Omnicom Reports Second Quarter 2024 Results
Omnicom (NYSE: OMC) reported Q2 2024 results with revenue of $3.9 billion, representing 5.2% organic growth. Key highlights include:
- Net income of $328.1 million
- Diluted EPS of $1.65; Non-GAAP adjusted EPS of $1.95
- Non-GAAP adjusted EBITA of $589.6 million with a 15.3% margin
Organic growth was led by Advertising & Media (7.8%) and Experiential (17.6%). The company saw strong performance in larger markets, with the US growing 6.3%. Omnicom continues to invest in data, technology, and AI capabilities to address evolving consumer needs and serve clients effectively.
- Revenue increased 6.8% to $3.85 billion
- Organic growth of 5.2% in Q2 2024
- Non-GAAP adjusted EPS increased 4.8% to $1.95
- Advertising & Media discipline grew 17.6% organically
- Strong organic growth in key markets: US (6.3%), UK (6.9%), Latin America (24.5%)
- Operating income decreased 7.3% to $510.3 million
- Operating income margin declined to 13.2% from 15.3%
- Net income decreased 10.4% to $328.1 million
- Diluted EPS decreased 9.3% to $1.65
- Branding & Retail Commerce discipline declined 3.8% organically
Omnicom's Q2 2024 financial performance presents a mixed bag for investors. On the one hand, the company reported a 6.8% increase in revenue to
However, net income declined by
On a positive note, Omnicom's Non-GAAP adjusted figures show an improved performance. Adjusted EBITA rose by
For retail investors, the key takeaway is the balance between the positive revenue growth and the negative impact of rising costs and lower margins. While Omnicom is expanding, the profitability challenges could weigh on investor sentiment in the short term.
Omnicom's quarterly performance underscores the importance of regional growth dynamics. Notably, the company achieved robust growth in Latin America (24.5%), Middle East & Africa (8.0%) and United Kingdom (6.9%). These regions are emerging as key drivers for the company's revenue as they outperformed more mature markets like the United States and Europe. This geographic diversification helps mitigate risks associated with slowing growth in other regions.
However, there's a noticeable decline in the Asia Pacific region and Other North America, with revenue dropping by
Additionally, the company's discipline-specific growth highlights the changing landscape of marketing. The Experiential discipline saw a remarkable
For investors, understanding these regional and sectoral trends is crucial. They indicate where Omnicom is most likely to face opportunities and challenges moving forward, helping to shape more informed investment decisions.
Revenue of
Net income of
Diluted earnings per share of
Non-GAAP adjusted EBITA of
"Our
Second Quarter 2024 Results
$ in millions, except per share amounts | Three Months Ended June 30, | |||||
2024 | 2023 | |||||
Revenue | $ 3,853.8 | $ 3,609.9 | ||||
Operating Income | 510.3 | 550.7 | ||||
Operating Income Margin | 13.2 % | 15.3 % | ||||
Net Income1 | 328.1 | 366.3 | ||||
Net Income per Share - Diluted1 | $ 1.65 | $ 1.82 | ||||
Non-GAAP Measures:2,3,4 | ||||||
EBITA | 531.8 | 565.4 | ||||
EBITA Margin | 13.8 % | 15.7 % | ||||
Adjusted EBITA | 589.6 | 558.9 | ||||
Adjusted EBITA Margin | 15.3 % | 15.5 % | ||||
Non-GAAP Adjusted Net Income per Share - Diluted | $ 1.95 | $ 1.86 | ||||
Notes 1-4, see page 10. |
Revenue
Revenue in the second quarter of 2024 increased
Organic growth by discipline in the second quarter of 2024 compared to the second quarter of 2023 was as follows:
Organic growth by region in the second quarter of 2024 compared to the second quarter of 2023 was as follows:
Expenses
Operating expenses increased
Salary and service costs increased
Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, increased
SG&A expenses increased
Operating expenses in the second quarter of 2024 included
Operating Income
Operating income decreased
Interest Expense, net
Net interest expense in the second quarter of 2024 increased
Income Taxes
Our effective tax rate for the three months ended June 30, 2024 decreased slightly period-over-period to
Net Income – Omnicom Group Inc. and Diluted Net Income per Share
Net income - Omnicom Group Inc. for the second quarter of 2024 decreased
EBITA
EBITA decreased
Risks and Uncertainties
Current global economic challenges, including geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and discipline. 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.
Definitions - Components of Revenue Change
We use certain terms in describing the components of the change in revenue above.
Foreign exchange rate impact: calculated by translating the current period's local currency revenue using the prior period average exchange rates to derive current period constant currency revenue. The foreign exchange rate impact is the difference between the current period revenue in
Acquisition revenue, net of disposition revenue: Acquisition revenue is calculated as if the acquisition occurred twelve months prior to the acquisition date by aggregating the comparable prior period revenue of acquisitions through the acquisition date. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date, and the comparable prior period revenue and the positive or negative growth after the acquisition date is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of disposals through such date. The acquisition revenue and disposition revenue amounts are netted in the description above.
Organic growth: calculated by subtracting the foreign exchange rate impact component and the acquisition revenue, net of disposition revenue component from total revenue growth.
Conference Call
Omnicom will host a conference call to review its financial results on Tuesday, July 16, 2024, starting at 4:30 p.m. Eastern Time. A live webcast of the call, along with the related slide presentation, will be available at Omnicom's investor relations website, investor.omnicomgroup.com, and a webcast replay will be made available after the call concludes.
Corporate Responsibility
At Omnicom, we are committed to promoting responsible practices and making positive contributions to society around the globe. Please explore our website (omnicomgroup.com/corporate-responsibility) for highlights of our progress across the areas on which we focus: Empower People, Protect Our Planet, Lead Responsibly.
About Omnicom
Omnicom (NYSE: OMC) is a leading provider of data-inspired, creative marketing and sales solutions. Omnicom's iconic agency brands are home to the industry's most innovative communications specialists who are focused on driving intelligent business outcomes for their clients. The company offers a wide range of services in advertising, strategic media planning and buying, precision marketing, retail and digital commerce, branding, experiential, public relations, healthcare marketing and other specialty marketing services to over 5,000 clients in more than 70 countries. For more information, visit www.omnicomgroup.com.
Non-GAAP Financial Measures
We present financial measures determined in accordance with generally accepted accounting principles in
Forward-Looking Statements
Certain statements in this document contain forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company's management as well as assumptions made by, and information currently available to, the Company's management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "should," "would," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company's control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues affecting the distribution of our clients' products; international, national, or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments, and a deterioration or disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing, and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing, and corporate communications industries; unanticipated changes to, or the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems and risks related to cybersecurity incidents; effective management of the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and related partnerships in our business; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with its acquisitions, critical accounting estimates and legal proceedings; the Company's international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions, and an evolving regulatory environment in high-growth markets and developing countries; and risks related to our environmental, social, and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company's business, including those described in Item 1A, "Risk Factors" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.
OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In millions, except per share amounts) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenue | $ 3,853.8 | $ 3,609.9 | $ 7,484.3 | $ 7,053.2 | |||
Operating Expenses: | |||||||
Salary and service costs | 2,800.1 | 2,617.8 | 5,492.7 | 5,160.7 | |||
Occupancy and other costs | 314.2 | 297.7 | 628.3 | 589.3 | |||
Real estate and other repositioning costs1 | 57.8 | 72.3 | 57.8 | 191.5 | |||
Gain on disposition of subsidiary1 | — | (78.8) | — | (78.8) | |||
Cost of services | 3,172.1 | 2,909.0 | 6,178.8 | 5,862.7 | |||
Selling, general and administrative expenses | 111.0 | 99.1 | 196.3 | 188.3 | |||
Depreciation and amortization | 60.4 | 51.1 | 120.0 | 105.0 | |||
Total operating expenses1 | 3,343.5 | 3,059.2 | 6,495.1 | 6,156.0 | |||
Operating Income | 510.3 | 550.7 | 989.2 | 897.2 | |||
Interest Expense | 62.7 | 57.5 | 116.5 | 112.4 | |||
Interest Income | 21.0 | 30.1 | 48.0 | 65.7 | |||
Income Before Income Taxes and Income From Equity Method Investments | 468.6 | 523.3 | 920.7 | 850.5 | |||
Income Tax Expense1 | 123.7 | 141.2 | 239.7 | 224.6 | |||
Income From Equity Method Investments | 3.3 | 1.1 | 4.2 | 1.2 | |||
Net Income1 | 348.2 | 383.2 | 685.2 | 627.1 | |||
Net Income Attributed To Noncontrolling Interests | 20.1 | 16.9 | 38.5 | 33.3 | |||
Net Income - Omnicom Group Inc.1 | $ 328.1 | $ 366.3 | $ 646.7 | $ 593.8 | |||
Net Income Per Share - Omnicom Group Inc.: | |||||||
Basic | $ 1.67 | $ 1.84 | $ 3.28 | $ 2.96 | |||
Diluted1 | $ 1.65 | $ 1.82 | $ 3.24 | $ 2.92 | |||
Dividends Declared Per Common Share | $ 0.70 | $ 0.70 | $ 1.40 | $ 1.40 | |||
Operating income margin | 13.2 % | 15.3 % | 13.2 % | 12.7 % | |||
Non-GAAP Measures:4 | |||||||
EBITA2 | $ 531.8 | $ 565.4 | $ 1,032.2 | $ 926.7 | |||
EBITA Margin2 | 13.8 % | 15.7 % | 13.8 % | 13.1 % | |||
EBITA - Adjusted1,2 | $ 589.6 | $ 558.9 | $ 1,090.0 | $ 1,039.4 | |||
EBITA Margin - Adjusted1,2 | 15.3 % | 15.5 % | 14.6 % | 14.7 % | |||
Non-GAAP Adjusted Net Income Per Share - Omnicom Group Inc. - Diluted1,2,3 | $ 1.95 | $ 1.86 | $ 3.62 | $ 3.47 |
1) | See Notes 3-5 on page 10 regarding our repositioning actions. |
2) | See Note 6 on page 10 for the definition of EBITA. |
3) | Beginning with the first quarter of 2024, Adjusted Net Income per Share - Diluted excludes after-tax amortization of acquired intangible assets and internally developed strategic platform assets. We believe these measures are useful in evaluating the impact of these items on operating performance and allows for comparability between reporting periods. |
4) | See Non-GAAP reconciliations starting on page 8. |
OMNICOM GROUP INC. AND SUBSIDIARIES DETAIL OF OPERATING EXPENSES (Unaudited) (In millions) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenue | $ 3,853.8 | $ 3,609.9 | $ 7,484.3 | $ 7,053.2 | |||
Operating Expenses: | |||||||
Salary and service costs: | |||||||
Salary and related costs | 1,836.9 | 1,772.0 | 3,684.2 | 3,550.0 | |||
Third-party service costs1 | 811.1 | 715.8 | 1,509.3 | 1,355.1 | |||
Third-party incidental costs2 | 152.1 | 130.0 | 299.2 | 255.6 | |||
Total salary and service costs | 2,800.1 | 2,617.8 | 5,492.7 | 5,160.7 | |||
Occupancy and other costs | 314.2 | 297.7 | 628.3 | 589.3 | |||
Real estate and other repositioning costs3 | 57.8 | 72.3 | 57.8 | 191.5 | |||
Gain on disposition of subsidiary | — | (78.8) | — | (78.8) | |||
Cost of services | 3,172.1 | 2,909.0 | 6,178.8 | 5,862.7 | |||
Selling, general and administrative expenses | 111.0 | 99.1 | 196.3 | 188.3 | |||
Depreciation and amortization | 60.4 | 51.1 | 120.0 | 105.0 | |||
Total operating expenses | 3,343.5 | 3,059.2 | 6,495.1 | 6,156.0 | |||
Operating Income | $ 510.3 | $ 550.7 | $ 989.2 | $ 897.2 |
1) | Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. |
2) | Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs, which we bill back to the client directly at our cost and which we are required to include in revenue. |
3) | See Notes 3-5 on page 10 regarding our repositioning actions. |
OMNICOM GROUP INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In millions) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net Income - Omnicom Group Inc. | $ 328.1 | $ 366.3 | $ 646.7 | $ 593.8 | |||
Net Income Attributed To Noncontrolling Interests | 20.1 | 16.9 | 38.5 | 33.3 | |||
Net Income | 348.2 | 383.2 | 685.2 | 627.1 | |||
Income From Equity Method Investments | 3.3 | 1.1 | 4.2 | 1.2 | |||
Income Tax Expense | 123.7 | 141.2 | 239.7 | 224.6 | |||
Income Before Income Taxes and Income From Equity Method Investments | 468.6 | 523.3 | 920.7 | 850.5 | |||
Interest Expense | 62.7 | 57.5 | 116.5 | 112.4 | |||
Interest Income | 21.0 | 30.1 | 48.0 | 65.7 | |||
Operating Income | 510.3 | 550.7 | 989.2 | 897.2 | |||
Add back: amortization of acquired intangible assets and internally developed strategic platform assets1 | 21.5 | 14.7 | 43.0 | 29.5 | |||
Earnings before interest, taxes and amortization of intangible assets ("EBITA")1 | $ 531.8 | $ 565.4 | $ 1,032.2 | $ 926.7 | |||
Amortization of other purchased and internally developed software | 4.8 | 4.6 | 9.1 | 9.1 | |||
Depreciation | 34.1 | 31.8 | 67.9 | 66.4 | |||
EBITDA | $ 570.7 | $ 601.8 | $ 1,109.2 | $ 1,002.2 | |||
EBITA | $ 531.8 | $ 565.4 | $ 1,032.2 | $ 926.7 | |||
Real estate and other repositioning costs2 | 57.8 | 72.3 | 57.8 | 191.5 | |||
Gain on disposition of subsidiary2 | — | (78.8) | — | (78.8) | |||
EBITA - Adjusted1,2,3 | $ 589.6 | $ 558.9 | $ 1,090.0 | $ 1,039.4 | |||
Revenue | $ 3,853.8 | $ 3,609.9 | $ 7,484.3 | $ 7,053.2 | |||
Non-GAAP Measures: | |||||||
EBITA1 | $ 531.8 | $ 565.4 | $ 1,032.2 | $ 926.7 | |||
EBITA Margin1 | 13.8 % | 15.7 % | 13.8 % | 13.1 % | |||
EBITA - Adjusted1,2,3 | $ 589.6 | $ 558.9 | $ 1,090.0 | $ 1,039.4 | |||
EBITA Margin - Adjusted1 | 15.3 % | 15.5 % | 14.6 % | 14.7 % |
1) | See Note 6 on page 10 for the definition of EBITA. |
2) | See Notes 3-5 on page 10 regarding our repositioning actions. |
3) | The above table reconciles the |
OMNICOM GROUP INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In millions) | ||||||||||||
Three Months Ended June 30, | ||||||||||||
Reported 2024 | Non-GAAP Adj. | Non-GAAP | Reported 2023 | Non-GAAP Adj. (1) | Non-GAAP | |||||||
Revenue | $ — | $ — | ||||||||||
Operating Expenses1 | 3,343.5 | (57.8) | 3,285.7 | 3,059.2 | 6.5 | 3,065.7 | ||||||
Operating Income | 510.3 | 57.8 | 568.1 | 550.7 | (6.5) | 544.2 | ||||||
Operating Income Margin | 13.2 % | 14.7 % | 15.3 % | 15.1 % |
Six Months Ended June 30, | ||||||||||||
Reported 2024 | Non-GAAP Adj. | Non-GAAP | Reported 2023 | Non-GAAP Adj. (1) | Non-GAAP | |||||||
Revenue | $ — | $ — | ||||||||||
Operating Expenses1 | 6,495.1 | (57.8) | 6,437.3 | 6,156.0 | (112.7) | 6,043.3 | ||||||
Operating Income | 989.2 | 57.8 | 1,047.0 | 897.2 | 112.7 | 1,009.9 | ||||||
Operating Income Margin | 13.2 % | 14.0 % | 12.7 % | 14.3 % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Net Income | Net Income per | Net Income | Net Income per | Net Income | Net Income per | Net Income | Net Income per | ||||
Net Income - Omnicom Group Inc. - Reported | $ 328.1 | $ 1.65 | $ 366.3 | $ 1.82 | $ 646.7 | $ 3.24 | $ 593.8 | $ 2.92 | |||
Real estate and other repositioning costs1 | 42.9 | 0.22 | 54.5 | 0.27 | 42.9 | 0.22 | 145.5 | 0.72 | |||
Gain on disposition of subsidiary | — | — | (55.9) | (0.28) | — | — | (55.9) | (0.28) | |||
Amortization of acquired intangible assets and | 15.9 | 0.08 | 10.9 | 0.05 | 31.8 | 0.16 | 21.8 | 0.11 | |||
Non-GAAP Net Income - Omnicom Group Inc. - | $ 386.9 | $ 1.95 | $ 375.8 | $ 1.86 | $ 721.4 | $ 3.62 | $ 705.2 | $ 3.47 |
1) | See Notes 3-5 on page 10 regarding our repositioning actions. |
2) | Beginning with the first quarter of 2024, Adjusted Net Income per Share - Diluted excludes after-tax amortization of acquired intangible assets and internally developed strategic platform assets. We believe these measures are useful in evaluating the impact of these items on operating performance and allows for comparability between reporting periods. |
3) | Diluted Shares for the three months ended June 30, 2024 and 2023 were 198.5 million and 201.6 million, respectively. |
The above tables reconcile the GAAP financial measures of Operating Income, Net Income - Omnicom Group Inc., and Net Income per Share - Diluted to adjusted Non-GAAP financial measures of Non-GAAP Operating Income - Adjusted, Non-GAAP Net Income-Omnicom Group Inc. - Adjusted and Non-GAAP Adjusted Net Income per Share - Diluted. Management believes these Non-GAAP measures are useful for investors to evaluate the comparability of the performance of our business year to year. |
NOTES: | |
1) | Net Income and Net Income per Share for Omnicom Group Inc. |
2) | See non-GAAP reconciliations starting on page 8. |
3) | For the three and six months ended June 30, 2024, operating expenses included |
4) | For the three months ended June 30, 2023, operating expenses included a net decrease of |
5) | For the six months ended June 30, 2023, operating expenses included a net increase of |
6) | Beginning with the first quarter of 2024, EBITA is defined as earnings before interest, taxes and amortization of acquired intangible assets and internally developed strategic platform assets. As a result, we reclassified the prior year periods to be consistent with the revised definition, which reduced EBITA from previously reported amounts. Included in the above table are the after-tax effects of the amortization of acquired intangible assets and internally developed strategic platform assets. |
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SOURCE Omnicom Group Inc.
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