Omnicom’s global operations see mixed performance, with U.S. and Latin America leading revenue growth

Omnicom has announced results for the quarter and full year ended December 31, 2024.

John Wren, Chairman and Chief Executive Officer, Omnicom: “With 5.2% organic revenue growth for both the fourth quarter and full year, and even higher growth in adjusted EBITA and adjusted EPS, our strong operational execution gives us confidence for continued strength in 2025. From this position of strength, we are incredibly well prepared for and excited about the complementary combination of businesses and cultures with our proposed acquisition of Interpublic. Together, clients and employees will benefit from expanded products to deliver superior creativity, innovation and effectiveness. We will also bring together unparalleled data assets to market, fueling leading creative, produced at scale, and activated by the world’s top-ranked media practice to drive measurable sales. We see significant upside potential through expected revenue and cost synergies that can drive growth beyond what Omnicom was delivering alone.”

Fourth Quarter 2024 Results

Revenue

Revenue in the fourth quarter of 2024 increased $261.3 million, or 6.4%, to $4,322.2 million. Worldwide revenue growth in the fourth quarter of 2024 compared to the fourth quarter of 2023 was led by an increase in organic revenue of $212.2 million, or 5.2%. Acquisition revenue, net of disposition revenue, increased revenue by $73.3 million, or 1.8%. The impact of foreign currency translation reduced revenue by 0.6%.

Organic growth by discipline in the fourth quarter of 2024 compared to the fourth quarter of 2023 was as follows: 7.1% for Media & Advertising, 9.1% for Precision Marketing, 10.3% for Public Relations, 1.8% for Execution & Support, and 4.9% for Experiential, partially offset by declines of 4.3% for Healthcare, and 11.6% for Branding & Retail Commerce.

Organic growth by region in the fourth quarter of 2024 compared to the fourth quarter of 2023 was as follows: 9.9% for the United States, 1.8% for Asia Pacific, 1.2% for the United Kingdom, 16.1% for Latin America, 0.1% for Other North America, and 1.7% for the Middle East & Africa, partially offset by a decline of 2.1% for Euro Markets & Other Europe.

Expenses

Operating expenses increased $222.7 million, or 6.5%, to $3,636.9 million in the fourth quarter of 2024 compared to the fourth quarter of 2023. Included in operating expenses in the fourth quarter of 2024 are $14.6 million of acquisition transaction costs related to the proposed acquisition of The Interpublic Group of Companies, Inc. (“IPG”). Included in operating expenses in the fourth quarter of 2023 are $14.5 million of acquisition transaction costs primarily related to the acquisition of Flywheel Digital.

Salary and service costs increased $189.8 million, or 6.4%, to $3,143.8 million. These costs tend to fluctuate with changes in revenue and are comprised of salary and related costs, which include employee compensation and benefits costs and freelance labor, third-party service costs, and third-party incidental costs. Salary and related costs increased $4.2 million, or 0.2%, to $1,910.3 million.

Third-party service costs include third-party supplier costs when the company acts as principal in providing services to its clients. Third-party incidental costs that are required to be included in revenue primarily consist of client-related travel and incidental out-of-pocket costs, which are billed back to the client directly at Omnicom’s cost. Third-party service costs increased $170.8 million, or 19.3%, to $1,054.8 million, primarily as a result of organic growth in the Media & Advertising, Experiential, Public Relations and Execution & Support disciplines. Third-party incidental costs increased $14.8 million, or 9.0%, to $178.7 million.

Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, increased $29.6 million, or 10.2%, to $320.5 million. The increase is primarily related to the acquisition activity during the year.

SG&A expenses decreased $3.3 million, or 2.9%, to $112.3 million. Included in SG&A expenses in the fourth quarter of 2024 are $14.6 million of acquisition transaction costs related to the proposed acquisition of IPG. Included in SG&A expenses in the fourth quarter of 2023 are $14.5 million of acquisition transaction costs primarily related to the acquisition of Flywheel Digital.

Operating Income

Operating income increased $38.6 million, or 6.0%, to $685.3 million in the fourth quarter of 2024 compared to the fourth quarter of 2023, and the related margin was unchanged at 15.9%.

Interest Expense, net

Net interest expense in the fourth quarter of 2024 increased $11.3 million to $38.1 million compared to the fourth quarter of 2023. Interest expense increased $12.4 million to $65.0 million, primarily due to higher outstanding debt, and interest income increased primarily due to higher average cash balances. In August 2024, we issued $600 million aggregate principal amount of 5.30% Senior Notes due 2034. Net proceeds from the offering, along with available cash, were used to fund the $750 million repayment of our 3.65% Senior Notes due November 1, 2024.

Net Income – Omnicom Group Inc. and Diluted Net Income per Share

Net income – Omnicom Group Inc. for the fourth quarter of 2024 increased $22.3 million, or 5.2%, to $448.0 million compared to the fourth quarter of 2023. Diluted shares outstanding for the fourth quarter of 2024 decreased 0.6% to 198.4 million from 199.5 million as a result of net share repurchases. Diluted net income per share of $2.26 increased $0.13, or 6.1%, from $2.13.

Non-GAAP Adjusted Net Income per Share – Diluted for the fourth quarter of 2024 increased $0.15, or 6.6%, to $2.41 from $2.26. Non-GAAP Adjusted Net Income per Share – Diluted for the fourth quarter of 2024 excluded $29.6 million of after-tax amortization of acquired intangible assets and internally developed strategic platform assets and acquisition transaction costs, and the fourth quarter of 2023 excluded $25.2 million of after-tax amortization of acquired intangible assets and internally developed strategic platform assets and acquisition transaction costs.

EBITA

EBITA increased $44.3 million, or 6.7%, to $707.6 million in the fourth quarter of 2024 compared to the fourth quarter of 2023, and the related margin increased to 16.4% from 16.3%.

Adjusted EBITA increased $44.4 million, or 6.6%, to $722.2 million in the fourth quarter of 2024 compared to the fourth quarter of 2023, and the related margin was unchanged at 16.7%. EBITA and Adjusted EBITA excluded amortization of acquired intangible assets and internally developed strategic platform assets of $22.3 million and $16.6 million in the fourth quarters of 2024 and 2023, respectively. Adjusted EBITA also excluded acquisition transaction costs of $14.6 million and $14.5 million in the fourth quarters of 2024 and 2023, respectively.

Risks and Uncertainties

Global economic disruptions, including geopolitical events, international hostilities, acts of terrorism, public health crises, inflation or stagflation, tariffs and other trade barriers, central bank interest rate policies in countries that comprise the company’s major markets and labor and supply chain challenges could cause economic uncertainty and volatility. According to the statement from the company, the impact of these issues on the business will vary by geographic market and discipline.

Statement: “We monitor economic conditions closely, as well as client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness and other developments.”

www.omnicomgroup.com

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