Omnicom Group Inc. Q3 FY2025 earnings call

• Acquisition update: Secured antitrust clearance except EU, submitted EU filing on 10/20, expect to close acquisition in late November. Integration teams working on seamless transition and launching OmniPlus, a next-gen marketing OS unifying data assets. - OmniPlus: Unifies data assets via Acxiom's Real ID, with generative AI layer as fastest-growing platform. - New business wins: Including American Express, Porsche, etc., for Omnicom; Amgen, Bayer, etc., for IPG. - Strong financials: Liquidity and balance sheet strong, cash flow supports dividends, acquisitions, share repurchases.

Organic growth was 2.6% for the quarter, with 3% for the first nine months, in line with annual guidance. Non-GAAP adjusted EBITDA was $551.6 million with a margin of 16.1% for the quarter, up 10 basis points from last year. Non-GAAP adjusted net income per share was $2.24, up 10.3% versus 2024. Product segments: Media and advertising led growth at +9% organic; Creative was impacted by macroeconomic uncertainty; Precision Marketing was ~1% organic with US strength offset by European declines; Public relations declined -8% primarily due to no US national election-related revenue; Health care was -2% organic; Branding and retail commerce -17%; Experiential -18% on tough comp; Execution and support +2% driven by merchandising. Geography: US saw 4.6% growth, UK 3.7%, Continental Europe -3.1%. Industry sector: Auto category increased relative revenue due to new business wins.

• Annual guidance: Organic growth 3% year-to-date aligns with annual guidance. - Acquisition timeline: Expect to close Interpublic acquisition in late November. - Synergies: Confident in exceeding expected synergies from acquisition.

• Antitrust clearance: Pending EU approval but expect to secure with recent filing. - Macroeconomic factors: Impact on creative, public relations, etc. - Regulatory changes: Potential impact on earnings reporting as discussed.

Q: When will pro forma financials and guidance for combined business be available?

A: Shortly after integration, likely around CES in January, with details on synergies and P&L benefit in 2026.

Q: Precision marketing slowdown in Europe?

A: Decline in Cordero consulting business related to government work in European cities, but rest of business strong with new business pipeline.

Q: Organic growth guidance for year?

A: Year-to-date 3% in line with outlook, Q4 dependent on project work availability.

Q: Client response to combined offering?

A: Clients positive, encouraging response to potential post-merger offering during pitches.

Q: Third-party costs increase?

A: Driven by faster growth in media and execution/support, variable costs align with revenue growth.

Q: Closing gap with Publicis post-merger?

A: Confident in differentiating and growing, focusing on media, health, and precision marketing segments.

Q: Client tone in US and Europe?

A: Conversations touch on AI, automotive challenges, but budgets not drastically cut, expecting Q4 project funding release.

Q: Thought on earnings reporting change?

A: Phil noted evaluation if rules change, but current quarterly reporting is a good discipline, but would consider if rules alter.