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Item 2. Management’s Discussion and Analysis

2024-10-16 compared with 2024-07-17 · 201 added, 183 removed, 459 unchanged (46% of the section changed)

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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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Financial Performance

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.

Worldwide revenue for the three months ended September 30, 2024 increased $304.5 million, or 8.5%, to $3,882.6 million, compared to $3,578.1 million in the prior year quarter.

Worldwide organic revenue growth (defined below) increased revenue $231.3 million, or 6.5%, reflecting increased client spending across most of our disciplines, primarily driven by our Advertising & Media, Public Relations and Experiential disciplines.

Our Public Relations discipline was helped by spending on the upcoming U.S.

elections, and the Experiential discipline benefited from the Summer Olympics.

Substantially all of our major geographic markets had positive organic growth compared to the prior year period.

Changes in foreign exchange rates period-over-period reduced revenue $1.2 million, or 0.1%.

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.

Acquisition revenue, net of disposition revenue, increased revenue $74.4 million, or 2.1%, primarily related to the purchase of Flywheel Digital in January 2024 (see Note 4 to the unaudited consolidated financial statements).

Worldwide revenue for the nine months ended September 30, 2024 increased $735.6 million, or 6.9%, to $11,366.9 million, compared to $10,631.3 million in the prior year period.

Worldwide organic revenue growth increased revenue $556.5 million, or 5.2%, 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.

The Experiential discipline benefited from the Summer Olympics.

Changes in foreign exchange rates period-over-period reduced revenue $41.3 million, or 0.4%.

Acquisition revenue, net of disposition revenue, increased revenue $220.4 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 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:

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

Advertising & Media increased $174.5 million, Precision Marketing increased $77.3 million, Public Relations increased $22.0 million, Healthcare decreased $3.1 million, Branding & Retail Commerce decreased $12.6 million, Experiential increased $43.7 million, and Execution & Support increased $2.7 million.

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

Advertising & Media increased $440.1 million, Precision Marketing increased $225.3 million, Public Relations increased $61.4 million, Healthcare increased $5.9 million, Branding & Retail Commerce decreased $33.2 million, Experiential increased $77.5 million, and Execution & Support decreased $41.4 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.

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

North America $170.8 million, or 8.6%, Latin America $0.3 million, or 0.3%, Europe $64.0 million, or 6.3%, the Middle East and Africa $11.7 million, or 22.7%, and Asia-Pacific $57.7 million, or 13.5%.

The period-over-period increase in worldwide revenue across our geographic markets for the nine months ended September 30, 2024, was:

North America $454.5 million, or 7.7%, Latin America $44.6 million, or 17.3%, Europe $174.2 million, or 5.8%, the Middle East and Africa $9.4 million, or 4.7%, and Asia-Pacific $52.9 million, or 4.2%.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

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

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15.5 % 15.7 % (0.2) % 14.0 % 13.7 % 0.3 %

Interest expense, net $ 41.7 $ 27.4 $ 14.3 52.2 % $ 68.5 $ 46.7 $ 21.8 46.7 %

Net Income - Omnicom Group Inc.

$ 385.9 $ 371.9 $ 14.0 3.8 % $ 1,032.6 $ 965.7 $ 66.9 6.9 %

Net Income per Share - Omnicom Group Inc.:

Net Income per Share - Omnicom

$ 1.95 $ 1.86 $ 0.09 4.8 % $ 5.19 $ 4.78 $ 0.41 8.6 %

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1) Reconciliation of Non-GAAP Financial Measures on page 26 .

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.

2) For the nine months ended September 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.

There were no repositioning costs for the three months ended September 30, 2024.

For the nine months ended September 30, 2023, operating expenses included real estate operating lease impairment charges, severance, and other exit costs of $191.5 million ($145.5 million after-tax) 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 of $78.8 million ($55.9 million after tax) on disposition of certain of our research businesses in the Execution & Support discipline.

There were no repositioning costs for the three months ended September 30, 2023.

The net impact of these actions reduced diluted net income per share- Omnicom Group Inc.

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

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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, the after-tax impact of which on diluted net income per share- Omnicom Group Inc.

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.

for the three and nine months ended September 30, 2024 was $0.08 and $0.24, respectively, and for the three and nine months ended September 30, 2023 was $0.06 and $0.17, respectively.

Omnicom is a strategic holding company providing data-inspired, creative marketing and sales solutions to many of the largest global companies.

Our portfolio of companies includes our global networks, BBDO, DDB, TBWA, Omnicom Media Group, the DAS Group of Companies, and the Communications Consultancy Network.

All of our global networks integrate their service offerings with the Omnicom branded practice areas, including Omnicom Health Group, Omnicom Precision Marketing Group, Omnicom Commerce Group, Omnicom Advertising Collective, Omnicom Public Relations Group, Omnicom Brand Consulting Group and Flywheel Digital, as well as our Experiential businesses and Execution & Support businesses, which includes Omnicom Specialty Marketing Group.

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:

All of our global networks integrate their service offerings with the Omnicom branded practice areas, including Omnicom Health Group, Omnicom Precision Marketing Group, Omnicom Commerce Group, Omnicom Advertising Collective, Omnicom Public Relations Group, Omnicom Brand Consulting Group, Flywheel Digital and Omnicom Production, a new practice area that brings together Omnicom's global production capabilities, as well as our Experiential businesses and Execution & Support businesses, which includes Omnicom Specialty Marketing Group.

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

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

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

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

Precision Marketing includes digital and direct marketing, digital transformation consulting, e-commerce operations, media execution, market intelligence and data and analytics.

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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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The rapidly developing nature of AI technology makes it difficult to assess the full impact on our business at this time.

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, 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.

As a provider of data-inspired, creative marketing and sales solutions, we operate in all major markets and have a large and diverse client base.

For the twelve months ended September 30, 2024, 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 54.3% 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 nine months ended September 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.

Risks and Uncertainties

Global economic challenges, including geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues could cause economic uncertainty and volatility.

Global economic disruptions, including geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues 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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The period-over-period change in results of operations:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2024 2023 $ Change 2024 2023 $ Change

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Interest Income 26.0 15.2 10.8 74.0 80.9 (6.9)

Income Before Income Taxes and Income From Equity Method Investments 468.6 523.3 (54.7) 920.7 850.5 70.2

Income Before Income Taxes and Income

From Equity Method Investments 559.7 522.5 37.2 1,480.4 1,373.0 107.4

Income Tax Expense 150.2 136.1 14.1 389.9 360.7 29.2

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409.9 388.3 21.6 1,095.1 1,015.4 79.7

Net Income Attributed To Noncontrolling Interests 20.1 16.9 3.2 38.5 33.3 5.2

Net Income Attributed To Noncontrolling

Interests 24.0 16.4 7.6 62.5 49.7 12.8

Net Income - Omnicom Group Inc.

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1) Reconciliation of Non-GAAP Financial Measures on page 26 .

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.

There were no repositioning costs for the three months ended September 30, 2024.

In addition, in the second quarter of 2023, we recorded a gain of $78.8 million ($55.9 million after tax) on disposition of certain of our research businesses in the Execution & Support discipline.

There were no repositioning costs for the three months ended September 30, 2023.

The net impact of these actions reduced diluted net income per share- Omnicom Group Inc.

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

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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.

for the three and nine months ended September 30, 2024 was $0.08 and $0.24, respectively, and for the three and nine months ended September 30, 2023 was $0.06 and $0.17, 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 June 30, 2023

Three months ended September 30, 2023

$ 3,578.1 $ 1,868.8 $ 1,709.3

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Organic growth 231.3 6.5 % 120.8 6.5 % 110.5 6.5 %

Three months ended June 30, 2024

Three months ended September 30, 2024

$ 3,882.6 8.5 % $ 2,039.7 9.1 % $ 1,842.9 7.8 %

Total Domestic International

Six months ended June 30, 2023

Nine months ended September 30, 2023

$ 10,631.3 $ 5,531.6 $ 5,099.7

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Organic growth 556.5 5.2 % 316.6 5.7 % 239.9 4.7 %

Six months ended June 30, 2024

Nine months ended September 30, 2024

$ 11,366.9 6.9 % $ 5,999.0 8.4 % $ 5,367.9 5.3 %

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 $3,891.2 million and $7,524.4 million for the Total column for the three and six months ended June 30, 2024, 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 $3,883.8 million and $11,408.2 million for the Total column for the three and nine months ended September 30, 2024, respectively).

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

Dollars and the current period constant currency revenue ($3,853.8 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).

Dollars and the current period constant currency revenue ($3,882.6 million less $3,883.8 million and $11,366.9 million less $11,408.2 million for the Total column for the three and nine months ended September 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 ($3,609.9 million and $7,053.2 million for the Total column for the three and six months ended June 30, 2024, respectively).

• The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($3,578.1 million and $10,631.3 million for the Total column for the three and nine months ended September 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 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.

Assuming exchange rates at October 11, 2024 remain unchanged, we expect the impact of changes in foreign exchange rates will increase revenue by 1.0% for the fourth quarter and be flat for the full year.

Based on our acquisition and disposition activity to date, we expect that the net impact will increase revenue by 1.8% for the fourth quarter and 2.0% for the full year.

Revenue by Discipline

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

Three Months Ended June 30,

Three Months Ended September 30,

2024 2023 2024 vs.

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Revenue $ 3,882.6 $ 3,578.1 $ 304.5 6.5 %

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 2024 vs.

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Revenue $ 11,366.9 $ 10,631.3 $ 735.6 5.2 %

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 $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.

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

Worldwide organic revenue growth increased revenue $231.3 million, or 6.5%, primarily reflecting increased client spending across most of our disciplines, primarily driven by Advertising & Media, led by Media, as well as Public Relations and Experiential disciplines compared to the prior year period.

Our Public Relations discipline was helped by spending on the upcoming U.S.

election cycle, and the Experiential discipline benefited from the Summer Olympics.

The organic growth was partially offset by underperformance in our Branding & Retail Commerce discipline.

Changes in foreign exchange rates period-over-period reduced revenue $1.2 million, or 0.1%.

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:

The decrease in revenue from foreign exchange translation was primarily related to the weakening of some currencies, including the Brazilian Real, against the U.S.

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

Acquisition revenue, net of disposition revenue, increased revenue $74.4 million, or 2.1%, primarily related to the purchase of Flywheel Digital in January 2024, which is included in our Precision Marketing discipline.

The period-over-period change in worldwide revenue for the nine months ended September 30, 2024, compared to the nine months ended September 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.

Worldwide organic revenue growth increased revenue $556.5 million, or 5.2%, primarily reflecting increased client spending in Advertising & Media, led by Media, as well as Experiential, Precision Marketing and Public Relations disciplines compared to the prior year period.

The Experiential discipline benefited from the Summer Olympics.

Organic growth was partially offset by underperformance in our Branding & Retail Commerce and Execution & Support disciplines.

Changes in foreign exchange rates period-over-period reduced revenue $41.3 million, or 0.4%.

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.

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

partially offset by the strengthening of the British Pound, Colombian Peso and the Euro against the U.S.

Acquisition revenue, net of disposition revenue, increased revenue $220.4 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 second half of 2023, partially offset by dispositions in our Execution & Support discipline in the first 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 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.

Our largest client represented 2.8% and 3.0% of revenue for the twelve months ended September 30, 2024 and 2023, respectively.

Our ten largest and 100 largest clients represented 19.4% and 54.3% of revenue for the twelve months ended September 30, 2024, respectively, and 20.4% and 54.4% of revenue for the twelve months ended September 30, 2023, respectively.

Revenue by Geography

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

Three Months Ended June 30,

Three Months Ended September 30,

2024 2023 2024 vs.

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Revenue $ 3,882.6 $ 3,578.1 $ 304.5 6.5 %

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 2024 vs.

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Revenue $ 11,366.9 $ 10,631.3 $ 735.6 5.2 %

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.

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

The period-over-period increase in worldwide revenue across our geographic markets for the nine months ended September 30, 2024, was:

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 North America, organic revenue growth period-over-period for the three and nine months ended September 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, Experiential, and Public Relations disciplines.

Our Public Relations discipline was helped by spending on the upcoming U.S.

election cycle, and the Experiential discipline benefited from the Summer Olympics.

The organic growth was partially offset by underperformance in 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.

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

In the nine months ended September 30, 2024, the acquisition growth was partially offset by dispositions in the Execution & Support discipline in the first half of 2023.

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 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.

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

The weakening of several currencies, including the Brazilian Real, against the U.S.

Dollar decreased revenue in the three and nine months ended September 30, 2024 compared to the same periods in 2023, partially offset by the strengthening of the Colombian Peso against the U.S.

Dollar in the nine months ended September 30, 2024.

Acquisitions positively impacted revenue and were primarily related to acquisition activity in our Advertising & Media discipline in the prior year and the purchase of Flywheel Digital in January 2024.

In Europe, compared to the prior year period, organic revenue growth for the three months ended September 30, 2024 was driven by strong performance in our Advertising & Media discipline, led by our media business, and in our Experiential and Execution & Support disciplines, partially offset by under performance in our Precision Marketing, Branding & Retail Commerce and Public Relations disciplines.

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

Dollar period-over-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.

Acquisitions, net of dispositions for the three months ended September 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 current and prior year.

In Europe, compared to the prior year period, organic revenue growth for the nine months ended September 30, 2024 was driven by strong performance in our Advertising & Media discipline, led by our media business, and in our Experiential and Execution & Support disciplines, partially offset by under performance in our Precision Marketing, Branding & Retail Commerce and Public Relations disciplines.

Foreign currency changes increased revenue for the nine months ended September 30, 2024, primarily as a result of the strengthening of the British Pound and the Euro 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.

Acquisitions, net of dispositions for the nine months ended September 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 current and prior year.

In the nine months ended September 30, 2024, the increase from our acquisition activity was partially offset by the divestiture of our research businesses in the Execution & Support discipline in the first half of 2023.

In the U.K., organic revenue decreased by 0.2% period-over-period for the three months ended September 30, 2024.

In Continental Europe, which includes the Euro Zone and the other European countries, organic growth for the three months ended September 30, 2024 of 6.8% was led by Italy, France, Spain and Germany and in most disciplines, partially offset by underperformance in our Branding & Retail Commerce and Precision Marketing disciplines.

In the U.K., organic revenue increased by 3.2% period-over-period for the nine months ended September 30, 2024 and was led by our Advertising & Media discipline, along with most of our other disciplines, but was partially offset by weakness in our Public Relations discipline.

In Continental Europe, which includes the Euro Zone and the other European countries, organic growth of 5.0% for the nine months ended September 30, 2024 was led by Germany, Italy and Spain and in most disciplines, partially offset by underperformance in our Branding & Retail Commerce and Public Relations disciplines.

In the Middle East and Africa, for the three and nine months ended September 30, 2024, organic revenue increased period-over-period, driven by our Experiential and our Advertising & Media disciplines.

In Asia-Pacific, organic revenue increased period-over-period for the three months ended September 30, 2024.

Organic growth led by our Advertising & Media discipline was partially offset by underperformance in our Precision Marketing and Public Relations disciplines.

Most markets in the region, especially Australia, India and China, had positive organic growth as compared to the prior year period.

Foreign currency changes increased revenue for the three months ended September 30, 2024, primarily as a result of the strengthening of the Australian Dollar against the U.S.

Dollar, partially offset by the weakening of the Japanese Yen against the U.S.

Dollar period-over-period.

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

In Asia-Pacific, organic revenue increased period-over-period for the nine months ended September 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 and in our Precision Marketing and Public Relations disciplines.

Most markets in the region, especially Australia, India, Hong Kong, Philippines, China, Thailand and Korea, had positive organic growth as compared to the prior year period.

Foreign currency changes decreased revenue for the nine months ended September 30, 2024, primarily as a result of the weakening of the Japanese Yen, Chinese Reminbi and Australian Dollar against the U.S.

Dollar period-over-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:

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

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

2024 2023 2024 2023

17 unchanged sentences

The period-over-period change in operating expenses:

Three Months Ended June 30,

Three Months Ended September 30,

2024 2023 2024 vs.

8 unchanged sentences

Occupancy and other costs 325.6 8.4 % 288.6 8.1 % 37.0 12.8 %

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 3,121.6 2,875.1 246.5 8.6 %

3 unchanged sentences

Operating Income $ 600.1 15.5 % $ 560.8 15.7 % $ 39.3 7.0 %

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 2024 vs.

20 unchanged sentences

Third-party service costs include vendor costs when we act as principal in providing services to our clients.

Third-party incidental costs that are required to be included in revenue primarily consist of client-related travel and incidental out-of-pocket costs, which are billed back to the client directly at our cost.

Third-party incidental costs that are required to be included in revenue primarily consist of client-related travel and incidental out-of-pocket costs that are billed back to the client directly at our cost.

Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office expenses and other expenses.

1 unchanged sentence

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- and six- month periods ended June 30, 2024.

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 for the three months ended September 30, 2024 increased $265.2 million, or 8.8%, to $3,282.5 million from $3,017.3 million, compared to the prior year period.

Operating expenses for the nine months ended September 30, 2024 increased $604.3 million, or 6.6%, to $9,777.6 million from $9,173.3 million, compared to the prior year period.

Included in operating expenses for the nine-months ended September 30, 2024 is the impact of repositioning costs, primarily related to severance of $57.8 million.

Included in operating expenses 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 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 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.

Salary and service costs for the three months ended September 30, 2024 increased $209.5 million, or 8.1%, to $2,796.0 million, compared to the prior year period.

Salary and related costs for the three months ended September 30, 2024 increased $90.2 million, or 5.1%, to $1,846.9 million, primarily as a result of our acquisition of Flywheel Digital.

These costs decreased as a percentage of revenue, primarily due to the reduction arising from our ongoing repositioning actions and global employee mix.

Third-party service costs for the three months ended September 30, 2024 increased $105.7 million, or 15.6%, to $784.5 million, primarily as a result of organic growth in our Advertising & Media and Experiential disciplines.

Third-party incidental costs for the three months ended September 30, 2024 increased $13.6 million, or 9.0%, to $164.6 million.

Salary and service costs for the nine months ended September 30, 2024 increased $541.5 million, or 7.0%, to $8,288.7 million, compared to the prior year period.

Salary and related costs for the nine months ended September 30, 2024 increased $224.4 million, or 4.2%, to $5,531.1 million, primarily as a result of our acquisition of Flywheel Digital.

These costs decreased as a

percentage of revenue, primarily due to the reduction arising from our ongoing repositioning actions.

Third-party service costs for the nine months ended September 30, 2024 increased $259.9 million, or 12.8%, to $2,293.8 million, primarily as a result of organic growth in our Advertising & Media and Experiential disciplines.

Third-party incidental costs for the nine months ended September 30, 2024, increased $57.2 million, or 14.1%, to $463.8 million.

Operating Expenses - Occupancy and Other Costs

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.

Occupancy and other costs for the three and nine months ended September 30, 2024, which are less directly linked to changes in revenue than salary and service costs, increased by $37.0 million, or 12.8%, to $325.6 million and increased by $76.0 million, or 8.7%, to $953.9 million, respectively, primarily resulting from our acquisition activity.

Increased office and other related 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, 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.

SG&A expenses increased for the three and nine months ended September 30, 2024 by $9.7 million and $17.7 million, respectively, compared to the same period in 2023, primarily due to professional fees related to strategic initiatives.

Operating Income

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%.

Operating income for the three months ended September 30, 2024 increased $39.3 million to $600.1 million, and operating margin decreased to 15.5% from 15.7% compared to the same period in 2023.

EBITA increased $45.8 million to $622.3 million, and EBITA margin decreased to 16.0% from 16.1%.

Operating income for the nine months ended September 30, 2024 increased $131.3 million to $1,589.3 million, and operating margin increased to 14.0% from 13.7% compared to the same period in 2023.

EBITA increased $151.3 million to $1,654.5 million, and EBITA margin increased to 14.6% from 14.1%.

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%.

The effect of the repositioning actions in the nine months ended September 30, 2024 reduced operating income and EBITA by $57.8 million and decreased both operating margin and EBITA margin by 0.5%.

The net effect of the real estate and other repositioning costs and the gain on disposition of subsidiaries in the nine months ended September 30, 2023 reduced both operating income and EBITA by $112.7 million, and reduced both operating margin and EBITA margin by 1.1%.

Net Interest Expense

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.

Net interest expense for the three and nine months ended September 30, 2024 increased $2.1 million and $23.9 million period-over-period to $40.4 million and $108.9 million, respectively.

Interest expense on debt for the three and nine months ended September 30, 2024 increased $13.8 million and $19.2 million period-over-period to $61.6 million and $169.0 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, and the issuance in the third quarter of 2024 of $600 million 5.30% Senior Notes due 2034, or 2034 Notes.

The net proceeds from the issuance of the 2034 Notes, along with available cash, will be used to fund the repayment of our $750 million 3.65% Senior Notes due November 1, 2024 (see Note 6 to the unaudited financial statements).

Interest income in the three months ended September 30, 2024 increased $10.8 million period-over-period to $26.0 million, principally due to higher cash balances from the issuance of the $600 million 2034 notes.

Interest income in the nine months ended September 30, 2024 decreased $6.9 million period-over-period to $74.0 million.

Our effective tax rate for the nine months ended September 30, 2024 was flat period-over-period at 26.3%.

The effective tax rate for the nine months ended September 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 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.

The effective tax rate for the nine months ended September 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.

2 unchanged sentences

Net income - Omnicom Group Inc.

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.

in the three months ended September 30, 2024 increased $14.0 million to $385.9 million from $371.9 million.

The period-over-period increase 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.

increased to $1.95 in the three months ended September 30, 2024, from $1.86 in the three months ended September 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 September 30, 2024 and 2023, there were no repositioning costs.

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.

in the nine months ended September 30, 2024 increased $66.9 million to $1,032.6 million from $965.7 million.

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

Diluted net income per share - 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.

increased to $5.19 in the nine months ended September 30, 2024, from $4.78 in the nine months ended September 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 nine months ended September 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 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.

For the nine months ended September 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.

9 unchanged sentences

to EBITDA, EBITA and EBITA Margin:

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

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

2024 2023 2024 2023

5 unchanged sentences

Income Tax Expense 150.2 136.1 389.9 360.7

Income Before Income Taxes and Income From Equity Method Investments 468.6 523.3 920.7 850.5

Income Before Income Taxes and Income From Equity

Method Investments 559.7 522.5 1,480.4 1,373.0

Interest Expense 66.4 53.5 182.9 165.9

1 unchanged sentence

Operating Income 600.1 560.8 1,589.3 1,458.0

Amortization of acquired intangible assets and internally developed strategic platform assets

Amortization of acquired intangible assets and

internally developed strategic platform assets

22.2 15.7 65.2 45.2

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

Amortization of other purchased and internally developed software 4.8 4.6 9.1 9.1

Earnings before interest, taxes and amortization of

intangible assets (“EBITA”) $ 622.3 $ 576.5 $ 1,654.5 $ 1,503.2

Amortization of other purchased and internally

developed software 4.3 4.6 13.4 13.7

Depreciation 34.9 32.1 102.8 98.5

5 unchanged sentences

Cash Sources and Requirements

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, terminating on June 2, 2028.

We also have the ability to issue up to $2 billion of U.S.

The primary sources of our 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, terminating on June 2, 2028, and 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.

1 unchanged sentence

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.

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

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

Our working capital requirements typically peak during the second quarter of the year due to the timing of payments for incentive compensation, income taxes and contingent purchase price obligations.

Our working capital requirement typically peaks during the second quarter of the year due to the timing of payments for incentive compensation, income taxes and contingent purchase price obligations.

In addition, we have contractual obligations related to our long-term debt (principal and interest payments), recurring business operations, primarily related to lease obligations, and acquisition related obligations.

Our principal discretionary cash spending includes dividend payments to common shareholders, capital expenditures, strategic acquisitions and repurchases of our common stock.

Cash and cash equivalents decreased $1.7 billion 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.

Cash and cash equivalents decreased $898.1 million from December 31, 2023.

During the first nine months of 2024, we used $191.5 million of cash in operating activities, which included the use for operating capital of $1.6 billion, primarily related to our typical working capital cycle.

Discretionary spending for the first nine months of 2024 was $1.9 billion, compared to $1.3 billion for the first nine months of 2023.

Discretionary spending for the first nine months of 2024 was comprised of capital expenditures of $93.6 million, dividends paid to common shareholders of $416.0 million, dividends paid to shareholders of noncontrolling interests of $64.0 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 $358.5 million, and 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 $953.4 million.

Discretionary spending was partially offset by the proceeds from financing activities of approximately $1.2 billion, which includes the issuance in the third quarter of 2024 of $600 million 5.30% Senior Notes due 2034, or 2034 Notes.

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.

8 unchanged sentences

Additionally, under the terms of the arrangement, set-off of foreign exchange positions are limited to the long and short positions within their own account.

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.

To the extent that our treasury centers require liquidity, they can 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, or the uncommitted credit lines.

5 unchanged sentences

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

At September 30, 2024, our foreign subsidiaries held approximately $1.9 billion of our total cash and cash equivalents of $3.5 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, 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.

At September 30, 2024, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents, increased $2.2 billion to $3.4 billion from December 31, 2023.

The increase in net debt primarily resulted from the use of cash of $191.5 million for operating activities, which included the use for operating capital of $1.6 billion, primarily related to

our typical working capital requirement during the period, discretionary spending of $1.9 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 $38 million.

Components of net debt:

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

September 30, 2024 December 31, 2023 September 30, 2023

Short-term debt $ 16.9 $ 10.9 $ 14.5

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Cash and cash equivalents 3,533.9 4,432.0 2,769.6

Short-term investments — — 75.9

Net debt $ 3,413.1 $ 1,218.5 $ 2,817.0

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Debt Instruments and Related Covenants

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.

On August 2, 2024, Omnicom issued $600 million 5.30% Senior Notes due 2034, or 2034 Notes.

The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $592.4 million.

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.

The net proceeds from the issuance, along with available cash, will be used to fund the repayment of our $750 million 3.65% Senior Notes due November 1, 2024.

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 and were used for general corporate purposes, including working capital expenditures, acquisitions and repurchases of our common stock.

The 2.45% Senior Notes due 2030, 4.20% Senior Notes due 2030, 2.60% Senior Notes due 2031 and 5.30% Senior Notes due 2034 are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.

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

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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 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 has 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 September 30, 2024, we were in compliance with this covenant as our Leverage Ratio was 2.8 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.

At September 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.

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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.

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.

During the three months ended September 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.

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

We provide data-inspired, creative marketing and sales solutions to 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 September 30, 2024.

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

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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.

The main 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.

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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.

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.

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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