With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are advertising, diversified outsourcing services, and financial data services.

Fortune Sector Leaders: Business Services

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-229-Omnicom Group

The advertisement giant based out of New York City provides services related to customer relationships, public relations, and marketing in over 100 countries.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-211-Omnicom-Group

The marketing and corporate communications holding company includes advertising, PR, and media planning agencies—including industry heavyweights TBWA, BBDO, and DDB. Together, they serve more than 5,000 clients, such as McDonald's, Apple, Unilever, and Johnson &amp; Johnson.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Omnicom Group is a global marketing and corporate communications company. With a portfolio of over 200 brands, including renowned agencies like BBDO, DDB, TBWA, and Omnicom Media Group, Omnicom delivers services such as advertising, strategic media planning and buying, digital marketing, customer relationship management, public relations, and brand consulting. Serving thousands of global clients, the company leverages data-driven insights and creative excellence to craft impactful marketing solutions. Through its integrated approach and global reach, Omnicom helps businesses connect with their audiences.

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Omnicom Group (OMC): Company Profile, Stock Price, News, Rankings

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Omnicom Group

omnicom group

Hello, and welcome to the Omnicom Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Greg Lundberg, Senior Vice President of Investor Relations. You may begin.

Thank you for joining our second quarter earnings call. With me today are John Wren, Chairman and Chief Executive Officer Phil Angelastro, Executive Vice President and Chief Financial Officer and Paulo Juveienko, Chief Technology Officer. On our website, omnicomgroup.com, you will find a press release and a presentation covering the information that we'll review today. An archived webcast will be available when today's call concludes. Before we start, I'd like to remind everyone to read the forward looking statements and non GAAP financial and other information that we've included at the end of our investor presentation.

Certain of the statements made today may constitute forward looking statements. These represent our present expectations, and relevant factors that could cause actual results to differ materially are listed in our earnings materials and in our SEC filings, including our 2024 Form 10 ks. During the course of today's call, we will also discuss certain non GAAP measures. You can find the reconciliation of these to the nearest comparable GAAP measures in the presentation materials. After our prepared remarks, we will open up the line for your questions. And I'll now hand the call over to John.

Thank you, Greg. Good afternoon, everyone, and thank you for joining us today. We are pleased to share our second quarter results. Organic growth was a solid 3% for the quarter, in line with our expectations. Non GAAP adjusted EBITDA margin was 15.3 for the quarter and flat to last year.

Non GAAP adjusted net income per share, which excludes the after tax effect of the amortization of acquired and strategic platform intangibles, repositioning costs and acquisitions costs was $2.5 up 5.1% versus the comparable amount in 2024. Our cash flow continues to support our primary uses of cash dividends, acquisitions, and share repurchases and our liquidity and balance sheet remain very strong. During the first half, we used $223,000,000 in cash to repurchase shares and are on track to repurchase $600,000,000 in shares in 2025. After a solid first half of the year, we are maintaining our guidance for the full year 2025 organic growth to be 2.5% to 4.5% and adjusted EBITDAR guidance to be 10 basis points higher than the 15.5% we achieved in 2024. Turning now to our key initiatives, I'd like to begin with an update on our proposed acquisition of Interpublic.

In June, we reached a major milestone when we received antitrust approval to close the transaction in The United States, bringing the total number of approved jurisdictions to 13 out of the 18 required for closing. We remain fully on track to complete the transaction in the second half of this year. As we progress through the regulatory approval process, Philippe and I have continued to speak with our clients and our people. The response has been overwhelmingly positive. There's a genuine sense of anticipation and excitement about the opportunities our combined company will create that has only intensified as we approach the closing.

By combining our complementary strengths, the new Omnicom will be equipped with industry leading resources to drive a bold era of growth for our people, delivering superior outcomes for our clients, and generating significant long term value for our shareholders. Omnicom and IPG have dedicated teams at both corporate levels, working closely with our merger consultants, leading the process to ensure a seamless and successful closing. Contrary to the early speculation that the transaction might distract our professional staff, our agencies remain fully focused on delivering exceptional service to our clients and securing new business. Recent wins include Under Armour, Bimbo Global and ASDA, just to name a few. We continue to refine our analysis and identification of synergies to achieve our $750,000,000 run rate target following the closing.

We are highly confident that we will achieve this level of synergies and we continue to identify further opportunities beyond our target as we move forward with the evaluation. We've also taken steps to align our existing portfolio ensuring that we can immediately deliver the benefits of the combined company to our clients, particularly in relation to our operating platform strategy. To that end, effective July 1, Omnicom reorganized our most advanced data and technology assets, Omni, OmniAI, Artbot, and the Flywheel Commerce Cloud into an end to end platform organization to drive our strategy forward. This move is designed to directly support our clients' marketing and commercial ambitions while accelerating our own growth trajectory. With the proposed acquisition of IPG, our new platform will be significantly enhanced by the addition of Kineso and Acxiom, recognized as the world's highest fidelity data platform, as well as Real ID, the most comprehensive customer identity solution available.

These assets will enable us to deliver an even greater value and innovation to our clients. The new platform organization will be led by Duncan Painter, who's experienced in building well established tech platforms across Flywheel, EDS, Experian, and Sky, and makes him uniquely suited for this role. Our long standing strategy has always been rooted in the belief that data and technology supercharge creativity. In today's world, especially with the rise of generative AI, breakthrough creativity is more valuable than ever. I'm proud to share that our agencies returned from this year's Cannes Lion Festival of Creativity with two of the industry's highest honors.

OMD Worldwide won Media Network of the Year, and DDB Worldwide won Network of the Year. Our ability to excel in both creative and media underscores the strength of Omnicom's end to end capabilities and the outstanding work we deliver for our clients. The recognition also follows Omnicom being named most effective holding company for the second consecutive year by the 2,024 EFI index, demonstrating that our people and agencies continue to stay ahead of the curve, consistently delivering work that drives real business impact. Lastly, I wanna highlight a key addition to our leadership team. In May, we welcomed Susan Catalano, our new chief people officer in The United States.

Susan brings a wealth of experience in organizational redesign, talent operations, and management, and has successfully guided global organizations through transformational changes. Susan will play a key role in bringing Omnicommon into public together, creating a world class HR organization that attracts and develops the industry's best talent. In closing, we're pleased with our first half financial results, our progress on key strategic initiatives, and the integration planning underway for Interpublic. As we look to the second half of the year, we remain confident in achieving our full year organic growth and margin targets. Our focus will remain on delivering for our clients and successfully completing the Interpublic transaction.

Now I wanna introduce and turn the call over to Paolo Juveianco, our chief technology officer, who's joining us today to explain how we are making generative AI accessible to all our colleagues and clients across the organization. Paolo?

Thanks, John. I wanna now spend a few minutes on what we think is one of our most significant competitive differentiators, how we're deploying generative AI and agentic capabilities through our omni platform and data assets to fundamentally reshape how we create value for clients. Back in 2022, we made the strategic decision to be an early adopter of generative AI, recognizing the transformative potential ahead of many of our competitors and clients. Initially, our focus was on the obvious applications, using generative AI for ideation and content creation and copy generation, as well as distilling insights from audiences. While these delivered immediate productivity gains, they represented only the first phase of our AI strategy.

What is driving the latest phase of our continuous transformation has been the development and deployment of our agentic framework. Over the last year, we have been aggressively and systematically rolling out AI agents throughout our workflows where we can deploy multiple AI agents that collaborate seamlessly to deliver comprehensive solutions. Rather than isolated AI tools addressing individual tasks, we can now orchestrate intelligent agents across campaign life cycles, simultaneously analyzing data, optimizing strategies, and refining creative elements. This capability is powered by a proprietary data asset and institutional knowledge, democratizing access to our industry leading consumer intelligence, encompassing behaviors, demographics, cultural insights, and transactions. Additionally, we are fine tuning and grounding the market leading foundational and frontier models, effectively encoding our strategic expertise into our scalable AI system.

Most importantly, we are orchestrating complex, multistage workflows that previously required extensive human resources. Examples of this cover the entire spectrum of our workforce. For instance, our strategy and creative teams across all our agencies are incorporating synthetic audience agents that are grounded in the Omni datasets, allowing teams to conduct synthetic focus groups for ideation, personalized content creation, and prelaunch testing and scoring of campaigns and assets. In our health group, the teams have been able to create a multi agent reasoning engine that helps in recalibrating campaigns and assets at significantly greater speed when the market conditions change by simulating market scenarios, model stakeholder responses, and synthesizes existing signals. Within our digital commerce group, the teams have crafted numerous agents that assist in new product launches, helping to optimize strategies by surfacing actionable insights from sales trends, market data, and competitor analysis.

This all represents far more than operational efficiency, though those benefits are significant. We are building differentiated capabilities through our data and technology stack. This positions Omnicom to capture value as the industry evolves and strengthens our long term competitive positioning. Now I'm going to hand it back to John, but I'll be available for our q and a session later on the call.

Thanks, Paulo. I hope that gives you a better sense of how we are embedding generative AI across the enterprise. I'll now turn the call over to Phil for a closer look at our financial results. Phil?

In an uncertain market, our performance through the first half was solid with organic revenue growth near the midpoint of our annual guidance and our adjusted EBITDA margin levels flat. As we begin the second half, less uncertainty in the macro environment may allow marketers to normalize spending levels. Although it is still too early to say that the uncertainty in the macro environment has been eliminated. The larger parts of our business continue to perform very well and we continue to invest in our technology platforms and tools that differentiate marketplace. And at the corporate level, as John said, we are focused on planning for the integration of IPG, so we can hit the ground running.

Let's now review our results in more detail, beginning with changes in revenue on slide three. Organic growth in the quarter was 3%. The impact on revenue from foreign currency translation increased reported revenue by 1.1% as the U. S. Dollar weakened relative to most currencies throughout the quarter.

If rates stay where they are, we estimate the impact of foreign currency translation on revenue will approximate positive 1% for Q3 and positive 2% in Q4, which would result in a benefit from foreign exchange of approximately 1% for the full year 2025. The net impact of acquisitions and dispositions on reported revenue was positive 0.1%. At this time, we expect the impact of acquisitions and dispositions completed to date will be minimal for the full year 2025. Let's now turn to Slide four for a summary of our income statement. This table shows our reported numbers on the left and non GAAP adjusted numbers on the right.

Adjusting for acquisition related expenses and repositioning costs, our Q2 twenty twenty five non GAAP adjusted EBITDA grew 3.7% to $613,800,000 with a margin of 15.3%. And our non GAAP adjusted diluted EPS grew 5.1% to $2.05 To highlight the two adjustments made to operating expenses, the first is an increase in Q2 of acquisition related expenses related to both regulatory approval work and an acceleration in our integration planning work. The second relates to repositioning actions, primarily severance, we took to optimize Omnicom Advertising Group and Omnicom Production Group as well as to align our businesses and markets more broadly to recent changes in market conditions and client demand related to the challenging macro environment. Please turn to slide five for a reconciliation of these items in detail. Acquisition related costs of $66,000,000 in Q2 twenty twenty five increased from the $34,000,000 we incurred in Q1 of twenty twenty five and repositioning costs were $89,000,000 during Q2 of twenty twenty five.

We continue to expect our non GAAP adjusted EBITDA margin for the year to be 10 basis points higher than our 2024 results of 15.5%. As we get closer to closing the acquisition of IPG, we'll be evaluating ways to accelerate savings opportunities prior to the closing date. We continue to expect to achieve our cost savings target of $750,000,000 Let's now turn to Slide eight and review organic revenue growth in more detail, beginning with our disciplines. Media and advertising was up 8% with solid growth in most geographies. Overall results were driven by strong growth in our media business and mixed performance in advertising.

Precision marketing grew 5%, including strong performance in our digital, CRM and experience design agencies in The U. S, offset by mixed performance internationally. Public Relations declined 9% primarily in The U. S. Due largely to weaker performance in our global networks and some reduction relative to the benefit in 2024 from national election spend.

We expect to see a difficult comp for the rest of 2025. Healthcare revenues were down 5% and this includes our having now cycled through a large prior period client loss as well as work winding down on brands that are close to loss of patent protection. We continue to expect improved performance as the year progresses. Branding and retail commerce was down 17%. Branding experienced continued pressure from uncertain market conditions impacting both new brand launches and rebranding projects as well as continued slow M and A activity, while retail commerce in the quarter slowed.

Experiential grew 3% driven by good performance in The U. S, offset by a challenging comparison to last year with the Olympics as well as declines in The Middle East and China. Lastly, Execution and Support increased 1% driven by strong growth in The U. S. Offset by negative performance in The UK and Continental Europe.

Turning to organic revenue growth by geography on slide nine, we saw growth across all of our regions with the exception of The UK, where strength in media and advertising was offset by other disciplines. Our largest market, The U. S. Had organic growth of 3% and Asia Pacific also posted solid growth as well as Continental Europe, although mixed by market. Slide 10 is our revenue by industry sector.

Year to date relative to 2024, there are various small changes in the categories we track. The auto category increased year over year, reflecting new business wins, which were offset by some client spend reductions. Now let's move down the income statement and look at our expenses on Slide 11. In the quarter, salary related service costs, our largest expense, were down on a reported basis and as a percentage of revenue, driven by our continued efficiency initiatives and ongoing changes in our global employee mix. Third party service costs grew in connection with the growth in revenue, primarily in the media and advertising discipline.

Third party incidental costs, which are out of pocket costs build back to clients at our cost, also grew in connection with revenue growth. Occupancy and other costs increased just under 4%, but decreased as a percentage of revenue. These include office rent, other occupancy and general office expenses as well as technology expenses. SG and A expenses increased primarily due to the $66,000,000 of IPG acquisition related costs in the second quarter of twenty twenty five. Excluding these costs, reported SG and A expenses declined by 6%.

Turning to slide 12, you can see a presentation of our income statement that adjusts for the items that are not part of our normal course operations. As I mentioned earlier, when excluding both the acquisition related and repositioning costs from the second quarter of twenty twenty five, non GAAP adjusted EBITDA grew 4.1% and the related margin was flat at 15.3%. Net interest expense in the second quarter of twenty twenty five was flat, reflecting a decrease of $1,000,000 to $40,700,000 We estimate that net interest expense will increase by approximately $4,000,000 in Q3 and by $5,000,000 in Q4. Our reported income tax rate was 30.2% in Q2 of twenty twenty five compared to 26.4% in the prior year. The increased rate is primarily due to the non deductibility of certain acquisition related costs in 2025.

On an adjusted basis, our Q2 twenty twenty five rate was 26.5%, up slightly from Q2 of twenty twenty four, which was 26.3%. For full year 2025, we expect the rate on an adjusted basis to be between 26.527%. Average diluted shares outstanding were down 1% from Q2 twenty twenty four due to net repurchase activity. While reported diluted earnings per share were down 21% on an adjusted non GAAP basis, As discussed, it increased 5% to $2.5 per share. Now please turn to slide 12 for a look at year to date free cash flow.

The year over year decline was driven primarily by the reduction in net income resulting from the impact of both the acquisition related costs and the repositioning costs. As you know, our free cash flow definition excludes changes in operating capital. As you can see in the appendix on slide 18, we had an improvement of approximately $250,000,000 in the use of operating capital in the first six months of twenty twenty five compared to last year. It's worth noting that on a twelve month basis, our change in operating capital is once again positive. Regarding our primary uses of free cash flow, for the six months ended June 30, we used $277,000,000 of cash to pay for dividends to common shareholders and another $34,000,000 for dividends to non controlling interest shareholders.

Our capital expenditures were $72,000,000 As we've discussed, they are a bit higher than our historical average due to ongoing investments in our strategic technology platform initiatives. Total acquisition payments were $48,000,000 including earn out payments and the acquisition of additional non controlling interests. This is down significantly from last year, which included the acquisition of Flywheel, net of cash acquired. Finally, share repurchase activity was $223,000,000 excluding proceeds from stock plans of $13,000,000 This included share repurchases of $142,000,000 in Q2 and $81,000,000 in Q1. We still expect repurchase activity of approximately $600,000,000 in total for the year.

Slide 13 is a summary of our credit, liquidity and debt maturities. At the end of Q2 twenty twenty five, the book value of our outstanding debt was $6,300,000,000 flat with the same prior year period. We have no maturities in 2025. However, you will note that our $1,400,000,000 April 2026 maturities are now classified as current on our balance sheet. We will address these in due course.

Our cash equivalents and short term investments at the end of the quarter were $3,300,000,000 We continue to maintain an undrawn $2,500,000,000 revolving credit facility, which backstops our $2,000,000,000 U. S. Commercial paper program. Slide 14 presents our historical returns on two important performance metrics for the twelve months ended 06/30/2025. Omnicom's return on invested capital was 18% and our return on equity was 34%, both of which reflect our strong performance and strong balance sheet.

The year over year change is driven by the IPG related acquisition costs and the repositioning costs incurred in the twelve months ended 06/30/2025. I will now ask the operator to please open the lines up for questions and answers. Thank you.

Thank Your first question comes from David Karnovsky with JPMorgan. Line is open.

Thank you. John, you noted the ongoing macro uncertainty in your remarks. Can you speak to the progression of things since you last updated in April, just given one of your competitors had noted a worsening trend in June? And then how should we view the low end of the guide? And what's your thinking to maintain that in the context of the over 3% growth through the first half?

Sure. Other than some specific client type of issues with them being more impacted by proposed tariffs than not. In general, I don't think the environment's changed all that much since the last time we spoke. I think the Trump administration hasn't hasn't issued final guidelines nor conclusions about some key markets that our clients operate in. And so I think it's business as usual for the most part.

I think on all of our major clients, and they'll be even more significant to us after this transaction closes, they are long term partners of ours. And so to the extent that there's a little bump in the road someplace, it's nothing more than just that. And we will collectively get through it together in a very constructive way. So, yeah, there are macro concerns. I would imagine there are macro concerns of different sorts almost every year, but, these seem to be controlled by decisions coming out of Washington for the most part.

And I think they're gonna settle down as as we get through the balance of the year. And, you know, if you have more something specific you wanna know, I'm happy to answer, David.

No. Just, any more thinking, John, on on the low end of the range, maintaining in the in the complex

No. No. No. No. What we did is with the uncertainty, we made our comments earlier in the year.

We're still operating well within that range, and we have no reason at this point to think it's gonna be any lower for any circumstance. And so everything should be upside from the bottom. But until we get further and further into these decisions that are being made by third parties, we really can't measure that impact.

I can. Your third party principal cost increases in the quarter would indicate continued strong contribution from principal trading. Just for this offering, how do we think about the sustainability and growth here and kind of maintaining that strong performance overall for, media and advertising?

Sure. I mean, media is probably the strongest area within the industry. And our third party, what you referred to as third party cost, as you see from our disclosures that you can't see from any of our competitors, it's a product we have. It's a product we've had for a long time. It's a product that continues to grow, and I can see very clearly that it's gonna continue to grow into the future.

So it isn't this unicorn by any standard other than the fact that everybody else that you speak to in the industry doesn't tell you the truth. So it is what it is. It continues to grow. It is a product. The reason it's revenue is for all sorts of accounting reasons that so can probably better explain.

But it's a product that our clients opt into. We plan with them, and then we execute against it. And the client gets a better deal, and we we get incremental revenue with an incremental margin.

The next question comes from Steven Cahall with Wells Fargo. Your line is open.

Thanks. I want to follow-up on David's question, but focusing on the creative side within media and advertising. And Phil, I think last quarter you said creative was flattish in Q1 and might pick up during the year. So I'm just curious if you've seen any pickup on the creative side of things. And then relatedly, David pointed out, it does look like the media business is growing strong.

John, you said that you think that will continue to the future. Is there any margin mix benefit or shift that we should think about as media becomes kind of this longer term tailwind and becomes a bigger and bigger piece of revenue ahead?

Well, let me go to the second part, Phil can talk to the first part. Sure. Yeah. Media is a very, very strong area, which continues to grow. I think our increased size will will benefit us as we move forward and complete the transaction.

Also, the unique attributes of what's in our platform of that we gather information, which allows us to gain insights to help target how clients spend their money and how to optimize that spend improves every single day. Paulo spoke to generative AI and the benefits it has to the tools that we're providing both our creative people and our media people. That continues to happen at breakneck pace. And he's available, by the way, to ask to answer more specific question because I'm a generalist. And, yeah, there increasing opportunities that are being developed in terms of different products, different opportunities to increase margin, different ways to process media transaction.

So to me, that is very I'm very optimistic about that and its continued growth. I know some you know, I think if you objectively look at the industry, at least for the last two years, out of the people you would consider competitive in the set, two of us continue to win, and the others continue to suffer at one pace or another. By the way, those are the same two that I tried to merge with a decade ago. So I wasn't wrong then. It probably won't be wrong this time. You wanna hit creative?

Yeah. On your first question, Steve, the the the creative business was was basically flat to slightly down in the quarter. Performance was stronger outside The U. S. In many international markets, not every international market, but many relative to The U.

S. So performance was okay. It's been better in the past, but not that difficult. I think some of the macro probably had a little more of an impact on the Creative business this quarter.

It's certainly easier to move from quarter to quarter or from month to month than some of the media commitments that you have to make if you're, you know, standing at 20,000 feet and dissecting our business.

The next question comes from Cameron McVeigh with Morgan Stanley. Your line is open.

Hi, thanks. I wanted to ask about the AI agents and where you expect to see the biggest immediate value add and then long term, how you may expect that to evolve? And then secondly, on that point, yeah, how you expect that to impact your financials? Do you see this more enabling share gains in cross selling, so more of a top line growth driver? Or is this more for an operational efficiency standpoint and help with margins or maybe both?

I'm going let Paulo take a lead on the question and then I have some opinions. I don't think they're more than that, on what the impacts are going to be financially. But Paulo?

Sure. So as John articulated earlier, we believe that we sit on effectively the most elite dataset in the industry. And our generative AI strategy is grounded in this notion of an agentic framework. And what those agents are allowing us to do is to effectively infuse the intelligence of our elite dataset into every facet of the marketing workflow. So every discipline, all the teams across Omnicom now have the capability to drive deeper intelligence and a deeper understanding into every part of the work that they're doing for clients.

This not only connects our capabilities, but also drives better understanding of consumers at every touch point.

In terms of the financial impacts, there's a book yet to be written. Immediate benefit that we get is we're putting tools in the hands of our employees and colleagues all over the world in just about every practice area that we function in. What hasn't adoption of that is gonna be dependent upon, you know, widespread use of many of these tools by large enterprise clients, which happen to be the clients that we serve, will happen at a slightly different pace than, say, the smaller self-service clients that somebody like Facebook looks to. Now what hasn't been factored into this future state is as you get more productive and possibly need fewer people, there's gonna be a cost which hasn't been fully loaded in by these people developing all these breakthrough wonderful technologies, the cost to compute, the cost to store. All those things haven't hit the headlines yet.

So they haven't been factored into the decision making process at a client level as to it's better to use the the fanciest product that's on the market or to do it in a more traditional fashion. That's all it's that's gonna play out over the course, I think, in the next twenty four to thirty six months. What's key to us is to make sure that we have all the tools and make all those tools available to the incredible group of over a 100,000 professionals that we have around the world because they're gonna help us invent new things and to do things in ways that sitting here in our corporate headquarters, we can't yet imagine, which I think is gonna be a great benefit. And we'll figure out ways to efficiently deliver these services to a client in a way that they're gonna get a return on investment, and they're gonna optimize the dollars that they spend in media earned and unearned. Did that quite do it for you? Or I can expand.

You're living in interesting times as we all are. So it's it is it's wonderful because I'm very optimistic about it.

The next question comes from Adam Berlin with UBS. Your line is open.

Good evening. I've got three questions. The first question is, if macro conditions remain the same for the rest of the year as we've seen in H1, is it reasonable to assume growth improves in H2 because of the ramp up of the Amazon revenues from the win last year? That's the first question.

Do want to ask all three of or you want me to ask them one at a time?

Yeah. I can whatever it is. I'll ask the others then. The second question is

The repositioning costs that you talked about in Q2, the $89,000,000 when do we see the benefit of those? Is that in H2 or is that more 2026? And is that already in the 10 bps of guidance that you've given for margin improvement this year? And the third question is, can you tell us how Flywheel performed in Q2?

I'll take a shot at it and Phil will back me up with facts. You know, hypothetical macro conditions, you know, it's tough for me to project. What I do know is I do know that I have a very long history within Omnicom that we're quite flexible and agile in adjusting to whatever the conditions are. And never lose sight that we're not doing things simply transactionally. We're entering into longer term relationships trying to grow clients' brands.

So blip of, you know, small numbers in a particular quarter or a particular moment in time are really irrelevant to the long term health and and continued growth of our business. So I'm not we're very as we said earlier, we're very comfortable with the guidance that we previously have given you and we're sticking with it. We don't see we don't plan based upon wonderful macro conditions suddenly changing overnight. We think there's still going to be some challenges as we go forward. I think Washington will bring a lot of clarity to this over the rest of this quarter.

And then we'll be able to plan better as we move into the fourth quarter and into the future. So that's how I'd respond to the first one. Phil can talk a little bit more about repositioning our cost, but but I just have one comment before he does. Many of the changes that we've made or we've insisted on making almost since July of last year, starting with production, then OAG, then a few and then now the delivery platform was that Duncan's gonna going to continue to build out for us required some anticipated reorganization. So the host being Omnicom is ready when this closes in just a few months to absorb those activities in a very productive way, which allows us to achieve and possibly exceed the $750,000,000 we discussed at the time we announced the merger.

So we're not standing still during this period of time. We're planning the integration. And where we have to reorganize ourselves to make it easier to to ingest our new colleagues, that's what we're we're doing. Now Phil could have more specific answers on the repositioning cost, but that's the reason behind why we're incurring them.

Sure. As far as the actions we took in the quarter, Adam, a couple of clarifications. They weren't they certainly weren't part of the actions we expect to take to meet our $750,000,000 synergy target that we talked about post close. We continue to expect to achieve the $750,000,000 synergy target and we're certainly working on plans to exceed it as well as John had mentioned in his prepared remarks. We took the actions in the second quarter, as we said, to optimize OAG and Omnicom production units, which will help us certainly in the IPG integration process.

And as I said in my prepared remarks, all of this has been considered in our 10 basis point improvement for the year as we reiterate our guidance. As far as Flywheel goes, we haven't and aren't going to provide individual numbers for individual or specific numbers for individual businesses. But the Flywheel business continues to perform well, especially in The U. S. And it certainly continues to enhance our broader portfolio, including the omni platform and our AI and data strategies. And Duncan has been invaluable both in integrating Flywheel into our business as well as the additional role that he's gonna take that take on that John referred to in his prepared remarks. So I think I think that, that addresses it, but but happy to clarify any any follow-up items.

And one other positive thing about Flywheel, if you look historically at the portfolios of Omnicom and Intrepublic, Intrepublic had has deeper relationships with many CPG companies that haven't been traditionally part of our growth and portfolio. That's going to introduce flywheel to even more opportunities to provide service.

Your next question comes from Adrian de Saint Hilaire with Bank of America. Your line is open.

Thank you very much, John, Phil, for taking the questions, please. So I've got a few of them. One of your competitor was talking about a smaller pipeline, smaller opportunities right now. Was just wondering what your thoughts were around this. Secondly, maybe a housekeeping question, but how much repositioning and acquisition related costs should we model for the year?

And sticking to that topic, is there some pull forward in that number from the EUR $750,000,000 of cost savings that you've planned from the IPG combination? Or does these actions in 2025 come on top of that number?

I'll take the latter first and then we can go back to your first question. On the repositioning charges, they were not as I said earlier, they were not part of the seven fifty synergy target. We continue to expect to achieve the seven fifty and beyond. But those charges were not part of the seven fifty. And I think it's safe to say we don't intend to take any further repositioning charges in the third quarter.

I think there are some actions we're going to be taking in connection with when the deal closes. We don't have a precise date, but we expect and believe it will continue to close in the second half. And when it does, certainly to achieve the $750,000,000 there are going to be some actions that we need to take that are going to result in charges, which I think we've made clear prior. When we get there, we'll certainly provide some more information and disclosure around that.

And on your first question, I I typically read and follow very much what my competitors are saying. I don't recall that particular quote referring to smaller opportunities. So maybe you can provide some clarity. Maybe I just don't fully understand the question. I do think that because of some of the uncertainties that are out there that some decision processes have gotten delayed or a little slower than what we might have expected in prior years.

But, again, that's a temporary phenomenon from from my perspective. I mean, could you give me a little bit more clarity? Maybe I can be a bit more help Yeah. In terms of the first question.

Sure. Sure. Sure. I think they were specifically calling out the fact that there isn't a lot of pitches basically going on at the minute in media specifically.

Well, yeah, that I don't know if that's true or not. I mean, it's certainly inconsistent with all the projections everybody was making about all the disruption I was gonna have in my business when I announced the deal because that hasn't occurred. So but we can we continue, along with at least one competitor, to be invited to, I think, every single pitch of any size because clients are curious about how our services differ from those of maybe one other in the group, you know, primarily. So it's business is evil, I think. And and, also, there are some active features going on during the summer that I find somewhat unusual, because people typically delay some of those decisions until the autumn.

So there isn't I wouldn't say quantity a lot, but there's a few big opportunities that we're currently in the process of having conversations with clients about.

The next question comes from Jason Bazinet with Citi. Your line is open.

Can I just ask a quick question about your philosophy regarding buybacks? The reason I ask is that the $600,000,000 that you called out for the year seems very consistent with what you've done in terms of buybacks over the last ten years with a few exceptions. But your multiple seems as low today anytime maybe ex the GFC back in o eight and maybe ex COVID in 2020. So why I guess the inference of the 600,000,000 is you don't really think about buying back more stock if your stock is cheap and less if you think it's expensive. It's just a pretty consistent sort of capital return independent of the price of your stock. Is that a is that a fair characterization?

No. It wouldn't be. And and the reason is back on December, as we were announcing the transaction to purchase into public Yep. We were acquiring them, and we had to come up with a decision as to how much we would permit them to buy back during until the transaction closed. And since we were insisting that they would be limited, they very respectfully asked us to define what we would do.

And at the time, again, remember we were coming off COVID. Last year, we were coming off of having purchased Flywheel. And so we agreed arbitrarily to two numbers, a number for them, which I'll allow them to tell you what it is on their call and 600000000 for us. By all means, if it weren't for this agreement, we would probably be a lot more active in the market than we are currently. But we are respectful of merger agreement that we signed.

The good news is I expect that to be completed sometime in the next four months, at which point we'll be a lot more flexible and free to react to whatever the conditions are. But that's an arbitrary decision that was taken seven, eight months ago that we're honoring. It is not business as usual and it's not because we don't see the same opportunities that you just mentioned.

Omnicom Group (OMC) Q2 2025 Earnings Call Transcript

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