Author: Amanda Granath

Revenue of $3.6 billion, with organic growth of 4.0%

Diluted earnings per share of $1.59; $1.67 Non-GAAP adjusted

Operating income of $478.9 million and 13.2% margin

EBITA of $500.4 million and 13.8% margin

NEW YORK, April 16, 2024 /PRNewswire/ — Omnicom (NYSE: OMC) today announced results for the quarter ended March 31, 2024.

“Omnicom began the year with solid organic revenue growth of 4.0%, led by continued strength in our advertising & media and precision marketing disciplines, including Flywheel Digital,” said John Wren, Chairman and Chief Executive Officer of Omnicom. “We are uniquely able to combine marketing and sales solutions with a seamless set of information signals to turn our award-winning creativity into measurable dynamic business outcomes for our clients.  Our industry-leading tools and platforms, combined with the strength of our operating leadership, has led to our excellent new business performance and, when combined with the new opportunities we are pursuing, give us great confidence in the future.”

First Quarter 2024 Results

Revenue
Reported revenue in the first quarter of 2024 increased $187.2 million, or 5.4%, to $3,630.5 million. Worldwide revenue growth in the first quarter of 2024 compared to the first quarter of 2023 was led by an increase in organic growth of $136.9 million, or 4.0%. Acquisition revenue, net of disposition revenue, increased revenue by $53.0 million, or 1.5%, primarily due to the Flywheel Digital acquisition in the Precision Marketing discipline. The impact of foreign currency translation reduced revenue by $2.7 million, or 0.1%.

Organic growth by discipline in the first quarter of 2024 compared to the first quarter of 2023 was as follows: 7.0% for Advertising & Media, 4.3% for Precision Marketing, 9.5% for Experiential, and 2.1% for Healthcare, partially offset by declines of 4.3% for Execution & Support, 3.8% for Branding & Retail Commerce, and 1.1% for Public Relations.

Organic growth by region in the first quarter of 2024 compared to the first quarter of 2023 was as follows: 4.3% for the United States, 3.5% for Euro Markets & Other Europe, 22.3% for Latin America, 3.0% for Asia Pacific, 3.2% for the United Kingdom, and 1.1% for Other North America, partially offset by a decline of 4.2% for the Middle East & Africa.

Expenses
Operating expenses increased $54.8 million, or 1.8%, to $3,151.6 million in the first quarter of 2024 compared to the first quarter of 2023.

Salary and service costs increased $149.7 million, or 5.9%, to $2,692.6 million. These costs tend to fluctuate with changes in revenue and are comprised of salary and related costs, which include employee compensation and benefits costs, freelance labor, third-party service costs, and third-party incidental costs. Salary and related costs increased $69.3 million, or 3.9%, to $1,847.3 million, primarily due to an increase in headcount primarily as a result of our acquisition of Flywheel Digital. Third-party service costs include third-party supplier 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 service costs increased $58.9 million, or 9.2%, to $698.2 million, and third-party incidental costs increased $21.5 million, or 17.1%, to $147.1 million, both primarily as a result of organic growth.

Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, increased $22.5 million, or 7.7%, to $314.1 million. The increase is primarily related to our acquisition activity in the period. Increased occupancy costs were partially offset by lower rent expense.

SG&A expenses decreased $3.9 million, or 4.4%, to $85.3 million, primarily due to a decrease in administrative costs.

Operating Income
Operating income increased $132.4 million, or 38.2%, to $478.9 million in the first quarter of 2024 compared to the first quarter of 2023, and the related margin increased to 13.2% from 10.1%. In the three months ended March 31, 2023, the effect of real estate repositioning costs reduced operating income by $119.2 million and decreased operating margin by 3.4%.

Interest Expense, net
Interest expense was flat, offset by a decrease in interest income of $8.6 million due primarily to lower average cash and short-term investment balances. 

Income Taxes
Our effective tax rate for the three months ended March 31, 2024 increased period-over-period to 25.7% from 25.5%. The effective tax rate for 2024 includes the favorable impact from the resolution of certain tax positions of $7.5 million. The effective tax rate for the three months ended March 31, 2023 includes the favorable impact of approximately $10.0 million of previously unrecognized tax benefits, partially offset by approximately $6.0 million related to a lower tax benefit in certain jurisdictions for the real estate repositioning costs in the quarter, and an increase in the U.K. statutory tax rate.

Net Income – Omnicom Group Inc. and Diluted Net Income per Share
Net income – Omnicom Group Inc. for the first quarter of 2024 increased $91.1 million, or 40.0%, to $318.6 million compared to the first quarter of 2023. Diluted shares outstanding for the first quarter of 2024 decreased 2.2% to 200.1 million from 204.5 million as a result of net share repurchases. Diluted net income per share of $1.59 increased $0.48, or 43.2%, from $1.11. The first quarter 2023 included $119.2 million ($91.0 million after-tax, $0.45 per diluted share) related to real estate repositioning costs.

Beginning with the three months ended March 31, 2024, Non-GAAP Adjusted Net Income per Share – Diluted excludes the effect of after-tax amortization of acquired intangible assets and internally developed strategic platform assets.  For the three months ended March 31, 2024, Non-GAAP Adjusted Net Income per Share – Diluted of $1.67 increased $0.06 or 3.7%, from Non-GAAP Adjusted Net Income per Share – Diluted of $1.61 in the first quarter of 2023. We present Non-GAAP Adjusted Net Income per Share – Diluted to allow for comparability with the prior year period.

EBITA
Adjusted EBITA increased $19.9 million, or 4.1%, to $500.4 million in the first quarter of 2024 compared to the first quarter of 2023, and the related margin decreased to 13.8% from 14.0%.

Risks and Uncertainties
Current 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. The impact of these issues on our business will vary by geographic market and discipline. We monitor economic conditions closely, as well as client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness, and other developments.

Definitions – Components of Revenue Change
We use certain terms in describing the components of the change in revenue above. 

Foreign exchange rate impact: calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue. The foreign exchange rate impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue.

Acquisition revenue, net of disposition revenue: 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. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date, and the comparable prior period revenue and the positive or negative growth after the acquisition date is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of disposals through such date. The acquisition revenue and disposition revenue amounts are netted in the description above.

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

Conference Call
Omnicom will host a conference call to review its financial results on Tuesday, April 16, 2024, starting at 4:30 p.m. Eastern Time.  A live webcast of the call, along with the related slide presentation, will be available at Omnicom’s investor relations website, investor.omnicomgroup.com, and a webcast replay will be made available after the call concludes.

Corporate Responsibility
At Omnicom, we are committed to promoting responsible practices and making positive contributions to society around the globe. Please explore our website (omnicomgroup.com/corporate-responsibility) for highlights of our progress across the areas on which we focus: Empower People, Protect Our Planet, Lead Responsibly.

About Omnicom
Omnicom (NYSE: OMC) is a leading provider of data-inspired, creative marketing and sales solutions. Omnicom’s iconic agency brands are home to the industry’s most innovative communications specialists who are focused on driving intelligent business outcomes for their clients. The company offers a wide range of services in advertising, strategic media planning and buying, precision marketing, retail and digital commerce, branding, experiential, public relations, healthcare marketing and other specialty marketing services to over 5,000 clients in more than 70 countries. For more information, visit www.omnicomgroup.com. 

Non-GAAP Financial Measures
We present financial measures determined in accordance with generally accepted accounting principles in the United States (“GAAP”) and adjustments to the GAAP presentation (“Non-GAAP”), which we believe are meaningful for understanding our performance. We believe these measures are useful in evaluating the impact of certain items on operating performance and allows for comparability between reporting periods. EBITA is defined as operating income before interest, taxes, and amortization of acquired intangible assets and internally developed strategic platform assets, and EBITA margin is defined as EBITA divided by revenue. We use EBITA and EBITA margin as additional operating performance measures, which exclude the non-cash amortization expense of acquired intangible assets and internally developed strategic platform assets. We also use Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITA, Adjusted EBITA Margin, Adjusted Income Tax Expense, Adjusted Net Income – Omnicom Group Inc. and Adjusted Net Income per diluted share – Omnicom Group Inc. as additional operating performance measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Non-GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies.

Forward-Looking Statements
Certain statements in this document contain forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by 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 affecting the distribution of our clients’ products; international, national, or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments, and a deterioration or disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing, and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing, and corporate communications industries; unanticipated changes to, or the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems and risks related to cybersecurity incidents; effective management of the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and related partnerships in our business; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with acquisitions, its critical accounting estimates and legal proceedings; the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions, and an evolving regulatory environment in high-growth markets and developing countries; and risks related to our environmental, social, and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

NEW YORK, April 8, 2024 /PRNewswire/ — Omnicom (NYSE: OMC) will publish its first quarter results on Tuesday, April 16, 2024 after the New York Stock Exchange close of trading. The company will also host a conference call to review such financial results on Tuesday, April 16, 2024, starting at 4:30 p.m. Eastern Time.  A live webcast of the call will be available at Omnicom’s investor relations website, investor.omnicomgroup.com, along with the related earnings press release and slide presentation. A webcast replay will be made available after the call concludes.

About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, digital commerce, branding, experiential, public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries.

SOURCE Omnicom Group Inc.

Omnicom joined leaders and experts across the industry for Adobe Summit 2024, a 3-day event of inspiring keynotes, with more than 200 breakout sessions, and hands-on labs.

Omnicom’s Adobe center of excellence, Credera, is one of the select few agencies in the world to hold Adobe Global Platinum Solution Partner status in addition to achieving specializations across an unmatched number of Adobe Experience products.

Learn how Omnicom brought its foundation of creativity and innovation, deep specialization, and more to Adobe Summit, and view our key takeaways from the premier digital experience conference.

In case you missed it, watch Omnicom’s content from the summit on demand!

Watch: Maximize Creativity and Content at Scale

Dr. Ali Alkhafaji and Cleve Gibbon shared how Omnicom goes the distance with Adobe’s modern, scalable, and repeatable content supply chain. Our content supply chain empowers marketing teams at Omnicom to meet exploding content personalization requirements while ensuring that creativity stays front and center. The session was opened by Heather Freeland, Chief Brand Officer, Adobe, and closed with a demo of our Generative AI powered campaign.

Speakers:

• Heather Freeland, Chief Brand Officer, Adobe
• Cleve Gibbon, SVP of AI and Creative Technology, Omnicom
• Dr. Ali Alkhafaji, Chief Executive Officer, Credera Digital, Omnicom
• Loni Stark, VP, Experience Manager and Commerce, Adobe
• Emily Palmer, Principal Solutions Consultant, Adobe

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Watch: Leveraging Generative AI to Produce Content at Scale

Alissa Hansen and Jay Proulx revealed Omnicom’s tested approach to managing content workflows, which is fueled by Generative AI to deliver even more powerful outcomes for our clients. Alissa and Jay explained how Generative AI helps Omnicom optimize hyper personalized marketing campaigns while unlocking new growth and ROI.

Speakers:

• Alissa Hansen, Chief Production Officer, Critical Mass
• Jay Proulx, Global Adobe Platform Lead, Credera

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Watch: Rapid Content Scaling for ​Exceptional Marketing Experiences

Karen Ballenden and Ash King explained how Generative AI can help brands multiply their scaled content variations a thousand-fold—all while enabling engaging, brand-aligned experiences. Karen and Ash also touched upon the role of trust and ethics to ensure every one of the thousands of campaign elements resonates with authenticity and integrity.

Speakers:

• Karen Ballenden, Global Business Director, 180 Global
• Ash King, Director, Gen AI Consulting, Adobe

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Watch: The Forefront of Innovation: AI-Powered Commerce

David Battrick and Olin Moran showed how our innovative Omnicom Commerce solution (DTC) uses Generative AI and the power of the Adobe ecosystem. These solutions are increasingly critical for accelerating digital commerce and going to market with best-in class experiences in every connected touchpoint.

Speakers:

• David Battrick, SVP, DTC Practice Lead, OMC Transact
• Olin Moran, Partner Commerce Lead, OPMG

Each year, South by Southwest® (SXSW®) serves as an essential destination for creatives across the globe to meet, learn, and share ideas.

What started as a music festival quickly evolved into a music and media conference, which then grew to encompass digital, tech, innovation, and more. Though SXSW has evolved significantly over the years, what hasn’t changed is the underlying thread of creativity.

This year, Omnicom returned to SXSW through the lens of ‘Expecting the Unexpected’ – because while machines are great at classifying and predicting, the creativity that underpins ‘the unexpected’ is a unique quality only humans have the power to bring to life.

To check out Omnicom’s presence at the Festival, visit our schedule and read on as Omnicom colleagues give their ‘Unexpected Takes’ from SXSW 2024.

T

NEW YORK, Feb. 28, 2024 /PRNewswire/ — Omnicom (NYSE: OMC) and Omnicom Finance Holdings plc (the “Issuer”), a wholly owned indirect subsidiary of Omnicom, today announced the pricing of the Issuer’s public offering of €600 million aggregate principal amount of 3.700% Senior Notes due 2032 (the “Notes”). The Notes will mature on March 6, 2032. The transaction is expected to close on March 6, 2024, subject to customary closing conditions.

The Notes will bear interest at a rate of 3.700 percent per annum. The Notes will be fully and unconditionally guaranteed by Omnicom. The Notes and the related guarantee will be the unsecured and unsubordinated obligations of the Issuer and Omnicom, respectively, and will rank equal in right of payment to all of their respective existing and future unsecured senior indebtedness.

The Issuer intends to use the net proceeds from the offering for general corporate purposes, which could include working capital expenditures, fixed asset expenditures, acquisitions, repayment of commercial paper and short-term debt, refinancing of other debt, repurchases of Omnicom’s common stock or other capital transactions.

Application will be made to have the Notes listed on The New York Stock Exchange. The listing application will be subject to approval by The New York Stock Exchange. If such a listing is obtained, the Issuer will have no obligation to maintain such listing, and the Issuer may delist the Notes at any time.

Barclays Bank PLC, BNP Paribas, HSBC Bank plc, and J.P. Morgan Securities plc are acting as joint book-running managers for the offering.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer, solicitation or sale in such jurisdiction. The public offering is being made pursuant to an effective shelf registration statement that has been filed with the Securities and Exchange Commission (“SEC”). A final prospectus supplement related to the offering will be filed with the SEC and will be available on the SEC’s website at http://www.sec.gov. In addition, copies of the prospectus and prospectus supplement relating to the Notes offered in the offering may be obtained by contacting any of the following underwriters: Barclays Bank PLC toll-free at 1-888-603-5847, BNP Paribas toll-free at 1-800-854-5674, HSBC Bank plc at +44-207-991-8888, or J.P. Morgan Securities plc (for non-U.S. investors) collect at +44-207-134-2468 or J.P. Morgan Securities LLC (for U.S investors) collect at 1-212-834-4533.

This document is for distribution only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”).  This document is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.

Relevant stabilization regulations including FCA/ICMA will apply. UK MiFIR and MiFID II professionals / ECPs-only / No UK or EEA PRIIPs KID – Manufacturer target market (MIFID II and UK MiFIR product governance) is eligible counterparties and professional clients only (all distribution channels). No EEA or UK PRIIPs key information document (KID) has been prepared as the Notes are not available to retail in EEA or UK.

About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries.

Forward-Looking Statements
Certain statements in this document contain forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by 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 affecting the distribution of our clients’ products; international, national, or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments, and a deterioration or disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing, and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing, and corporate communications industries; unanticipated changes to, or the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems and risks related to cybersecurity incidents; effective management of the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and related partnerships in our business; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with acquisitions, its critical accounting estimates and legal proceedings; the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions, and an evolving regulatory environment in high-growth markets and developing countries; and risks related to our environmental, social, and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

SOURCE Omnicom Group Inc.

NEW YORK, Feb. 23, 2024 /PRNewswire/ — Omnicom (NYSE: OMC) today announced it will present at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco, California on Tuesday, March 5, 2024 at 11:45 a.m. Pacific Time. Live and archived webcasts will be available on Omnicom’s website at investor.omnicomgroup.com.

About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries.

SOURCE Omnicom Group Inc.

NEW YORK, Feb. 15, 2024 /PRNewswire/ — The Board of Directors of Omnicom (NYSE: OMC) declared a quarterly dividend of 70 cents per outstanding share of the corporation’s common stock. The dividend is payable on April 9, 2024 to Omnicom common shareholders of record at the close of business on March 11, 2024.

About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries.

2023 Fourth Quarter:

Revenue of $4,060.9 million, with organic growth of 4.4%

Operating income of $646.7 million; $661.2 million non-GAAP adjusted

Operating income margin of 15.9%; 16.3% non-GAAP adjusted

Diluted earnings per share of $2.13; $2.20 non-GAAP adjusted

2023 Full Year:

Revenue of $14,692.2 million, with organic growth of 4.1%

Operating income of $2,104.7 million; $2,231.9 million non-GAAP adjusted

Operating income margin of 14.3%; 15.2% non-GAAP adjusted

Diluted earnings per share of $6.91; $7.41 non-GAAP adjusted

NEW YORK, Feb. 6, 2024 /PRNewswire/ — Omnicom (NYSE: OMC) today announced results for the quarter and full year ended December 31, 2023.

“Omnicom finished 2023 with 4.4% organic revenue growth in the fourth quarter and 4.1% for the year.  Looking out to full year 2024, we are set up well with solid fundamentals, tremendous opportunities in digital commerce and retail media from our Flywheel acquisition, and momentum in new business wins,” said John Wren, Chairman and Chief Executive Officer of Omnicom. “Our accelerated investments in analytics and AI will enhance our ability to drive the best outcomes for our clients, while shareholders remain supported by our profitable operations and balanced deployment of capital through dividends, acquisitions, and share repurchases.”

Fourth Quarter 2023 Results

 

Revenues
Reported revenue in the fourth quarter of 2023 increased $192.7 million, or 5.0%, to $4,060.9 million.

Worldwide revenue growth in the fourth quarter of 2023 compared to the fourth quarter of 2022 was led by an increase in organic growth of $171.3 million, or 4.4%.  The impact of foreign currency translation increased  revenue by $47.0 million, or 1.2%.  Acquisition revenue, net of disposition revenue, reduced revenue by $25.6 million, or 0.7%, primarily due to dispositions earlier in the year in the Execution & Support discipline, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and Public Relations disciplines. 

Organic growth by discipline in the fourth quarter of 2023 compared to the fourth quarter of 2022 was as follows: 9.3% for Advertising & Media, 3.6% for Healthcare, and 1.0% for Commerce & Branding, partially offset by declines of 8.0% for Experiential, 2.9% for Public Relations, 1.1% for Precision Marketing, and 0.4% for Execution & Support.

Organic growth by region in the fourth quarter of 2023 compared to the fourth quarter of 2022 was as follows: 14.1% for Euro Markets & Other Europe, 10.9% for Asia Pacific, 5.8% for the United Kingdom, 13.7% for Latin America, and 0.6% for the United States, partially offset by declines of 17.3% for the Middle East & Africa, and 1.3% for Other North America.

Expenses
Operating expenses increased $188.7 million, or 5.9%, to $3,414.2 million in the fourth quarter of 2023 compared to the fourth quarter of 2022.

Salary and service costs increased $162.0 million, or 5.8%, to $2,954.0 million. These costs tend to fluctuate with changes in revenue and are comprised of salary and related costs, which include employee compensation and benefits costs and freelance labor, third-party service costs, and third-party incidental costs. Salary and related costs increased $52.7 million, or 2.8%, to $1,906.1 million, primarily due to an increase in headcount as a result of organic growth and acquisitions, partially offset by our disposition activity earlier in the year.  Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs that we bill back to the client directly at our cost and which we are required to include in revenue. Third-party service costs increased $97.5 million, or 12.4%, to $884.0 million, and third-party incidental costs increased $11.8 million, or 7.8%, to $163.9 million, both as a result of organic growth and our acquisitions. Third-party service costs were less impacted by our disposition activity.

Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, decreased $3.5 million, or 1.2%, to $290.9 million, due to a decrease in rent expense, partially offset by an increase in other occupancy expenses.

SG&A expenses increased $31.1 million, or 36.8%, to $115.6 million, primarily due to an increase in professional fees and $14.5 million of acquisition transaction costs related primarily to our Flywheel Digital acquisition, which closed on January 2, 2024.

Operating Income
Operating income increased $4.0 million, or 0.6%, to $646.7 million in the fourth quarter of 2023 compared to the fourth quarter of 2022. The related operating income margin was 15.9% compared to 16.6% for the fourth quarter of 2022.  In the fourth quarter of 2023, non-GAAP adjusted operating income of $661.2 million increased 2.9%, and the non-GAAP adjusted operating income margin was 16.3%.

Interest Expense, net
Net interest expense in the fourth quarter of 2023 increased $0.9 million to $26.8 million compared to the fourth quarter of 2022. Interest income decreased $2.7 million to $25.8 million, primarily due to lower average cash and short-term investment balances compared to the fourth quarter of 2022.

Income Taxes
Our effective tax rate of 26.5% in the fourth quarter of 2023 was flat with the rate in the fourth quarter of 2022.

Net Income – Omnicom Group Inc. and Diluted Net Income per Share
Net income – Omnicom Group Inc. for the fourth quarter of 2023 decreased $4.1 million, or 1.0%, to $425.7 million compared to the fourth quarter of 2022. Diluted shares outstanding for the fourth quarter of 2023 decreased 2.8% to 199.5 million from 205.2 million in the fourth quarter of 2022 as a result of net share repurchases. Diluted net income per share of $2.13 increased $0.04, or 1.9%, from $2.09 per share.  In the fourth quarter of 2023, non-GAAP adjusted diluted earnings per share of $2.20 increased 5.3%.

EBITA
EBITA increased $5.4 million, or 0.8%, to $668.1 million in the fourth quarter of 2023 compared to the fourth quarter of 2022. The related EBITA margin was 16.5% compared to 17.1% for the fourth quarter of 2022. In the fourth quarter of 2023, non-GAAP adjusted EBITA of $682.6 million increased 3.0%, and the non-GAAP adjusted EBITA margin was 16.8%.

Full Year 2023 Results

 

Revenues
Reported revenue in 2023 increased $403.1 million, or 2.8%, to $14,692.2 million.

Worldwide revenue growth in 2023 compared to 2022 was led by an increase in organic growth of $584.5 million, or 4.1%.  The impact of foreign currency translation reduced revenue by $28.3 million, or 0.2%.  Acquisition revenue, net of disposition revenue, reduced revenue by $153.1 million, or 1.1%, primarily due to dispositions earlier in the year in the Execution & Support discipline, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and Public Relations disciplines. 

Organic growth by discipline in 2023 compared to 2022 was as follows: 6.5% for Advertising & Media, 3.8% for Healthcare, 3.1% for Precision Marketing, 3.0% for Experiential, and 1.2% for Commerce & Branding, partially offset by declines of 1.0% for Execution & Support and 0.8% for Public Relations.

Organic growth by region in 2023 compared to 2022 was as follows: 2.6% for the United States, 7.2% for Euro Markets & Other Europe, 6.0% for Asia Pacific, 4.7% for the United Kingdom, 13.0% for Latin America, and 3.0% for Other North America, partially offset by a decline of 5.8% for Middle East & Africa.

Expenses
Operating expenses increased $381.7 million, or 3.1%, to $12,587.5 million in 2023 compared to 2022. Included in operating expenses for 2023 is the net impact of the gain on disposition of certain of our research businesses in our Execution & Support discipline of $78.8 million and repositioning costs related to real estate and other exit charges and severance costs of $191.5 million.

Salary and service costs increased $375.3 million, or 3.6%, to $10,701.2 million. These costs tend to fluctuate with changes in revenue and are comprised of salary and related costs, which include employee compensation and benefits costs and freelance labor, third-party service costs, and third-party incidental costs. Salary and related costs increased $14.9 million, or 0.2%, to $7,212.8 million, primarily due to an increase in headcount as a result of organic growth and acquisitions, partially offset by our disposition activity earlier in the year.  Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs that we bill back to the client directly at our cost and which we are required to include in revenue. Third-party service costs increased $332.4 million, or 12.9%, to $2,917.9 million, and third-party incidental costs increased $28.0 million, or 5.2%, to $570.5 million, both as a result of organic growth and our acquisitions for the year. Third-party service costs were less impacted by our disposition activity.

Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, were flat due to increases in other occupancy expenses, offset by lower rent.

SG&A expenses increased $15.2 million, or 4.0%, to $393.7 million, primarily due to an increase in professional fees, including $14.5 million of acquisition transaction costs primarily related to our Flywheel acquisition, which closed on January 2, 2024.

Operating Income
Operating income increased $21.4 million, or 1.0%, to $2,104.7 in 2023 compared to 2022. The related operating income margin was 14.3% compared to 14.6% for 2022. In 2023, non-GAAP adjusted operating income of $2,231.9 million increased 1.6%, and the non-GAAP adjusted operating income margin was 15.2%.

Interest Expense, net
Net interest expense in 2023 decreased $26.1 million to $111.8 million compared to 2022.  Interest income increased $36.0 million to $106.7 million, primarily due to higher interest rates on cash balances and short-term investment balances compared to 2022.

Income Taxes
Our effective tax rate of 26.3% in 2023 decreased from 28.1% in 2022. The higher effective tax rate for 2022 was primarily due to the result of the non-deductibility of $113.4 million in charges recorded in the first quarter of 2022 arising from the effects of the war in Ukraine, as well as an additional increase in income tax expense of $4.8 million related to the disposition of our businesses in Russia.

Net Income – Omnicom Group Inc. and Diluted Net Income per Share
Net income – Omnicom Group Inc. in 2023 increased $74.9 million, or 5.7%, to $1,391.4 compared to 2022. Diluted shares outstanding for 2023 decreased 2.7% to 201.4 million from 207.0 million in 2022 as a result of net share repurchases. Diluted net income per share increased $0.55, or 8.6%, to $6.91 per share.  In 2023, non-GAAP adjusted diluted earnings per share of $7.41 increased 6.9%.

EBITA
EBITA increased $21.4 million, or 1.0%, to $2,185.0 million in 2023 compared to 2022. The related EBITA margin was 14.9% compared to 15.1% for 2022.  In 2023, non-GAAP adjusted EBITA of $2,312.2 million increased 1.5%, and the non-GAAP adjusted EBITA margin was 15.7%.

Risks and Uncertainties
Current global economic challenges, including geopolitical events, international hostilities, acts of terrorism, public health crises, high 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. We monitor economic conditions closely, as well as client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness, and other developments.

Definitions – Components of Revenue Change
We use certain terms in describing the components of the change in revenue above. 

Foreign exchange rate impact: calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue. The foreign exchange rate impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue.

Acquisition revenue, net of disposition revenue: 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. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date, and the comparable prior period revenue and the positive or negative growth after the acquisition date is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of disposals through the disposition date. The acquisition revenue and disposition revenue amounts are netted in the description above.

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

Conference Call
Omnicom will host a conference call to review its financial results on Tuesday, February 6, 2024 at 4:30 p.m. Eastern Time. Participants can listen to the conference call by calling 844-291-6362 (domestic) or 234-720-6995 (international), along with access code 1468163. The call will also be simulcast and archived on our investor relations website.

Corporate Responsibility
At Omnicom, we are committed to promoting responsible practices and making positive contributions to society around the globe. Please explore our website (omnicomgroup.com/corporate-responsibility) for highlights of our progress across the areas on which we focus: Empower People, Protect Our Planet, Lead Responsibly.

About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries. 

Non-GAAP Financial Measures
We present financial measures determined in accordance with generally accepted accounting principles in the United States (“GAAP”) and adjustments to the GAAP presentation (“Non-GAAP”), which we believe are meaningful for understanding our performance. EBITA is defined as operating income before interest, taxes, and amortization of intangible assets, and EBITA margin is defined as EBITA divided by revenue. We use EBITA and EBITA margin as additional operating performance measures, which exclude the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). We also use Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITA, Adjusted EBITA Margin, Adjusted Income Tax Expense, Adjusted Net Income – Omnicom Group Inc. and Adjusted Net Income per diluted share – Omnicom Group Inc. as additional operating performance measures. We believe these measures are useful in evaluating the impact of certain items on operating performance and allow for comparability between reporting periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Non-GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies.

Forward-Looking Statements
Certain statements in this document contain forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by 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 affecting the distribution of our clients’ products; international, national, or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments, and a deterioration or disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing, and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing, and corporate communications industries; unanticipated changes to, or the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems and risks related to cybersecurity incidents; effective management of the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and related partnerships in our business; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with acquisitions, its critical accounting estimates and legal proceedings; the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions, and an evolving regulatory environment in high-growth markets and developing countries; and risks related to our environmental, social, and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and in other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

 

 

 

 

 

 

 

NEW YORK, Jan. 25, 2024 /PRNewswire/ — Omnicom (NYSE: OMC) will publish its fourth quarter and full year 2023 results on Tuesday, February 6, 2024 after the New York Stock Exchange close of trading. The company will also host a conference call to review such financial results on Tuesday, February 6, 2024, starting at 4:30 p.m. Eastern Time. Participants may listen to the conference call by dialing 844-291-6362 (domestic) or 234-720-6995 (international), along with access code 1468163. The conference call will also be simulcast and archived on Omnicom’s website at investor.omnicomgroup.com. 

About Omnicom

Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing, and other specialty communications services to over 5,000 clients in more than 70 countries.

SOURCE Omnicom Group Inc.

Each year, CES gathers global innovators to showcase breakthrough technologies and explore our industry’s tech landscape. Across the 12 million square feet of innovation at the event, Omnicom compiled top trends that have wide-reaching implications across brands and sectors.

Check out our highlights from the week in the deck below.

NEW YORK, Dec. 18, 2023 /PRNewswire/ — Omnicom (NYSE: OMC) today announced that Casey Santos has been appointed as an independent director to its Board of Directors and as a member of the Finance Committee, effective January 1, 2024.

“We are thrilled to welcome Casey to our esteemed Board of Directors, which is known for the diverse perspectives it brings together,” said John Wren, Chairman and CEO of Omnicom. “Casey has deep expertise in technology, digital transformation and AI, bringing new perspectives highly relevant to Omnicom. Her career path is truly a remarkable one, and her unique experiences make her a valuable addition to our Board.”

The appointment increases the size of the Board of Directors to 11 members, 10 of whom are independent, including seven who are women and six who are ethnically diverse.

Santos is currently Chief Information Officer at Asurion, where she leads the organization’s global technology and procurement teams and strategy. Prior to her work at Asurion, she held technology leadership roles in the finance industry, including roles at Alliance Bernstein, General Atlantic and McKinsey. She began her career as a NASA Flight Controller supporting over 20 space shuttle missions.

Santos received her Bachelor of Science degree in aeronautics and astronautics from MIT and holds dual master’s degrees from the University of Pennsylvania. She is the Board Chair of the Greater Nashville Technology Council, Board Director of Horizon Blue Cross Blue Shield of New Jersey, and a Board Member of Nashville Electric Service. She also works with non-profits to help advance Science, Technology, Engineering, and Mathematics (STEM) education and technology leadership for all.

To learn more about Omnicom’s Board of Directors, please visit https://www.omnicomgroup.com/about/corporate-governance.

About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries.

SOURCE Omnicom Group Inc.

NEW YORK, Dec. 12, 2023 /PRNewswire/ — The Board of Directors of Omnicom (NYSE: OMC) declared a quarterly dividend of 70 cents per outstanding share of the corporation’s common stock. The dividend is payable on January 12, 2024 to Omnicom common shareholders of record at the close of business on December 22, 2023.

About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries.

SOURCE Omnicom Group Inc.

NEW YORK, Nov. 14, 2023 /PRNewswire/ — Omnicom (NYSE: OMC) today announced a first-mover collaboration with Getty Images (NYSE: GETY),  that will provide it early access to Generative AI by Getty Images. The new tool pairs Getty Images’ best in class creative content with the latest AI technology for a commercially safe and legally indemnified generative AI tool.

As part of their Alpha testing program, Omnicom integrated the tool into Omni, Omnicom’s open operating system. By combining the tool with Omni’s data, agency teams will be able to safely create on-brand content that helps marketers orchestrate better outcomes. They will also be able to bring the tool into client ecosystems and customize it with clients’ proprietary data to produce commercially safe images with the clients’ unique brand style and language. 

“We are honored to be a part of Getty Image’s new Generative AI tool, one that will significantly help our people move from ideation to execution in a seamless manner,” said Omnicom’s EVP, Chief Technology Officer, Paolo Yuvienco. “Getty Images shares our commitment to the responsible use of AI, and that makes their new tool all the more enticing to us, especially given it is built with high quality authentic content. Providing our people and our clients a commercially safe option is a true game changer, and we’re eager to harness the tool’s capabilities alongside them.” 

Generative AI by Getty Images launched in September 2023 and is developed on the state‑of‑the‑art Edify model architecture, which is part of NVIDIA Picasso, a foundry for generative AI models for visual design. The tool is trained solely from Getty Images’ content with uncapped indemnification for commercial use. With broad protection and usage rights, users can download and license any visual they generate, helping Omnicom teams move from ideas to outcomes faster.

“We are giving brands the freedom to explore Generative AI for internal ideation, alongside the confidence and trust to use content in commercial settings with the same protections as our world-class pre-shot libraries,” said Grant Farhall, Chief Product Officer at Getty Images. “We’re honored to have worked with Omnicom in our initial testing to refine in ways that meet the ongoing needs of marketers and advertisers.”

Both companies have taken a strong stance on responsible AI practices. Omnicom is part of the Coalition for Content Provenance and Authenticity (C2PA) that seeks to build and standardize a future framework of content verification and protects the authenticity of AI assets for creators, brands, and consumers. Additionally, Omnicom was the first advertising holding company to join Adobe’s Content Authenticity Initiative (CAI), which is focused on increasing trust and transparency in digital content. This initiative is responsible for the promotion of the C2PA standard.

Getty Images has also taken important steps to protect editorial integrity and public trust in media amidst the rise of AI tools and platforms by signing an open letter alongside several media companies and organizations that lays out proposed principles for regulatory and industry action, including transparency of training sets, clear identification of AI generated content, efforts to eliminate bias in generated content, and others. With the latest tool from Getty Images, users can be confident that the content that they generate is safe to use in commercial settings and will not include any trademarked brands, products, characters or identifiable people.

About Omnicom
Omnicom (NYSE: OMC) (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries.

About Getty Images
Getty Images (NYSE: GETY) is a preeminent global visual content creator and marketplace that offers a full range of content solutions to meet the needs of any customer around the globe, no matter their size. Through its Getty Images, iStock and Unsplash brands, websites and APIs, Getty Images serves customers in almost every country in the world and is the first-place people turn to discover, purchase and share powerful visual content from the world’s best photographers and videographers. Getty Images works with over 541,000 contributors and more than 310 content partners to deliver this powerful and comprehensive content. Each year Getty Images covers more than 160,000 news, sport and entertainment events providing depth and breadth of coverage that is unmatched. Getty Images maintains one of the largest and best privately-owned photographic archives in the world with millions of images dating back to the beginning of photography.

Revenue of $3,578.1 million, with organic growth of 3.3%

Operating income of $560.8 million

Operating income margin of 15.7%

Diluted earnings per share of $1.86

NEW YORK, Oct. 17, 2023 /PRNewswire/ — Omnicom (NYSE: OMC) today announced results for the quarter ended September 30, 2023.

“We are pleased with our strong organic revenue growth of 3.3%, with notable performances in our Advertising & Media, Precision Marketing, and Healthcare disciplines. Our year-to-date organic growth of 4.0% remains in line with our full-year expectations, which reflects the resiliency of our business even in periods of economic uncertainty,” said John Wren, Chairman and Chief Executive Officer of Omnicom. “Omnicom continued to post strong profitability and earnings growth in the quarter, and our recent business wins validate the benefits of our client strategy in this rapidly evolving marketplace. We are very well positioned for a recovery in business conditions, with a strong balance sheet and leading creativity in all of our service disciplines.”

Third Quarter 2023 Results

 

Revenues
Reported revenue in the third quarter of 2023 increased $134.7 million, or 3.9%, to $3,578.1 million. Worldwide revenue growth in the third quarter of 2023 compared to the third quarter of 2022 was led by an increase in organic growth of $113.1 million, or 3.3%.  The impact of foreign currency translation increased  revenue by $59.1 million, or 1.7%.  Acquisition revenue, net of disposition revenue, reduced revenue by $37.5 million, or 1.1%, primarily due to dispositions earlier in the year in the Execution & Support discipline, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and Public Relations disciplines. 

Organic growth by discipline in the third quarter of 2023 compared to the third quarter of 2022 was as follows: 6.1% for Advertising & Media, 4.3% for Precision Marketing, 3.8% for Healthcare, and 9.2% for Experiential. Organic decline by discipline was as follows: 5.5% for Public Relations, 3.6% for Execution & Support, and 1.7% for Commerce & Branding.

Organic growth by region in the third quarter of 2023 compared to the third quarter of 2022 was as follows: 2.7% for the United States, 5.7% for Euro Markets & Other Europe, 4.4% for the United Kingdom, 19.2% for Latin America, and 2.5% for Asia Pacific. Organic decline by region was as follows: 10.8% for the Middle East & Africa, and 1.7% for Other North America.

Expenses
Operating expenses increased $119.9 million, or 4.1%, to $3,017.3 million in the third quarter of 2023 compared to the third quarter of 2022.

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 include employee compensation and benefits costs and freelance labor. Salary and service costs increased $110.4 million, or 4.5%, to $2,586.5 million.  Salary and related costs increased $7.6 million, or 0.4%, to $1,756.7 million, primarily due to an increase in headcount as a result of organic growth and acquisitions.  Third-party service costs include third-party supplier costs when we act as principal in providing services to our clients. Third-party incidental costs primarily consist of client-related travel and incidental out-of-pocket costs that we bill back to the client directly at our cost and which we are required to include in revenue. Third-party service costs increased $90.6 million, or 15.4%, to $678.8 million as a result of organic growth, and third-party incidental costs increased $12.2 million, or 8.8%, to $151.0 million.

Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, increased $7.6 million, or 2.7%, to $288.6 million, due to increases in other occupancy expenses, partially offset by lower rent.

SG&A expenses increased $3.4 million, or 3.9%, to $89.8 million, primarily due to higher professional fees related to acquisitions.

Operating Income
Operating income increased $14.8 million, or 2.7%, to $560.8 million in the third quarter of 2023 compared to the third quarter of 2022. The related operating income margin was 15.7% compared to 15.9% for the third quarter of 2022.

Interest Expense, net
Net interest expense in the third quarter of 2023 increased $9.2 million to $38.3 million compared to the third quarter of 2022. Interest expense increased $1.5 million to $53.5 million, and interest income decreased $7.7 million to $15.2 million primarily due to lower cash and short term investment balances.

Income Taxes
Our effective tax rate of 26% in the third quarter of 2023 was flat with the rate in the third quarter of 2022.

Net Income – Omnicom Group Inc. and Diluted Net Income per Share
Net income – Omnicom Group Inc. for the third quarter of 2023 increased $7.4 million, or 2.0%, to $371.9 million compared to the third quarter of 2022. Diluted shares outstanding for the third quarter of 2023 decreased 3.1% to 199.9 million from 206.3 million in the third quarter of 2022 as a result of net share repurchases. Diluted net income per share of $1.86 increased $0.09, or 5.1%, from $1.77 per share.

EBITA
EBITA increased $15.0 million, or 2.6%, to $581.1 million in the third quarter of 2023 compared to the third quarter of 2022. The related EBITA margin was 16.2% compared to 16.4% for the third quarter of 2022.

Risks and Uncertainties
Current global economic challenges, including the war in Ukraine, high and sustained inflation, rising interest rates, supply chain disruptions, credit market deterioration, and other macroeconomic factors, could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and discipline. We closely monitor economic conditions, client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness, and other developments.

Definitions – Components of Revenue Change
We use certain terms in describing the components of the change in revenue above. 

Foreign exchange rate impact: calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue. The foreign exchange rate impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue.

Acquisition revenue, net of disposition revenue: 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. As a result, acquisition revenue excludes the positive or negative difference between our current period revenue subsequent to the acquisition date and the comparable prior period revenue and the positive or negative growth after the acquisition date is attributed to organic growth. Disposition revenue is calculated as if the disposition occurred twelve months prior to the disposition date by aggregating the comparable prior period revenue of disposals through the disposition date. The acquisition revenue and disposition revenue amounts are netted in the description above.

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

Conference Call
Omnicom will host a conference call to review its financial results on Tuesday, October 17, 2023 at 4:30 p.m. Eastern Time. Participants can listen to the conference call by calling 844-291-5494 (domestic) or 409-207-6995 (international), along with access code 4961768. The call will also be simulcast and archived on our investor relations website.

Corporate Responsibility
At Omnicom, we are committed to promoting responsible practices and making positive contributions to society around the globe. Please explore our website (omnicomgroup.com/corporate-responsibility) for highlights of our progress across the areas on which we focus: Empower People, Protect Our Planet, Lead Responsibly.

About Omnicom
Omnicom (www.omnicomgroup.com) is a leading global marketing and corporate communications company. Omnicom’s branded networks and numerous specialty firms offer services in advertising, strategic media planning and buying, precision marketing, commerce and branding, experiential, customer relationship marketing (CRM), public relations, healthcare marketing and other specialty communications services to over 5,000 clients in more than 70 countries. 

Non-GAAP Financial Measures
We present financial measures determined in accordance with generally accepted accounting principles in the United States (“GAAP”) and adjustments to the GAAP presentation (“Non-GAAP”), which we believe are meaningful for understanding our performance. EBITA is defined as operating income before interest, taxes, and amortization of intangible assets, and EBITA margin is defined as EBITA divided by revenue. We use EBITA and EBITA margin as additional operating performance measures, which exclude the non-cash amortization expense of intangible assets (primarily consisting of amortization arising from acquisitions). We also use Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITA, Adjusted EBITA Margin, Adjusted Income Tax Expense, Adjusted Net Income – Omnicom Group Inc. and Adjusted Net Income per diluted share – Omnicom Group Inc. as additional operating performance measures. We believe these measures are useful in evaluating the impact of certain items on operating performance and allow for comparability between reporting periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Non-GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies.

Forward-Looking Statements
Certain statements in this press release constitute forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company’s management as well as assumptions made by, and information currently available to, the Company’s management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “should,” “would,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by the war in Ukraine, the lingering effects of the COVID-19 pandemic, high and persistent inflation in countries that comprise our major markets, rising interest rates, and supply chain issues affecting the distribution of our clients’ products; international, national or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments and a deterioration or a disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing and corporate communications industries; the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with its critical accounting estimates and legal proceedings; and the Company’s international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions and regulatory environment;effectively managing the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and partnerships in our business; and risks related to our environmental, social and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

SOURCE Omnicom Group Inc.