What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-10-18 compared with 2023-07-19 · 197 added, 195 removed, 439 unchanged (47% of the section changed)

8 unchanged sentences

Factors that could cause actual results to differ materially from those in the forward-looking statements include:

• adverse economic conditions, including those caused by the war in Ukraine, the lingering effects of COVID-19, high and

persistent inflation in countries that comprise our major markets, rising interest rates, and supply chain issues affecting the

distribution of our clients’ products;

• adverse economic conditions, including those caused by the ongoing war in Ukraine, the lingering effects of COVID-19, high and persistent inflation in countries that comprise our major markets, rising interest rates, and supply chain issues affecting the distribution of our clients’ products;

• international, national or local economic conditions that could adversely affect the Company or its clients;

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Financial Performance

Revenue for the three months ended June 30, 2023 increased to $3,609.9 million, compared to $3,567.2 million in the prior year quarter.

Organic revenue growth (defined below) increased $121.4 million, or 3.4%, primarily reflecting increased client

spending in most of our disciplines and all of our major geographic markets compared to the prior year period.

Changes in foreign exchange rates reduced revenue $24.4 million, or 0.7%, primarily due to the weakening of the Australian Dollar, Canadian Dollar, and Renminbi against the U.S.

Dollar, which was partially offset by the strengthening of the Euro against the U.S.

Revenue for the three months ended September 30, 2023, increased $134.7 million, or 3.9%, to $3,578.1 million, compared to $3,443.4 million in the prior year quarter.

Organic revenue growth (defined below) was $113.1 million, or 3.3%, primarily

reflecting increased client spending in most of our disciplines and geographic markets compared to the prior year period.

Changes in foreign exchange rates period-over-period increased revenue $59.1 million, or 1.7%, primarily due to the strengthening of the Euro and British Pound against the U.S.

Acquisition revenue, net of disposition revenue, reduced revenue $37.5 million, or 1.1%.

The reduction from acquisition revenue, net of disposition revenue, primarily reflects dispositions in the Execution & Support discipline in the first and second quarters of 2023.

Revenue for the six months ended June 30, 2023 increased slightly to $7,053.2 million, compared to $6,977.5 million in the prior year period.

Organic revenue growth increased $300.1 million, or 4.3%, primarily reflecting increased client spending in most of our disciplines and across all of our major geographic markets compared to the prior year period.

Changes in foreign exchange rates reduced revenue $134.4 million, or 1.9%, primarily due to the weakening of the British Pound, Australian Dollar, Canadian Dollar, Euro, and Yen against the U.S.

Dollar, and acquisition revenue, net of disposition revenue, reduced revenue $90.0 million, or 1.3%.

The reduction in acquisition revenue, net of disposition revenue, primarily reflects dispositions in the Execution & Support discipline in the first and second quarters of 2023 and the disposition of our businesses in Russia in the first quarter of 2022, partially offset by acquisitions in the Precision Marketing discipline in the first quarter of 2022.

The change in revenue period-over-period for the three months ended June 30, 2023 was:

Advertising & Media increased $77.1 million, Precision Marketing increased $5.1 million, Commerce & Brand Consulting increased $3.5 million, Experiential increased $12.4 million, Execution & Support decreased $60.6 million, Public Relations decreased $0.4 million and Healthcare increased $5.6 million.

The change in revenue period-over-period for the six months ended June 30, 2023 was:

Advertising & Media increased $83.4 million, Precision Marketing increased $25.9 million, Commerce & Brand Consulting increased $1.7 million, Experiential increased $20.5 million, Execution & Support decreased $82.1 million, Public Relations increased $12.7 million and Healthcare increased $13.6 million.

The change in revenue period-over-period across our geographic markets for the three months ended June 30, 2023 was:

North America increased $9.3 million, or 0.5%, Latin America increased $4.7 million, or 5.9%, Europe increased $20.7 million, or 2.0%, the Middle East and Africa decreased $2.3 million, or 3.5%, and Asia-Pacific increased $10.3 million, or 2.4%.

The change in revenue period-over-period across our geographic markets for the six months ended June 30, 2023 was:

North America increased $97.1 million, or 2.5%, Latin America increased $11.0 million, or 7.5%, Europe decreased $19.4 million, or 1.0%, the Middle East and Africa increased $0.7 million, or 0.5%, and Asia-Pacific decreased $13.7 million, or 1.6%.

The reduction from acquisition revenue, net of disposition revenue, primarily reflects dispositions in the Execution & Support discipline in the first and second quarters of 2023, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and the Public Relations disciplines.

Revenue for the nine months ended September 30, 2023, increased $210.4 million, or 2.0%, to $10,631.3 million, compared to $10,420.9 million in the prior year period.

Organic revenue growth was $413.2 million, or 4.0%, primarily reflecting increased client spending in most of our disciplines and across all of our major geographic markets compared to the prior year period.

Changes in foreign exchange rates reduced revenue $75.3 million, or 0.7%, primarily due to the weakening of the Australian Dollar, Canadian Dollar, British Pound, Renminbi, and Japanese Yen against the U.S.

Dollar, partially offset by the strengthening of the Euro against the U.S.

Dollar, compared to the prior nine-month period.

Acquisition revenue, net of disposition revenue, reduced revenue $127.5 million, or 1.2%, compared to the prior nine-month period.

The reduction from acquisition revenue, net of disposition revenue, primarily reflects dispositions in the Execution & Support discipline in the first and second quarters of 2023 and the disposition of our businesses in Russia in the first quarter of 2022, partially offset by acquisitions in the Precision Marketing discipline in the first quarter of 2022 and our acquisition activity in the current quarterly period.

The change in revenue period-over-period for the three months ended September 30, 2023, was:

Advertising & Media increased $144.3 million, Precision Marketing increased $20.4 million, Commerce & Branding decreased $0.3 million, Experiential increased $12.7 million, Execution & Support decreased $55.9 million, Public Relations decreased $0.6 million, and Healthcare increased $14.1 million.

The change in revenue period-over-period for the nine months ended September 30, 2023, was:

Advertising & Media increased $227.7 million, Precision Marketing increased $46.3 million, Commerce & Branding increased $1.4 million, Experiential increased $33.2 million, Execution & Support decreased $138.0 million, Public Relations increased $12.1 million, and Healthcare increased $27.7 million.

The change in revenue period-over-period across our geographic markets for the three months ended September 30, 2023, was:

North America increased $14.2 million, or 0.7%, Latin America increased $22.1 million, or 28.6%, Europe increased $108.6 million, or 12.0%, the Middle East and Africa decreased $10.4 million, or 16.8%, and Asia-Pacific remained flat.

The change in revenue period-over-period across our geographic markets for the nine months ended September 30, 2023, was:

North America increased $111.3 million, or 1.9%, Latin America increased $33.1 million, or 14.7%, Europe increased $89.2 million, or 3.0%, the Middle East and Africa decreased $9.7 million, or 4.6%, and Asia-Pacific decreased $13.5 million, or 1.1%.

A summary of our consolidated results of operations period-over-period is:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 $ Change % Change 2023 2022 $ Change % Change

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16.2 % 16.4 % (0.2) % 14.3 % 14.4 % (0.1) %

1) See Non-GAAP reconciliation for the calculation of EBITA on page 25 .

2) For the six months ended June 30, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs related to repositioning actions we took to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets.

In the second quarter of 2023, we recorded a gain on disposition of our research businesses in the Execution & Support discipline and incurred repositioning costs, primarily related to severance payments.

The impact to Operating Income for the three and six months ended June 30, 2023, was an increase of $6.5 million ($1.4 million after tax) and a reduction of $112.7 million ($89.6 million after tax), respectively.

The net aggregate effect of these items in the three and six months ended June 30, 2023 to diluted net income per share - Omnicom Group Inc.

was an increase of $0.01 and a decrease of $0.44, respectively (see Notes 9 and 10 to the unaudited consolidated financial statements).

3) For the six months ended June 30, 2022, operating expenses included $113.4 million charges recorded in the first quarter of 2022 as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income - Omnicom Group Inc.

1) Reconciliation of Non-GAAP Financial Measures on page 25 .

2) For the nine months ended September 30, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets.

In addition, in the second quarter of 2023, we recorded a gain on disposition of certain of our research businesses in the Execution & Support discipline.

There was no impact to Operating Income for the three months ended September 30, 2023 from this disposition.

The net aggregate impact to Operating Income for the nine months ended September 30, 2023 was a reduction of $112.7 million ($89.6 million after tax).

The net aggregate effect of these items in the nine months ended September 30, 2023 to diluted net income per share - Omnicom Group Inc.

was a decrease of $0.44 (see Notes 9 and 10 to the unaudited consolidated financial statements).

3) For the nine months ended September 30, 2022, operating expenses included $113.4 million of charges recorded in the first quarter of 2022 as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income -

Omnicom Group Inc.

by $118.2 million and diluted net income per share - Omnicom Group Inc.

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On a global, pan-regional, and local basis, our networks, practice areas, and agencies provide a comprehensive range of services in the following fundamental disciplines:

Advertising & Media, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations, and Healthcare.

Advertising & Media, Precision Marketing, Commerce & Branding, Experiential, Execution & Support, Public Relations, and Healthcare.

Advertising & Media includes creative services across digital and traditional media, strategic media planning and buying, performance media, and data analytics services.

Precision Marketing includes digital and direct marketing, digital transformation consulting and data and analytics.

Commerce & Brand Consulting services include brand and product consulting, strategy and research, retail, and ecommerce.

Commerce & Branding services include brand and product consulting, strategy and research, retail, and ecommerce.

Experiential marketing services include live and digital events and experience design and execution.

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As a leading global advertising, marketing and corporate communications company, we operate in all major markets and have a large and diverse client base.

For the twelve months ended June 30, 2023, our largest client accounted for 2.8% of our revenue and our 100 largest clients, which represent many of the world's major marketers, accounted for approximately 53.6% of our revenue.

Our clients operate in virtually every sector of the global economy with no one industry representing more than 17% of our revenue for the six months ended June 30, 2023.

For the twelve months ended September 30, 2023, our largest client accounted for 3.0% of our revenue, and our 100 largest clients, which represent many of the world's major marketers, accounted for approximately 54.4% of our revenue.

Our clients operate in virtually every sector of the global economy with no one industry representing more than 17% of our revenue for the nine months ended September 30, 2023.

Although our revenue is generally balanced between the United States and international markets, and we have a large and diverse client base, we are not immune to general economic downturns.

Risks and Uncertainties

Current global economic challenges, including the impact of the war in Ukraine, high and persistent inflation, rising interest rates, supply chain disruptions, credit market deterioration, and other macroeconomic factors, could cause economic uncertainty and volatility.

Current global economic challenges, including the impact of the ongoing war in Ukraine, high and persistent inflation, rising interest rates, supply chain disruptions, credit market deterioration, and other macroeconomic factors, could cause economic uncertainty and volatility.

The impact of these issues on our business will vary by geographic market and discipline.

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However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness, and other developments.

Revenue is typically lower in the first and third quarters and higher in the second and fourth quarters, reflecting client spending patterns during the year and additional project work that usually occurs in the fourth quarter.

Certain global events targeted by major marketers for advertising expenditures, such as the FIFA

World Cup and the Olympics, and certain national events, such as the U.S.

Revenue is typically lower in the first and third quarters and

higher in the second and fourth quarters, reflecting client spending patterns during the year and additional project work that usually occurs in the fourth quarter.

Certain global events targeted by major marketers for advertising expenditures, such as the FIFA World Cup and the Olympics, and certain national events, such as the U.S.

election process, may affect our revenue period-over-period in certain businesses.

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CONSOLIDATED RESULTS OF OPERATIONS

The change in results of operations period-over-period were:

Three Months Ended June 30,

Six Months Ended June 30,

The period-over-period change in results of operations were:

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 $ Change 2023 2022 $ Change

8 unchanged sentences

Gain on disposition of subsidiary 1

— — — (78.8) — (78.8)

Cost of services 2,875.1 2,757.1 118.0 8,737.8 8,521.5 216.3

19 unchanged sentences

EBITA Margin % 16.2 % 16.4 % 14.3 % 14.4 %

1) For the six months ended June 30, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs related to repositioning actions we took to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets.

In the second quarter of 2023, we recorded a gain on the disposition of our research businesses in the Execution & Support discipline and incurred repositioning costs, primarily related to severance payments.

The net aggregate effect of these items in the three and six months ended June 30, 2023 to diluted net income per share - Omnicom Group Inc.

was an increase of $0.01 and a decrease of $0.44, respectively (see Notes 9 and 10 to the unaudited consolidated financial statements).

2) For the six months ended June 30, 2022, operating expenses included $113.4 million charges recorded in the first quarter of 2022 as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income - Omnicom Group Inc.

1) For the nine months ended September 30, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets.

In addition, in the second quarter of 2023, we recorded a gain on disposition of certain of our research businesses in the Execution & Support discipline.

There was no impact to Operating Income for the three months ended September 30, 2023 from this disposition.

The net aggregate impact to Operating Income for the nine months ended September 30, 2023 was a reduction of $112.7 million ($89.6 million after tax).

The net aggregate effect of these items in the nine months ended September 30, 2023 to diluted net income per share - Omnicom Group Inc.

was a decrease of $0.44 (see Notes 9 and 10 to the unaudited consolidated financial statements).

2) For the nine months ended September 30, 2022, operating expenses included $113.4 million of charges recorded in the first quarter of 2022 as well as an additional net income tax charge of $4.8 million related to the disposition of our businesses in Russia, which reduced net income - Omnicom Group Inc.

by $118.2 million and diluted net income per share - Omnicom Group Inc.

by $0.57 (see Note 11 to the unaudited consolidated financial statements).

The components of revenue change period-over-period in the United States (“Domestic”) and the remainder of the world (“International”) were:

The components of period-over-period revenue change in the United States (“Domestic”) and the remainder of the world (“International”) were:

Total Domestic International

Three months ended June 30, 2022 $ 3,567.2 $ 1,842.8 $ 1,724.4

Three months ended September 30, 2022 $ 3,443.4 $ 1,847.8 $ 1,595.6

Components of revenue change:

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Organic growth 113.1 3.3 % 49.4 2.7 % 63.7 4.0 %

Three months ended June 30, 2023 $ 3,609.9 1.2 % $ 1,850.6 0.4 % $ 1,759.3 2.0 %

Three months ended September 30, 2023 $ 3,578.1 3.9 % $ 1,868.8 1.1 % $ 1,709.3 7.1 %

Total Domestic International

Six months ended June 30, 2022 $ 6,977.5 $ 3,567.4 $ 3,410.1

Nine months ended September 30, 2022 $ 10,420.9 $ 5,415.2 $ 5,005.7

Components of revenue change:

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Organic growth 413.2 4.0 % 180.7 3.3 % 232.5 4.6 %

Six months ended June 30, 2023 $ 7,053.2 1.1 % $ 3,662.8 2.7 % $ 3,390.4 (0.6) %

Nine months ended September 30, 2023 $ 10,631.3 2.0 % $ 5,531.6 2.1 % $ 5,099.7 1.9 %

The components and percentages are calculated as follows:

• Foreign exchange rate impact is calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue (in this case $3,634.3 million and $7,187.6 million for the Total column for the three and six months ended June 30, 2023, respectively).

• Foreign exchange rate impact is calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue (in this case $3,519.0 million and $10,706.6 million for the Total column for the three and nine months ended September 30, 2023, respectively).

The foreign exchange impact is the difference between the current period revenue in U.S.

Dollars and the current period constant currency revenue ($3,609.9 million less $3,634.3 million and $7,053.2 million less $7,187.6 million for the Total column for the three and six months ended June 30, 2023, respectively).

Dollars and the current period constant currency revenue ($3,578.1 million less $3,519.0 million and $10,631.3 million less $10,706.6 million for the Total column for the three and nine months ended September 30, 2023, respectively).

• Acquisition revenue is calculated as if the acquisition occurred twelve months prior to the acquisition date by aggregating the comparable prior period revenue of acquisitions through the acquisition date.

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• Organic growth is calculated by subtracting the foreign exchange rate impact, and the acquisition revenue, net of disposition revenue components from total revenue growth.

• The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($3,567.2 million and $6,977.5 million for the Total column for the three and six months ended June 30, 2023, respectively).

• The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($3,443.4 million and $10,420.9 million for the Total column for the three and nine months ended September 30, 2023, respectively).

Changes in the value of foreign currencies against the U.S.

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For the most part, because the revenue and expense of our foreign operations are both denominated in the same local currency, the economic impact on operating margin is minimized.

Assuming exchange rates at July 14, 2023 remain unchanged, we expect the impact of changes in foreign exchange rates to increase revenue in the third quarter by approximately 1.5% and to be flat for the year.

Based on our acquisition and disposition activity to date, we expect that the net impact will reduce revenue by 1.5% for the third quarter of 2023 and 1.5% for the full year.

Assuming exchange rates at October 13, 2023 remain unchanged, we expect the impact of changes in foreign exchange rates will increase revenue by 0.5% in the fourth quarter and reduce revenue for the year by 0.5%.

Based on our acquisition and disposition activity to date, we expect that the net impact will reduce revenue by 0.75% for the fourth quarter of 2023 and 1.1% for the full year.

Revenue by Discipline

To monitor the changing needs of our clients and to further expand the scope of our services to key clients, we monitor revenue across a broad range of disciplines and group them into the following categories:

Advertising & Media, Precision Marketing, Commerce & Brand Consulting, Experiential, Execution & Support, Public Relations, and Healthcare.

The change in revenue period-over-period and organic growth by discipline was:

Three Months Ended June 30,

Advertising & Media, Precision Marketing, Commerce & Branding, Experiential, Execution & Support, Public Relations, and Healthcare.

The period-over-period change in revenue and organic growth by discipline was:

Three Months Ended September 30,

2023 2022 2023 vs.

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Precision Marketing 383.7 10.7 % 363.3 10.5 % 20.4 4.3 %

Commerce & Brand Consulting 210.5 5.8 % 207.0 5.8 % 3.5 2.4 %

Commerce & Branding 211.6 5.9 % 211.9 6.2 % (0.3) (1.7) %

Experiential 133.3 3.7 % 120.6 3.5 % 12.7 9.2 %

3 unchanged sentences

Revenue $ 3,578.1 $ 3,443.4 $ 134.7 3.3 %

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 2023 vs.

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Precision Marketing 1,112.7 10.5 % 1,066.4 10.3 % 46.3 4.5 %

Commerce & Brand Consulting 420.1 6.0 % 418.4 6.0 % 1.7 2.8 %

Commerce & Branding 631.7 5.9 % 630.3 6.0 % 1.4 1.3 %

Experiential 445.5 4.2 % 412.3 4.0 % 33.2 8.9 %

3 unchanged sentences

Revenue $ 10,631.3 $ 10,420.9 $ 210.4 4.0 %

Effective January 1, 2023, we realigned the classification of certain services primarily within our Commerce & Brand Consulting, Execution & Support, and Experiential disciplines and prior year amounts have been reclassified.

The period-over-period change in revenue for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 in our fundamental disciplines was:

Organic revenue increased across most of our disciplines and was partially offset by the negative effects of foreign exchange translation, primarily due to the weakening of the Australian Dollar, Canadian Dollar, and Renminbi against the U.S.

Dollar, which was partially offset by the strengthening of the Euro against the U.S.

Dispositions, primarily in the Execution & Support discipline in the first and second quarters of 2023, reduced our revenue compared to the prior year period.

The period-over-period change in revenue for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 in our fundamental disciplines was:

Organic revenue increased across fundamentally all our disciplines and was partially offset by the weakening of substantially all other foreign currencies against the U.S.

Dollar, primarily the British Pound, Australian Dollar, Canadian Dollar, Euro, and Yen against the U.S.

Dollar and by dispositions, primarily in the Execution & Support discipline in the first and second quarters of 2023 and in the Advertising & Media discipline, including the disposition of our businesses in Russia in the first quarter of 2022, which negatively impacted our revenue in the current period.

Effective January 1, 2023, we realigned the classification of certain services primarily within our Commerce & Branding, Execution & Support, and Experiential disciplines, and prior year amounts have been reclassified.

The period-over-period change in revenue for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, in our fundamental disciplines was:

Organic revenue increased across most of our disciplines.

Our revenue growth was aided by the positive impact of foreign exchange translation, partially offset by net disposition activity in 2023.

The positive impact from foreign exchange translation period to period was primarily due to the Euro and British Pound strengthening against the U.S.

Dispositions, primarily of certain of our research businesses in the Execution & Support discipline in the first and second quarters of 2023, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and the Public Relations disciplines, negatively impacted our revenue compared to the third quarter of the prior year.

The period-over-period change in revenue for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, in our fundamental disciplines was:

Organic revenue increased across substantially all our disciplines.

The impact of foreign exchange translation slightly reduced our revenue, and dispositions, primarily of certain of our research businesses in the Execution & Support discipline in the first and second quarters of 2023, reduced our revenue compared to the prior year period.

The decrease in revenue from foreign exchange translation was primarily related to the weakening of substantially all currencies against the U.S.

Dollar, except the Euro which strengthened against the U.S.

Dollar and partially offset the decrease.

In the normal course of business, our agencies both gain and lose business from clients each year due to a variety of factors.

Under our client-centric approach, we seek to broaden our relationships with all of our clients.

Our largest client represented 2.8% and 2.9% of revenue for the twelve months ended June 30, 2023 and 2022, respectively.

Our ten largest and 100 largest clients represented 19.8% and 53.6% of revenue for the twelve months ended June 30, 2023, respectively, and 21.0% and 53.1% of revenue for the twelve months ended June 30, 2022, respectively.

Our largest client represented 3.0% and 2.6% of revenue for the twelve months ended September 30, 2023 and 2022, respectively.

Our ten largest and 100 largest clients represented 20.4% and 54.4% of revenue for the twelve months ended September 30, 2023, respectively, and 19.4% and 52.6% of revenue for the twelve months ended September 30, 2022, respectively.

Revenue by Geography

The change in revenue period-over-period and organic growth in our geographic markets was:

Three Months Ended June 30,

The period-over-period change in revenue and organic growth in our geographic markets was:

Three Months Ended September 30,

2023 2022 2023 vs.

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Revenue $ 3,578.1 $ 3,443.4 $ 134.7 3.3 %

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 2023 vs.

7 unchanged sentences

Revenue $ 10,631.3 $ 10,420.9 $ 210.4 4.0 %

The period-over-period change in revenue across our geographic markets for the three months ended June 30, 2023 was:

Organic revenue for the three months ended June 30, 2023 increased across most of our geographic markets.

The period-over-period change in revenue across our geographic markets for the six months ended June 30, 2023 was:

Organic revenue for the six months ended June 30, 2023 increased across most of our geographic markets.

In North America for the three months ended June 30, 2023 compared to the prior year period, increased organic revenue was driven primarily by strong performance in the United States, especially in the Advertising & Media discipline, led by our media business, and our Precision Marketing and Healthcare disciplines, and was partially offset by a reduction in our Commerce & Brand Consulting, Experiential, and Execution & Support disciplines which faced difficult comparisons to the prior year.

The weakening of the Canadian Dollar against the U.S.

Dollar partially offset organic growth.

Dispositions in the Execution & Support discipline in the United States in the first and second quarters of 2023 also decreased revenue.

In North America for the six months ended June 30, 2023 compared to the prior year period, increased organic revenue was driven primarily by strong performance in the United States across substantially all of our disciplines and was partially offset by the weakening of the Canadian Dollar against the U.S.

Dollar and dispositions in our Execution & Support discipline in the first and second quarters of 2023.

In Latin America compared to the prior year periods, organic revenue for the three and six months ended June 30, 2023, increased in substantially all our disciplines, led by Advertising & Media, and in most countries, especially in Colombia, Chile, Mexico, and Argentina, and was partially offset by the weakening of the Colombian Peso and the Argentine Peso against the U.S.

In Europe compared to the prior year periods, organic revenue for the three and six months ended June 30, 2023 increased across most of our major geographic markets in the region and in substantially all disciplines, especially Advertising & Media, led by our media business, and Experiential.

The organic revenue growth for the three months ended June 30, 2023, combined with the strengthening of the Euro against the U.S.

Dollar in the period, which was partially offset by the weakening of the Turkish Lira, Swedish Krona, and British Pound, also contributed to the total revenue growth for the region.

For the six months ended June 30, 2023 the weakening of substantially all currencies as compared to the the prior year period offset organic growth.

organic revenue growth for the three and six months ended June 30, 2023 of 2.5% and 4.2%, respectively, was led by our Advertising & Media, Healthcare, and Commerce & Brand Consulting disciplines, partially offset by the weakening of the British Pound against the U.S..

In Continental Europe, which includes the Euro Zone and the other European countries, organic growth for the three and six months ended June 30, 2023 of 2.6% and 4.0%, respectively, was led by France, Italy, and Germany in substantially all disciplines.

In the Middle East and Africa compared to the prior year periods, organic revenue increased for the three and six months ended June 30, 2023, led by the Advertising & Media discipline and in most of our major markets in the region.

For the three and six months ended June 30, 2023, organic revenue was partially offset by the weakening of all currencies in the region against the U.S.

In Asia-Pacific compared to the prior year periods, organic revenue increased for the three and six months ended June 30, 2023, led by our Advertising & Media and Experiential disciplines and most major markets in the region, especially in China, India, Japan, and Malaysia.

The organic growth was partially offset by the weakening of substantially all currencies in the region against the U.S.

Dollar, especially the Australian Dollar, Renminbi, Yen, and New Zealand Dollar.

The period-over-period change in revenue across our geographic markets for the three months ended September 30, 2023 was:

Organic revenue for the three months ended September 30, 2023 increased across most countries within our major markets.

The period-over-period change in revenue across our geographic markets for the nine months ended September 30, 2023 was:

Organic revenue for the nine months ended September 30, 2023 increased across most countries within our major markets.

In North America for the three months ended September 30, 2023 compared to the prior year period, increased organic revenue was driven primarily by strong performance in the United States, especially in the Advertising & Media discipline, led by our media business, and our Precision Marketing and Healthcare disciplines, partially offset by negative performance in our Public Relations, Commerce & Branding, and Execution & Support disciplines, which faced difficult comparisons to the prior year.

Dispositions in the Execution & Support discipline in the United States in the first and second quarters of 2023, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and the Public Relations disciplines, also reduced revenue in the region period to period.

For the nine months ended September 30, 2023 compared to the prior year period, increased organic revenue was driven primarily by strong performance in the United States across most of our disciplines and was partially offset by the weakening of the Canadian Dollar against the U.S.

Dollar and dispositions in our Execution & Support discipline in the first and second quarters of 2023, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and the Public Relations disciplines.

In Latin America compared to the prior year periods, organic revenue for the three and nine months ended September 30, 2023, increased in substantially all our disciplines, led by Advertising & Media, and in substantially all countries in the region.

The strengthening of most currencies, especially the Mexican Peso and Brazilian Real against the U.S.

Dollar, increased revenue in the three and nine months ended September 30, 2023 compared to the same periods in 2022.

In Europe compared to the prior year periods, organic revenue for the three and nine months ended September 30, 2023 increased across most countries of our major markets and in substantially all disciplines, especially Advertising & Media, led by our media business, and in our Experiential discipline.

Foreign currency changes increased revenue for the three months ended September 30, 2023, primarily as a result of the strengthening of the Euro and British Pound against the U.S.

Dollar period to

The impact to revenue from foreign currency changes for the nine months ended September 30, 2023 was essentially flat as the strengthening of the Euro against the U.S.

Dollar was offset by the weakening of the British Pound against the U.S.

Acquisition revenue, net of disposition revenue, decreased revenue in the nine-month period compared to the prior year due to the disposition of our businesses in Russia in the first quarter of 2022.

In the U.K., organic revenue growth for the three and nine months ended September 30, 2023 of 4.4% and 4.3%, respectively, was led by our Advertising & Media and Commerce & Branding disciplines, as well as the Healthcare discipline, in particular in the three months ended September 30, 2023.

In Continental Europe, which includes the Euro Zone and the other European countries, organic growth in substantially all disciplines for the three and nine months ended September 30, 2023 compared to 2022 of 5.7% and 4.5%, respectively, was led by France, Germany, and Italy.

In the Middle East and Africa for the three months ended September 30, 2023, organic revenue decreased period-over-period, primarily as a result of our Advertising & Media and Experiential disciplines, which faced difficult comparisons in the region.

For the nine-month period compared to the prior year period, organic revenue increased, led by our Advertising & Media discipline.

For the three and nine months ended September 30, 2023, the weakening of certain currencies in the region against the U.S.

Dollar decreased revenue period-over-period.

In Asia-Pacific, organic revenue increased period-over-period for the three months ended September 30, 2023, led by our Experiential discipline.

For the nine-month period ended September 30, 2023, substantially all disciplines had organic growth.

Most major markets in the region, especially China, India, Malaysia, and Japan, had positive organic growth period to period.

The organic growth in the region was partially offset by an underperformance in Australia and New Zealand and the weakening of certain foreign currencies against the U.S.

Dollar, especially the Australian Dollar, Renminbi, Japanese Yen, and New Zealand Dollar.

Revenue by Industry

Revenue by type of client industry sector period-over-period was:

Three Months Ended June 30,

Six Months Ended June 30,

Revenue by type of client industry sector was:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Operating Expenses

The change in operating expenses period-over-period were:

Three Months Ended June 30,

The period-over-period change in operating expenses was:

Three Months Ended September 30,

2023 2022 2023 vs.

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Occupancy and other costs 288.6 8.1 % 281.0 8.2 % 7.6 2.7 %

Real estate and other repositioning costs 72.3 2.0 % — — % 72.3

Gain on disposition of subsidiary (78.8) (2.2) % — — % (78.8)

Cost of services 2,875.1 2,757.1 118.0 4.3 %

3 unchanged sentences

Operating Income $ 560.8 15.7 % $ 546.0 15.9 % $ 14.8 2.7 %

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 2023 vs.

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Adverse and beneficial fluctuations in foreign currencies from period to period impact our results of operations and financial position when we translate our financial statements from local foreign currencies to the U.S.

However, substantially all of

our foreign operations transact business in their local currency, mitigating the impact of changes in foreign currency exchange rates on our operating margin percentage.

Operating expenses for the three and six months ended June 30, 2023 increased slightly to $3,059.2 million from $3,025.6 million and to $6,156.0 million from $6,082.9 million, respectively, period-over-period.

Included in operating expenses for the three-month period ended June 30, 2023 is a reduction from the gain on disposition of subsidiary in our Execution & Support discipline of $78.8 million and an increase related to repositioning costs of $72.3 million incurred in the period, consisting primarily of severance payments.

Included in operating expense for the six-month period ended June 30, 2023 is the net impact of the gain on disposition of subsidiary in our Execution & Support discipline of $78.8 million and repositioning costs of related to real estate and other exit charges and severance of $191.5 million incurred in the period (see Notes 9 and 10 to the unaudited financial statements).

The reduction in our operating expense period-over-period from foreign currency translation was in line with the percentage impact from changes in foreign currencies on revenue for the three and six month periods ended June 30, 2023.

However, substantially all of our foreign operations transact business in their local currency, mitigating the impact of changes in foreign currency exchange rates on our operating margin percentage.

Operating expenses for the three and nine months ended September 30, 2023 compared to the prior year periods increased 4.1% to $3,017.3 million from $2,897.4 million and increased 2.1% to $9,173.3 million from $8,980.3 million, respectively.

Included in operating expense for the nine months ended September 30, 2023 is the net impact of the gain on disposition of subsidiary in our Execution & Support discipline of $78.8 million and repositioning costs of related to real estate and other exit charges and severance costs of $191.5 million (see Notes 9 and 10 to the unaudited financial statements).

The changes in our operating expenses period-over-period from foreign currency translation were in line with the percentage impact from changes in foreign currencies on revenue for the three and nine-month periods ended September 30, 2023.

Operating Expenses - Salary and Service Costs

Salary and service costs, which tend to fluctuate with changes in revenue, are comprised of salary and related costs, third-party service costs, and third-party incidental costs.

Salary and service costs for the three and six months ended June 30, 2023 compared to the prior year period increased $51.8 million, or 2.0%, to $2,617.8 million and increased $102.9 million, or 2.0%, to $5,160.7 million, respectively.

Salary and related costs for the three and six months ended June 30, 2023 decreased $28.8 million, or 1.6%, to $1,772.0 million and $45.4 million, or 1.3%, to $3,550.0 million, respectively.

While headcount increased for the three and six months ended June 30, 2023 as a result of organic growth, the increase was offset by the dispositions of our research businesses in our Execution & Support discipline in the first and second quarters of 2023 compared to the prior year period.

The effects of foreign currency translation also decreased salaries and related expenses year over year in the six-month period.

Third-party service costs for the three and six months ended June 30, 2023 increased $86.8 million, or 13.8%, to $715.8 million and increased $144.2 million, or 11.9%, to $1,355.1 million, and was less impacted by the effects of our dispositions and foreign currency translation.

Third-party incidental costs for the three and six months ended June 30, 2023 decreased slightly by $6.2 million, or 4.6%, to $130.0 million and increased $4.1 million, or 1.6%, to $255.6 million, respectively.

Salary and service costs for the three and nine months ended September 30, 2023 compared to the prior year period increased $110.4 million, or 4.5%, to $2,586.5 million and increased $213.3 million, or 2.8%, to $7,747.2 million, respectively.

Salary and related costs for the three and nine months ended September 30, 2023 increased $7.6 million, or 0.4%, to $1,756.7 million and decreased $37.8 million, or 0.7%, to $5,306.7 million, respectively.

Headcount increased for the three and nine months ended September 30, 2023 as a result of organic growth and our acquisitions primarily in the third quarter of 2023;

the increase was offset by the dispositions in our Execution & Support discipline in the first and second quarters of 2023, as well as the effects of foreign currency changes compared to the prior year period.

Third-party service costs for the three and nine months ended September 30, 2023 increased $90.6 million, or 15.4%, to $678.8 million and increased $234.9 million, or 13.1%, to $2,033.9 million, and were less impacted by the effects of our dispositions.

Third-party incidental costs for the three and nine months ended September 30, 2023, increased $12.2 million, or 8.8%, to $151.0 million and increased $16.2 million, or 4.1%, to $406.6 million, respectively.

Operating Expenses - Occupancy and Other Costs

Occupancy and other costs for the three and six months ended June 30, 2023, which are less directly linked to changes in revenue than salary and service costs, increased by $4.7 million and decreased by $3.9 million, respectively.

Occupancy and other costs for the three and nine months ended September 30, 2023, which are less directly linked to changes in revenue than salary and service costs, increased by $7.6 million and $3.7 million, respectively.

Increased occupancy costs were substantially offset by lower rent expense in the periods.

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SG&A expenses primarily consist of third-party marketing costs, professional fees, and compensation and benefits and occupancy and other costs of our corporate and executive offices, including group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs.

Excluding the impact from changes in foreign currencies, SG&A expenses remained decreased for the three and six months ended June 30, 2023 by $11.8 million and $19.3 million, respectively, period-over-period.

SG&A expenses for the three months ended September 30, 2023 compared to 2022 increased by $3.4 million primarily a result of higher professional fees in connection with the acquisition activity in the period.

For the nine months ended September 30, 2023, SG&A expenses decreased overall, period-over-period.

The increase in the three months ended September 30, 2023, was primarily a result of higher professional fees in connection with the acquisition activity in the period.

Operating Income

Operating income for the three months ended June 30, 2023 compared to 2022, increased $9.1 million to $550.7 million, and operating margin increased to 15.3% from 15.2%.

EBITA increased by $7.6 million to $570.0 million, and EBITA margin was unchanged at 15.8%, period-over-period.

The net effect of the second quarter of 2023 repositioning costs and the gain on disposition of subsidiaries related to our research businesses in the Execution & Support discipline (see Notes 9 and 10 and to the unaudited consolidated financial statements) increased both operating income and EBITA by $6.5 million, and increased both operating margin and EBITA margin by 0.2%.

Operating income for the six months ended June 2023 compared to 2022, increased $2.6 million to $897.2 million, and operating margin decreased to 12.7% from 12.8%.

EBITA increased $1.0 million to $935.8 million, and EBITA margin decreased to 13.3% from 13.4%, period-over-period.

The six months year-to-date effect of the real estate and other repositioning cost and the gain on disposition of subsidiaries (see Notes 9 and 10 to the unaudited consolidated financial statements) reduced both operating income and EBITA by $112.7 million, and reduced both operating margin and EBITA margin by 1.6%.

Operating income and

EBITA in the six months ended June 30, 2022 included a reduction of $113.4 million related to the war in Ukraine (see Note 11 to the unaudited consolidated financial statements), which decreased both operating margin and EBITA margin by 1.6%.

Operating income for the three months ended September 30, 2023 compared to 2022, increased $14.8 million to $560.8 million, and operating margin decreased to 15.7% from 15.9%.

EBITA increased $15.0 million to $581.1 million, and EBITA margin decreased to 16.2% from 16.4%.

Operating income for the nine months ended September 30, 2023 compared to 2022, increased $17.4 million to $1,458.0 million, and operating margin decreased to 13.7% from 13.8%.

EBITA increased $16.0 million to $1,516.9 million, and EBITA margin decreased to 14.3% from 14.4%.

In the nine months ended September 30, 2023, the effect of the real estate and other repositioning cost and the gain on disposition of subsidiaries (see Notes 9 and 10 to the unaudited consolidated financial statements) reduced both operating income and EBITA by $112.7 million, and reduced operating margin by 1.1% and EBITA margin by 1.0%.

Operating income and EBITA in the nine months ended September 30, 2022 included a reduction of $113.4 million related to the war in Ukraine (see Note 11 to the unaudited consolidated financial statements), which decreased both operating margin and EBITA margin by 1.1%.

Net Interest Expense

Net interest expense in the three months ended June 30, 2023 decreased $12.7 million period-over-period to $27.4 million.

Interest expense on debt in the quarter increased by $4.6 million period-over-period to $51.8 million.

Interest income in the second quarter of 2023 increased $19.0 million period-over-period to $30.1 million, primarily as a result of higher interest rates on cash balances and short-term investments.

Net interest expense in the six months ended June 30, 2023 decreased $36.2 million period-over-period to $46.7 million.

Interest expense on debt in the first six months increased by $7.8 million period-over-period to $102.0 million.

Interest income in the first six months of 2023 increased $46.4 million period-over-period to $65.7 million, primarily as a result of higher interest rates on cash balances and short-term investments.

Our effective tax rate for the three months ended June 30, 2023 increased slightly period-over-period to 27.0% from 26.5%, primarily due to a higher tax rate on the gain on disposition of subsidiaries and a lower benefit of the repositioning costs incurred in the period.

Our effective tax rate for the six months ended June 30, 2023 decreased period-over-period to 26.4% from 30.6%.

The six months ended June 30, 2023 includes an increase of $10.7 million in income tax expense related to a lower tax benefit in certain jurisdictions for the real estate and other repositioning costs and an increase in the U.K.

Net interest expense in the three months ended September 30, 2023 increased $9.2 million period-over-period to $38.3 million.

Interest expense on debt in the quarter decreased by $0.2 million period-over-period to $47.8 million.

Interest income in the third

quarter of 2023 decreased $7.7 million period-over-period to $15.2 million, primarily due to lower cash and short term investment balances.

Net interest expense in the nine months ended September 30, 2023 decreased $27.0 million period-over-period to $85.0 million.

Interest expense on debt in the first nine months increased by $7.6 million period-over-period to $149.8 million.

Interest income in the first nine months of 2023 increased $38.7 million period-over-period to $80.9 million, primarily as a result of higher interest rates on cash balances and short-term investments.

Our effective tax rate for the three months ended September 30, 2023 decreased slightly period-over-period to 26.0% from 26.1%.

Our effective tax rate for the nine months ended September 30, 2023 decreased period-over-period to 26.3% from 28.8%.

The nine months ended September 30, 2023 includes an increase of $10.7 million in income tax expense related to a lower tax benefit in certain jurisdictions for the real estate and other repositioning costs and an increase in the U.K.

statutory tax rate, partially offset by $10.0 million of previously unrecognized tax benefits.

The higher effective tax rate for the six months ended June 30, 2022 was predominantly due to the non-deductibility of the $113.4 million charges recorded in the first quarter of 2022, arising from the effects of the war in Ukraine, as well as an additional increase in income tax expense of $4.8 million related to the disposition of our businesses in Russia.

On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law.

The IRA levies a 1% excise tax on net stock repurchases after December 31, 2022.

The higher effective tax rate for the nine months ended September 30, 2022 was predominantly due to the non-deductibility of the $113.4 million of charges recorded in the first quarter of 2022, arising from the effects of the war in Ukraine, as well as an additional increase in income tax expense of $4.8 million related to the disposition of our businesses in Russia.

The Inflation Reduction Act of 2022, or IRA, levies a 1% excise tax on net stock repurchases after December 31, 2022.

The excise tax is recorded as part of the cost of acquiring treasury stock and is not material.

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The CAMT is not expected to have a material impact on our results of operations or financial position.

Various foreign jurisdictions are in the process of enacting legislation to adopt a minimum tax described in the Global Anti-Base Erosion, GloBE or Pillar Two, model rules issued by the Organization for Economic Cooperation and Development.

A minimum effective tax of 15% would apply to multinational companies with consolidated revenue above €750 million.

Currently, South Korea and Japan are the only countries to have enacted legislation consistent with the GloBE rules.

Other countries are expected to adopt GloBE rules in 2023 with effective dates beginning in 2024.

Currently, Japan, South Korea and the United Kingdom have enacted legislation effective beginning in 2024 that is consistent with the GloBE rules.

Other countries are expected to adopt GloBE rules within the next year.

Under the GloBE rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction.

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Net income - Omnicom Group Inc.

in the three months ended June 30, 2023 increased $17.9 million to $366.3 million from $348.4 million.

in the three months ended September 30, 2023 increased $7.4 million to $371.9 million from $364.5 million.

The period-over-period increase is due to the factors described above.

Diluted net income per share - Omnicom Group Inc.

increased to $1.82 in the three months ended June 30, 2023, from $1.68 in the three months ended June 30, 2022, due to the factors described above and the impact of the reduction in our weighted average common shares outstanding resulting from the repurchases of our common stock during the quarter, net of shares issued for stock option exercises and the employee stock purchase plan.

For the three months ended June 30, 2023, the net impact of the real estate and other repositioning costs and gain on disposition of subsidiaries increased net income - Omnicom Group Inc.

by $1.4 million and diluted net income per share - Omnicom Group Inc.

increased to $1.86 in the three months ended September 30, 2023, from $1.77 in the three months ended September 30, 2022, due to the factors described above and the impact of the reduction in our weighted average common shares outstanding resulting from the repurchases of our common stock during the quarter, net of shares issued for stock option exercises and the employee stock purchase plan.

Net income - Omnicom Group Inc.

in the six months ended June 30, 2023 increased $71.6 million to $593.8 million from $522.2 million.

in the nine months ended September 30, 2023 increased $79.0 million to $965.7 million from $886.7 million.

The period-over-period increase is due to the factors described above.

Diluted net income per share - Omnicom Group Inc.

increased to $2.92 in the six months ended June 30, 2023, from $2.51 in the six months ended June 30, 2022, due to the factors described above and the impact of the reduction in our weighted average common shares outstanding resulting from the repurchases of our common stock during the first half of the year, net of shares issued for stock option exercises and the employee stock purchase plan.

For the six months ended June 30, 2023, the net impact of the real estate repositioning costs and gain on disposition of subsidiaries reduced net income - Omnicom Group Inc.

increased to $4.78 in the nine months ended September 30, 2023, from $4.27 in the nine months ended September 30, 2022, due to the factors described above and the impact of the reduction in our weighted average common shares outstanding resulting from the repurchases of our common stock during the first half of the year, net of shares issued for stock option exercises and the employee stock purchase plan.

For the nine months ended September 30, 2023, the net impact of the real estate repositioning costs and gain on disposition of subsidiaries reduced net income - Omnicom Group Inc.

by $89.6 million and diluted net income per share - Omnicom Group Inc.

For the six months ended June 30, 2022, the impact of the after-tax charges arising from the effects

of the war in Ukraine reduced net income - Omnicom Group Inc.

For the nine months ended September 30, 2022, the impact of the after-tax charges arising from the effects of the war in Ukraine reduced net income - Omnicom Group Inc.

by $118.2 million and diluted net income per share - Omnicom Group Inc.

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to EBITA and EBITA Margin:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 2023 2022

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Cash Sources and Requirements

Primary sources of our short-term liquidity are our operating cash flow, cash and cash equivalents and short-term investments.

Additional liquidity sources include our $2.5 billion multi-currency revolving credit facility, or Credit Facility, the ability to issue up to $2 billion of U.S.

Primary sources of our short-term liquidity are our operating cash flow and cash and cash equivalents.

Additional liquidity sources include our $2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, the ability to issue up to $2 billion of U.S.

Dollar denominated commercial paper and issue up to the equivalent of $500 million in British Pounds or Euro under a Euro commercial paper program, and access to the capital markets.

In June 2023, the Credit Facility was amended to, among other things, extend the termination date of the Credit Facility to June 2, 2028 and transition the benchmark rate for U.S.

In June 2023, we amended the Credit Facility to, among other things, extend the termination date of the Credit Facility to June 2, 2028 and transition the benchmark rate for U.S.

Dollar denominated loans from LIBOR to the Secured Overnight Financing Rate, or SOFR.

Certain of our international subsidiaries have uncommitted credit lines that are guaranteed by Omnicom aggregating $585.5 million.

In addition, certain of our international subsidiaries have uncommitted credit lines aggregating $576.0 million, that are guaranteed by Omnicom.

Our liquidity sources fund our non-discretionary cash requirements and our discretionary spending.

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Cash and cash equivalents decreased $1.5 billion from December 31, 2022.

During the first six months 2023, we used $784.6 million of cash in operating activities, which included the use for operating capital of $1,664.8 million, primarily related to our typical working capital requirement during the period.

Discretionary spending for the first six months of 2023 was $917.8 million as compared to $1.1 billion for the prior year period.

Discretionary spending for the first six months of 2023 is comprised of capital expenditures of $40.0 million, dividends paid to common shareholders of $285.1 million, dividends paid to shareholders of noncontrolling interests of $32.0 million, repurchases of our common stock, net of proceeds from stock option exercises and

related tax benefits and common stock sold to our employee stock purchase plan of $505.6 million, and payment of contingent purchase price obligations and acquisition of additional shares of noncontrolling interests of $55.1 million.

Discretionary spending was partially offset by the proceeds from disposition of subsidiary, net of other investing activities, of $178.7 million.

The impact of foreign exchange rate changes increased cash and cash equivalents by $1.3 million.

Based on past performance and current expectations, we believe that our cash and cash equivalents, short-term investments and operating cash flow will be sufficient to meet our non-discretionary cash requirements for the next twelve months.

During the first nine months 2023, we used $379.1 million of cash in operating activities, which included the use for operating capital of $1.7 billion, primarily related to our typical working capital requirement during the period.

Discretionary spending for the first nine months of 2023 was $1.3 billion, compared to $1.4 billion for the first nine months of 2022.

Discretionary spending for the first nine months of 2023 is comprised of capital expenditures of $64.2 million, dividends paid to common shareholders of $424.0 million, dividends paid to shareholders of noncontrolling interests of $47.0 million, repurchases of our common stock, net of proceeds from vesting of restricted stock awards and stock option exercises and related tax benefits and common stock sold to our employee stock purchase plan of $529.8 million, and payment of contingent purchase price obligations and acquisition of additional shares of noncontrolling interests of $202.4 million.

Discretionary spending was partially offset by the proceeds from disposition of subsidiary and other investing activities of $192.6 million, and proceeds from the maturity of short-term investments of $60.8 million.

The impact of foreign exchange rate changes decreased cash and cash equivalents by $68.0 million.

Based on past performance and current expectations, we believe that our cash and cash equivalents and operating cash flow will be sufficient to meet our non-discretionary cash requirements for the next twelve months.

Over the longer term, our Credit Facility is available to fund our working capital and contractual obligations.

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Likewise, operations that require funds borrow from their regional treasury center.

Treasury centers with excess cash invest on a short-term basis with third parties, generally with maturities ranging from overnight to less than 90 days.

Treasury centers with excess cash invest on a short-term basis with third parties, with maturities generally ranging from overnight to 90 days.

Certain treasury centers have notional pooling arrangements that are used to manage their cash and set-off foreign exchange imbalances.

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In countries where we do not conduct treasury operations, all cash and cash equivalents are held by counterparties that meet specific minimum credit standards.

At June 30, 2023, our foreign subsidiaries held approximately $1.4 billion of our total cash and cash equivalents of $2.7 billion.

At September 30, 2023, our foreign subsidiaries held approximately $1.4 billion of our total cash and cash equivalents of $2.8 billion.

Substantially all of the cash is available to us, net of any foreign withholding taxes payable upon repatriation to the United States.

At June 30, 2023, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents and short-term investments, increased $1.6 billion to $2.8 billion from December 31, 2022.

The increase in net debt primarily resulted from the use of cash of $784.6 million for operating activities, which included the use for operating capital of $1,664.8 million, primarily related to our typical working capital requirement during the period, discretionary spending of $917.8 million, as discussed above, and the net effect of foreign exchange rate changes on cash and cash equivalents and our foreign currency denominated debt of $33.4 million, and was partially offset by the proceeds from disposition of subsidiary in the second quarter of 2023, net of other investing activities of $178.7 million.

At September 30, 2023, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents and short-term investments, increased $1.6 billion to $2.8 billion from December 31, 2022.

The increase in net debt primarily resulted from the use of cash of $379.1 million for operating activities, which included the use for operating capital of $1.7 billion, primarily related to our typical working capital requirement during the period, discretionary spending of $1.3 billion, as discussed above, and the net effect of foreign exchange rate changes on cash and cash equivalents and our foreign currency denominated debt of $59.4 million, and was partially offset by the proceeds from disposition of subsidiary in the second quarter of 2023 and other investing activities of $192.6 million.

Components of net debt:

June 30, 2023 December 31, 2022 June 30, 2022

September 30, 2023 December 31, 2022 September 30, 2022

Short-term debt $ 14.5 $ 16.9 $ 10.2

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Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under our 3.65% Senior Notes due 2024 and 3.60% Senior Notes due 2026.

These notes are a joint and several liability of Omnicom and OCI, and

Omnicom unconditionally guarantees OCI’s obligations with respect to the notes.

These notes are a joint and several liability of Omnicom and OCI, and Omnicom unconditionally guarantees OCI’s obligations with respect to the notes.

OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries.

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Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed the obligations of Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the €500 million 0.80% Senior Notes due 2027 and the €500 million 1.40% Senior Notes due 2031, collectively the Euro Notes.

OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in Europe, Australia and other countries in the Asia-Pacific region.

OFH’s assets consist of its investments

in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in Europe, Australia and other countries in the Asia-Pacific region.

The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable.

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The Credit Facility contains a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3.5 times for the most recently ended 12-month period.

At June 30, 2023, we were in compliance with this covenant as our Leverage Ratio was 2.4 times.

At September 30, 2023, we were in compliance with this covenant as our Leverage Ratio was 2.4 times.

The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

At June 30, 2023, our long-term and short-term debt was rated BBB+ and A2 by S&P and Baa1 and P2 by Moody's.

At September 30, 2023, our long-term and short-term debt was rated BBB+ and A2 by S&P and Baa1 and P2 by Moody's.

Our access to the commercial paper market and the cost of these borrowings are affected by market conditions and our credit ratings.

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We have the ability to fund our day-to-day liquidity, including working capital, by issuing commercial paper or borrowing under the Credit Facility.

Beginning in 2022 through the first quarter of 2023, we did not issue commercial paper, or borrow under the Credit Facility.

In the second quarter of 2023, we issued commercial paper.

The maximum amount of commercial paper outstanding was $200 million, the average amount outstanding was $18.8 million, the average days outstanding was 1.7 days, and the weighted average interest rate was 5.22%.

At June 30, 2023, there were no outstanding borrowings under the Credit Facility, and no outstanding commercial paper.

We can issue commercial paper to fund our day-to-day liquidity when needed.

For our commercial paper issuances in the third quarter of 2023, the maximum amount outstanding was $60 million, the average amount outstanding was $1.5 million, the average days outstanding was 1.0 day, and the weighted average interest rate was 5.39%.

At September 30, 2023, there were no outstanding borrowings under the Credit Facility, and no outstanding commercial paper issuances.

We may issue commercial paper to fund our day-to-day liquidity when needed.

However, disruptions in the credit markets may lead to periods of illiquidity in the commercial paper market and higher credit spreads.

5 unchanged sentences

We provide advertising, marketing and corporate communications services to several thousand clients that operate in nearly every sector of the global economy, and we grant credit to qualified clients in the normal course of business.

Due to the diversified nature of our client base, we do not believe that we are exposed to a concentration of credit risk as our largest client represented

2.8% of revenue for the twelve months ended June 30, 2023.

Due to the diversified nature of our client base, we do not believe that we are exposed to a concentration of credit risk as our largest client represented 3.0% of revenue for the twelve months ended September 30, 2023.

However, during periods of economic downturn, the credit profiles of our clients could change.

2 unchanged sentences

If permitted by local law and the client agreement, many of our agencies purchase media and production services for our clients as an agent for a disclosed principal.

In addition, while operating practices vary by country, media type and media vendor, in the United States and certain foreign markets, many of our agencies’ contracts with media and production providers specify that our agencies are not liable to the media and production providers under the theory of sequential liability until and to the extent we have been paid by our client for the media or production services.

liable to the media and production providers under the theory of sequential liability until and to the extent we have been paid by our client for the media or production services.

Where purchases of media and production services are made by our agencies as a principal or are not subject to the theory of sequential liability, the risk of a material loss as a result of payment default by our clients could increase significantly and such a loss could have a material adverse effect on our business, results of operations and financial position.

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In valuing these identified intangible assets, we typically use an income approach and consider comparable market participant measurements.

To better align with our internal financial processes, in 2023, the date of our annual impairment test was changed from June 30 to May 1.

In 2023, to better align with our internal financial processes, the date of our annual impairment test was changed from June 30 to May 1.

We will continue to evaluate goodwill for impairment at least annually at May 1 each year and whenever events or circumstances indicate the carrying value may not be recoverable.

16 unchanged sentences

All of these estimates and assumptions are affected by conditions specific to our businesses, economic conditions related to the industry we operate in, as well as conditions in the global economy.

The assumptions that have the most significant effect on our valuations derived using a DCF methodology are:

The assumptions that have the most

significant effect on our valuations derived using a DCF methodology are:

(1) the expected long-term growth rate of our reporting units' cash flows and (2) the weighted average cost of capital (“WACC”) for each reporting unit.

5 unchanged sentences

For the past ten years, the average historical revenue growth rate of our reporting units and the Average Nominal GDP, or NGDP, growth of the countries comprising the major markets that account for substantially all of our revenue was approximately 3.5% and 4.4% , respectively.

We considered this history when determining the long-term growth rates used in our annual impairment test at May 1, 2023, and included in the 10-year history is the full year 2020 that reflected the negative impact of the COVID-19 pandemic on the global economy and our revenue.

We considered this history when determining the long-term growth rates used in our annual impairment test at May 1, 2023.

Included in the 10-year history is the full year 2020 that reflected the negative impact of the COVID-19 pandemic on the global economy and our revenue.

We believe marketing expenditures over the long term have a high correlation to NGDP.

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Goodwill Impairment Review - Conclusion

Based on the results of our impairment test, we concluded that our goodwill at May 1, 2023 was not impaired, because the fair value of each of our reporting units was in excess of its respective net book value.

Based on the results of our impairment test, we concluded that our goodwill as of May 1, 2023 was not impaired, because the fair value of each of our reporting units was in excess of its respective net book value.

For our reporting units with negative book value, we concluded that the fair value of their total assets was in excess of book value.

4 unchanged sentences

The estimates used in our goodwill impairment test do not constitute forecasts or projections of future results of operations, but rather are estimates and assumptions based on historical results and assessments of macroeconomic factors affecting our reporting units as of the valuation date.

We believe that our estimates and assumptions are reasonable, but

they are subject to change from period to period.

We believe that our estimates and assumptions are reasonable, but they are subject to change from period to period.

Actual results of operations and other factors will likely differ from the estimates used in our discounted cash flow valuation, and it is possible that differences could be significant.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis