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Item 2. Management’s Discussion and Analysis

2025-07-16 compared with 2025-04-16 · 291 added, 104 removed, 366 unchanged (52% of the section changed)

45 unchanged sentences

Following the closing of the Merger, Omnicom shareholders are expected to own approximately 60.6% of the combined company, and IPG shareholders are expected to own approximately 39.4%, on a fully diluted basis.

The completion of the Merger is subject to customary closing conditions, including required regulatory approvals, which are ongoing.

The completion of the Merger is subject to customary closing conditions, including required regulatory approvals.

If completed, the Merger is expected to have a material impact on our business, results of operations and financial condition.

In the first quarter of 2025, we recorded $33.8 million of acquisition related costs in selling, general and administrative expenses.

During the three and six months ended June 30, 2025, we recorded acquisition related costs related to the Merger of $66.0 million and $99.8 million, respectively, in selling, general and administrative expenses.

The results of IPG are not included in our 2025 or 2024 results of operations or financial position.

On June 23, 2025, the U.S.

Federal Trade Commission FTC concluded its antitrust review of Omnicom’s pending acquisition of IPG and reached agreement with Omnicom and IPG on a mutually acceptable consent order.

We continue to work to obtain other required regulatory approvals and continue to expect that the Merger will be completed in the second half of 2025.

Risks and Uncertainties

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Our fundamental business principle is that our clients’ specific requirements are the central focus of how we structure our service offerings and allocate our resources.

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 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.

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.

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.

In addition, we pursue selective acquisitions of complementary companies with strong entrepreneurial management teams that could fill gaps in our service delivery to our existing clients.

We believe generative AI will have a significant effect on how we provide services to our clients and how we enhance the productivity of our people.

We believe generative AI and agentic AI will have a significant effect on how we provide services to our clients and how we enhance the productivity of our people.

As with any new technology, we are working closely with our clients and technology partners to take advantage of the benefits of AI while being mindful of its limitations, risks, and privacy concerns.

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We operate in all major markets and have a large client base.

For the twelve months ended March 31, 2025, our largest client accounted for 2.7% 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 16% of our revenue for the three months ended March 31, 2025.

For the twelve months ended June 30, 2025, our largest client accounted for 2.6% of our revenue, and our 100 largest clients, which represent many of the world’s major marketers, accounted for approximately 54.1% of our revenue.

Our clients operate in virtually every sector of the global economy with no one industry representing more than 15% of our revenue for the six months ended June 30, 2025.

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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Financial Performance

Worldwide revenue for the three months ended March 31, 2025 increased $59.9 million, or 1.6%, to $3,690.4 million, compared to $3,630.5 million in the prior year period.

Worldwide organic revenue growth (defined below) increased revenue $121.9 million, or 3.4%, reflecting increased client spending across most of our disciplines, primarily driven by our Media & Advertising and Precision Marketing disciplines.

In contrast, our Branding & Retail Commerce, Public Relations, and Healthcare disciplines had negative performance during the quarter, while our Experiential and Execution & Support disciplines remained relatively stable.

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

Worldwide revenue for the three months ended June 30, 2025 increased $161.8 million, or 4.2%, to $4,015.6 million, compared to $3,853.8 million in the prior year quarter.

Worldwide organic revenue growth increased revenue $116.8 million, or 3.0%, primarily driven by our Media & Advertising, Precision Marketing and Experiential disciplines.

Our Public Relations, Branding & Retail Commerce and Healthcare disciplines had negative performance during the quarter.

All of our major geographic regions had positive organic growth compared to the prior year period.

Organic growth in the quarter was led by our largest market, the U.S.

In Europe, growth in most of our markets was offset by negative performance in the U.K.

In Asia-Pacific, Australia and India had strong performances, which was partially offset by a weak performance in China, with the remaining markets flat.

In Europe, growth was mixed by market.

In Asia-Pacific, we experienced growth in substantially all of our markets.

Changes in foreign exchange rates period-over-period increased revenue $42.4 million, or 1.1%.

Acquisition revenue, net of disposition revenue, increased revenue $2.6 million, or 0.1%.

Worldwide revenue for the six months ended June 30, 2025 increased $221.7 million, or 3.0%, to $7,706.0 million, compared to $7,484.3 million in the prior year period.

Worldwide organic revenue growth increased revenue $238.7 million, or 3.2%, primarily driven by our Media & Advertising, Precision Marketing and Execution & Support disciplines.

Our Public Relations, Branding & Retail Commerce and Healthcare disciplines had negative performance during the period.

All of our major geographic regions had positive organic growth compared to the prior year period.

Organic growth in the six month period was led by our largest market, the U.S.

In Europe, growth was mixed by market.

In Asia-Pacific, we experienced growth in substantially all of our markets.

Changes in foreign exchange rates period-over-period reduced revenue $16.8 million, or 0.2%.

Acquisition revenue, net of disposition revenue, reduced revenue $2.8 million, or 0.1%.

The period-over-period change in worldwide revenue for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, in our fundamental disciplines was:

Media & Advertising increased $94.0 million, Precision Marketing increased $24.9 million, Public Relations decreased $20.8 million, Healthcare decreased $11.3 million, Branding & Retail Commerce decreased $26.0 million, Experiential decreased $1.5 million, and Execution & Support increased $0.6 million.

The period-over-period change in worldwide revenue across our geographic markets for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was:

North America increased $70.6 million, or 3.5%, Latin America decreased $0.1 million, or 0.1%, Europe decreased $10.8 million, or 1.1%, Middle East and Africa decreased $8.8 million, or 11.1%, and Asia-Pacific increased $9.0 million, or 2.2%.

Acquisition revenue, net of disposition revenue, reduced revenue slightly by $0.2 million.

The period-over-period change in worldwide revenue for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, in our fundamental disciplines was:

Media & Advertising increased $190.3 million, Precision Marketing increased $30.0 million, Public Relations decreased $35.0 million, Healthcare decreased $12.5 million, Branding & Retail Commerce decreased $33.5 million, Experiential increased $14.4 million, and Execution & Support increased $8.1 million.

The period-over-period change in worldwide revenue for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, in our fundamental disciplines was:

Media & Advertising increased $284.3 million, Precision Marketing

increased $54.9 million, Public Relations decreased $55.8 million, Healthcare decreased $23.8 million, Branding & Retail Commerce decreased $59.5 million, Experiential increased $12.9 million, and Execution & Support increased $8.7 million.

The period-over-period change in worldwide revenue across our geographic markets for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was:

North America increased $61.3 million, or 2.9%, Latin America increased $8.2 million, or 7.7%, Europe increased $64.5 million, or 5.9%, Middle East and Africa increased $0.5 million, or 0.8%, and Asia-Pacific increased $27.3 million, or 6.3%.

The period-over-period change in the worldwide revenue across our geographic markets for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was:

North America increased $131.9 million, or 3.1%, Latin America increased $8.1 million, or 4.0%, Europe increased $53.7 million, or 2.5%, Middle East and Africa decreased $8.3 million, or 5.7%, and Asia-Pacific increased $36.3 million, or 4.3%.

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

Three Months Ended March 31,

2025 2024 $ Change % Change

Three Months Ended June 30,

Six Months Ended June 30,

2025 2024 $ Change % Change 2025 2024 $ Change % Change

Revenue $ 4,015.6 $ 3,853.8 $ 161.8 4.2 % $ 7,706.0 $ 7,484.3 $ 221.7 3.0 %

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

2) Included in selling, general and administrative expenses for the three months ended March 31, 2025 are acquisition related costs of $33.8 million ($32.7 million after-tax), in connection with the pending merger with IPG (see Note 1 to the unaudited consolidated financial statements), which reduced diluted net income per share - Omnicom Group Inc.

There were no acquisition related costs for the three months ended March 31, 2024.

2) For the three and six months ended June 30, 2025, operating expenses included $88.8 million ($67.2 million after-tax) of repositioning costs recorded in the second quarter of 2025, primarily related to severance actions related to efficiency initiatives (see Note 9 to the unaudited consolidated financial statements).

In addition, included in selling, general and administrative expenses for the three and six months ended June 30, 2025, are acquisition related costs of $66.0 million ($61.6 million after-tax) and $99.8 million ($94.3 million after-tax), respectively, related to the pending merger with IPG (see Note 1 to the unaudited consolidated financial statements).

The net impact of these items reduced operating income for the three and six months ended June 30, 2025, by $154.8 million ($128.8 million after-tax) and $188.6 million ($161.5 million after-tax), respectively, which reduced diluted net income per share - Omnicom Group Inc.

by $0.66 and $0.82, respectively.

For the three and six months ended June 30, 2024, operating expenses included $57.8 million ($42.9 million after-tax) of repositioning costs recorded in the second quarter of 2024, primarily related to severance actions related to ongoing efficiency initiatives, including strategic agency consolidation in our smaller international markets and the launch of our centralized production strategy, which reduced diluted net income per share - Omnicom Group Inc.

There were no acquisition related costs for the three and six months ended June 30, 2024.

3) EBITA is defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets.

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.

In the three months ended March 31, 2025, the effects of after-tax amortization of acquired intangible assets and internally developed strategic platform assets decreased diluted net income per share- Omnicom Group Inc.

by $0.08 for each of the three months ended March 31, 2025 and 2024.

In the three and six months ended June 30, 2025, the effect of after-tax amortization of acquired intangible assets and internally developed strategic platform assets decreased diluted net income per share by $0.08 for each of the three months ended June 30, 2025 and 2024 and $0.15, and $0.16 for the six months ended June 30, 2025 and 2024, respectively.

CONSOLIDATED RESULTS OF OPERATIONS

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

Three Months Ended March 31,

2025 2024 $ Change

Three Months Ended June 30,

Six Months Ended June 30,

2025 2024 $ Change 2025 2024 $ Change

Revenue $ 4,015.6 $ 3,853.8 $ 161.8 $ 7,706.0 $ 7,484.3 $ 221.7

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Occupancy and other costs 325.9 314.2 11.7 640.5 628.3 12.2

Repositioning costs 2

88.8 57.8 31.0 88.8 57.8 31.0

Cost of services 3,347.3 3,172.1 175.2 6,408.2 6,178.8 229.4

25 unchanged sentences

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

statements), which reduced diluted net income per share - Omnicom Group Inc.

There were no acquisition related costs for the three months ended March 31, 2024.

by $0.66 and $0.82, respectively.

There were no acquisition related costs for the three and six months ended June 30, 2024.

3) EBITA is defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets.

by $0.08 for each of the three months ended March 31, 2025 and 2024.

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, 2024

Three months ended June 30, 2024

$ 3,853.8 $ 2,033.4 $ 1,820.4

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Organic growth 116.8 3.0 % 60.4 3.0 % 56.4 3.1 %

Three months ended March 31, 2025

Three months ended June 30, 2025

$ 4,015.6 4.2 % $ 2,093.5 3.0 % $ 1,922.1 5.6 %

Total Domestic International

Six months ended June 30, 2024

$ 7,484.3 $ 3,959.3 $ 3,525.0

Components of revenue change:

Foreign exchange rate impact (16.8) (0.2) % — — % (16.8) (0.5) %

Acquisition revenue, net of disposition revenue (0.2) — % (7.0) (0.2) % 6.8 0.2 %

Organic growth 238.7 3.2 % 148.2 3.7 % 90.5 2.6 %

Six months ended June 30, 2025

$ 7,706.0 3.0 % $ 4,100.5 3.6 % $ 3,605.5 2.3 %

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 $3,749.6 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 ($3,690.4 million less $3,749.6 million for the Total column).

Dollars and the current period constant currency revenue ($4,015.6 million less $3,973.2 million and $7,706.0 million less $7,722.8 million for the Total column for the three and six months ended June 30, 2025, 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 ($3,630.5 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 ($3,853.8 million and $7,484.3 million for the Total column for the three and six months ended June 30, 2025, 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 March 31, 2025 remain unchanged, we expect the impact of changes in foreign exchange rates will be a negative 0.5% for the second quarter and a negative 1.0% for the full year.

Based on our acquisition and disposition activity completed to date, we expect the net impact on revenue to remain flat for both the second quarter and the full year.

Assuming exchange rates at July 14, 2025 remain unchanged, we expect the impact of changes in foreign exchange rates will be a positive 1.0% for the third quarter and positive 1.0% for the full year.

Based on our acquisition and disposition activity completed to date, we expect the net impact on revenue to remain flat for both the third quarter and 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 March 31,

Three Months Ended June 30,

2025 2024 2025 vs.

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Revenue $ 4,015.6 $ 3,853.8 $ 161.8 3.0 %

Six Months Ended June 30,

2025 2024 2025 vs.

Revenue $ % of

Revenue $ Change % Organic Growth

Media & Advertising $ 4,339.5 56.3 % $ 4,055.2 54.2 % $ 284.3 7.7 %

Precision Marketing 907.4 11.8 % 852.5 11.4 % 54.9 5.4 %

Public Relations 735.6 9.5 % 791.4 10.6 % (55.8) (7.0) %

Healthcare 638.3 8.3 % 662.1 8.8 % (23.8) (4.0) %

Branding & Retail Commerce 308.1 4.0 % 367.6 4.9 % (59.5) (13.4) %

Experiential 351.0 4.6 % 338.1 4.5 % 12.9 0.9 %

Execution & Support 426.1 5.5 % 417.4 5.6 % 8.7 1.7 %

Revenue $ 7,706.0 $ 7,484.3 $ 221.7 3.2 %

Beginning in the first quarter of 2025, we realigned the classification of certain services, primarily within our Media & Advertising, Branding & Retail Commerce, Precision Marketing and Public Relations disciplines.

As a result, we reclassified the prior year periods to be consistent with the revised classifications.

The period-over-period change in worldwide revenue for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, in our fundamental disciplines was:

Worldwide organic revenue growth increased revenue $121.9 million, or 3.4%, primarily reflecting increased client spending across most of our disciplines, primarily driven by Media & Advertising, led by our media business, and Precision Marketing disciplines compared to the prior year period.

The organic growth was partially offset by underperformance in our Branding & Retail Commerce, Public Relations and Healthcare disciplines.

The period-over-period change in worldwide revenue for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, in our fundamental disciplines was:

Worldwide organic revenue growth increased revenue $116.8 million, or 3.0%, compared to the prior year period, primarily driven by Media & Advertising, led by our media business, Precision Marketing and Experiential disciplines.

The organic growth was partially offset by underperformance in our Public Relations, Branding & Retail Commerce and Healthcare disciplines.

Changes in foreign exchange rates period-over-period increased revenue $42.4 million, or 1.1%.

The increase in revenue from foreign exchange translation was primarily related to the strengthening of some currencies, including the British Pound and the Euro, against the U.S.

Dollar, partially offset by the weakening of the Brazilian Real, Mexican Peso, and Australian Dollar against the U.S.

Acquisition revenue, net of disposition revenue, increased revenue $2.6 million, or 0.1%.

The period-over-period change in worldwide revenue for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, in our fundamental disciplines was:

Media & Advertising increased $284.3 million, Precision Marketing increased $54.9 million, Public Relations decreased $55.8 million, Healthcare decreased $23.8 million, Branding & Retail Commerce decreased $59.5 million, Experiential increased $12.9 million, and Execution & Support increased $8.7 million.

Worldwide organic revenue growth increased revenue $238.7 million, or 3.2%, compared to the prior year period, primarily driven by Media & Advertising, led by our media business, Precision Marketing, Experiential and Execution & Support disciplines.

The organic growth was partially offset by underperformance in our Public Relations, Branding & Retail Commerce and Healthcare disciplines.

Changes in foreign exchange rates period-over-period reduced revenue $16.8 million, or 0.2%.

The decrease in revenue from foreign exchange translation was primarily related to the weakening of most currencies, including the Euro, Brazilian Real, Canadian Dollar, Australian Dollar, Mexican Peso and British Pound, against the U.S.

Acquisition revenue, net of disposition revenue, reduced revenue $2.8 million, or 0.1%.

The decrease in revenue from foreign exchange translation was primarily related to the weakening of several currencies, including the Brazilian Real, Australian Dollar, Mexican Peso, and the Canadian Dollar, against the U.S.

Dollar, partially offset by the strengthening of the

British Pound and the Euro against the U.S.

Acquisition revenue, net of disposition revenue, reduced revenue slightly by $0.2 million.

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 2.7% and 3.0% of revenue for the twelve months ended March 31, 2025 and 2024, respectively.

Our ten largest and 100 largest clients represented 19.1% and 53.6% of revenue for the twelve months ended March 31, 2025, respectively, and 20.0% and 53.8% of revenue for the twelve months ended March 31, 2024, respectively.

Our largest client represented 2.6% and 2.9% of revenue for the twelve months ended June 30, 2025 and 2024, respectively.

Our ten largest and 100 largest clients represented 19.0% and 54.1% of revenue for the twelve months ended June 30, 2025, respectively, and 19.7% and 53.6% of revenue for the twelve months ended June 30, 2024, respectively.

Revenue by Geography

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

Three Months Ended March 31,

Three Months Ended June 30,

2025 2024 2025 vs.

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Revenue $ 4,015.6 $ 3,853.8 $ 161.8 3.0 %

The period-over-period change in worldwide revenue across our geographic markets for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was:

North America increased $70.6 million, or 3.5%, Latin America

decreased $0.1 million, or 0.1%, Europe decreased $10.8 million, or 1.1%, Middle East and Africa decreased $8.8 million, or 11.1%, and Asia-Pacific increased $9.0 million, or 2.2%.

Six Months Ended June 30,

2025 2024 2025 vs.

Revenue $ % of

Revenue $ Change % Organic Growth

North America $ 4,321.2 56.1 % $ 4,189.3 56.0 % $ 131.9 3.5 %

In North America, organic revenue growth period-over-period for the three months ended March 31, 2025 was primarily driven by strong performance in the United States, especially in the Media & Advertising discipline, led by our media business, and our Precision Marketing, Experiential and Execution & Support disciplines.

The organic growth was partially offset by underperformance in our Branding & Retail Commerce, Public Relations and Healthcare disciplines.

Latin America 211.0 2.7 % 202.9 2.7 % 8.1 16.5 %

In Latin America, organic revenue growth for the three months ended March 31, 2025 was led by our Media & Advertising discipline, and in substantially all countries in the region, compared to the prior year period.

Europe 2,161.4 28.0 % 2,107.7 28.2 % 53.7 0.6 %

Middle East and Africa 136.9 1.8 % 145.2 1.9 % (8.3) (4.7) %

Asia-Pacific 875.5 11.4 % 839.2 11.2 % 36.3 6.2 %

Revenue $ 7,706.0 $ 7,484.3 $ 221.7 3.2 %

The period-over-period change in worldwide revenue across our geographic markets for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was:

The period-over-period change in the worldwide revenue across our geographic markets for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was:

North America

In North America, organic revenue growth period-over-period for the three and six months ended June 30, 2025 was primarily driven by strong performance in the United States, especially in the Media & Advertising discipline, led by our media business, and our Precision Marketing, Experiential and Execution & Support disciplines.

The organic growth was partially offset by underperformance in our Public Relations, Branding & Retail Commerce and Healthcare disciplines.

Latin America

In Latin America, organic revenue growth for the three and six months ended June 30, 2025, compared to the prior year periods, was led by our Media & Advertising discipline, and in all countries in the region.

The weakening of all currencies, especially the Brazilian Real and Mexican Peso, against the U.S.

Dollar decreased revenue in the three months ended March 31, 2025 compared to the prior year period.

In Europe, compared to the prior year period, organic revenue growth for the three months ended March 31, 2025 was driven by strong performance in our Media & Advertising discipline, led by our media business, and in our Experiential discipline, partially offset by underperformance in our Precision Marketing, Healthcare, Branding & Retail Commerce and Public Relations disciplines.

Foreign currency changes decreased revenue for the three months ended March 31, 2025, primarily as a result of the weakening of the Euro and British Pound against the U.S.

Dollar decreased revenue in the three and six months ended June 30, 2025 compared to the same periods in 2024.

In Europe, compared to the prior year periods, organic revenue growth for the three and six months ended June 30, 2025 was driven by strong performance in our Media & Advertising discipline, led by our media business, and our Experiential discipline, substantially offset by underperformance in all other disciplines.

Foreign currency exchange rate changes increased revenue for the three and six months ended June 30, 2025, primarily as a result of the strengthening of the Euro and the British Pound against the U.S.

Dollar period-over-period.

In the U.K., for the three months ended March 31, 2025, organic revenue decreased period-over-period by 0.7%.

In Continental Europe, which includes the Euro Zone and the other European countries, organic revenue growth of 1.7% for the three months ended March 31, 2025 was led by Czech Republic, Italy and Poland, primarily driven by our Media & Advertising and Experiential disciplines.

In the Middle East and Africa, for the three months ended March 31, 2025, organic revenue decreased period-over-period by 9.3%, primarily due to underperformance in our Experiential discipline.

In Asia-Pacific, organic revenue increased period-over-period for the three months ended March 31, 2025 by 6.0%.

In the U.K., for the three and six months ended June 30, 2025, organic revenue decreased period-over-period by 2.5% and 1.6%, respectively.

A strong performance in our Media & Advertising discipline, led by our media business, was substantially offset by underperformance in all other disciplines.

In Continental Europe, which includes the Euro Zone and the other European countries, organic revenue growth of 2.5% and 2.1% for the three and six months ended June 30, 2025, respectively, was mixed by country and driven primarily by our Media & Advertising, led by our media business, and Experiential disciplines.

The Middle East and Africa, for the three and six months ended June 30, 2025, experienced weak organic growth with a strong performance in our Media & Advertising discipline, led by our media business, offset by negative performance in our Experiential discipline.

In Asia-Pacific, organic growth for the three and six months ended June 30, 2025 was 6.5% and 6.2%, respectively.

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

Several markets in the region, especially India and Australia, had positive organic growth, partially offset by weakening in China, as compared to the prior year period.

Foreign currency changes decreased revenue for the three months ended March 31, 2025, primarily as a result of the weakening of several currencies, including the Australian Dollar, New Zealand Dollar and Japanese Yen, against the U.S.

Substantially all markets in the region, led by Australia, India and New Zealand, had positive organic growth, partially offset by slight weakening in China, as compared to the prior year periods.

Foreign currency exchange rate changes increased revenue for the three months ended June 30, 2025, primarily as a result of the strengthening of several currencies against the U.S.

Dollar, including the Japanese Yen.

Foreign currency exchange rate changes decreased revenue for the six months ended June 30, 2025, primarily as a result of the weakening of several currencies against the U.S.

Dollar, including the Australian Dollar and New Zealand Dollar.

Revenue by Industry

Revenue by type of client industry sector:

Three Months Ended March 31,

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

2025 2024 2025 2024

Pharmaceuticals and Healthcare 15 % 17 % 15 % 16 %

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The period-over-period change in operating expenses:

Three Months Ended March 31,

Three Months Ended June 30,

2025 2024 2025 vs.

8 unchanged sentences

Occupancy and other costs 325.9 8.1 % 314.2 8.2 % 11.7 3.7 %

Repositioning costs 88.8 2.2 % 57.8 1.5 % 31.0 53.6 %

Cost of services 3,347.3 3,172.1 175.2 5.5 %

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Operating Income $ 439.2 10.9 % $ 510.3 13.2 % $ (71.1) (13.9) %

Six Months Ended June 30,

2025 2024 2025 vs.

Revenue $ % of

Revenue $ 7,706.0 $ 7,484.3 $ 221.7 3.0 %

Operating Expenses:

Salary and service costs:

Salary and related costs 3,608.3 46.8 % 3,684.2 49.2 % (75.9) (2.1) %

Third-party service costs 1,715.2 22.3 % 1,509.3 20.2 % 205.9 13.6 %

Third-party incidental costs 355.4 4.6 % 299.2 4.0 % 56.2 18.8 %

Total salary and service costs 5,678.9 73.7 % 5,492.7 73.4 % 186.2 3.4 %

Occupancy and other costs 640.5 8.3 % 628.3 8.4 % 12.2 1.9 %

Repositioning costs 88.8 1.2 % 57.8 0.8 % 31.0 53.6 %

Cost of services 6,408.2 6,178.8 229.4 3.7 %

Selling, general and administrative expenses 288.3 3.7 % 196.3 2.6 % 92.0 46.9 %

Depreciation and amortization 117.7 1.5 % 120.0 1.6 % (2.3) (1.9) %

Total Operating Expenses 6,814.2 88.4 % 6,495.1 86.8 % 319.1 4.9 %

Operating Income $ 891.8 11.6 % $ 989.2 13.2 % $ (97.4) (9.8) %

We measure cost of services in two distinct categories:

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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.

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

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

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

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 months ended March 31, 2025.

Operating expenses for the three months ended March 31, 2025 increased $86.2 million, or 2.7%, to $3,237.8 million from $3,151.6 million, compared to the prior year period.

Included in selling, general and administrative expenses for the three months ended March 31, 2025 are acquisition related costs of $33.8 million ($32.7 million after-tax), related to the pending merger with IPG (see Note 1 to the unaudited consolidated financial statements).

Operating expenses for the three months ended June 30, 2025 increased $232.9 million, or 7.0%, to $3,576.4 million from $3,343.5 million, in the prior year period.

Included in selling, general and administrative expenses for the three months ended June 30, 2025 are acquisition related costs of $66.0 million ($61.6 million after-tax) related to the pending merger with IPG (see Note 1 to the unaudited consolidated financial statements).

Included in operating expenses for the three months ended June 30, 2025 are $88.8 million ($67.2 million after-tax) of repositioning costs recorded in the second quarter of 2025, primarily related to severance actions related to efficiency initiatives, primarily within the Omnicom Advertising Group and the Omnicom Production Group (see Note 9 to the unaudited financial statements).

Operating expenses for the six months ended June 30, 2025 increased $319.1 million, or 4.9%, to $6,814.2 million from $6,495.1 million, in the prior year period.

Included in selling, general and administrative expenses for the six months ended June 30, 2025 are acquisition related costs of $99.8 million ($94.3 million after-tax) related to the pending merger with IPG (see Note 1 to the unaudited consolidated financial statements).

Included in operating expenses are $88.8 million ($67.2 million after-tax) of repositioning costs recorded in the second quarter of 2025, primarily related to severance actions related to efficiency initiatives, primarily within the Omnicom Advertising Group and the Omnicom Production Group (see Note 9 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, 2025 increased $53.7 million, or 2.0%, to $2,746.3 million, compared to the prior year period.

Salary and related costs for the three months ended March 31, 2025 decreased $66.8 million, or 3.6%, to $1,780.5 million.

These costs decreased primarily due to the reduction arising from our repositioning actions in 2024 and global employee mix.

Third-party service costs for the three months ended March 31, 2025 increased $98.6 million, or 14.1%, to $796.8 million, primarily as a result of organic growth in our Media & Advertising discipline.

Third-party incidental costs for the three months ended March 31, 2025 increased $21.9 million, or 14.9%, to $169.0 million, primarily as a result of organic growth.

Salary and service costs for the three months ended June 30, 2025 increased $132.5 million, or 4.7%, to $2,932.6 million, compared to the prior year period.

Salary and related costs for the three months ended June 30, 2025 decreased $9.1 million, or 0.5%, to $1,827.8 million, primarily due to reductions arising from our ongoing repositioning actions and changes in our global employee mix, substantially offset by an increase related to changes in foreign currency exchange rates.

Third-party service costs for the three months ended June 30, 2025 increased $107.3 million, or 13.2%, to $918.4 million, primarily as a result of organic growth in our Media & Advertising discipline.

Third-party incidental costs for the three months ended June 30, 2025 increased $34.3 million, or 22.6%, to $186.4 million.

Salary and service costs for the six months ended June 30, 2025 increased $186.2 million, or 3.4%, to $5,678.9 million, compared to the prior year period.

Salary and related costs for the six months ended June 30, 2025 decreased $75.9 million, or 2.1%, to $3,608.3 million, primarily due to reductions arising from our repositioning actions and changes in our global employee mix.

Third-party service costs for the six months ended June 30, 2025 increased $205.9 million, or 13.6%, to $1,715.2 million, primarily as a result of organic growth in our Media & Advertising discipline.

Third-party incidental costs for the six months ended June 30, 2025 increased $56.2 million, or 18.8%, to $355.4 million.

Operating Expenses - Occupancy and Other Costs

Occupancy and other costs are less directly linked to changes in revenue than salary and service costs.

For the three months ended March 31, 2025, occupancy and other costs increased by $0.5 million to $314.6 million.

Occupancy and other costs for the three and six months ended June 30, 2025, which are less directly linked to changes in revenue than salary and service costs, increased by $11.7 million, or 3.7%, to $325.9 million and increased by $12.2 million, or 1.9%, to $640.5 million, respectively.

Increased other occupancy costs were driven in part by negative effects from foreign currency exchange rates, partially offset by lower rent expense in the periods.

As a percentage of revenue, occupancy and other costs decreased for the three and six month periods ended June 30, 2025.

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 months ended March 31, 2025 by $32.6 million, compared to the same period in 2024, primarily due to acquisition related costs of $33.8 million ($32.7 million after-tax), in connection with the pending merger with IPG (see Note 1 to the unaudited consolidated financial statements).

SG&A expenses increased for the three and six months ended June 30, 2025 by $59.4 million and $92.0 million, respectively, compared to the same periods in 2024, primarily due to acquisition related costs in connection with the pending merger with IPG (see Note 1 to the unaudited consolidated financial statements).

Operating Income

Operating income for the three months ended March 31, 2025 decreased $26.3 million to $452.6 million, and operating margin decreased to 12.3% from 13.2% compared to the same period in 2024.

EBITA for the three months ended March 31, 2025 decreased $26.0 million to $474.4 million, and EBITA Margin decreased to 12.9% from 13.8%.

Acquisition related costs recorded in the first quarter of 2025 (see Note 1 to the unaudited financial statements) reduced both operating income and EBITA by $33.8 million, and reduced both operating margin and EBITA margin by 0.9%.

Operating income for the three months ended June 30, 2025 decreased $71.1 million to $439.2 million, and operating margin decreased to 10.9% from 13.2% compared to the same period in 2024.

EBITA for the three months ended June 30, 2025 decreased $72.8 million to $459.0 million, and EBITA Margin decreased to 11.4% from 13.8%.

Acquisition related costs and repositioning costs recorded in the second quarter of 2025 (see Notes 1 and 9 to the unaudited financial statements) reduced both operating income and EBITA by $154.8 million, and reduced both operating margin and EBITA margin by 3.9%.

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%.

Operating income for the six months ended June 30, 2025 decreased $97.4 million to $891.8 million, and operating margin decreased to 11.6% from 13.2% compared to the same period in 2024.

EBITA for the six months ended June 30, 2025 decreased $98.8 million to $933.4 million, and EBITA Margin decreased to 12.1% from 13.8%.

Acquisition related costs in the first half of 2025 and repositioning costs recorded in the second quarter of 2025 (see Notes 1 and 9 to the unaudited financial statements)

reduced both operating income and EBITA by $188.6 million, and reduced operating margin by 2.4% and EBITA margin by 2.5% for the six month period.

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

Net Interest Expense

Net interest expense for the three months ended March 31, 2025 increased $2.6 million period-over-period to $29.4 million.

Interest expense for the three months ended March 31, 2025 increased $5.3 million period-over-period to $59.1 million, primarily related to the higher weighted average cost of debt in connection with our financing activities in 2024.

Interest income in the three months ended March 31, 2025 increased $2.7 million period-over-period to $29.7 million, principally due to higher cash balances.

Our effective tax rate for the three months ended March 31, 2025 increased period-over-period to 28.5% from 25.7%, due primarily to the non-deductibility of acquisition related costs related to the pending merger with IPG.

The effective tax rate for the 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, 2025 decreased $1.0 million and $1.6 million period-over-period to $40.7 million and $70.1 million, respectively.

Interest expense on debt for the three and six months ended June 30, 2025 increased $2.0 million and $7.5 million period-over-period to $58.8 million and $114.9 million, respectively, primarily related to the higher weighted average cost of debt in connection with our financing activities in 2024.

Interest income in the three and six months ended June 30, 2025 increased $0.9 million to $21.9 million and $3.6 million to $51.6 million, respectively, principally due to higher cash balances.

Our effective tax rate for the six months ended June 30, 2025 increased period-over-period to 29.4% from 26.0%, primarily due to the non-deductibility of certain acquisition related costs in connection with the pending merger with IPG (see Note 1 to the unaudited consolidated financial statements).

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

tax positions of $7.5 million.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S.

which contains a broad range of tax reform provisions affecting businesses.

We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position, but we expect that the legislation will likely not have a material impact on our financial statements.

As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025.

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

Net income - Omnicom Group Inc.

in the three months ended March 31, 2025 decreased $30.9 million to $287.7 million from $318.6 million.

in the three months ended June 30, 2025 decreased $70.5 million to $257.6 million from $328.1 million.

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

Diluted net income per share - Omnicom Group Inc.

decreased to $1.45 in the three months ended March 31, 2025, from $1.59 in the three months ended March 31, 2024, due to the factors described above and the impact of the reduction in our weighted average common shares outstanding resulting from repurchases of our common stock.

After-tax, the acquisition related costs recorded in the first quarter of 2025 (see Note 1 to the unaudited consolidated financial statements) reduced net income - Omnicom Group Inc.

decreased to $1.31 in the three months ended June 30, 2025, from $1.65 in the three months ended June 30, 2024, due to the factors described above, partially offset by the impact of the reduction in our weighted average common shares outstanding resulting from repurchases of our common stock.

For the three months ended June 30, 2025, the impact of the acquisition related costs and repositioning costs (see Notes 1 and 9 to the unaudited consolidated financial statements) reduced net income - Omnicom Group Inc.

by $128.8 million and diluted net income per share - Omnicom Group Inc.

In the three months ended March 31, 2025, the effect of after-tax amortization of acquired intangible assets and internally developed strategic platform assets decreased diluted net income per share by $0.08 for each of the three months ended March 31, 2025 and 2024.

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.

Net income - Omnicom Group Inc.

in the six months ended June 30, 2025 decreased $101.4 million to $545.3 million from $646.7 million.

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

Diluted net income per share - Omnicom Group Inc.

decreased to $2.77 in the six months ended June 30, 2025 from $3.24 in the six months ended June 30, 2024, 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, 2025, the impact of the acquisition related costs and repositioning costs (see Notes 1 and 9 to the unaudited consolidated financial statements) reduced net income - Omnicom Group Inc.

by $161.5 million and diluted net income per share - Omnicom Group Inc.

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.

The effect of after-tax amortization of acquired intangible assets and internally developed strategic platform assets decreased diluted net income per share by $0.08 for each of the three months ended June 30, 2025 and 2024 and $0.15 and $0.16 for the six months ended June 30, 2025 and 2024, respectively.

NON-GAAP FINANCIAL MEASURES

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to EBITA and EBITA Margin:

Three Months Ended March 31,

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

2025 2024 2025 2024

Net Income - Omnicom Group Inc.

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internally developed strategic platform assets

19.8 21.5 41.6 43.0

Earnings before interest, taxes and amortization of intangible assets (“EBITA”) $ 459.0 $ 531.8 $ 933.4 $ 1,032.2

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Cash and cash equivalents decreased $1,039.0 million from December 31, 2024.

During the first three months of 2025, we used $786.8 million of cash in operating activities, which included the use for operating capital of $1.2 billion, primarily related to our typical working capital cycle.

Discretionary spending for the first three months of 2025 was $253.7 million, compared to $1.2 billion for the first three months of 2024, which included $801.5 million for acquisition of businesses and interests in affiliates, net of cash acquired.

Discretionary spending for the first three months of 2025 was comprised of capital expenditures of $29.5 million, dividends paid to common shareholders of $137.7 million, dividends paid to shareholders of noncontrolling interests of $13.0 million, repurchases of our common stock, net of proceeds from vesting of restricted stock awards and related tax benefits and common stock sold under our employee stock purchase plan of $69.5 million, the acquisition of additional shares of noncontrolling interests, and payment of contingent purchase price obligations of $4.0 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.

During the first six months of 2025, we used $576.7 million of cash in operating activities, which included the use for operating capital of $1.4 billion, primarily related to our typical working capital cycle.

Discretionary spending for the first six months of 2025 was $641.6 million, compared to $1.5 billion for the first six months of 2024, which included $790.3 million for acquisition of businesses and interests in affiliates, net of cash acquired.

Discretionary spending for the first six months of 2025 was comprised of capital expenditures of $71.6 million, dividends paid to common shareholders of $277.4 million, dividends paid to shareholders of noncontrolling interests of $34.3 million, repurchases of our common stock, net of proceeds from vesting of restricted stock awards and related tax benefits and common

stock sold under our employee stock purchase plan of $210.1 million, the acquisition of additional shares of noncontrolling interests, and payment of contingent purchase price obligations of $48.2 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 is available to fund our working capital and contractual obligations.

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

At March 31, 2025, our foreign subsidiaries held approximately $1.8 billion of our total cash and cash equivalents of $3.4 billion.

At June 30, 2025, our foreign subsidiaries held approximately $1.7 billion of our total cash and cash equivalents of $3.3 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, 2025, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents, increased $1.0 billion to $2.8 billion from December 31, 2024.

At June 30, 2025, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents, increased $1.3 billion to $3.0 billion from December 31, 2024.

The increase in net debt primarily resulted from the use of cash of $576.7 million for operating activities, which included the use for operating capital of $1.4 billion, primarily related to our typical working capital requirement during the period and discretionary spending of $641.6 million, as discussed above.

Components of net debt:

March 31, 2025 December 31, 2024 March 31, 2024

June 30, 2025 December 31, 2024 June 30, 2024

Short-term debt $ 22.3 $ 21.3 $ 15.1

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Our 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 3.60% Senior Notes due April 2026.

Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under the 3.60% Senior Notes due April 2026, accordingly it has been reclassified to current liabilities on the balance sheet.

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

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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 March 31, 2025, we were in compliance with this covenant as our Leverage Ratio was 2.4 times.

At June 30, 2025, 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 March 31, 2025, our long-term and short-term debt was rated BBB+ and A2 by S&P and Baa1 and P2 by Moody’s.

At June 30, 2025, 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 March 31, 2025, there were no drawings under the Credit Facility, and no commercial paper issuances.

During the three and six months ended June 30, 2025, there were no drawings under the Credit 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 provide marketing and 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 2.7% of revenue for the twelve months ended March 31, 2025.

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 2.6% of revenue for the twelve months ended June 30, 2025.

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 2024 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 evaluate goodwill for impairment 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.

Effective January 1, 2025, we formed Omnicom Advertising Group (OAG), which aligned all of our creative advertising networks under one segment manager.

We identified our regional reporting units as components of our operating segments, which are our four 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.

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.

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, or 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, or WACC, for each reporting unit.

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

May 1, 2025 May 1, 2024

Long-Term Growth Rate 3.5% 3.5%

WACC 12.5% - 12.8% 10.8% - 11.8%

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 3.5% and 5.0%, respectively.

We considered this history when determining the long-term growth rates used in our annual impairment test at May 1, 2025.

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, 2025, we used an estimated long-term growth rate of 3.5%.

When performing the annual impairment test as of May 1, 2025 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 2025.

In the first half of 2025, our organic revenue increase was 3.2%, 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 four 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 some 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 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, 2025 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 of total assets.

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 46%.

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, 2025 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