in millions) | Geographic Market | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | North America | $2,245.3 | $2,154.0 | $6,566.5 | $6,343.3 | | Latin America | $126.4 | $99.7 | $337.4 | $302.6 | | Europe | $1,135.4 | $1,080.8 | $3,296.8 | $3,188.5 | | Middle East and Africa | $67.4 | $63.3 | $204.3 | $208.5 | | Asia-Pacific | $462.6 | $484.8 | $1,338.1 | $1,324.0 | | Total Revenue | $4,037.1 | $3,882.6 | $11,743.1 | $11,366.9 | Contract Balances (in millions) | Item | Sep 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :-------------------- | :----------- | :----------- | :----------- | | Work in process | $2,023.5 | $1,622.2 | $1,898.4 | | Customer advances | $1,273.0 | $1,336.1 | $1,303.2 | 3. Net Income per Share This note provides the calculation of basic and diluted net income per share Net Income per Share - Omnicom Group Inc. | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic EPS | $1.76 | $1.97 | $4.54 | $5.25 | | Diluted EPS | $1.75 | $1.95 | $4.51 | $5.19 | | Weighted Average Shares (Diluted, millions) | 194.9 | 198.2 | 196.4 | 198.9 | - Diluted EPS decreased by $0.20 (10.3%) for the three months and $0.68 (13.1%) for the nine months ended September 30, 2025, compared to the prior year periods[30] - 5.8 million potentially dilutive common shares were excluded from diluted shares outstanding for both the three and nine months ended September 30, 2025, as their inclusion would have been anti-dilutive[30] 4. Goodwill and Intangible Assets This note details changes in goodwill and intangible assets, including impairment testing Change in Goodwill (in millions) | Item | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | January 1 | $10,677.4 | $10,082.3 | | Acquisitions | $2.5 | $751.1 | | Foreign currency translation | $296.4 | $76.2 | | September 30 | $10,915.2 | $10,928.0 | - Goodwill increased to $10,915.2 million at September 30, 2025, from $10,677.4 million at January 1, 2025. The increase in 2024 was primarily due to the acquisition of Flywheel Digital[31] - No goodwill impairment charges were recorded in the nine months ended September 30, 2025 or 2024. The annual goodwill impairment test as of May 1, 2025, concluded that goodwill was not impaired[31][32] Intangible Assets (Net, in millions) | Item | Sep 30, 2025 | Dec 31, 2024 | | :---------------------------------------------------------------- | :----------- | :----------- | | Acquired intangible assets and internally developed strategic platform assets | $455.6 | $490.0 | | Other purchased and internally developed software | $33.2 | $32.0 | | Total Intangible Assets, Net | $488.8 | $522.0 | Amortization Expense (in millions) | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :---------------------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Amortization Expense | $25.4 | $26.5 | $75.0 | $78.6 | 5. Debt This note describes the company's debt structure, credit facilities, and compliance with covenants - Omnicom has a $2.5 billion unsecured multi-currency revolving credit facility terminating on June 2, 2028, and commercial paper programs totaling $2.5 billion equivalent. No drawings or issuances occurred in Q3 or YTD 2025/2024[34] - The company was in compliance with its Credit Facility covenant, maintaining a Leverage Ratio of 2.6 times at September 30, 2025, below the 3.5 times limit[35] Long-Term Debt (in millions) | Item | Sep 30, 2025 | Dec 31, 2024 | | :------------------------------------------ | :----------- | :----------- | | Long-Term Debt, Gross | $6,308.7 | $6,073.0 | | Current portion | $(1,399.0) | — | | Long-Term Debt | $4,876.2 | $6,035.3 | - The 3.60% Senior Notes due 2026 were reclassified to current liabilities. Omnicom and its finance subsidiaries (OCI, OFH, OCH) are co-obligors or guarantors for various senior unsecured notes[39][40][41] 6. Segment Reporting This note explains the company's operating segments and provides disaggregated financial information - Omnicom aggregates its operating segments (agency networks) into one reporting segment due to similar economic characteristics and a client-centric business model[43][153] Segment Operating Income (in millions) | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $4,037.1 | $3,882.6 | $11,743.1 | $11,366.9 | | Total segment operating expenses | $3,407.6 | $3,282.5 | $10,033.2 | $9,719.8 | | Segment Operating Income | $629.5 | $600.1 | $1,709.9 | $1,647.1 | - Segment Operating Income increased by 4.9% for the three months and 3.8% for the nine months ended September 30, 2025[44] Revenue by Geographic Region (in millions) | Region | Three Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2025 | | :----------- | :------------------------------ | :----------------------------- | | Americas | $2,371.7 | $6,903.9 | | EMEA | $1,202.8 | $3,501.1 | | Asia-Pacific | $462.6 | $1,338.1 | 7. Income Taxes This note details the company's income tax provisions, effective tax rates, and unrecognized tax benefits - The effective tax rate for the nine months ended September 30, 2025, increased to 28.5% from 26.3% in 2024, primarily due to the non-deductibility of certain acquisition-related costs for the pending IPG acquisition[47] - The company is monitoring Pillar Two model rules for a minimum effective tax rate of 15% and the U.S. One Big Beautiful Bill Act, neither of which is expected to have a material adverse impact in 2025[48][49][50] - Unrecognized tax benefits were $162.1 million at September 30, 2025, with approximately $155.5 million potentially affecting the effective tax rate upon resolution[50] 8. Pension and Other Postemployment Benefits This note provides information on the company's defined benefit pension plans and postemployment arrangements Net Periodic Benefit Expense (in millions) | Item | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Defined Benefit Pension Plans | $12.2 | $7.3 | | Postemployment Arrangements | $8.5 | $10.2 | - Total net periodic benefit expense for Defined Benefit Pension Plans increased by 67.1% to $12.2 million for the nine months ended September 30, 2025[51] - Contributions to defined benefit pension plans were $0.5 million in 2025, down from $1.2 million in 2024[51] 9. Repositioning Costs This note details costs incurred for restructuring and efficiency initiatives - Repositioning costs for the three months ended September 30, 2025, were $38.6 million ($28.4 million after-tax), primarily for severance related to the pending IPG acquisition integration[52] - For the nine months ended September 30, 2025, repositioning costs totaled $127.4 million ($95.7 million after-tax), also related to IPG integration and efficiency initiatives within Omnicom Advertising Group and Omnicom Production Group[52] - In the nine months ended September 30, 2024, repositioning costs were $57.8 million ($42.9 million after-tax) for ongoing efficiency initiatives and strategic agency consolidation[52][53] 10. Supplemental Cash Flow Data This note provides additional details on non-cash investing and financing activities and changes in operating capital Change in Operating Capital (in millions) | Item | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | (Increase) decrease in accounts receivable | $983.8 | $383.4 | | (Increase) decrease in work in process and other current assets | $(458.0) | $(577.6) | | Increase (decrease) in accounts payable | $(1,538.8) | $(902.0) | | Increase (decrease) in operating capital | $(1,422.8) | $(1,593.6) | Supplemental Financial Information (in millions) | Item | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Income taxes paid | $393.3 | $389.1 | | Interest paid | $121.5 | $90.4 | - Operating capital used decreased to $(1,422.8) million in 2025 from $(1,593.6) million in 2024. Interest paid increased by 34.4% to $121.5 million for the nine months ended September 30, 2025[54] 11. Commitments and Contingent Liabilities This note discloses the company's commitments and potential liabilities from legal proceedings - The company is involved in various legal proceedings in the ordinary course of business but does not expect them to have a material adverse effect on its results of operations or financial position[55] 12. Accumulated Other Comprehensive Income (Loss) This note details changes in components of accumulated other comprehensive income (loss) Changes in Accumulated Other Comprehensive Income (Loss), Net of Income Taxes (in millions) | Item | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | January 1 | $(1,475.9) | $(1,337.6) | | Other comprehensive income (loss) before reclassifications | $144.6 | $59.4 | | Reclassification from accumulated other comprehensive income (loss) | $4.2 | $3.9 | | September 30 | $(1,327.1) | $(1,274.3) | - Accumulated Other Comprehensive Income (Loss) improved to $(1,327.1) million at September 30, 2025, from $(1,475.9) million at January 1, 2025, primarily due to positive foreign currency translation adjustments[56] 13. Fair Value This note provides information on financial assets and liabilities measured at fair value Financial Assets and Liabilities Measured at Fair Value (in millions) | Item | Sep 30, 2025 | Dec 31, 2024 | | :------------------------------------------ | :----------- | :----------- | | Cash and cash equivalents | $3,406.5 | $4,339.4 | | Marketable equity securities | $0.9 | $0.9 | | Cross currency swaps - net investment hedge (Liabilities) | $8.8 | — | | Contingent purchase price obligations (Liabilities) | $204.8 | $220.1 | - Contingent purchase price obligations decreased to $204.8 million at September 30, 2025, from $220.1 million at December 31, 2024[57][58] - The fair value of long-term debt at September 30, 2025, was $6,036.3 million, compared to a carrying amount of $6,275.2 million[58] 14. New Accounting Standards This note discusses recently issued accounting pronouncements and their expected impact - ASU 2025-06, 'Targeted Improvements to the Accounting for Internal-Use Software,' issued in September 2025 and effective January 1, 2028, is not expected to have a material impact on the financial statements[59] 15. Subsequent Events This note discloses significant events occurring after the balance sheet date - No events requiring additional adjustments or disclosures have occurred subsequent to the balance sheet date of September 30, 2025[60] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Omnicom's financial condition, operational results, liquidity, and critical accounting estimates Forward-Looking Statements This section outlines potential future events and factors that could impact the company's performance - The report contains forward-looking statements subject to various risks and uncertainties, many outside the company's control[61] - Key risks include those related to the pending IPG Merger (completion, regulatory approvals, integration, client loss), adverse economic conditions, client spending reductions, competitive factors, personnel changes, currency fluctuations, cybersecurity incidents, effective management of AI technologies, and changes in legislation or regulations[63] Executive Summary This section provides a high-level overview of the company's business model and recent financial performance - Omnicom is a strategic holding company offering data-inspired, creative marketing and sales solutions through global networks and practice areas, including Omnicom Advertising Group, Omnicom Media Group, and Omnicom Health Group[69][70] - The pending acquisition of IPG is expected to close by the end of November 2025, with shareholders of both companies having approved the merger. Acquisition-related costs of $160.6 million were incurred for the nine months ended September 30, 2025[65][66] - Generative AI and agentic AI are anticipated to significantly impact service delivery and productivity, with the company committed to responsible AI practices while evaluating associated risks[73] - Worldwide revenue for the three months ended September 30, 2025, increased by 4.0% to $4,037.1 million, with organic revenue growth of 2.6%. For the nine months, revenue increased by 3.3% to $11,743.1 million, with organic growth of 3.0%[77][78] - The largest client accounted for 2.6% of revenue, and the top 100 clients accounted for approximately 54.9% of revenue for the twelve months ended September 30, 2025, demonstrating a diversified client base[75] Consolidated Results of Operations This section analyzes the company's financial performance, including revenue, expenses, and income Revenue Analysis This section provides a detailed breakdown of revenue performance by growth components, discipline, and geographic market Worldwide Revenue Growth Components (in millions) | Component | Three Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2025 | | :------------------------------------------ | :------------------------------ | :----------------------------- | | Total Revenue | $4,037.1 (+4.0%) | $11,743.1 (+3.3%) | | Foreign exchange rate impact | $52.4 (+1.4%) | $35.6 (+0.3%) | | Acquisition revenue, net of disposition revenue | $(0.3) (—%) | $(0.5) (—%) | | Organic growth | $102.4 (+2.6%) | $341.1 (+3.0%) | Organic Revenue Growth by Discipline | Discipline | Three Months Ended Sep 30, 2025 (% Organic Growth) | Nine Months Ended Sep 30, 2025 (% Organic Growth) | | :-------------------------- | :----------------------------------------- | :---------------------------------------- | | Media & Advertising | 9.1% | 8.2% | | Precision Marketing | 0.8% | 3.8% | | Public Relations | (7.5)% | (7.2)% | | Healthcare | (1.9)% | (3.3)% | | Branding & Retail Commerce | (16.9)% | (14.6)% | | Experiential | (17.7)% | (5.5)% | | Execution & Support | 2.0% | 1.8% | Organic Revenue Growth by Geographic Market | Geographic Market | Three Months Ended Sep 30, 2025 (% Organic Growth) | Nine Months Ended Sep 30, 2025 (% Organic Growth) | | :------------------------ | :----------------------------------------- | :---------------------------------------- | | North America | 4.4% | 3.8% | | Latin America | 27.3% | 20.1% | | Europe | (0.5)% | 0.3% | | Middle East and Africa | 5.9% | (1.5)% | | Asia-Pacific | (3.7)% | 2.6% | - North America's organic growth was driven by Media & Advertising, Precision Marketing, and Execution & Support, partially offset by Public Relations. Latin America saw strong organic growth across all countries, led by Media & Advertising[98][99][100] - Europe's organic growth was mixed, with strong performance in Media & Advertising offset by underperformance in other disciplines. Asia-Pacific experienced a decline in organic revenue for the three months but positive growth for the nine months, led by India, Australia, and New Zealand, offset by China[101][102][103][105][106] Revenue by Industry This section categorizes revenue contributions from various client industry sectors Revenue by Type of Client Industry Sector (Nine Months Ended Sep 30, 2025) | Industry Sector | % of Total Revenue | | :-------------------------- | :----------------- | | Pharmaceuticals and Healthcare | 15% | | Food and Beverage | 15% | | Auto | 13% | | Consumer Products | 9% | | Financial Services | 8% | | Travel and Entertainment | 8% | | Technology | 8% | | Retail | 7% | | Government | 4% | | Telecommunications | 3% | | Services | 3% | | Oil, Gas and Utilities | 2% | | Not-for-Profit | 1% | | Education | 1% | | Other | 3% | - Pharmaceuticals and Healthcare, Food and Beverage, and Auto were the top three industry sectors, each contributing 13-15% of revenue for the nine months ended September 30, 2025[108] Operating Expenses Analysis This section analyzes the components and changes in the company's operating expenses Operating Expenses (in millions) | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Operating Expenses | $3,507.0 (+6.8%) | $3,282.5 | $10,321.2 (+5.6%) | $9,777.6 | | Salary and related costs | $1,778.5 (-3.7%) | $1,846.9 | $5,386.8 (-2.6%) | $5,531.1 | | Third-party service costs | $955.6 (+21.8%) | $784.5 | $2,670.8 (+16.4%) | $2,293.8 | | Repositioning costs | $38.6 | — | $127.4 | $57.8 | | Selling, general and administrative expenses | $163.5 (+64.3%) | $99.5 | $451.8 (+52.7%) | $295.8 | - Total operating expenses increased by 6.8% for the three months and 5.6% for the nine months ended September 30, 2025, primarily due to acquisition-related costs for the IPG merger and repositioning costs[111][112] - Salary and related costs decreased due to prior repositioning actions and changes in global employee mix, while third-party service costs increased significantly due to organic growth in Media & Advertising and Execution & Support[114][115] - Selling, general and administrative (SG&A) expenses increased by 64.3% (three months) and 52.7% (nine months) primarily due to acquisition-related costs for the pending IPG acquisition[117] Operating Income This section details the company's operating income and operating margin performance Operating Income and Margin | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating Income | $530.1 (-11.7%) | $600.1 | $1,421.9 (-10.5%) | $1,589.3 | | Operating Margin | 13.1% (-2.4 pp) | 15.5% | 12.1% (-1.9 pp) | 14.0% | - Operating income decreased by $70.0 million (11.7%) for the three months and $167.4 million (10.5%) for the nine months ended September 30, 2025. Operating margin decreased by 2.4 percentage points (three months) and 1.9 percentage points (nine months)[118][119] - Acquisition-related costs and repositioning costs reduced operating income by $99.4 million (three months) and $288.0 million (nine months) in 2025[118][119] Net Interest Expense This section analyzes changes in the company's interest income and expense - Net interest expense increased by $2.8 million to $43.2 million for the three months and by $4.4 million to $113.3 million for the nine months ended September 30, 2025[120] - Interest expense on debt for the nine months increased by $2.1 million to $171.1 million, primarily due to a higher weighted average cost of debt in 2025. Interest income decreased due to lower cash balances and interest rates[120] Income Taxes This section discusses the company's effective tax rate and significant tax-related events - The effective tax rate for the nine months ended September 30, 2025, increased to 28.5% from 26.3% in the prior year, mainly due to the non-deductibility of certain acquisition-related costs for the IPG merger[121] - The 2024 effective tax rate included a favorable impact of $7.5 million from the resolution of non-U.S. tax positions[121] - The One Big Beautiful Bill Act, signed into U.S. law on July 4, 2025, is not expected to have a material impact on the company's financial statements[122] Net Income and Net Income Per Share - Omnicom Group Inc. This section presents the company's net income and earnings per share performance Net Income and Diluted EPS - Omnicom Group Inc. | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Income | $341.3 (-$44.6) | $385.9 | $886.6 (-$146.0) | $1,032.6 | | Diluted EPS | $1.75 (-$0.20) | $1.95 | $4.51 (-$0.68) | $5.19 | - The decrease in net income and diluted EPS is primarily due to acquisition-related costs and repositioning costs, partially offset by the reduction in weighted average common shares outstanding from repurchases[123][124] - Acquisition-related and repositioning costs reduced 2025 diluted EPS by $0.41 (three months) and $1.23 (nine months)[123][124] - After-tax amortization of acquired intangible assets decreased diluted EPS by $0.08 for each of the three months and $0.24 for each of the nine months ended September 30, 2025 and 2024[125] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures used to evaluate performance - EBITA (Earnings Before Interest, Taxes, and Amortization of acquired intangible assets and internally developed strategic platform assets) and EBITA Margin are used as non-GAAP measures to evaluate operating performance and comparability[126] EBITA and EBITA Margin (in millions) | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | EBITA | $551.6 (-11.4%) | $622.3 | $1,485.0 (-10.2%) | $1,654.5 | | EBITA Margin | 13.7% (-2.3 pp) | 16.0% | 12.6% (-2.0 pp) | 14.6% | Liquidity and Capital Resources This section discusses the company's cash flows, debt, and financial flexibility - Primary short-term liquidity sources are net cash from operating activities and cash and cash equivalents, supplemented by a $2.5 billion revolving credit facility and commercial paper programs[128] - Cash and cash equivalents decreased by $932.9 million from December 31, 2024. Net cash used in operating activities was $99.2 million for the first nine months of 2025, including $1.4 billion for operating capital[130] - Discretionary spending for the first nine months of 2025 was $963.5 million, significantly lower than $1.9 billion in 2024 due to reduced acquisition spending[130] - Net debt increased by $1.2 billion to $2.9 billion at September 30, 2025, from December 31, 2024, primarily due to cash usage for operating activities and discretionary spending[134][135] - The company's Leverage Ratio was 2.6 times at September 30, 2025, well within the Credit Facility covenant of 3.5 times. Debt is rated BBB+/A2 by S&P and Baa1/P2 by Moody's[141][142] - Omnicom's diversified client base (largest client 2.6% of revenue) mitigates concentration of credit risk, but economic downturns could increase payment default risk, especially where agencies act as principal[146][148] Critical Accounting Estimates This section highlights accounting policies requiring significant judgment and their potential impact on financial results - The company's acquisition strategy focuses on acquiring specialized know-how and assembled workforces to expand core capabilities and service offerings[151][152] - Goodwill is evaluated for impairment annually on May 1. For the May 1, 2025, test, reporting units were aggregated at the operating segment level due to similar economic characteristics[153] - Valuation methodologies include the income approach (discounted expected future cash flows), comparative market participant multiples for EBITDA, and recent acquisition transactions[154] - Key assumptions for discounted cash flow valuation are the expected long-term growth rate (3.5% for May 1, 2025) and the weighted average cost of capital (WACC) (12.5%-12.8% for May 1, 2025)[155][156][157] - The goodwill impairment test as of May 1, 2025, concluded that goodwill was not impaired, with the fair value of each reporting unit exceeding its net book value. A sensitivity analysis showed that even with a 1% increase in WACC or a 1% decrease in long-term growth rate, reporting units would still pass the impairment test[161] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines Omnicom's approach to managing market risks, specifically foreign exchange rate risk and interest rate risk, through the use of derivative financial instruments. It confirms no material changes to these risks since the previous annual report - Omnicom manages foreign exchange rate risk and interest rate risk using derivative financial instruments, including forward foreign exchange contracts and net investment hedges, but not for speculative purposes[163] - There have been no material changes to the company's market risks since the disclosure in its 2024 Form 10-K[164] Item 4. Controls and Procedures This section confirms that management, including the CEO and CFO, evaluated and concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of September 30, 2025, with no material changes during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2025[165] - Internal control over financial reporting was also deemed effective as of September 30, 2025, with no material changes during the most recent fiscal quarter[166] PART II. OTHER INFORMATION This section includes legal proceedings, risk factors, equity sales, and other required disclosures Item 1. Legal Proceedings This section states that Omnicom is involved in various legal proceedings in the ordinary course of business but does not anticipate any material adverse effect on its financial position or results of operations - The company does not expect ongoing legal proceedings to have a material adverse effect on its results of operations or financial position[168] Item 1A. Risk Factors This section confirms that there have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K and the quarterly report for March 31, 2025 - No material changes to the risk factors disclosed in the 2024 Form 10-K or the quarterly report for the period ended March 31, 2025[169] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the common stock repurchases made during the third quarter of 2025, including shares bought for general corporate purposes and those withheld from employees for tax obligations, and confirms no unregistered sales of equity securities Common Stock Repurchases (Three Months Ended Sep 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------------- | :----------------------------- | :--------------------------- | | July 1 - July 31, 2025 | 1,214,539 | $72.54 | | August 1 - August 31, 2025 | 12,714 | $75.88 | | September 1 - September 30, 2025 | — | — | | Total | 1,227,253 | $72.57 | - During the three months ended September 30, 2025, Omnicom repurchased 958,903 shares for general corporate purposes and withheld 268,350 shares from employees to satisfy tax obligations related to restricted stock awards and stock option exercises[170] - There were no unregistered sales of equity securities during the three months ended September 30, 2025[170] Item 5. Other Information This section reports that no directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the third quarter of 2025 - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended September 30, 2025[171] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including various certifications and XBRL-related documents - Exhibits include certifications by the CEO and CFO (Rule 13a-14(a) and 13a-14(b)) and Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents)[176] Signatures This section contains the required signatures for the Form 10-Q filing - The report was signed on October 22, 2025, by Philip J. Angelastro, Executive Vice President and Chief Financial Officer[176]