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INTERPUBLIC GROUP OF COMPANIES, INC. (IPG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net revenue was $2.43B (organic -1.8%), with adjusted EBITA margin at 24.3%; diluted EPS was $0.92 reported and $1.11 adjusted .
  • Management guided FY 2025 organic revenue decline of 1% to 2% and targeted adjusted EBITA margin of 16.6%, supported by a $250M in-year restructuring savings program with equivalent (largely non-cash) cost .
  • Segment performance was mixed: Media/Data/Engagement (-0.6% organic), Integrated Advertising & Creativity (-4.7%), and Specialized Communications & Experiential (+1.3%) .
  • Key catalyst narrative: proposed Omnicom acquisition (limited overlap with $750M Omnicom cost synergies), “principal media” capability gap driving client losses, and accelerated transformation (Interact platform, AI adoption, off/nearshoring) .

What Went Well and What Went Wrong

What Went Well

  • Margin discipline: Adjusted EBITA margin hit 24.3% in Q4 and 16.6% for FY 2024, in line with forecasts, reflecting strong operating discipline .
  • New business and capabilities: Headline wins (Amgen, Little Caesars, Volvo; Kimberly‑Clark consolidation) and Interact platform enhancements; Golin’s AI integration across 80% of staff; planned acquisition of Intelligence Node to bolster commerce analytics .
  • Balance sheet and capital return: Year-end cash $2.19B, debt $2.96B; 2024 capital return totaled $727M (dividends and buybacks), with Q4 dividend of $0.33 and new $155M buyback authorization announced post quarter .

What Went Wrong

  • Top-line headwinds: Q4 organic net revenue declined 1.8% and net revenue fell 5.9% vs. Q4 2023, driven by trailing account losses and net divestitures (Huge sale closed Q4) .
  • Client losses tied to “principal media”: Management cited principal media economics at scale as a decisive factor, with the three largest losses creating a 4.5–5 percentage point drag on 2025 growth and ~4% drag in Q4 timing .
  • Non‑operating items: Q4 included $57.8M net losses on business dispositions/held-for-sale and $9.3M deal costs related to the Omnicom transaction; FY 2024 also impacted by $232.1M non‑cash goodwill impairment in Q3 .

Financial Results

Quarterly financials (Q2 2024 → Q3 2024 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Billions)$2.710 $2.629 $2.857
Net Revenue before Billable ($USD Billions)$2.327 $2.243 $2.435
Adjusted EBITA ($USD Millions)$338.9 $385.8 $591.2
Adjusted EBITA Margin %14.6% 17.2% 24.3%
Diluted EPS (Reported) ($USD)$0.57 $0.05 $0.92
Diluted EPS (Adjusted) ($USD)$0.61 $0.70 $1.11
Operating Income ($USD Millions)$318.2 $132.9 $567.9
Staff Cost Ratio %66.9% 65.3% 58.7%
Office & Other Direct Expenses %15.4% 14.6% 13.8%
SG&A ($USD Millions)$27.6 $20.8 $44.1

Notes:

  • Q4 YoY: net revenue -5.9%; organic -1.8% .
  • Q3 included $232.1M non-cash goodwill impairment; Q4 included $57.8M non-operating losses and $9.3M deal costs .

Segment breakdown

SegmentQ4 2024 Organic GrowthFY 2024 Organic Growth
Media, Data & Engagement Solutions-0.6% +0.2%
Integrated Advertising & Creativity Led Solutions-4.7% -0.2%
Specialized Communications & Experiential Solutions+1.3% +1.3%

Regional trends (Q4 2024)

RegionMix of Net RevenueOrganic Growth
United States60% -3.2%
International (Total)40% +0.3%
United Kingdom9% -3.3%
Continental Europe10% -3.0%
Asia Pacific8% -7.9%
Latin America6% +10.4%
Other International (Canada, MEA)7% +12.1%

KPIs

KPIQ4/FY 2024 Level
Headcount (end of year)53,300
Cash & Equivalents (12/31/24)$2.19B
Total Debt (12/31/24)$2.96B
Share Repurchases (FY 2024)7.3M shares; $230.1M; none in Q4
Dividend per Share (Q4 2024)$0.330
Other Non-Operating (Q4)Net losses $57.8M; deal costs $9.3M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue GrowthFY 2024~+1% (target reiterated in Oct) Actual +0.2% organic Miss vs target
Organic Revenue GrowthFY 2025N/A-1% to -2% New guide: lowered vs prior year
Adjusted EBITA MarginFY 202416.6% target 16.6% delivered Maintained
Adjusted EBITA MarginFY 2025N/A16.6% target New guide
Restructuring SavingsFY 2025N/A~$250M in-year savings; equivalent cost, largely non-cash New program
Dividend PolicyPre-merger periodHistorically raised annually No increases per merger agreement; $0.33 declared for Mar 17, 2025 Maintained level
Share RepurchasesQ4 2024 / FY 2025Suspended in Q4 due to merger Expect to resume post shareholder meeting; new $155M authorization Resumption signaled

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesEmphasis on integrating generative AI; margin expansion; solid organic growth (1.7%) Launch of Interact platform; continued investment despite impairment Interact enhancements; Intelligence Node acquisition; Golin’s AI adoption (80% staff) Strengthening capability; wider deployment
Principal media / competitive dynamicsNot highlightedNot highlightedPrincipal media economics cited as decisive in losses; 4.5–5pp drag expected in 2025 Key competitive factor; drives merger rationale
Macro/toneSolid quarter; expect ~1% FY organic Pipeline strong; impairment and held-for-sale actions Slight macro caution; clients more deliberative; overall engaged Stabilizing but cautious
Regional performanceNot detailedNot detailedUS -3.2% organic; LatAm +10.4%; MEA rebound Mixed; LatAm/MEA strong
Portfolio actionsNone notedGoodwill impairment ($232.1M); R/GA/Huge held for sale Huge sale closed; non-operating losses on dispositions Portfolio reshaping continues
Capital allocationDividend; buybacks ongoing Buybacks YTD; dividend maintained Q4 buybacks suspended; dividend $0.33; new $155M buyback authorization Temporary pause; authorization renewed
Omnicom transactionNot applicableAnnounced Dec 8; integration benefits outlined Limited overlap with $750M synergies; HSR refile; expected H2 2025 close Progressing through regulatory

Management Commentary

  • “Our organic revenue decrease in Q4 was 1.8%, bringing us to full year organic growth of 20 basis points… adjusted [EBITA] margin… 24.3% in Q4 and 16.6% for the full year.”
  • “We are forecasting an organic decrease in revenue for the full year of 1% to 2%… and target an adjusted EBITA margin for 2025 of 16.6%.”
  • “This blueprint includes… strategic centralization… greater offshoring and nearshoring… We estimate that this program will lead to savings of approximately $250 million in calendar 2025 — net of reinvestment… at an equivalent cost.”
  • “The decisive factor on those largest [media] decisions was principal media… the three largest… will weigh on our growth for this year by four and a half to five percentage points.”
  • “Our proposed combination with Omnicom will position us with greatly strengthened solutions… we believe these actions have very limited overlap with the $750 million of cost synergies…”

Q&A Highlights

  • Growth headwinds: Management quantified ~4% Q4 drag from trailing losses and 4.5–5pp drag in 2025 from the three largest account decisions; timing, not new issues, is the driver .
  • Restructuring economics: ~$250M savings in 2025 with equivalent costs (significant non-cash), to be recognized mostly in Q1–Q2; benefits expected to expand margins in future years beyond 2025 .
  • Principal media strategy: Omnicom’s global principal media capability seen as complementary to IPG’s consultative, data-led approach; integration expected to improve competitiveness .
  • Sector outlook: Healthcare expected to grow in 2025 excluding a single large account swing; tech/telco returned to growth; retail muddied by one sizable loss .
  • Capital returns: Repurchases paused due to merger; expected back after shareholder meeting; dividend increases paused contractually pre-merger .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of analysis due to an S&P Global request limit error; therefore, no beat/miss comparison versus consensus is included today. Results: adjusted EPS $1.11; net revenue organic -1.8%; adjusted EBITA margin 24.3% .
  • Implication: Without consensus, focus shifts to margin outperformance versus prior periods and management’s 2025 guide (organic -1% to -2%, margin 16.6%) .

Key Takeaways for Investors

  • Margin quality remains high despite revenue headwinds: Q4 adjusted EBITA margin at 24.3% and FY 2024 at 16.6% demonstrates disciplined cost management; restructuring should underpin FY 2025 margin target even with organic decline .
  • Competitive gap in principal media is a core driver of client losses; Omnicom combination is a strategic solution to restore competitiveness and support top-line over time .
  • Transformation actions are meaningful and front-loaded (centralization, off/nearshoring, platform services), with ~$250M 2025 savings and equivalent cost recognition mostly 1H’25; expect margin expansion beyond 2025 .
  • Mixed segment/regional performance suggests near-term cautious stance: U.S. and AsiaPac softness offset by LatAm and MEA strength; Media/Data segment near flat; Creativity segment pressured .
  • Portfolio reshaping continues (Huge sale closed; dispositions) with some non-operating P&L noise; expect cleaner run-rate as actions complete .
  • Capital return framework intact post-merger milestones: New $155M buyback authorization and expectation to resume repurchases after shareholder vote; dividend held at $0.33 in pre-merger period .
  • Near-term trading implications: Narrative is driven by merger/regulatory progress, principal media capabilities, and visibility on restructuring execution; absence of consensus comparison today limits beat/miss framing, but margin discipline and guidance clarity support medium-term thesis .