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Aon plc (AON)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered 16% total revenue growth to $4.729B, with 5% organic revenue growth; adjusted EPS was $5.67 and adjusted operating margin was 38.4%, while GAAP EPS fell 17% YoY to $4.43 due to higher amortization and interest from the NFP acquisition .
  • Against S&P Global consensus, Aon missed on adjusted EPS ($5.67 vs $6.04*) and revenue ($4.73B vs $4.86B*); EBITDA was also below consensus ($1.84B vs $1.93B*). FX translation was a notable headwind to EPS and operating income. Bolded: EPS miss, revenue miss (Values retrieved from S&P Global).
  • Management reaffirmed full‑year 2025 guidance: mid‑single‑digit or greater organic growth, 80–90bps adjusted margin expansion, strong adjusted EPS growth, and double‑digit free cash flow growth; Q2 2025 adjusted EPS growth guided to 15–18% off a $2.93 baseline .
  • Capital allocation remained disciplined: $397M returned to shareholders (incl. $250M buybacks) and a 10% dividend increase to $0.745; leverage targeted to reach 2.8–3.0x by Q4 2025, supported by NFP tuck-in M&A and restructuring savings .

What Went Well and What Went Wrong

What Went Well

  • Adjusted operating income grew 12% YoY to $1.816B, driven by 5% organic growth, NFP contribution, and $40M net restructuring savings (ABS efficiencies) .
  • Segment strength: Commercial Risk and Reinsurance posted 5% and 4% organic growth, respectively; Wealth led at 8% on NFP asset inflows and regulatory demand; Health grew 5% on global health and benefits demand .
  • Management tone confident; CEO Greg Case: “We are reaffirming our 2025 guidance… reflecting the resilience and strength of our business and financial model,” highlighting ABS analytics and client demand across Risk and Human Capital . CFO underscored 85bps margin expansion contribution from restructuring in Q1 and reiterated full-year 80–90bps margin expansion target .

What Went Wrong

  • GAAP EPS declined 17% YoY (to $4.43) and operating margin fell 510bps to 30.9% due to NFP-related amortization and higher interest expense; adjusted margin fell 130bps to 38.4% YoY .
  • Cash from operations ($140M) and free cash flow ($84M) were down 55% and 68% YoY on higher incentive, interest, and restructuring payments; fiduciary investment income dipped to $67M (-15% YoY) .
  • Consensus misses: adjusted EPS and revenue below S&P Global expectations; EBITDA also below consensus (FX headwinds cited, plus timing impact from a large multi‑year reinsurance extension) . Bolded: EPS miss, revenue miss (Values retrieved from S&P Global).

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus
Total revenue ($USD Billions)$3.721 $4.147 $4.729 $4.860*
Diluted EPS ($USD)$1.57 $3.28 $4.43 —
Adjusted EPS ($USD)$2.72 $4.42 $5.67 $6.04*
Operating margin (%)16.7% 26.3% 30.9% —
Adjusted operating margin (%)24.6% 33.3% 38.4% —
Adjusted operating income ($USD Billions)$0.915 $1.380 $1.816 —

Values with asterisks (*) retrieved from S&P Global.

Segment revenue and organic growth (Q1 2025 vs Q1 2024):

Segment / SolutionQ1 2024 Revenue ($mm)Q1 2025 Revenue ($mm)Organic Revenue Growth (%)
Commercial Risk Solutions$1,808 $2,002 5%
Reinsurance Solutions$1,167 $1,189 4%
Health Solutions$733 $1,026 5%
Wealth Solutions$370 $519 8%
Eliminations($8) ($7) N/A
Total$4,070 $4,729 5%

KPIs and cash metrics:

KPIQ1 2025Notes
Organic revenue growth5% Mid-single-digit target reaffirmed
Adjusted EPS FX impact-$0.14 per share YoY FY FX headwind indicated ~$0.08 if rates hold
Effective tax rate (GAAP / Adjusted)21.4% / 20.9% FY tax guidance 19.5–20.5%
Weighted avg diluted shares217.9M NFP share issuance impact
Cash from operations$140M Down 55% YoY on payments
Free cash flow$84M Down 68% YoY
Dividend$0.745 declared (10% increase) Payable May 15, 2025
Share repurchase$250M; 0.6M shares $2.1B authorization remaining
Leverage ratio3.5x (Q1) with target 2.8–3.0x by Q4’25 On track

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic revenue growthFY 2025Mid-single-digit or greater Mid-single-digit or greater Maintained
Adjusted operating margin expansionFY 202580–90bps 80–90bps Maintained
Adjusted EPS growthFY 2025Strong Strong Maintained
Free cash flow growthFY 2025Double-digit Double-digit Maintained
Tax rate (adjusted)FY 2025—19.5–20.5% New specificity
Leverage ratio targetQ4 20252.8–3.0x 2.8–3.0x Maintained
Q2 adjusted EPS growthQ2 2025—15–18% growth; baseline $2.93 New quarterly guide
Interest expenseQ2 2025—~$209M expected New quarterly guide
DividendOngoing—10% increase to $0.745 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
ABS analytics & Analyzers (technology)Expanded ABS, property/cyber/health analyzers; margin scale ABS drove 85bps margin expansion; push to standardize ops, invest in client-facing tech Strengthening
Tariffs/macro/tradeMegatrends shaping demand; volatility elevated Trade/tariffs top of mind; Aon using supply chain diagnostics, credit solutions Heightened focus
Reinsurance pricing & demandExpect muted rate, strong STG and ILS; fac growth April 1 property down 5–20%; July 1 renewals to be strong; one large multi‑year extension timing impact Mixed near term; stronger H2
NFP integration/middle marketAccretive growth; strong M&A engine Year‑1 milestone; producer retention higher than pre-deal; pipeline strong; $19M EBITDA acquired Q1 On track/accelerating
Health cost inflationDouble-digit international growth; demand for analytics Health Solutions +5% organic; rising health cost trends supporting demand Persistent tailwind
Hiring/productivity rampPriority hires (construction, energy, health) 12–18 month ramp Early vintages profitable; contribution expected in H2 Building
Tax & FXTax variability; FX headwinds noted Q1 adjusted tax 20.9%; FY guide 19.5–20.5%; FX headwind to EPS Clarified guidance

Management Commentary

  • CEO Greg Case: “We delivered 5% Organic revenue growth, 12% Adjusted Operating Income growth and Adjusted EPS of $5.67… We are reaffirming our 2025 guidance, across all key metrics” .
  • CFO Edmund Reese: “Restructuring savings in the first quarter were $40 million, which contributed approximately 85 basis points to adjusted operating margin… we remain committed to driving full year adjusted operating margin expansion of 80 to 90 basis points in 2025” .
  • CEO on tariffs and client support: “We are arming clients with real-time insights… using our supply chain Risk Diagnostic Tool… and tailoring Credit Solutions… despite trade disruptions” .
  • CFO on capital and leverage: “Leverage ratio was 3.5x, and we continue to be on track to achieve a 2.8x to 3x leverage ratio in Q4 2025” .

Q&A Highlights

  • NFP M&A engine: Pipeline “rich”; plan to acquire $45–$60M of EBITDA in 2025 via middle-market tuck-ins; capital priority remains deleveraging to target ratio by Q4 .
  • Commercial Risk backdrop and pricing: Growth driven by net new business and retention; market impact flat; buyer-friendly micro-markets with softness in property and some specialty lines; pockets of firmness in U.S. auto/excess casualty .
  • Reinsurance timing: A “very unique and very substantial” multi‑year extension drove a Q1 timing effect but strengthens long‑term client relationship; outlook in H2 supported by July 1 renewals and international facultative .
  • Free cash flow seasonality: Q1 typically lowest due to incentives, integration and restructuring payments; double‑digit FY FCF growth expected, with $300M contribution from NFP .
  • Q2 EPS guidance: Adjusted EPS growth of 15–18% off $2.93 baseline given NFP closing timing and operating momentum .

Estimates Context

MetricQ1 2025 ActualQ1 2025 ConsensusSurprise
Adjusted EPS ($)5.67 6.04*Miss
Total revenue ($B)4.729 4.860*Miss
EBITDA ($B)1.839 1.925*Miss

Values with asterisks (*) retrieved from S&P Global.

Implications: Consensus likely to adjust modestly lower for near-term profitability given FX and timing impacts in Reinsurance. Management’s reiterated H2 strength (July renewals, hiring ramp) and margin expansion plan support medium-term EPS trajectory .

Key Takeaways for Investors

  • Q1’s consensus misses were largely driven by FX headwinds, higher interest post‑NFP, and a one‑off timing impact in Reinsurance; underlying demand and ABS-driven operating leverage remain intact .
  • Reaffirmed FY 2025 guide (organic growth, margin, EPS, FCF) and specific quarterly markers (Q2 EPS +15–18%) provide near-term visibility; look for H2 uplift from July renewals and maturing hiring vintages .
  • Middle‑market strategy is scaling: strong NFP producer retention, tuck‑in M&A ($19M EBITDA in Q1), and cross‑sell synergies should support Health/Wealth growth and Commercial accretion .
  • Capital return remains active (10% dividend raise, $250M buybacks), with deleveraging to 2.8–3.0x by Q4 2025 as a key catalyst; monitor ABS restructuring savings ($150M in 2025) for margin expansion .
  • Watch reinsurance pricing (April softness, stronger July limits) and FX trajectory; both are swing factors for quarterly volatility but do not alter medium-term thesis .
  • June 9 Investor Day may be a narrative catalyst to showcase ABS/3x3 execution and client outcomes, supporting multiple expansion if conviction in margin/FCF durability increases .

Additional Supporting Data and Sources:

  • Q1 2025 8‑K and Press Release: revenue/EPS/margins, segment detail, FX/tax/share count .
  • Q1 2025 Call Transcript: ABS savings, Q2 guide, reinsurance color, NFP performance, leverage .
  • Prior quarters for trend: Q4 2024 press release and call transcript –; Q3 2024 press release and call transcript – –.
  • Dividend increase press release (April 11, 2025) .