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Item 2. Management’s Discussion and Analysis

2024-07-17 compared with 2024-04-17 · 312 added, 134 removed, 330 unchanged (57% of the section changed)

27 unchanged sentences

Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Amounts in tables in millions, except share and per share data or unless otherwise noted)

EXECUTIVE SUMMARY

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Given our size and breadth, we manage our business by monitoring several financial indicators.

The key performance indicators we focus on are revenue growth, operating income, and EBITA (defined as operating income before amortization of acquired intangible assets and internally developed strategic platform assets) and EBITA margin (defined as EBITA divided by revenue).

We analyze revenue growth by reviewing the components and mix of the growth, including growth by principal regional market, practice area and marketing discipline, the impact from foreign currency exchange rate changes, growth from acquisitions,

net of dispositions, and growth from our largest clients.

The key performance indicators we focus on are revenue growth, operating income, and EBITA (defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets) and EBITA margin (defined as EBITA divided by revenue).

Variability in operating expenses is analyzed in the following categories:

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Financial Performance

Worldwide revenue for the three months ended March 31, 2024, increased $187.2 million, or 5.4%, to $3,630.5 million, compared to $3,443.3 million in the prior year quarter.

Worldwide organic revenue growth (defined below) increased revenue $136.9 million, or 4.0%, primarily reflecting increased client spending in our Advertising & Media, Precision Marketing, Experiential, and Healthcare disciplines and most geographic markets compared to the prior year period.

Worldwide revenue for the three months ended June 30, 2024 increased $243.9 million, or 6.8%, to $3,853.8 million, compared to $3,609.9 million in the prior year quarter.

Worldwide organic revenue growth (defined below) increased revenue $188.3 million, or 5.2%, period to period, reflecting increased client spending across substantially all of our disciplines, and primarily driven by our Advertising & Media, Experiential, and Healthcare disciplines.

Our Experiential discipline benefited from the upcoming summer Olympics.

Most geographic markets had positive organic growth compared to the prior year period.

Changes in foreign exchange rates period-over-period reduced revenue $37.4 million, or 1.0%.

Acquisition revenue, net of disposition revenue, increased revenue $93.0 million, or 2.6%, primarily related to the purchase of Flywheel Digital in January 2024 (see Note 4 to the unaudited consolidated financial statements) and acquisition activity in the second half of 2023.

Worldwide revenue for the six months ended June 30, 2024 increased $431.1 million, or 6.1%, to $7,484.3 million, compared to $7,053.2 million in the prior year quarter.

Worldwide organic revenue growth increased revenue $325.2 million, or 4.6%, primarily reflecting increased client spending in our Advertising & Media, Precision Marketing, Experiential, and Healthcare disciplines and in all of our major geographic markets compared to the prior year period.

Changes in foreign exchange rates period-over-period reduced revenue $40.1 million, or 0.6%.

Acquisition revenue, net of disposition revenue, increased revenue $146.0 million, or 2.1%, primarily related to the purchase of Flywheel Digital in January 2024 (see Note 4 to the unaudited consolidated financial statements) and acquisition activity in the second half of 2023, partially offset by dispositions in the Execution & Support discipline in the first half of 2023.

The period-over-period change in worldwide revenue for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, in our fundamental disciplines was:

Advertising & Media increased $130.3 million, Precision Marketing increased $78.2 million, Branding & Retail Commerce decreased $9.4 million, Experiential increased $12.1 million, Execution & Support decreased $44.0 million, Public Relations increased $14.8 million, and Healthcare increased $5.2 million.

The period-over-period change in worldwide revenue across our geographic markets for the three months ended March 31, 2024 was:

North America increased $114.1 million, or 5.9%, Latin America increased $22.5 million, or 30.4%, Europe increased $53.9 million, or 5.7%, the Middle East and Africa decreased $5.3 million, or 6.2%, and Asia-Pacific increased $2.0 million, or 0.5%.

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

Three Months Ended March 31,

2024 2023 $ Change % Change

The period-over-period change in worldwide revenue for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, in our fundamental disciplines was:

Advertising & Media increased $135.3 million, Precision Marketing increased $69.8 million, Public Relations increased $24.6 million, Healthcare increased $3.8 million, Branding & Retail Commerce decreased $11.2 million, Experiential increased $21.7 million, and Execution & Support decreased $0.1 million.

The period-over-period change in worldwide revenue for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, in our fundamental disciplines was:

Advertising & Media increased $265.6 million, Precision Marketing increased $148.0 million, Public Relations increased $39.4 million, Healthcare increased $9.0 million, Branding & Retail Commerce decreased $20.6 million, Experiential increased $33.8 million, and Execution & Support decreased $44.1 million.

The period-over-period change in worldwide revenue across our geographic markets for the three months ended June 30, 2024 was:

North America increased $169.6 million, or 8.6%, Latin America increased $21.8 million, or 25.8%, Europe increased $56.3 million, or 5.4%, the Middle East and Africa increased $3.0 million, or 4.8%, and Asia-Pacific decreased $6.8 million, or 1.6%.

Organic revenue for the three months ended June 30, 2024 increased across most countries within our major markets.

The period-over-period change in worldwide revenue across our geographic markets for the six months ended June 30, 2024 was:

North America increased $283.7 million, or 7.3%, Latin America increased $44.3 million, or 27.9%, Europe increased $110.2 million, or 5.5%, the Middle East and Africa decreased $2.3 million, or 1.6%, and Asia-Pacific decreased $4.8 million, or 0.6%.

Organic revenue for the six months ended June 30, 2024 increased across most countries within our major markets.

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

Three Months Ended June 30,

Six Months Ended June 30,

2024 2023 $ Change % Change 2024 2023 $ Change % Change

Revenue $ 3,853.8 $ 3,609.9 $ 243.9 6.8 % $ 7,484.3 $ 7,053.2 $ 431.1 6.1 %

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13.8 % 15.7 % (1.9) % 13.8 % 13.1 % 0.7 %

After-tax amortization per diluted share 3

$ 0.08 $ 0.05 $ 0.03 60.0 %

1) Reconciliation of Non-GAAP Financial Measures on page 27 .

2) For the three months ended March 31, 2023, operating expenses include $119.2 million ($91.0 million after tax) related to real estate repositioning costs, which decreased diluted net income per share - Omnicom Group Inc.

by $0.45 (see Note 10 to the unaudited consolidated financial statements).

3) Beginning with the three months ended March 31, 2024, EBITA is defined as operating income before amortization of acquired intangible assets and internally developed strategic platform assets.

2) For the three and six months ended June 30, 2024, operating expenses include $57.8 million ($42.9 million after-tax) of repositioning costs, primarily related to severance, which reduced diluted net income per share - Omnicom Group Inc.

For the three months ended June 30, 2023, operating expenses include a net decrease of $6.5 million ($1.4 million after-tax) related to a gain on the disposition of a subsidiary of $78.8 million ($55.9 million net of tax) in our Execution & Support discipline, partially offset by an increase of $72.3 million ($54.5 million after-tax) resulting from repositioning costs primarily related to severance, which increased diluted net income per share - Omnicom Group Inc.

For the six months ended June 30, 2023, operating expenses include a net increase of $112.7 million ($89.6 million after-tax) comprised of $191.5 million ($145.5 million after-tax) of real estate and other repositioning costs, partially offset by the gain on the disposition of a subsidiary of $78.8 million ($55.9 million after-tax), which reduced diluted net income per share- Omnicom Group Inc.

by $0.44 (see Notes 10 and 11 to the unaudited consolidated financial statements).

3) Beginning with the three months ended March 31, 2024, EBITA is defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets.

As a result, we reclassified the prior year period to be consistent with the revised definition, which reduced EBITA from previously reported amounts.

We believe EBITA is useful in evaluating the impact of amortization of acquired intangible assets and internally developed strategic platform assets on operating performance and allows for comparability between reporting periods.

for the three and six months ended June 30, 2024 was $0.08 and $0.16, respectively, and for the three and six months ended June 30, 2023 was $0.05 and $0.11, respectively.

Omnicom is a strategic holding company providing advertising, marketing and corporate communications services to many of the largest global companies.

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This client-centric business model requires that multiple agencies within Omnicom collaborate in formal and informal virtual client networks utilizing our key client matrix organization structure.

This collaboration allows us to cut across our internal organizational structures to execute our clients’ marketing requirements in a consistent and comprehensive manner.

This collaboration

allows us to cut across our internal organizational structures to execute our clients’ marketing requirements in a consistent and comprehensive manner.

We use our client-centric approach to grow our business by expanding our service offerings to existing clients, moving into new markets and obtaining new clients.

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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 March 31, 2024, 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 53.8% of our revenue.

Our clients operate in virtually every sector of the global economy with no one industry representing more than 16% of our revenue for the three months ended March 31, 2024.

For the twelve months ended June 30, 2024, our largest client accounted for 2.9% 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, 2024.

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.

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CONSOLIDATED RESULTS OF OPERATIONS

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

Three Months Ended March 31,

2024 2023 $ Change

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

Three Months Ended June 30,

Six Months Ended June 30,

2024 2023 $ Change 2024 2023 $ Change

Revenue $ 3,853.8 $ 3,609.9 $ 243.9 $ 7,484.3 $ 7,053.2 $ 431.1

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Occupancy and other costs 314.2 297.7 16.5 628.3 589.3 39.0

Real estate repositioning costs 2

Real estate other repositioning costs 2

57.8 72.3 (14.5) 57.8 191.5 (133.7)

Gain on disposition of subsidiary 2

— (78.8) 78.8 — (78.8) 78.8

Cost of services 3,172.1 2,909.0 263.1 6,178.8 5,862.7 316.1

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13.8 % 15.7 % (1.9) % 13.8 % 13.1 % 0.7 %

After-tax amortization effect per diluted share 3

$ 0.08 $ 0.05 $ 0.03

1) Reconciliation of Non-GAAP Financial Measures on page 27 .

by $0.45 (see Note 10 to the unaudited consolidated financial statements).

3) Beginning with the three months ended March 31, 2024, EBITA is defined as operating income before amortization of acquired intangible assets and internally developed strategic platform assets.

2) For the three and six months ended June 30, 2024, operating expenses included $57.8 million ($42.9 million after-tax) of repositioning costs, primarily related to severance, which reduced diluted net income per share - Omnicom Group Inc.

For the three months ended June 30, 2023, operating expenses included a net decrease of $6.5 million ($1.4 million after-tax) related to a gain on the disposition of a subsidiary of $78.8 million ($55.9 million net of tax) in our Execution & Support discipline, partially offset by an increase of $72.3 million ($54.5 million after-tax) resulting from repositioning costs primarily related to severance, which increased diluted net income per share - Omnicom Group Inc.

For the six months ended June 30, 2023, operating expenses included a net increase of $112.7 million ($89.6 million after-tax) comprised of $191.5 million ($145.5 million after-tax) of real estate and other repositioning costs, partially offset by the gain on the disposition of a subsidiary of $78.8 million ($55.9 million after-tax), which reduced diluted net income per share- Omnicom Group Inc.

by $0.44 (see Notes 10 and 11 to the unaudited consolidated financial statements).

As a result, we reclassified the prior year period to be consistent with the revised definition, which reduced EBITA from previously reported amounts.

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

for the three and six months ended June 30, 2024 was $0.08 and $0.16, respectively, and for the three and six months ended June 30, 2023 was $0.05 and $0.11, respectively.

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

Total Domestic International

Three months ended March 31, 2023 $ 3,443.3 $ 1,812.2 $ 1,631.1

Three months ended June 30, 2023

$ 3,609.9 $ 1,850.6 $ 1,759.3

Components of revenue change:

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Organic growth 188.3 5.2 % 117.2 6.3 % 71.1 4.0 %

Three months ended March 31, 2024 $ 3,630.5 5.4 % $ 1,925.9 6.3 % $ 1,704.6 4.5 %

Three months ended June 30, 2024

$ 3,853.8 6.8 % $ 2,033.4 9.9 % $ 1,820.4 3.5 %

Total Domestic International

Six months ended June 30, 2023

$ 7,053.2 $ 3,662.8 $ 3,390.4

Components of revenue change:

Foreign exchange rate impact (40.1) (0.6) % — — % (40.1) (1.2) %

Acquisition revenue, net of disposition revenue 146.0 2.1 % 100.7 2.7 % 45.3 1.3 %

Organic growth 325.2 4.6 % 195.8 5.3 % 129.4 3.8 %

Six months ended June 30, 2024

$ 7,484.3 6.1 % $ 3,959.3 8.1 % $ 3,525.0 4.0 %

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 $3,633.2 million for the Total column).

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

Dollars and the current period constant currency revenue ($3,630.5 million less $3,633.2 million for the Total column).

Dollars and the current period constant currency revenue ($3,853.8 million less $3,891.2 million and $7,484.3 million less $7,524.4 million for the Total column for the three and six months ended June 30, 2024, 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 ($3,443.3 million for the Total column).

• The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($3,609.9 million and $7,053.2 million for the Total column for the three and six months ended June 30, 2024, 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 April 12, 2024 remain unchanged, we expect the impact of changes in foreign exchange rates will reduce revenue in the second quarter by 1.0% and be flat for the year.

Based on our acquisition and disposition activity to date, we expect that the net impact will increase revenue by 2.5% for the second quarter and 2.0% for the full year.

Assuming exchange rates at July 15, 2024 remain unchanged, we expect the impact of changes in foreign exchange rates will reduce revenue in both the third quarter and for the full year by 0.5%.

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

Revenue by Discipline

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

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

Three Months Ended March 31,

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

Three Months Ended June 30,

2024 2023 2024 vs.

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Revenue $ 3,853.8 $ 3,609.9 $ 243.9 5.2 %

The period-over-period change in worldwide revenue for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, in our fundamental disciplines was:

Six Months Ended June 30,

2024 2023 2024 vs.

Revenue $ % of

Revenue $ Change % Organic Growth

Advertising & Media $ 3,953.6 52.8 % $ 3,688.0 52.3 % $ 265.6 7.4 %

Precision Marketing 877.0 11.7 % 729.0 10.3 % 148.0 2.9 %

Public Relations 808.5 10.8 % 769.1 10.9 % 39.4 (0.1) %

Healthcare 676.7 9.1 % 667.7 9.5 % 9.0 2.0 %

Branding & Retail Commerce 399.5 5.3 % 420.1 6.0 % (20.6) (3.8) %

Experiential 346.0 4.6 % 312.2 4.4 % 33.8 13.7 %

Execution & Support 423.0 5.7 % 467.1 6.6 % (44.1) (1.8) %

Revenue $ 7,484.3 $ 7,053.2 $ 431.1 4.6 %

The period-over-period change in worldwide revenue for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, in our fundamental disciplines was:

Worldwide organic revenue growth increased revenue $136.9 million, or 4.0%, primarily reflecting increased client spending in Advertising & Media, led by our Media, Precision Marketing, Experiential, and Healthcare disciplines compared to the prior year period.

Worldwide organic revenue growth increased revenue $188.3 million, or 5.2%, primarily reflecting increased client spending in Advertising & Media, led by Media, as well as Experiential and Healthcare disciplines compared to the prior year period.

Changes in foreign exchange rates period-over-period reduced revenue $37.4 million, or 1.0%.

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

Dollar, substantially offset by the strengthening of the British Pound and Euro against the U.S.

Acquisition revenue, net of disposition revenue, increased revenue $53.0 million, or 1.5%, primarily related to the purchase of Flywheel Digital in January 2024, which is included in our Precision Marketing discipline, and acquisition activity in the second half of 2023.

The decrease in revenue from foreign exchange translation was primarily related to the weakening of some currencies, including the Japanese Yen and the Euro against the U.S.

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

Acquisition revenue, net of disposition revenue, increased revenue $93.0 million, or 2.6%, primarily related to the purchase of Flywheel Digital in January 2024, which is included in our Precision Marketing discipline, and acquisition activity in the second half of 2023, partially offset by dispositions in our Execution & Support discipline in the second quarter of 2023.

The period-over-period change in worldwide revenue for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, in our fundamental disciplines was:

Worldwide organic revenue growth increased revenue $325.2 million, or 4.6%, primarily reflecting increased client spending in Advertising & Media, led by our Media, as well as Experiential, Precision Marketing and Healthcare disciplines compared to the prior year period.

Changes in foreign exchange rates period-over-period reduced revenue $40.1 million, or 0.6%.

The decrease in revenue from foreign exchange translation was primarily related to the weakening of some currencies, including the Japanese Yen and Australian Dollar, against the U.S.

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

Acquisition revenue, net of disposition revenue, increased revenue $146.0 million, or 2.1%, primarily related to the purchase of Flywheel Digital in January 2024, which is included in our Precision Marketing discipline, and acquisition activity in the later second half of 2023.

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 3.0% and 2.7% of revenue for the twelve months ended March 31, 2024 and 2023, respectively.

Our ten largest and 100 largest clients represented 20.0% and 53.8% of revenue for the twelve months ended March 31, 2024, respectively, and 19.3% and 52.7% of revenue for the twelve months ended March 31, 2023, respectively.

Our largest client represented 2.9% and 2.8% of revenue for the twelve months ended June 30, 2024 and 2023, respectively.

Our ten largest and 100 largest clients represented 19.7% and 53.6% of revenue for the twelve months ended June 30, 2024, respectively, and 19.8% and 53.6% of revenue for the twelve months ended June 30, 2023, respectively.

Revenue by Geography

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

Three Months Ended March 31,

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

Three Months Ended June 30,

2024 2023 2024 vs.

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Revenue $ 3,853.8 $ 3,609.9 $ 243.9 5.2 %

The period-over-period change in worldwide revenue across our geographic markets for the three months ended March 31, 2024 was:

Organic revenue for the three months ended March 31, 2024 increased across most countries within our major markets.

Six Months Ended June 30,

2024 2023 2024 vs.

Revenue $ % of

Revenue $ Change % Organic Growth

North America $ 4,189.3 56.0 % $ 3,905.6 55.4 % $ 283.7 4.8 %

In North America, organic revenue growth for the three months ended March 31, 2024 was primarily driven by strong performance in the United States, especially in the Advertising & Media discipline, led by our media business, and our Precision Marketing, Healthcare and Experiential disciplines, partially offset by negative performance in our Execution & Support discipline, which faced difficult comparisons to the prior year period, and our Branding & Retail Commerce discipline.

Acquisitions net of dispositions positively impacted revenue and were primarily related to the purchase of Flywheel Digital in January 2024 and acquisitions in the prior year in our Public Relations discipline, partially offset by dispositions in the Execution & Support discipline in the prior year.

Latin America 202.9 2.7 % 158.6 2.2 % 44.3 23.5 %

In Latin America, organic revenue for the three months ended March 31, 2024 increased in substantially all our disciplines, led by Advertising & Media, and in all countries in the region, compared to the prior year period.

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

Dollar, partially offset by the weakening of the Chilean Peso and Argentine Peso, increased revenue in the three months ended March 31, 2024 compared to the same period in 2023.

Europe 2,107.7 28.2 % 1,997.5 28.3 % 110.2 4.4 %

Middle East and Africa 145.2 1.9 % 147.5 2.1 % (2.3) 1.0 %

Asia-Pacific 839.2 11.2 % 844.0 12.0 % (4.8) 1.4 %

Revenue $ 7,484.3 $ 7,053.2 $ 431.1 4.6 %

The period-over-period change in worldwide revenue across our geographic markets for the three months ended June 30, 2024 was:

Organic revenue for the three months ended June 30, 2024 increased across most countries within our major markets.

The period-over-period change in worldwide revenue across our geographic markets for the six months ended June 30, 2024 was:

Organic revenue for the six months ended June 30, 2024 increased across most countries within our major markets.

North America

In North America, organic revenue growth period-over-period for the three and six months ended June 30, 2024 was primarily driven by strong performance in the United States, especially in the Advertising & Media discipline, led by our media business, and our Precision Marketing, Healthcare, Experiential, and Public Relations disciplines.

Public Relations discipline was helped by spending on the upcoming election cycle.

The organic growth was partially offset by underperformance in Canada, and by negative performance in our Execution & Support and Branding & Retail Commerce disciplines in the region.

In the six months ended June 30, 2024, the acquisition growth was partially offset by dispositions in the Execution & Support discipline.

Latin America

In Latin America, organic revenue growth for the three and six months ended June 30, 2024 increased in all our disciplines, led by Advertising & Media, and in all countries in the region, compared to the prior year period.

The weakening of several currencies against the U.S.

Dollar decreased revenue in the three and six months ended June 30, 2024 compared to the same period in 2023.

Acquisitions positively impacted revenue and were primarily related to acquisition activity in our Advertising & Media discipline during the prior year.

In Europe, compared to the prior year period, organic revenue for the three months ended March 31, 2024 increased in most countries and disciplines driven by strong performance in our Advertising & Media discipline, led by our media business, and in our Healthcare and Execution & Support disciplines, and was partially offset by negative performance in our Public Relations, and

Experiential disciplines, which faced difficult comparisons to the prior year period.

Foreign currency changes increased revenue for the three months ended March 31, 2024, primarily as a result of the strengthening of the British Pound and Euro against the U.S.

In Europe, compared to the prior year period, organic revenue for the three and six months ended June 30, 2024 increased in most countries and disciplines driven by strong performance in our Advertising & Media discipline, led by our media business, and in our Execution & Support, Precision Marketing and Healthcare disciplines, partially offset by under performance in our Public Relations discipline.

Foreign currency changes decreased revenue for the three months ended June 30, 2024, primarily as a result of the weakening of the Euro against the U.S.

Dollar period-over-period.

Acquisitions, net of dispositions positively impacted revenue and were primarily related to the purchase of Flywheel Digital in January 2024 and acquisition activity in our Advertising & Media discipline, partially offset by the impact of dispositions in our Execution & Support discipline in the second half of the prior year.

In the U.K., organic revenue growth for the three months ended March 31, 2024 of 3.2% was led by our Advertising & Media and Healthcare disciplines, partially offset by weakness in our Precision Marketing discipline.

In Continental Europe, which includes the Euro Zone and the other European countries, organic growth for the three months ended March 31, 2024 of 3.5% was led by Italy, Germany, and Spain and in most disciplines, except for Experiential, which faced difficult comparisons to the prior year period.

In the Middle East and Africa for the three months ended March 31, 2024, organic revenue decreased period-over-period, primarily as a result of decreases in our Advertising & Media discipline, which faced a difficult comparison in the region.

In Asia-Pacific, organic revenue increased period-over-period for the three months ended March 31, 2024 led by our Advertising & Media discipline.

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

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

Dollar, especially the Japanese Yen, Australian Dollar, and Chinese Renminbi.

Acquisition activity, including the purchase of Flywheel Digital in January 2024, increased revenue in the period compared to the prior year period.

Foreign currency changes increased revenue for the six months ended June 30, 2024, primarily as a result of the strengthening of the British Pound against the U.S.

Dollar period-over-period.

Acquisitions, net of dispositions for the three and six months ended June 30, 2024 positively impacted revenue and were primarily related to the purchase of Flywheel Digital in January 2024 and acquisition activity in our Advertising & Media discipline in the prior year.

In the U.K., organic revenue growth period-over-period for the three and six months ended June 30, 2024 of 6.9% and 5.1%, respectively, was led by our Advertising & Media and Experiential disciplines, partially offset by weakness in our Public Relations and Precision Marketing disciplines.

In Continental Europe, which includes the Euro Zone and the other European countries, organic growth for the three and six months ended June 30, 2024 of 4.5% and 4.0%, respectively, was led by Germany, Italy, Netherlands and Spain and in most disciplines, partially offset by under performance in our Public Relations discipline.

In the Middle East and Africa, for the three and six months ended June 30, 2024, organic revenue increased period-over-period, driven by our Experiential discipline and partially offset by decreases in our Advertising & Media discipline, which faced a difficult comparison in the region to the prior year periods.

In Asia-Pacific, organic revenue was flat period-over-period for the three months ended June 30, 2024 and increased slightly in the six months ended June 30, 2024.

Organic growth in our Advertising & Media discipline was partially offset by underperformance in our Experiential discipline, which faced difficult comparisons to the prior year periods.

Several major markets in the region, especially Hong Kong and India, had positive organic growth as compared to the prior year periods.

The organic growth in the region was partially offset by an underperformance in China, Australia, and Singapore.

The weakening of most foreign currencies in the region against the U.S.

Dollar, especially the Japanese Yen, Australian Dollar, and Chinese Renminbi, decreased revenue period to period.

Acquisition activity, including the purchase of Flywheel Digital in January 2024, increased revenue compared to the prior year periods.

Revenue by Industry

Revenue by type of client industry sector was:

Three Months Ended March 31,

Revenue by type of client industry sector:

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Pharmaceuticals and Healthcare 17 % 17 % 16 % 17 %

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Operating Expenses

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

Three Months Ended March 31,

The period-over-period change in operating expenses:

Three Months Ended June 30,

2024 2023 2024 vs.

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Occupancy and other costs 314.2 8.2 % 297.7 8.2 % 16.5 5.5 %

Real estate repositioning costs — — % 119.2 3.5 % (119.2)

Real estate and other repositioning costs 57.8 1.5 % 72.3 2.0 % (14.5) (20.1) %

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

Cost of services 3,172.1 2,909.0 263.1 9.0 %

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Operating Income $ 510.3 13.2 % $ 550.7 15.3 % $ (40.4) (7.3) %

Six Months Ended June 30,

2024 2023 2024 vs.

Revenue $ % of

Revenue $ 7,484.3 $ 7,053.2 $ 431.1 6.1 %

Operating Expenses:

Salary and service costs:

Salary and related costs 3,684.2 49.2 % 3,550.0 50.3 % 134.2 3.8 %

Third-party service costs 1,509.3 20.2 % 1,355.1 19.2 % 154.2 11.4 %

Third-party incidental costs 299.2 4.0 % 255.6 3.6 % 43.6 17.1 %

Total salary and service costs 5,492.7 73.4 % 5,160.7 73.2 % 332.0 6.4 %

Occupancy and other costs 628.3 8.4 % 589.3 8.4 % 39.0 6.6 %

Real estate and other repositioning costs 57.8 0.8 % 191.5 2.7 % (133.7) (69.8) %

Gain on disposition of subsidiary — — % (78.8) (1.1) % 78.8

Cost of services 6,178.8 5,862.7 316.1 5.4 %

Selling, general and administrative expenses 196.3 2.6 % 188.3 2.7 % 8.0 4.2 %

Depreciation and amortization 120.0 1.6 % 105.0 1.5 % 15.0 14.3 %

Total operating expenses 6,495.1 86.8 % 6,156.0 87.3 % 339.1 5.5 %

Operating Income $ 989.2 13.2 % $ 897.2 12.7 % $ 92.0 10.3 %

We measure cost of services in two distinct categories:

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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.

As a result, 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-month period ended March 31, 2024.

Operating expenses for the three months ended March 31, 2024 compared to the prior year period increased 1.8% to $3,151.6 million from $3,096.8 million.

Included in operating expense for the three months ended March 31, 2023 is the impact of the real estate repositioning costs of $119.2 million (see Note 10 to the unaudited consolidated financial statements).

Operating expenses for the three months ended June 30, 2024 compared to the prior year period increased $284.3 million, or 9.3%, to $3,343.5 million from $3,059.2 million.

For the three months ended June 30, 2024, operating expenses included $57.8 million of repositioning costs, reflecting severance actions related to ongoing efficiency initiatives including strategic agency consolidation in our smaller international markets and the launch of our centralized production strategy.

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 (see Note 10 to the unaudited financial statements).

Operating expenses for the six months ended June 30, 2024 compared to the prior year period increased $339.1 million, or 5.5%, to $6,495.1 million from $6,156.0 million.

For the six months ended June 30, 2024, operating expenses included $57.8 million of repositioning costs, reflecting severance actions related to ongoing efficiency initiatives including strategic agency consolidation in our smaller international markets and the launch of our centralized production strategy.

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 related to real estate and other exit charges and severance of $191.5 million incurred in the period (see Notes 10 and 11 to the unaudited financial statements).

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 months ended March 31, 2024 compared to the prior year period increased $149.7 million, or 5.9%, to $2,692.6 million.

Salary and related costs for the three months ended March 31, 2024 increased $69.3 million, or 3.9%, to $1,847.3 million.

Headcount increased for the three months ended March 31, 2024, primarily as a result of our acquisition of Flywheel Digital.

Third-party service costs for the three months ended March 31, 2024 increased $58.9 million, or 9.2%, to $698.2 million, primarily as a result of organic growth.

Third-party incidental costs for the three months ended March 31, 2024, increased $21.5 million, or 17.1%, to $147.1 million.

Salary and service costs for the three months ended June 30, 2024 compared to the prior year period increased $182.3 million, or 7.0%, to $2,800.1 million.

Salary and related costs for the three months ended June 30, 2024 increased $64.9 million, or 3.7%, to $1,836.9 million, primarily as a result of our acquisition of Flywheel Digital.

These costs were down as a percentage of revenue primarily due to our ongoing repositioning actions and global employee mix.

Third-party service costs for the three months ended

June 30, 2024 increased $95.3 million, or 13.3%, to $811.1 million, primarily as a result of organic growth in Media, Execution & Support and Experiential disciplines.

Third-party incidental costs for the three months ended June 30, 2024 increased $22.1 million, or 17.0%, to $152.1 million.

Salary and service costs for the six months ended June 30, 2024 compared to the prior year period increased $332.0 million, or 6.4%, to $5,492.7 million.

Salary and related costs for the six months ended June 30, 2024 increased $134.2 million, or 3.8%, to $3,684.2 million, primarily as a result of our acquisition of Flywheel Digital.

These costs were down as a percentage of revenue primarily due to our ongoing repositioning actions and global employee mix.

Third-party service costs for the six months ended June 30, 2024 increased $154.2 million, or 11.4%, to $1,509.3 million, primarily as a result of organic growth in Media and Experiential disciplines.

Third-party incidental costs for the six months ended June 30, 2024, increased $43.6 million, or 17.1%, to $299.2 million.

Operating Expenses - Occupancy and Other Costs

Occupancy and other costs for the three months ended March 31, 2024, which are less directly linked to changes in revenue than salary and service costs, increased by $22.5 million or 7.7% to $314.1 million, primarily resulting from our acquisition activity.

Increased occupancy costs were partially offset by lower rent expense in the period.

Occupancy and other costs for the three and six months ended June 30, 2024 which are less directly linked to changes in revenue than salary and service costs, increased by $16.5 million, or 5.5%, to $314.2 million and increased by $39.0 million, or 6.6%, to $628.3 million, respectively, primarily resulting from our acquisition activity.

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

Operating Expenses - Selling, General & Administrative Expenses

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.

SG&A expenses for the three months ended March 31, 2024 compared to the same period in 2023 decreased by $3.9 million.

SG&A expenses primarily consist of third-party marketing costs, professional fees, 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.

SG&A expenses increased for the three and six months ended June 30, 2024 compared to the same period in 2023 by $11.9 million and $8.0 million, respectively primarily due to professional fees related to our acquisitions and investments in strategic initiatives.

Operating Income

Operating income for the three months ended March 31, 2024 compared to the same period in 2023, increased $132.4 million to $478.9 million, and operating margin increased to 13.2% from 10.1%.

Operating income for the three months ended June 30, 2024 compared to the same period in 2023, decreased $40.4 million to $510.3 million, and operating margin decreased to 13.2% from 15.3%.

EBITA decreased $33.6 million to $531.8 million, and EBITA margin decreased to 13.8% from 15.7%.

The effect of the repositioning actions in the second quarter of 2024 reduced operating income and EBITA by $57.8 million and decreased both operating margin and EBITA margin by 1.5%.

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 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 30, 2024 compared to the same period in 2023, increased $92.0 million to $989.2 million, and operating margin increased to 13.2% from 12.7%.

EBITA increased $105.5 million to $1,032.2 million, and EBITA margin increased to 13.8% from 13.1%.

In the three months ended March 31, 2023, the effect of real estate repositioning costs reduced operating income and EBITA by $119.2 million, and decreased operating margin by 3.4% and EBITA Margin by 3.5%.

The effect of the repositioning actions in the second quarter of 2024 reduced operating income and EBITA by $57.8 million and decreased both operating margin and EBITA margin by 0.8%.

The effect of the real estate and other repositioning costs and the gain on disposition of subsidiaries in the six months ended June 30, 2023 reduced both operating income and EBITA by $112.7 million, and reduced both operating margin and EBITA margin by 1.6%.

Net Interest Expense

Net interest expense for the three months ended March 31, 2024 increased $7.5 million period-over-period to $26.8 million.

Interest expense on debt for the quarter increased $0.4 million period-over-period to $50.6 million, primarily related to the issuance of €600 million 3.70% Senior Notes due 2032.

Interest income in the first quarter of 2024 decreased $8.6 million period-over-period to $27.0 million, principally due to lower cash balances.

Our effective tax rate for the three months ended March 31, 2024 increased period-over-period to 25.7% from 25.5%.

The effective tax rate for three months ended March 31, 2024 includes the favorable impact from the resolution of certain non-U.S.

Net interest expense for the three and six months ended June 30, 2024 increased $14.3 million and $21.8 million period-over-period to $41.7 million and $68.5 million, respectively.

Interest expense on debt for the three and six months ended June 30, 2024 increased $5.0 million and $5.4 million period-over-period to $56.8 million and $107.4 million, respectively, primarily related to the issuance in the first quarter of 2024 of €600 million 3.70% Senior Notes due 2032, or 2032 Notes.

Interest income in the three and six months ended June 30, 2024 decreased $9.1 million and $17.7 million period-over-period to $21.0 million and $48.0 million, respectively, principally due to lower cash balances.

Our effective tax rate for the six months ended June 30, 2024 decreased period-over-period to 26.0% from 26.4%.

The effective tax rate for six months ended June 30, 2024 includes the favorable impact from the resolution of certain non-U.S.

tax positions of $7.5 million.

The effective tax rate for the three months ended March 31, 2023 includes the favorable impact of approximately $10.0 million of previously unrecognized tax benefits, partially offset by approximately $6.0 million related to a lower tax benefit in certain jurisdictions for the real estate repositioning costs in the quarter, and an increase in the U.K.

statutory tax rate.

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

statutory tax rate, partially offset by approximately $10.0 million of favorable impacts from the resolution of certain non-U.S.

tax positions.

Net Income and Net Income Per Share - Omnicom Group, Inc.

Net income - Omnicom Group Inc.

in the three months ended March 31, 2024 increased $91.1 million to $318.6 million from $227.5 million.

in the three months ended June 30, 2024 decreased $38.2 million to $328.1 million from $366.3 million.

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

Diluted net income per share - Omnicom Group Inc.

decreased to $1.65 in the three months ended June 30, 2024, from $1.82 in the three months ended June 30, 2023, 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.

For the three months ended June 30, 2024, the impact of repositioning costs reduced net income - Omnicom Group Inc.

by $42.9 million and diluted net income per share - Omnicom Group Inc.

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.

Net income - Omnicom Group Inc.

in the six months ended June 30, 2024 increased $52.9 million to $646.7 million from $593.8 million.

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

Diluted net income per share - Omnicom Group Inc.

increased to $1.59 in the three months ended March 31, 2024, from $1.11 in the three months ended March 31, 2023, 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.

For the three months ended March 31, 2023, the impact of the real estate repositioning costs reduced net income - Omnicom Group Inc.

increased to $3.24 in the six months ended June 30, 2024, from $2.92 in the six months ended June 30, 2023, due to the factors described above, partially offset by the impact of the reduction in our weighted average common shares outstanding resulting from the repurchases of our common stock.

For the six months ended June 30, 2024, the impact of repositioning costs reduced net income - Omnicom Group Inc.

by $42.9 million and diluted net income per share - Omnicom Group Inc.

In the three months ended March 31, 2024, the effects of after-tax amortization of acquired intangible assets and internally developed strategic platform assets decreased diluted net income per share by $0.08 and $0.05 for the three months ended March 31, 2024 and 2023, respectively.

For the six months ended June 30, 2023, the net impact of the real estate other 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.

NON-GAAP FINANCIAL MEASURES

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to EBITDA, EBITA and EBITA Margin:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net Income - Omnicom Group Inc.

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Amortization of acquired intangible assets and internally developed strategic platform assets

21.5 14.7 43.0 29.5

Earnings before interest, taxes and amortization of intangible assets (“EBITA”) $ 531.8 $ 565.4 $ 1,032.2 $ 926.7

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Primary sources of short-term liquidity are net cash provided by operating activities and cash and cash equivalents.

Additional liquidity sources include our $2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, with a termination date of June 2, 2028, and our $600 million Delayed Draw Term Loan Agreement, or Term Loan Facility, with a termination date of December 31, 2026.

Additional liquidity sources include our $2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, terminating on June 2, 2028.

We also have 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.

In addition, certain of our international subsidiaries have uncommitted credit lines, aggregating $507.0 million, that are guaranteed by Omnicom.

In addition, certain of our international subsidiaries have uncommitted credit lines that are guaranteed by Omnicom, aggregating $503.5 million.

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

The $600 million Delayed Draw Term Loan Agreement, or Term Loan Facility automatically terminated on July 15, 2024.

Working capital, which we define as current assets minus current liabilities, is our principal non-discretionary funding requirement.

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Cash and cash equivalents decreased $1.7 billion from December 31, 2023.

During the first three months of 2024, we used $618.5 million of cash in operating activities, which included the use for operating capital of $1.0 billion, primarily related to our typical working capital cycle.

Discretionary spending for the first three months of 2024 was $1.2 billion, compared to $495.1 million for the first three months of 2023.

Discretionary spending for the first three months of 2024 was comprised of capital expenditures of $23.1 million, dividends paid to common shareholders of $138.8 million, dividends paid to shareholders of noncontrolling interests of $13.3 million, repurchases of our common stock, net of proceeds from vesting of restricted stock awards and related tax benefits and common stock sold to our employee stock purchase plan of $178.0 million,the acquisition of businesses, net of cash acquired, and acquisition of additional shares of noncontrolling interests, and payment of contingent purchase price obligations of $812.4 million.

During the first quarter of 2024, we acquired Flywheel Digital for approximately $845 million.

On March 6, 2024, Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, issued €600 million 3.70% Senior Notes due 2032.

The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were approximately $643.1 million.

The net impact of these transactions reduced cash and cash equivalents by approximately $202 million from December 31, 2023.

During the first six months of 2024, we used $760.2 million of cash in operating activities, which included the use for operating capital of $1.7 billion, primarily related to our typical working capital cycle.

Discretionary spending for the first six months of 2024 was $1.5 billion, compared to $917.8 million for the first six months of 2023.

Discretionary spending for the first six months of 2024 was comprised of capital expenditures of $62.3 million, dividends paid to common shareholders of $278.9 million, dividends paid to shareholders of noncontrolling interests of $34.2 million, repurchases of our common stock, net of proceeds from vesting of restricted stock awards and related tax benefits and common stock sold to our employee stock purchase plan of $246.3 million, the acquisition of businesses, net of cash acquired, primarily attributable to the acquisition of Flywheel Digital and acquisition of additional shares of noncontrolling interests, and payment of contingent purchase price obligations of $829.4 million.

Discretionary spending was partially offset by the proceeds from financing activities of approximately $650 million.

The impact of foreign exchange rate changes decreased cash and cash equivalents by $108.7 million.

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

In addition, and over the longer term, our Credit Facility and Term Loan Facility are available to fund our working capital and contractual obligations.

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

Cash Management

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To the extent that our treasury centers require liquidity, they have the ability to issue up to a total of $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, or borrow under the Credit Facility, Term Loan Facility or the uncommitted credit lines.

This process enables us to manage our debt more efficiently and utilize our cash more effectively, as well as manage our risk to foreign exchange rate imbalances.

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We have a policy governing counterparty credit risk with financial institutions that hold our cash and cash equivalents, and we have deposit limits for each institution.

In countries where we conduct treasury operations, generally the counterparties are either branches or subsidiaries of institutions that are party to the Credit Facility, or the Term Loan Facility.

In countries where we conduct treasury operations, generally the counterparties are either branches or subsidiaries of institutions that are party to the Credit Facility.

These institutions generally have credit ratings equal to or better than our credit ratings.

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 March 31, 2024, our foreign subsidiaries held approximately $1.5 billion of our total cash and cash equivalents of $3.2 billion.

At June 30, 2024, our foreign subsidiaries held approximately $1.4 billion of our total cash and cash equivalents of $2.7 billion.

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

At March 31, 2024, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents, increased $1.9 billion to $3.1 billion from December 31, 2023.

The increase in net debt primarily resulted from the use of cash of $618.5 million for operating activities, which included the use for operating capital of $1.0 billion, primarily related to our typical working capital requirement during the period, discretionary spending of $1.2 billion, as discussed above, and the net increase from foreign exchange rate changes on cash and cash equivalents and our foreign currency denominated debt of $54.9 million.

At June 30, 2024, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents, increased $2.3 billion to $3.5 billion from December 31, 2023.

The increase in net debt primarily resulted from the use of cash of $760.2 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 $1.5 billion, as discussed above, and the net decrease from foreign exchange rate changes on cash and cash equivalents and our foreign currency denominated debt of $70 million.

Components of net debt:

March 31, 2024 December 31, 2023 March 31, 2023

June 30, 2024 December 31, 2023 June 30, 2023

Short-term debt $ 15.1 $ 10.9 $ 20.5

Long-term debt 6,251.3 5,639.6 5,609.4

Long-term debt, including current portion 6,239.6 5,639.6 5,613.7

Total debt 6,254.7 5,650.5 5,634.2

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Debt Instruments and Related Covenants

On March 6, 2024, OFH issued €600 million 3.70% Senior Notes due 2032.

On March 6, 2024, Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, issued €600 million of the 2032 Notes.

The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $643.1 million.

Omnicom has fully and unconditionally guaranteed the obligations of OFH.

Our 2.45% Senior Notes due 2030, 4.20% Senior Notes due 2030 and 2.60% Senior Notes due 2031 are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.

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Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and OCI have, jointly and severally, fully, and unconditionally guaranteed the obligations of OFH with respect to the €500 million 0.80% Senior Notes due 2027 and the €500 million 1.40% Senior Notes due 2031, and Omnicom has fully and unconditionally guaranteed the obligations of OFH with respect to the €600 million 3.70% Senior Notes due 2032, 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.

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The Sterling Notes and the related guarantee are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OCH and Omnicom, respectively.

The Credit Facility and Term Loan Facility each contain 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 March 31, 2024, we were in compliance with

this covenant as our Leverage Ratio was 2.5 times.

The Credit Facility and Term Loan Facility do not limit our ability to declare or pay dividends or repurchase our common stock.

At March 31, 2024, our long-term and short-term debt was rated BBB+ and A2 by S&P and Baa1 and P2 by Moody’s.

The Credit Facility has and Term Loan Facility had 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, 2024, we were in compliance with this covenant as our Leverage Ratio was 2.6 times.

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

At June 30, 2024, 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.

The long-term debt indentures, Credit Facility and Term Loan Facility do not contain provisions that require acceleration of cash payments in the event of a downgrade in our credit ratings.

The long-term debt indentures and Credit Facility do not contain provisions that require acceleration of cash payments in the event of a downgrade in our credit ratings.

Credit Markets and Availability of Credit

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We will also continue to monitor and manage the level of credit made available to our clients.

We believe that these actions, in addition to the availability of our Credit Facility and Term Loan Facility, are sufficient to fund our near-term working capital needs and our discretionary spending.

Information regarding our Credit Facility and Term Loan Facility is provided in Note 6 to the unaudited consolidated financial statements.

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

During the three months ended March 31, 2024, there were no drawings under the Credit Facility or the Term Loan Facility, and no commercial paper issuances.

We believe that these actions, in addition to the availability of our Credit Facility, are sufficient to fund our near-term working capital needs and our discretionary spending.

Information regarding our Credit Facility is provided in Note 6 to the unaudited consolidated financial statements.

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

During the three months ended June 30, 2024, there were no drawings under the Credit Facility or the Term Loan Facility, and no 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.

To mitigate any disruption in the credit markets and to fund our liquidity, we may borrow under the Credit Facility, Term Loan Facility or the uncommitted credit lines or access the capital markets if favorable conditions exist.

To mitigate any disruption in the credit markets and to fund our liquidity, we may borrow under the Credit Facility, or the uncommitted credit lines or access the capital markets if favorable conditions exist.

We will continue to monitor closely our liquidity and conditions in the credit markets.

We cannot predict with any certainty the impact on us of any disruptions in the credit markets.

In such circumstances, we may need to obtain additional financing to fund our day-to-day working capital requirements.

In such circumstances, we may need to

obtain additional financing to fund our day-to-day working capital requirements.

Such additional financing may not be available on favorable terms, or at all.

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 3.0% of revenue for the twelve months ended March 31, 2024.

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 2.9% of revenue for the twelve months ended June 30, 2024.

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

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For a more complete understanding of our accounting estimates and policies, the unaudited consolidated financial statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, readers are encouraged to consider this information together with our discussion of our critical accounting policies under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 10-K.

Acquisitions and Goodwill

We have made and expect to continue to make selective acquisitions.

The evaluation of potential acquisitions is based on various factors, including specialized know-how, reputation, geographic coverage, competitive position and service offerings of the target businesses, as well as our experience and judgment.

Our acquisition strategy is focused on acquiring the expertise of an assembled workforce in order to continue to build upon the core capabilities of our various strategic business platforms and agency brands through the expansion of their geographic reach or their service capabilities to better serve our clients.

Additional key factors we consider include the competitive position and specialized know-how of the acquisition targets.

Accordingly, as is typical in most service businesses, a substantial portion of the assets we acquire are intangible assets primarily consisting of the know-how of the personnel, which is treated as part of goodwill and is not required to be valued separately under U.S.

For each acquisition, we undertake a detailed review to identify other intangible assets that are required to be valued separately.

A significant portion of the identifiable intangible assets acquired is derived from customer relationships, including the related customer contracts, as well as trade names.

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

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.

Under FASB ASC Topic 350, Intangibles - Goodwill and Other , we have the option of either assessing qualitative factors to determine whether it is more-likely-than-not that the carrying value of our reporting units exceeds their respective fair value (Step 0) or proceeding directly to the quantitative goodwill impairment test.

While there were no trigger events that required us to perform a quantitative test, we performed the annual quantitative impairment test and compared the fair value of each of our reporting units to its respective carrying value, including goodwill.

We identified our regional reporting units as components of our operating segments, which are our six global agency networks.

The regional reporting units and practice areas monitor performance and are responsible for the agencies in their region.

They report to the segment managers and facilitate the administrative and logistical requirements of our key client matrix organization structure for delivering services to clients in their regions.

We have concluded that for each of our operating segments, their regional reporting units have similar economic characteristics and should be aggregated for purposes of testing goodwill for impairment at the operating segment level.

Our conclusion was based on a detailed analysis of the aggregation criteria set forth in FASB ASC Topic 280, Segment Reporting , and in FASB ASC Topic 350.

Consistent with our fundamental business strategy, the agencies within our regional reporting units serve similar clients in similar industries, and in many cases the same clients.

In addition, the agencies within our regional reporting units have similar economic characteristics, and the employees share similar skill sets.

economic components of each agency are employee compensation and related costs, and direct service costs and occupancy and other costs, which include rent and occupancy costs, technology costs that are generally limited to personal computers, servers and off-the-shelf software and other overhead expenses.

Finally, the expected benefits of our acquisitions are typically shared by multiple agencies in various regions as they work together to integrate the acquired agency into our virtual client network strategy.

Goodwill Impairment Review - Estimates and Assumptions

We use the following valuation methodologies to determine the fair value of our reporting units:

(1) the income approach, which utilizes discounted expected future cash flows, (2) comparative market participant multiples for EBITDA (earnings before interest, taxes, depreciation and amortization) and (3) when available, consideration of recent and similar acquisition transactions.

In applying the income approach, we use estimates to derive the discounted expected cash flows (“DCF”) for each reporting unit that serves as the basis of our valuation.

These estimates and assumptions include revenue growth and operating margin, EBITDA, tax rates, capital expenditures, weighted average cost of capital and related discount rates and expected long-term cash flow growth rates.

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:

(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.

The long-term growth rate and WACC assumptions used in our evaluations:

May 1, 2024 May 1, 2023

Long-Term Growth Rate 3.5% 3.5%

WACC 10.8% - 11.8% 11% - 11.4%

Long -term growth rate represents our estimate of the long-term growth rate for our industry and the geographic markets we operate in.

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 3.6% and 4.7%, respectively.

We considered this history when determining the long-term growth rates used in our annual impairment test at May 1, 2024.

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, notwithstanding the volatility of inflationary environments.

Based on our past performance, we also believe that our growth rate can exceed NGDP growth in the short-term in the markets we operate in, which are similar across our reporting units.

Accordingly, for our annual test as of May 1, 2024, we used an estimated long-term growth rate of 3.5%.

When performing the annual impairment test as of May 1, 2024 and estimating the future cash flows of our reporting units, we considered the current macroeconomic environment, as well as industry and market specific conditions in 2024.

In the first half of 2024, our organic revenue increase was 4.6%, which excluded our net disposition activity and the impact from changes in foreign exchange rates.

The WACC is comprised of:

(1) a risk-free rate of return, (2) a business risk index ascribed to us and to companies in our industry comparable to our reporting units based on a market derived variable that measures the volatility of the share price of equity securities relative to the volatility of the overall equity market, (3) an equity risk premium that is based on the rate of return on equity of publicly traded companies with business characteristics comparable to our reporting units, and (4) a current after-tax market rate of return on debt of companies with business characteristics similar to our reporting units, each weighted by the relative market value percentages of our equity and debt.

Our six reporting units vary in size with respect to revenue and the amount of debt allocated to them.

These differences drive variations in fair value among our reporting units.

In addition, these differences as well as differences in book value, including goodwill, cause variations in the amount by which fair value exceeds book value among the reporting units.

The goodwill balances and debt vary by reporting unit primarily because our three legacy agency networks were acquired at the formation of Omnicom and were accounted for as a pooling of interests that did not result in any additional debt or goodwill being recorded.

The remaining three agency networks were built through a combination of internal growth and acquisitions that were accounted for using the acquisition method and as a result, they have a relatively higher amount of goodwill and debt.

Finally, the allocation of goodwill when components are transferred between reporting units is based on relative fair value at the time of transfer.

Goodwill Impairment Review - Conclusion

Based on the results of our impairment test, we concluded that our goodwill as of May 1, 2024 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.

The minimum decline in fair value that one of our reporting units would need to experience in order to fail the goodwill impairment test was approximately 48%.

Notwithstanding our belief that the assumptions we used for WACC and long-term growth rate in our impairment testing were reasonable, we performed a sensitivity analysis for each reporting unit.

The results of this sensitivity analysis on our impairment test as of May 1, 2024 revealed that if the WACC increased by 1% and/or the long-term growth rate decreased by 1%, the fair

value of each of our reporting units would continue to be in excess of its respective net book value and would pass the impairment test.

We will continue to perform our impairment test at May 1 each year, unless events or circumstances trigger the need for an interim impairment test.

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.

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.

A change in the estimates we use could result in a decline in the estimated fair value of one or more of our reporting units from the amounts derived as of our latest valuation and could cause us to fail our goodwill impairment test if the estimated fair value for the reporting unit is less than the carrying value of the net assets of the reporting unit, including its goodwill.

A large decline in estimated fair value of a reporting unit could result in a non-cash impairment charge and may have an adverse effect on our results of operations and financial condition.

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