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OMNICOM GROUP INC. (OMC)·Q4 2024 Earnings Summary

Executive Summary

  • Solid Q4: revenue $4.32B (+6.4% y/y; +5.2% organic) and adjusted diluted EPS $2.41 (+6.6% y/y); adjusted EBITA margin held at 16.7% .
  • Growth drivers and mix: Media & Advertising (+7.1% organic), Precision Marketing (+9.1%), and Public Relations (+10.3%) offset declines in Healthcare (-4.3%) and Branding & Retail Commerce (-11.6%) .
  • 2025 outlook: management guided to 3.5%–4.5% organic growth and +10 bps adjusted EBITA margin improvement vs 2024; FX is a headwind (~-2% to -2.5% to Q1 revenue; ~-2% for FY) .
  • Strategic catalyst: integration plan for proposed IPG acquisition includes $750M run-rate cost synergies, with expected adjusted EPS accretion and closing targeted for 2H25; client-facing roles not targeted for cuts .
  • Capital returns: dividend maintained at $0.70 per share; buybacks expected to normalize to ~$600M in 2025 after $371M in 2024 .

What Went Well and What Went Wrong

What Went Well

  • Broad-based organic growth and resilient margins: “organic growth was 5.2% for the quarter… Adjusted EBITA margin for the fourth quarter was 16.7%,” with adjusted EPS up 6.6% y/y to $2.41 .
  • Discipline strength: Media & Advertising (+7.1% organic), Precision Marketing (+9.1%), and Public Relations (+10.3%) led Q4; U.S. organic growth +9.9% .
  • Cash generation and returns: “We generated almost $2 billion in free cash flow and returned over $900 million to shareholders through dividends and share repurchases” for 2024 .

What Went Wrong

  • Pockets of weakness: Healthcare (-4% Q4) and Branding & Retail Commerce (-12% Q4) weighed on mix as some clients shifted spend toward retail media and cut branding budgets .
  • FX and rates: FX reduced Q4 reported revenue by ~0.6% and is expected to be a -2% to -2.5% headwind in Q1 2025; net interest expense rose by $11.3M in Q4 and is seen increasing in 2025 .
  • 2025 posture cautious: despite strong wins, management guided slower 2025 organic growth (3.5%–4.5%) given macro and election uncertainty .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$4,060.9 $3,882.6 $4,322.2
Operating Income ($USD Millions)$646.7 $600.1 $685.3
Operating Margin (%)15.9% 15.5% 15.9%
Diluted EPS ($)$2.13 $1.95 $2.26
Adjusted Diluted EPS ($)$2.26 $2.03 $2.41
EBITA Margin (%)16.3% 16.0% 16.4%
Adjusted EBITA Margin (%)16.7% 16.0% 16.7%
  • Revenue +6.4% y/y (+$261M) driven by +5.2% organic growth, +1.8% net M&A, and -0.6% FX .
  • Adjusted EPS +6.6% y/y to $2.41; dilution from amortization and acquisition costs excluded in non-GAAP .

Segment Breakdown – Q4 2024

DisciplineRevenue ($MM)% of Revenue% GrowthOrganic Growth (%)
Media & Advertising2,428.9 56.2% 5.9% 7.1%
Precision Marketing482.9 11.2% 33.8% 9.1%
Public Relations456.3 10.5% 9.3% 10.3%
Healthcare339.3 7.9% -3.9% -4.3%
Branding & Retail Commerce194.4 4.5% -12.4% -11.6%
Experiential208.5 4.8% 1.3% 4.9%
Execution & Support211.9 4.9% 2.1% 1.8%
Total4,322.2 100.0% 6.4% 5.2%

Regional Trends – Q4 2024

RegionRevenue ($MM)% of Revenue% GrowthOrganic Growth (%)
United States2,187.5 50.6% 12.8% 9.9%
Other North America119.4 2.8% -2.5% 0.1%
United Kingdom448.8 10.4% 6.0% 1.2%
Euro Mkts & Other Europe801.7 18.5% -3.3% -2.1%
Asia Pacific523.0 12.1% 3.2% 1.8%
Latin America131.1 3.0% 1.8% 16.1%
Middle East & Africa110.7 2.6% 0.1% 1.7%

KPIs and Balance Sheet (FY)

MetricFY 2023FY 2024
Free Cash Flow ($MM)1,884.8 1,964.7
Return on Equity (%)40.5% 37.9%
Return on Invested Capital (%)25.8% 24.9%
EBITDA ($MM)2,315.8 2,516.3
Net Debt / EBITDA (x)0.5x 0.7x
Cash & Equivalents ($MM)4,432.0 4,339.4
Total Debt ($MM)5,650.5 6,056.6
Dividends per Share ($)$2.80 $2.80
Share Repurchases ($MM)570.8 370.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue GrowthFY 2025Not previously provided3.5%–4.5% New
Adjusted EBITA MarginFY 2025Not previously provided+10 bps vs 2024 New
FX Impact on RevenueQ1 2025Not previously provided-2% to -2.5% New
FX Impact on RevenueFY 2025Not previously provided~-2% New
Effective Tax RateFY 2025Not previously provided26.5%–27% New
Net Interest ExpenseQ1 2025 / FY 2025Not previously provided+$7M (Q1); +$15–$20M (FY) New
Share RepurchasesFY 20252024 below normal due to Flywheel~$600M targeted Raised vs 2024
DividendOngoing$0.70/quarter$0.70/quarter maintained Maintained
IPG Acquisition TimingCloseAnnounced Dec 2024Target 2H25 close Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/Technology & OmniRolled out Omni 3.0; ArtBotAI; first-mover AI partnerships OAG centralization to scale tools; AI investment for efficiency Active LLM testing; data partnerships with big tech augment Omni Building capabilities and adoption
Retail Media & FlywheelDeepening e-comm; Flywheel + TikTok Shop; Amazon data tie-ins Amazon media win; Flywheel integral to wins Flywheel integration complete; platform + data synergies emphasized Structural advantage, revenue synergy potential
Macro & FXMaintain 4–5% 2024 guide; cautious on macro Election/Olympics benefits; maintain high end of 2024 guide 2025 growth 3.5–4.5%; FX -2% to -2.5% Q1 headwind Moderating growth with FX drag
Margins & Investment2024 adj EBITA margin near flat; ongoing tech investment Balanced investments; efficiency initiatives; margins flat y/y +10 bps adj EBITA margin planned for 2025 Modest expansion
New Business & MediaClient wins across media/creative Amazon, Michelin, global wins; media momentum Strength in media, precision, PR in Q4 Continued momentum
Regulatory/M&A (IPG)N/AAcquisition announced Dec 9 $750M cost synergies plan; cannot co-pitch during regulatory period; 2H25 close targeted Integration planning underway

Management Commentary

  • Strategic position: “We are well positioned as we enter 2025… organic growth was 5.2%… Adjusted EBITA margin for the fourth quarter was 16.7%” .
  • On 2025 outlook: “we’re exercising a level of caution… expect organic growth between 3.5% and 4.5% and adjusted EBITA margins to be 10 basis points higher than 2024” .
  • On IPG synergies: “confident in… $750 million in run-rate cost savings… from streamlining holding company and eliminating duplicative overhead,” with categories spanning corporate expense, procurement, IT/shared services, and real estate .
  • On FX and revenue mix: “FX will reduce revenue by 2% to 2.5% in Q1 2025 and ~2% for full year,” with Q4 discipline strength in Media, Precision Marketing, PR; declines in Healthcare and Branding & Retail Commerce .

Q&A Highlights

  • Why Q4 topped expectations and 2025 looks slower: media, precision, and U.S. election-related PR spend lifted Q4; 2025 guide reflects conservative stance amid macro and policy uncertainty .
  • Client reaction to IPG deal: constructive with no material concerns; integration planning advancing while companies operate independently through regulatory period .
  • Margins: flat y/y in Q4 as expected; 2025 plan balances efficiency (automation/near/offshoring) and strategic investments to support sustainable growth .
  • Buybacks: expect to return to ~$600M in 2025; 2024 was reduced due to Flywheel financing and blackout windows .
  • Regulatory constraints: cannot jointly pitch with IPG before close; using the period to plan product/client deployment post-approval .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of analysis due to API request limits. As a result, we cannot assess beat/miss vs consensus here. Please consult S&P Global for the latest consensus figures.

Key Takeaways for Investors

  • Q4 delivered steady mid-single-digit organic growth and maintained peak Q4 adjusted EBITA margins (16.7%), with strong U.S. and media-led execution—supportive for near-term sentiment .
  • 2025 guidance implies moderation (3.5%–4.5% organic) on macro caution and FX drag; expect tougher 1H optics from FX and lack of Olympics tailwind in Experiential .
  • Proposed IPG combination is the primary medium-term catalyst: clearly defined $750M synergy roadmap and complementary data/commerce stack (Acxiom + Omni + Flywheel) could drive revenue opportunities and operating leverage post-close (target 2H25) .
  • Discipline mix remains favorable (Media, Precision, PR), while Healthcare and Branding soft spots merit monitoring; management expects Healthcare to improve in 2H 2025 as client loss rolls off and recent wins contribute .
  • Capital returns set to re-accelerate (buybacks back to $600M, dividend maintained), supported by robust FCF ($2B in 2024) and modest leverage (Net Debt/EBITDA 0.7x) .
  • Watch FX and rate sensitivity: management quantifies FX impact and expects higher net interest expense in 2025; U.S. growth and media wins can offset, but non-U.S. markets remain uneven .
  • Execution priorities: maintain share gains in media, integrate Flywheel with Omni for measurable outcomes, and prepare integration tracks for IPG synergy capture without disrupting client service .

Appendix: Additional Q4 Press Releases

  • Dividend declared: $0.70 per share payable April 9, 2025 to holders of record March 11, 2025 .
  • Transaction announced Dec 9, 2024: Omnicom to acquire Interpublic in stock-for-stock deal; $750M cost synergies; expected 2H25 close .